Privatizing Profits And Socializing Losses

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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.

INVESTOPEDIA EXPLAINS '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.

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