Privatizing Profits And Socializing Losses

DEFINITION of 'Privatizing Profits And Socializing Losses '

A phrase describing how businesses and individuals can successfully benefit from any and all profits related to their line of business, but avoid losses by having those losses paid for by society. Privatizing profits and socializing losses suggests that when large losses occur for speculators or businesses, they are able to successfully lobby government for aide rather than face the consequences of said losses.

BREAKING DOWN 'Privatizing Profits And Socializing Losses '

The biggest example of privatizing losses and socializing losses came during the TARP bailouts of 2008-2009 in which the United States government bailed out numerous banks, insurers and auto manufacturers after they had sustained huge losses in their business dealings, in some cases through unacceptable risk tasking and lack of due diligence.

RELATED TERMS
  1. Capital Loss

    The loss incurred when a capital asset (investment or real estate) ...
  2. Loss Development

    The difference between the final losses recorded by an insurer ...
  3. Unrealized Loss

    A loss that results from holding onto an asset after it has decreased ...
  4. Losses and Loss-Adjustment Expense

    The portion of an insurance company’s reserves set aside for ...
  5. Policy Year Experience

    The premiums and losses associated with insurance policies that ...
  6. Tax Loss Carryforward

    A tax loss carryforward takes place where a business or individual ...
Related Articles
  1. Personal Finance

    Capital Losses and Tax

    When an investment sells for less than its purchase price, the difference is a capital loss.
  2. Personal Finance

    Deducting Disaster: Casualty And Theft Losses

    If you've been a victim, your losses may be deductible. Find out how.
  3. Markets

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  4. Financial Advisor

    Top Tips for Deducting Stock Losses

    Investors who know the rules can turn their losing picks into tax savings. Here's how to deduct your stock losses.
  5. Trading

    The Art Of Cutting Your Losses

    Taking corrective action before your losses worsen is always a good strategy. Find out how to keep your capital losses small and let your winners run.
  6. Trading

    Taking The Sting Out Of Investment Loss

    Get a hold of yourself! Take losses in stride and learn to invest dispassionately.
  7. Financial Advisor

    Using Tax-Loss Harvesting to Keep Your Gains

    Harvesting tax losses is a key skill that investors can use to keep more of their money in their pockets the next time they file taxes.
  8. Markets

    Why Lobbying Is Legal And Important In the U.S.

    Political lobbying is again at a heightened spend level, and again being criticized; making it important to remember lobbying's legality and importance.
  9. Trading

    Limiting Losses

    It is impossible to avoid them completely, but there is a systematic method you can use to control them.
  10. Trading

    Options Pricing: Profit And Loss Diagrams

    A profit and loss diagram, or risk graph, is a visual representation of the possible profit and loss of an option strategy at a given point in time. Option traders use profit and loss diagrams ...
RELATED FAQS
  1. Do I still have to pay Social Security tax on my 2015 earnings?

    I retired in 2014. I started my own business in February 2015. I made about $1,500 in revenue in 2015,... Read Answer >>
  2. Can a self- employed person (now disabled) receive disability?

  3. What are unrealized gains and losses?

  4. Why is social responsibility important to a business?

    Take social responsibility seriously, and your business could benefit from happier, more productive staff members while helping ... Read Answer >>
  5. What is the difference between the loss ratio and combined ratio?

    Learn about the loss ratio and combined ratio, what the two ratios measure and the main difference between the loss ratio ... Read Answer >>
  6. What is backtesting in Value at Risk (VaR)?

    Learn about the value at risk of a portfolio and how backtesting is used to measure the accuracy of value at risk calculations. Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center