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Comment by baxtr | Hacker News Reader

> Privatise the profit, socialise the losses.

I always wondered about that. Maybe because I don’t understand what it’s trying to say. I mean profits of companies benefit many, don’t they? Through jobs, taxes, dividends in case it’s a public company and so on.

What am I getting wrong here?

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In the run up to the 2008 financial crash, banks, property developers, landlords and others were making a ton of money. I was a student, so was not making any money. Then in 2008 all of that came crashing down and many of these companies got bailed out using public money. I graduated and had to pay an added bailout tax.

So, while they were all benefiting and making money I didn't see any of that money (privatise the profit), sure some of it got paid out in taxes, but clearly not enough, since:

When their businesses started to fail, I, who didn't make any profits from them, had to pay extra in taxes to save these companies. (socialise the losses)

They only saw upside and no downside, I only saw downside and no upside.

Sure, they paid taxes while they were profited, but my life didn't change much before vs after the crash, in terms of what the government was providing. So the government provided the same to me when they were supposedly earning extra in taxes as they provided when they needed me to pay extra in taxes to bail out the companies. That doesn't sound like the taxes paid by the companies really made much difference (and that difference was easily wiped out by the bailouts anyway). Same goes for any jobs created: would have been cheaper to use the bailout money to pay these people directly (pre crash) than to give them job and let them wreck the economy, and then we have to bail them out anyway.

One of the most egregious examples of this that I like to use is in natural resource extraction, mining, deforestation, etc. When mining companies start a project to dig a quarry (in Australia), they are meant to set aside funds for rehabilitation of the environment when they are done, this should come out of the profits from the endeavor. I consider destruction of the environment a socialised cost. Unfortunately, quite often, these companies will avoid rehabilitating the environment and misappropriate those funds, and then pay out massive bonuses to the few executives that could make it happen. Some of these areas will not be habitable for native wildlife for decades because the process is destructive and leaves the area toxic. The Flint water crisis is a specific example of this in America that really is affecting people. While I think you are technically correct, I don't think you considered the scope of the issue of privatizing profits and socialising losses.

The book Game of Mates[0] has some detailed examples of this behavior.

[0] https://gameofmates.com/

> Maybe because I don’t understand what it’s trying to say.

When a business venture is doing well, it pays generous salaries to executives and avoids taxes. When the business venture fails or creates grotesque havoc through incompetence or bad principles, a government of cronies will use tax-payers' money to pay for the consequences.

The business venture continues its "mission" and its perpetrators continue their careers.

Think of the extraordinary sums of money given to corporations "too big to fail".

All of those jobs would have still existed in a public utility. How many dividends do you think the average Texan got from the various power companies in Texas?

How do you think the taxes paid by those private utilities will stack up against the massive harm caused by those utilities trying to preserve profits and reduce liability in a crisis? How much do you think it will cost Texan tax payers to dig themselves out of this hole?

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