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Union isn't a socialist society for exactly the reasons you pointed out, and it's not supposed to be.  The contradictions you pointed out are intentionally made in order to imply that the lore is written from the point of view of Union propaganda.  Union is pretty explicitly still an imperialist power that's scaled back from it's second iteration only to a certain degree, which is exactly why it tolerates the existence of, for instance, Harrison Armory, within Union space.  Union talks a big game, but is no more interested in giving everyone their fair share than it is in dropping the deification of the core worlds and their citizens.