Socialization of losses

If we agree that the socialization of losses and the privatization of revenues is a very bad thing, we must reject the action of the state in many areas of our lives. The state can do nothing but pass on the loss to those who are not responsible for it.


A lot of people say that banks need to be regulated / nationalized / shot / I don't know what, because we were forced to pay them the losses. It is "privatization of profits, socialization of losses", which is said to be bad and it should not be. I agree with them. I would just privatize even those losses while they want to socialize the proceeds, but that's secondary. We agree that the socialization of losses is bad.

Healthcare, pensions, corruption…

What is the principle of she socializing losses? Well, someone, Mr. Loss, hacks mistakes that put Mr. Loss (or his business, for example in banking) in the red. That's her loss. Socialization is then when Mr. Socialista from the government comes to Mr. Loss, and Mr. Losista pays the loss of Mr. Loss from the pockets of taxpayers (represented here by Mr. Platic).

In other words, everyone else will involuntarily pay for someone's mistakes and irresponsibility, the rest of the "society", while that Mr. Loss, the one who made a mistake, will enjoy the benefits of this system (profit privatization).

Many proponents of regulation and state supervision see this as something disgusting and the reason why state supervision is needed. But when we start looking at other transfers according to the above template, we start looking for other areas where losses are socialized, according to them it is "something else" and immediately they defend the same thing they criticize elsewhere.

Take it, for example compulsory health insurance, a model operating in the Czech Republic. We all have to pay a certain part of our income on health "insurance" (tax), regardless of how we handle our health responsibly. It is said to be "solidarity". A smoker and a notorious alcoholic pay the same part as a healthy person, a non-smoker, a non-drinker. A person living a healthy lifestyle, taking care of himself, is forced to pay with his money for the treatment of a notorious and smoker, who thus enjoys the benefits of the system without being responsible for treating the consequences of his behavior. Isn't this a textbook example of loss socialization and profit privatization?

A responsible and hard-working person who saves his old life all his life is forced to pay a pension through the state pension system to people who, for example, have spent their whole lives and have lived only on state pensions. The responsible individual must confine himself twice - once to secure himself, the second time to secure the irresponsible ones. Those who are irresponsible then limit themselves only once during their lives - to pay a pension to other irresponsible people. They enjoy the benefits of the system, their pension is secured and they do not have to limit themselves during the active part of their lives. Isn't this a textbook example of the socialization of losses and the privatization of profits?

Socialization and privatization - together forever and never otherwise

It should be noted that Wherever there is a socialization of losses, there is also a privatization of profits. It is inseparable, it cannot be otherwise. Revenues and losses cannot be socialized at the same time.

The profit itself is the very socialization of losses. Mr. Loss gains himself by others paying him his losses. He privatizes the profits from the socialization of losses, because only he gains socialization - because he does not have to pay for his losses. At least not now and not all at once (or in a given amount).

It is similar even if we socialize revenues and privatize losses. The socialization of income is, for example, the forcible nationalization of the property (enterprise) that earned (if it suffered, it is the socialization of losses, not profit). Only the one who was the original owner and whose income was socialized bears the loss of the income itself. The loss is therefore not socialized.

What if compensation is offered for the nationalization of property? If the property is nationalized and is not bought on the market, the need for nationalization is a sign that the original owner would not want to sell the property to the state on the market. Then the original owner is the one who bears the loss and the "company" is the one who bears the proceeds. If the compensation is higher than the possible market price (so that the original owner can comply with the state regulation), it is again a socialization of losses and privatization of revenues.

It is not possible to socialize or privatize losses and revenues at the same time. Any "solidarity" state system, any "state" rescue of a private company (such as a bank) and the like system of socialization of losses and privatization of revenues. The state cannot do both at once. The state either privatizes revenues and socializes losses, or socializes revenues and privatizes losses.

In other words, any state act is a transfer of losses to those who are not ultimately responsible for them.


  1. @kaktusak

    On the contrary, when it comes to life, it must be as strict as possible. Otherwise, it will be about life next time.

  2. When it comes to life, a company should perhaps be less strict than in the case of a failed (or just successful?) Business.

  3. That is my philosophy of life - I only want to pay for what I really want! Unfortunately, I can only afford this to a limited extent.

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