Maybe so, but please don't post unsubstantive comments (like mechanical tropes) to HN. They lead to predictable and therefore tedious and therefore off-topic, generic discussion.

We detached this subthread from https://news.ycombinator.com/item?id=22712653.

They often result in solid financial returns for the government holder of equity.

Is that actually true? TARP cost $426 billion in 2008 and when the assets were finally sold off in 2014, they summed $442 billion. So that's a 3.7% return during a time when the s&p 500 more than doubled in value.

Do you have some examples where the government made these returns?

Right but they maintained a whole tax producing economic center including (probably) corporate taxes and income tax on hundreds of thousands of wages from the companies themselves and their suppliers. Breaking even on a bailout is pretty phenomenal given the broader implications.

That assumes they had no leverage and no other options. Raising the rates by say 4% and companies would still have taken the money and the economy would have reacted in the same way.

You're missing the opportunity cost of doing twice as well?

The TARP is still projected to net a $121bn profit for the taxpayer. Only a portion of loans have been returned to the government currently.

https://projects.propublica.org/bailout/

You're assuming that the s&p would have done well had the government not enacted TARP. It's pretty agreed upon by economists that the bailouts of the GFC saved us from financial collapse.

Citation needed. AFAIK they sometimes result in a profit (as with GM in 2008) which unsurprisingly gets attention. But the long history of postwar nationalization’s in Europe and the US are not promising by this metric.

There are other reasons, some good, for doing so. Amtrak, for example, might better have been formed as a nationally operated part of the transit network rather than as a quasi-private-sector corporation that is neither fish nor fowl and suffers for it. Municipal utilities often work quite well at least here in Northern California, though at the national level I only know of the TVA and the western dam systems.

The parent post was talking about the current practice of bailouts.

The government took equity stakes during the 2008 bailouts, it was widely regarded as a successful program among economists. The government got repaid and jobs were saved.

The government got shafted by vastly below market returns. Economists are looking at the big picture but tend to ignore people picking your pockets as insignificant. Loss aversion means people actually care about these things, it’s just the simplified economic models that are ignoring them.

The government wasn't looking to maximize their return, if they were they wouldn't have included such huge protections for GM union workers. I don't think return maximization in a micro sense was the right approach anyways. The government got its pound of flesh through the increased tax revenue it generated by not having the economy implode.

> The government wasn’t looking to maximize their return

Someone was, the simple word you looking for is corruption. The end goal of a corrupt state might be to build a road, but the specific cash flow ending up in well connected hands has absolutely nothing to do with the stated goal.

Awesome, every poor person I know owns tons of those.

What do you mean by "privatize the profits" here? Are you ignoring taxation?

One way to view the government's role here is that it shifts around externalities to achieve efficiency. You can put cap-and-trade restrictions to absorb negative externalize in high-pollution industries and redistribute that to consumer/producer markets that suffer from the pollution.

You can probably apply a similar piece of reasoning across time. Government can tax industries during booms and then redistribute that during busts.

>What do you mean by "privatize the profits" here?

CEO's we getting their fat bonuses (tied to share prices) for years, inflating said prices with buybacks, and now, when shit hit the fan, they are dumping half-bankrupt companies to the public?

Airlines are a grey government agency. If they had to pay the true cost of things like air traffic control, FAA administration and safety regulation, or health costs due to pollution, to say nothing of the non-the-first-time-fat cash payment they just got on top of the huge fact that they are paying little to negative tax rates (all effectively government subsidies of their operations) then not a single airline would be in operation today. The industry exists at the price it exists only with heavy support from the government.

The cost of an airline ticket has fallen by around 50% since the 1980s; clearly the industry can exist and still pay for the services/infrastructure it consumes.

What you say is reasonable in theory, but grossly ignores the actual history. E.g., the 2017 tax cut was an enormous giveway to corporations and the rich: https://qz.com/1769421/trumps-tax-cuts-and-jobs-act-shows-po...

And a lot of that money is being borrowed, so it's even worse than it seems at first blush. Not only are the rich getting richer, but we'll all have to pay for it eventually. So recent history is the government doing the opposite: they were giving away money during the boom, making it harder to do countercyclical interventions in a crisis. And this from the supposedly fiscal conservative party.

> What do you mean by "privatize the profits" here? Are you ignoring taxation?

Are you (excuse my french) fucking kidding me?

Source: https://itep.org/notadime/ (dollars in millions)

     Company (U.S.)   ~ Income ~ Federal Tax ~ Effective Tax Rate
     Alaska Air Group ~ $576   ~ $-5         ~ -1%
     Delta Air Lines  ~ $5,073 ~ $-187       ~ -4%
     JetBlue Airways  ~ $219   ~ $-60        ~ -27%
     

And from this source: https://itep.org/covid-19-is-no-excuse-for-airline-industry-...

The most taxes paid was by Southwest, at 21.4% ... Which is a 60% of my personal tax! When can I get personal tax rates like that???