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Why are profits privatized and losses socialized?
  • typenameheretypenamehere October 2011 +1 -1 (+1 / -0 )
    That is the comfortable reality that the 1% live in. Why is it this way? What are some better alternatives?
  • slave October 2011 +1 -1 (+1 / -0 )
    That is called socialism for the 1%, capitalism for the 99%.
  • typenameheretypenamehere October 2011 +1 -1
    Yes, what it is has already been stated, what would you suggest as some better alternatives?
  • gott5gott5 December 2011 +1 -1
    The question is ,,,,,,,,,,,who socialized losses?
  • economicsystem December 2011 +1 -1
    I don't understand why loses are socialized. Why's that?
  • slave December 2011 +1 -1
    So the rich can get richer, and the poor poorer. If you could do that with a scheme, you would be called smart in this system (an entrepreneur) - if you get really good at it you may need to give some shares to the big bosses ("top dogs", or "fat cats") to show conformity and submission as they would want to keep you on their leash (I happen to know from many personal and indirect experiences).
  • gott5gott5 December 2011 +1 -1 (+1 / -0 )
    Please, supporting low income people long term is also "loses socialized" Rich End or Poor End it must stop. The Middle Class are those of modest income working hard and expecting little from govermment and they are being taken advantage of from many sides.

    Agrees: whitefeather

  • slave December 2011 +1 -1
    Did the low income people decide to be low income or were they forced into it? Don't worry you will join them soon. As a low income person I would like then to know whether you will consider supporting low income people is "loses socialized".
    As usual showing your bigotry for the poor. Class bigotry is the oldest and most pervasive type of bigotry shared by those of any race, sex, national origin, ethnicity. That is why "middle class" is such an unreliable and dangerous element in the movement, rooted in capitalism itself, happy to comply with the big capitalists and ignore the misery of the deeper enslaved working class as soon and as long as it is left alone in its mini-bubble. All bubbles will pop eventually. Time is catching up with the "middle class" and their "American Dream". Welcome to the future.

  • economicsystem December 2011 +1 -1
    I guess what I meant was I don't understand *how* "loses are socialized" or what that means. I don't understand how a loss in profit for a company means that those loses become socialized. Can anyone explain?
  • gott5gott5 December 2011 +1 -1 (+2 / -0 )
    A bailout is "loses socialized". GM is and will be for a long time beholding to the Fed. Many banks still survive only bacause of who they know in government. Taking over the loaning of money for student loans will soon become overwhelmingly that way.
  • gott5gott5 December 2011 +1 -1 (+1 / -0 )
    Low income might be for many reasons, but forced is the most temporary of all. I have gained and lost income many times, especially in the last 10 years, but government was my last resort of support. Family, friends, working harder, cutting back, these are the correct options, way before government support. No one should be allowed to exceed the amount of unemployment benefits they have paid in plus appreciation.
  • MundusVultDecipiMundusVultDecipi December 2011 +1 -1 (+1 / -0 )
    @economicsystem: To understand how losses are socialized you must first identify examples of losses. Here's what comes to mind for me...

    TARP BAILOUT
    Everything about this complex catastrophe is so calculated and engineered. I have a sneaking suspicion this was some kind of manufactured jubilee for the old boy network masquerading as a sudden crisis. This distraction of crisis allowed them to wipe the slate clean of a lot of financial baggage. I have no idea what that is but something along the lines of debts that raise too many questions.

    Anyway I just started reading "Money and Power: How Goldman Sachs Came to Rule the World" By: William D. Cohan. In it he introduces the company with explaining exactly how they concocted the CDO timebomb, what the risks and consequences were, and totals up how much wealth extracted from the crisis the single most powerful firm in the world engineered with deadly precision.

    I think the main lesson to learn from these megalomaniacs is that they can not be invincible anymore. No matter how much money they throw out to protect themselves and cover their trail we simply can not allow it. There is a reason we have anti-trust laws. We need to start busting these monopolies before the destroy out entire biosphere. Which leads to my next example...

    EXTERNALITIES
    https://secure.wikimedia.org/wikipedia/en/wiki/Externality
    These are the worst of the 'socialized losses' we take on as humanity. Granted we are collectively responsible for this not all of us wanted it this way. I don't understand why we can't take into account the wisdom of the Native Americans. It is so simple. Give back what you take from Mother Earth. We need to nurture our environment not extract unfathomable amounts of destruction for conversion into mortal luxuries.

    In that book about Goldman Sachs, John Fullerton wrote a letter to Lloyd Blankfein right before the New Year of 2010: " Surely you must acknowledge that this gain, much less the avoidance of a total loss, is attributable directly to the taxpayer bailout of the industry." Further down on page 10, James Cramer is quoted on his analysis of his previous employer's blunder and seemingly invincibility: "Is it because they worked really hard and did better? Was it because they had a good investor in Warren Buffet? Or was it because the U.S. Government did its very best to save the banking system from going into oblivion, to rout the people who had been seriously shortening stocks, to be able to break what I call the 'Kesselschlact' -the German word for battle of encirclement and annihilation -against all the different banks that had been going on? Who ended that? Ws it Lloyd? Was it Gary Cohn [Goldma's president]? No. It was the United States government."

    Agrees: 1loveAl

  • economicsystem December 2011 +1 -1
    Whoa....I am certainly not familiar with any of the economics lingo. What's a bailout? And still, I don't understand how a bailout is an example of a "loss socialized." Isn't it just better to define what it is? This is very confusing....anyone?
  • 1loveAl1loveAl December 2011 +1 -1
    Try Googling bailout and see if a wiki pops up for it.
    actually allow me: http://en.m.wikipedia.org/wiki/Bailout
  • gott5gott5 December 2011 +1 -1
    It's not that difficult.........in times of hardship...... anytime goverment give out tax money to those they deem as needy, Instead of allowing people and business to fail as sometimes they should, we bail them out or provide forms of welfare. If you receive more unemployment funds than you ever paid in.....that's welfare aid. losses socialized.
  • economicsystem December 2011 +1 -1
    I get the bailout part, but how does that make the loss socialized? Just because the government bails them out does not show that this is "socialized." I also don't see how receiving more unemployment shows "losses socialized." I think the explanations are not as clear as they might first appear to be.
  • 1loveAl1loveAl December 2011 +1 -1
    I believe "socialized" might loosely mean in this sense involvement of the people. "Losses" maybe referring to money paid from public sector. I'm not sure I agree with unemployment funds as a loss though.
  • gott5gott5 December 2011 +1 -1
    unemployment is losses socialized, when someone receives more from unemployment benefits than they ever contributed. This is Blunt but the Truth, if you didn't earn it and you don't have to pay it back , your losses have been socialized.
  • 1loveAl1loveAl December 2011 +1 -1
    Yes, it is paid back through its original intent. Unemployment is meant to be a safety net to help rebound people back into the workforce. Although the U.S. does a terrible job at its system of welfare, which creates loss. If one was to back up unemployment funds with an obligation to workshops and programs based on job creation and workforce building, you would have a streamlined system focused on maximizing the human resource of society. So I agree with you gott5 on its current implementation, but the need for some sort of system for unemployment rebound, I argue, should be a public good generated from society.
  • economicsystem December 2011 +1 -1
    I'm sorry but you haven't explained a thing! Involvement of people is inevitable everywhere and in any business, I don't think this is what people mean when they say, "socialized." It's not clear how receiving more than what you put in is "socialized." Perhaps you mean that other people pick-up the cost of an individual loss?
  • gott5gott5 December 2011 +1 -1
    ECO...quite so.........picking up the tab..........happens way too much.
  • gott5gott5 December 2011 +1 -1
    Al.................we do have a terrible system of Welfare. When people should be allowed to crash and burn on their own....we spend way too much time proping them up.
  • 1loveAl1loveAl December 2011 +1 -1
    @Gott5: cost will amount from doing nothing about the problem too.

    @economicsystem: I'm assuming that is what is meant by that terminology, as hinted in the language I used.

    But yes, people who didn't have knowledge and/or involvement in the desision to create toxic assets should not have to foot the bill.
  • marchelomarchelo December 2011 +1 -1 (+3 / -0 )
    @economicsystem "Socialized losses" refers to a system which prevents the economic failure of a corporation the government has deemed "to big to fail" while at the same time allowing the corp. to privatize its profits.
    It is called "socialized losses" because this system is funded with tax payer money. When the government bails out a corporation with money collected from its citizens, the losses of that corp. have effectively been socialized. Had the government allowed the corp. to fail, its owners and shareholders would take the loss, but when it is bailed-out its is society that takes the loss (hence "socialized losses").

    While I feel the government has no place propping up private corporations, this laissez-faire philosophy does not extend to citizens. I feel that we pay taxes so that we may fund our common welfare. The government builds and maintains infrastructure, provides defense, and launches projects that benefit the common welfare of its citizens.
    I don't like the idea of a 'welfare queen' anymore then you do, but I like the idea of starving poor roaming the streets even less- and so I support welfare which protects my fellow citizens from such a fate.

    A chain is only as strong as its weakest link. Our country is such a chain, and its strength is diminished when the lowest among us are made to suffer. This is not some useless 'feel good' hippy jargon, this is the reality of our interconnected society.
    The extraordinary success of the top 1% was not enough to make our country prosperous. Quite the opposite really, as their success was borne from the weakening and exploitation of the 99%.

    Corporations should be allowed to crash and burn precisely because they are not people. A failed corporation is broken up and sold off, generating opportunity for others to succeed.
    Citizens should not be be allowed to crash and burn because they are living and breathing people. A failed person lives on the street, taking what they can to survive, generating crime and more failure.

    An ounce of prevention is worth a pound of cure.
  • gott5gott5 December 2011 +1 -1
    those who crash and burn are only more a failure when they hav been conditioned to wait until someone helps them instead of getting up and doing for themselves.
    We are a chain, but we stay nothing more than a dog leash unless some are willing to break out a be a tow chain. Why are we always enabling someone who fails before we praise someone's success.
  • 1loveAl1loveAl December 2011 +1 -1 (+1 / -0 )
    Gott5, I think your being way too general in your assumption towards welfare. There are many reasons why and how someone fails. Murphy said it best. There is a cost to striping away the idea of a welfare system. A hungry mob is a hungry mob, and that could in its self destroy any civilization. Society needs to meet the demands of the human being and the ecology of this planet.

    Now I'm not saying give these people a free ride, that workforce center I suggested above would be like a school for people who need jobs. That is in no way conditioning them not to help themselves. Quite the contrary, we would be teaching people how to build themselves a career.

    Agrees: whitefeather

  • gott5gott5 December 2011 +1 -1
    I see way to many people who are educated but poor candidates for employment.........only they can change that. Then I will generalize again,,welfare type programs need to be much more narrow for eligibilty and for a shorter duation, A sense of urgency needs to be present. Too many of our tax dollars are spent on those taking no responsibilty for themselves.
  • 1loveAl1loveAl December 2011 +1 -1 (+1 / -0 )
    I agree. But lets look at the military. I think the amount of "socialized loss" there destroys any immediate issue with welfare. Where U.S. welfare is a common good that could do a better job, the war machine IS the definition of loss.
  • marchelomarchelo December 2011 +1 -1 (+3 / -0 )
    @gott5 "welfare type programs need to be much more narrow for eligibility and for a shorter duration, A sense of urgency needs to be present.Too many of our tax dollars are spent on those taking no responsibilty for themselves. "

    Do you have anything to back up this sentiment? Perhaps you have seen an economic study that shows a rise in GDP as welfare programs are shortened? Maybe you read somewhere that those on welfare are a big drag on the economy?
    If so, please send it along, because from here, that stance looks totally unfounded.

    Consider the situation: There are presently 13.3 million people who are unable to find work for an official unemployment rate of 8.6%. But remember, that rate reflects "how many people don't have jobs and are actively looking for them". Let's say you've been looking fruitlessly for ten months and realize you've exhausted every job listing in your area. Discouraged, you stop looking, at least for the moment. According to the government, you're no longer unemployed.
    Since 2007, the percent of the population that either has a job or is actively looking for one has fallen from 62.7 percent to 58.5 percent. That's millions of workers leaving the workforce, and it's not because they've become sick or old or infirm. It's because they can't find a job, and so they've stopped trying. If 62.7 percent of the country was still counted as in the workforce, unemployment would be 11%. And the real un- and underemployed rate - the so-called "U6" - is near 20%.

    You propose that narrower requirements for eligibility and for a shorter duration of unemployment insurance (insurance that is only paid for a worker who has become unemployed through no fault of their own. So if you quit, or a fired for poor performance- no unemployment checks for you.) will do what exactly?

    It won't create more jobs- just the opposite in fact. If you were to cut even half of the people on unemployment off, there would instantly be 6.65 million people who are no unable to pay rent, buy food, pay their utilities, or buy gas to drive to interviews. That's 6.65 million people who are no longer spend any money in their communities at local stores. A drop in the market that steep would lead to more layoffs, as stores wouldn't be able to cover the cost of employees from decreased sales, and so the downward spiral continues.

    So again I ask, in what way do think pulling back unemployment benefits will benefit the economy?

    It seems to me like an argument of emotion- The idea that while you and I work full time jobs, others are able to kick back and live off the fat of the land. I can see how that might be a bit annoying. But I wonder, have you ever tried to live on unemployment benefits? Have you ever had to get food with food-stamps? Have you ever had to stay at a State sponsored shelter because you couldn't pay the rent? Trust me, those that have want to get off those programs as fast as they can, they don't need any extra urgency to get their lives in order.

    Much like other forms of government spending, social welfare programs like unemployment insurance and food stamps put money into people's hands, increase aggregate demand and stimulate the economy. For Food Stamps alone, every dollar of benefits generates $1.84 in the economy in terms of economic activity.
    So let's not fire off economic proposals from the hip out of a misplaced sense of indignation, and try instead to base our policy decisions on the facts on the ground- the exact way our current legislators can't.
  • economicsystem December 2011 +1 -1
    Welfare is bad because it keeps people poor. Distribute the means of production and there's no need for welfare. Down with the welfare state!
  • whitefeather December 2011 +1 -1
    Thank you Marchelo. You said that much better than I me.

    In the end you still have to have a system in place to help people when they NEED it.