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Once again, the American tradition of privatizing gains and socializing losses lives on.
by fenwick67 6y ago
Once again, the American tradition of privatizing gains and socializing losses lives on.
- thoraway1010 6y agoExactly - this is the #1 issue we need to address economically to my mind.
- jackfoxy 6y agoNot for sure. We are missing the crucial bit of information on how much royalties and over what period of time the school district secured rents. Here's some background on the kind of typical agreement the school district entered into. http://oil-gas-leases.com/oil-lease-description.html http://oil-gas-leases.com/oil-lease-description.html
- throwaway_jobs 6y agoThe real question would be how much did the owners of these oil companies pocket before declaring bankruptcy. It’s exactly as the commenter says...taxpayers fund schools that buy land; the school leases mineral/oil rights to private companies (Likely self dealing with these leases too); private energy companies take the public land resources and pay themselves profits leaving the entity insolvent and then files bankruptcy protection; taxpayers Are left liable. What incentive does an oil company have to not liquidate the company after they exhaust the well and seek bankruptcy protection? In other words say it cost $10M to properly close up the well, you have that in the bank but you pay it to the owners as profit instead of covering the well, company is now insolvent and receives protections. Why would any oil company not do this on public lands? Do you think these owners disappeared or just set up new companies and got new leases on new public lands rinse and repeat?
- heavenlyblue 6y agoYou make the companies put that money upfront before starting the well. If that money no longer exist during liquidation the owner goes to prison for fraud.
- TallGuyShort 6y agoVery well put! Even when it's not a clear-cut distinction for gains-and-losses, too many proposals and even implementations in America for government programs are public/private hybrids, and the misaligned incentives caused a lot of the problems.
- nsxwolf 6y agoWhy wouldn't we socialize the losses here? It's not a handful of elites that just swooped in and took a bunch of money then stuck us with the bill for their garbage. We're all the consumers here. We create the problem with our demand for their product.
- chillwaves 6y agoThen why are the profits privatized?
- lotsofpulp 6y agoBecause sufficient voters like to think they will be part of the group who are or one day will benefit from the privatized profits, and therefore imagine themselves enjoying the spoils it would afford.
- kevin_thibedeau 6y agoThese companies are designed to go bankrupt to minimize shut down costs.
- piva00 6y agoThen do like Norway and get a US's own Statoil to also socialise the profits. We can't shame the population to solve a tragedy of the commons problem, it won't ever work, you need a strong power managing the commons to avoid the tragedy.
- dwaltrip 6y agoIf you socialize the losses, you incentivize others to cause more additional losses than they would otherwise, as they know they won't have to deal with it. A better society would have incentives and structures that guide people to reduce these harmful effects and externalities.