What Is Privati🌜zing Profits and Socializing Losses?

Privatizing profits and socializing losses refers to the practice of treating company earnings as the rightful property of shareholders and company losses as a responsibility that society must shoulder. In other words, the profitability of corporations is strictly for the benefit of their 澳洲幸运5开奖号码历史查询:shareholders. But when the companies fail, the fallout—the losses and recov💎ery—is the responsibility of the general public.

Understanding Privatizinꦚg Profits and Socializing Losses

The basis of this concept is that profits and losses are treated differently. When companies, even those that are 澳洲幸运5开奖号码历史查询:publicly traded, are profitable, it's the shareholders who reap the rewards. Therefore, only a certain group of people benefit. But when the losses these companies experience are steep, 澳洲幸运5开奖号码历史查询:taxpayers must bear the brunt.

The idea of privatizing profits and socializing losses generally comes in the form of some type of intervention from governments. This may be through bailouts or any number of 澳洲幸运5开奖号码历史查询:subsidies.

Large corporations, their executives, and their shareholders are able to benefit from government subsidies and rescues in large part because of their ability to cultivate or buy influence through lobbyists. At the same time, defenders of controversial subsidies and bailouts contend that some firms are 澳洲幸运5开奖号码历史查询:too big to fail.

This rationale is based on the assumption that allowing them to collapse would cause economic downturns and have much more dire effects on the working and middle-class population than rescues do. This was the basis for the bailouts given to the big banks and automakers following the 澳洲幸运5开奖号码历史查询:economic crisis of 2007.

The phrase privatizing profits and socializing losses has a number of synonyms, including socialism for the rich, capitalism for the poor, and lemon socialism. The latter was coined in a 1974 New York Times op-ed about New York State's decision to buy two half-finished power plants from the struggling electric utility ConEd for $500 million.

E🔜xample of Privatizing Profits and Socializing Losses: TARP

One of the most recent examples of privatizing 💖profits and socializing losses is the post-financial cr♏isis bailout of banks, insurers, and auto manufacturers.

The Troubled Asset Relief Program (TARP) of 2008 authorized the United States Treasury under President Barack Obama's administration to spend $700 billion of taxpayer money to rescue these firms, many of which contributed to the crisis through reckless—and for a while, enormously profitable—investments in risky 澳洲幸运5开奖号码历史查询:mortgage-backed derivatives. In reali𝓡ty, though, only $426.4 billion was actually used.

Some of the failing firms' employees were awarded multi-million dollar bonuses, despite accepting money from TARP and the 澳洲幸运5开奖号码历史查询:Federal Reserve (Fed). By contrast, 861,664 families lost their homes to 澳洲幸运5开奖号码历史查询:foreclosure in 2🔥008. The media and public widely perceived this cౠontrast as exemplifying the support rich people receive from the government at the expense of ordinary citizens.