W. H. Wakinshaw? Erma Angevine? Karl Brandt? Harold Davies? Anonymous?
Question for Quote Investigator: Critics of politicians and regulators complain about the preferential treatment given to some companies which act irresponsibly. A company that makes a risky bet or sells a dubious product is protected from the negative consequences by governmental intervention. Yet the same company collects profits when their strategy succeeds. Here are three versions of a pertinent description:
(1) Privatize profits and socialize costs
(2) Socialize the losses and individualize the gains
(3) Individualizing profits and socializing risks
Would you please help me to trace this family of expressions?
Reply from Quote Investigator: The phrasing of this notion is highly variable; hence, it is difficult to trace. Here is an overview depicting the evolution of the statement together with dates and ascriptions.
1924: Succeeded in individualizing their profits and socializing their risks (W. H. Wakinshaw)
1952 May: A policy that attempts to socialize the losses and to individualize gains (Karl Brandt)
1971 Oct: They pocket the profits and socialize the losses to be passed on to everyone (James Branscome)
1971 Nov: Capitalized the profits while socializing the losses (Harry M. Caudill)
1972 Sep: To socialize the losses while industry continues to individualize the profits (Erma Angevine)
1974 Aug: Socialize the losses on big projects and privatize the profits (Harold Davies)
1975 Feb: Socialize the losses and keep the profits private! (Attributed to boardroom philosopher)
1977 Mar: They want to socialize the risks and privatize the profits (Gene R. La Rocque)
2024 Jun: Socialize the cost and privatize the profit (Old Adage)
Below are details for selected citations in chronological order.
In 1924 W. H. Wakinshaw published the book “The Solution of Unemployment” which contained the following passage. Boldface added to excerpts by QI:1
They may even boast that they are “individualists,” i.e. men of vision who succeeded in individualizing their profits and socializing their risks, even when all but the strongest minded between 1914 and 1918 were wantonly socializing their profits and individualizing their risks.
In 1952 economist Karl Brandt of Stanford University delivered an address at the annual meeting of the American Economic Association. Brandt used an instance of the saying while arguing against an agricultural policy that he thought was misguided:2
This whole approach is basically wrong. High income must be the result of high performance which adapts itself continually to the needs of the nation …
It is equivalent to sedition to wean the entrepreneurs in so essential a part of our economic system from risk-taking by a policy that attempts to socialize the losses and to individualize gains. This is a dangerous and false philosophy.
In 1953 Professor of Political Philosophy Max Ascoli published a piece in “The Reporter” magazine that contained a thematically related remark:3
Neither do the Italian and French capitalists take from Moscow the line to which they zealously adhere: Keep production low and profits high, and let the Government socialize the losses of what they still call the system of free enterprise.
In October 1971 the U.S. House of Representatives held a hearing about strip mining. James Branscome, Director of Save Our Kentucky, provided a statement which included an instance of the saying:4
Truthfully, gentlemen, strip mined coal is not cheap. It is regarded as so because the strip miners are Socialists. They pocket the profits and socialize the losses to be passed on to everyone.
In November 1971 the U.S. House of Representatives held another hearing about strip mining. Harry M. Caudill of Whitesburg, Kentucky provided a statement which included an instance of the saying:5
But the general taxpayer should not be called upon to bear the whole burden of rehabilitating our industrially maimed land. The industries that rip up our soil and their customers who share directly in the benefits of such mining should carry most of the load. Otherwise we will have capitalized the profits while socializing the losses—an increasingly popular arrangement with Congress and a large part of the nation’s industry.
In September 1972 the U.S. Senate held a hearing about artificial sweetener cyclamate. A statement from Erma Angevine, Executive Director of the Consumer Federation of America, included the saying:6
The law you are considering today would not only reimburse those who chose to gamble with the people’s health, it would also reimburse them for the advertising used to build sales and increase profits. You are being asked, it seems to me, to socialize the losses while industry continues to individualize the profits.
In 1974 “The New Yorker” printed a piece which included a comment from British politician Harold Davies:7
We talked politics for a while, and Lord Davies said that the policy of modern governments was to socialize the losses on big projects and privatize the profits.
In 1975 journalist Geoffrey Smith of “Forbes” magazine credited the saying to an anonymous “boardroom philosopher”:8
As a boardroom philosopher once remarked: Socialize the losses and keep the profits private!
In 1977 U.S. Navy Rear Admiral Gene R. La Rocque employed the saying during a hearing held by a subcommittee of the U.S. House of Representatives:9
The claim that uncertainty justifies exorbitant profits will not stand up. Contractors who maintain the extreme risk in defense contracting makes it necessary to provide them with compensation if they underestimate their costs and high profits if they overestimate them are really saying that private profitmaking firms have no special competence in manufacturing defense goods. They want to socialize the risks and privatize the profits.
The saying remains popular. A letter published in “The Kansas City Star” of Missouri in 2024 contained the following:10
The fuss over building new stadiums for the Kansas City football and baseball teams raises the old adage: Socialize the cost and privatize the profit. Yes, soak the taxpayers for building costs while the team owners take home the profits.
In conclusion, the earliest match appeared in the 1924 book “The Solution of Unemployment” by W. H. Wakinshaw. The book states that Wakinshaw was formerly a scholar of Exeter College, Oxford. Wakinshaw is the leading candidate for founder of this family of sayings. Economist Karl Brandt employed a version of the saying using the word “losses” instead of “risks” in 1952.
Image Notes: Illustration of a person taking a large piece of the economic pie from Peggy_Marco at Pixabay. The image has been cropped and resized.
Acknowledgement: Great thanks to Gary Marcus whose inquiry led QI to formulate this question and perform this exploration.
- 1924, The Solution of Unemployment: Or, The Postulates and Implications of the Social Credit Theorem of Major C. H. Douglas by W. H. Wakinshaw (Formerly Scholar of Exeter College, Oxford), Chapter 4: The Trend of Industry, Quote Page 91, Andrew Reid and Company, Newcastle-Upon-Tyne, England. (Google Books Full View) link ↩︎
- 1952 May, Journal of Farm Economics, Volume 34, Number 2, American Agricultural Policy During Rearmament by Karl Brandt (Economist, Food Research Institute, Stanford University), Note: Address delivered at the 64th annual meeting of the American Economic Association, Boston, Mass., December 26, 1951, in joint session with the American Farm Economic Association), Start Page 184, Quote Page 199, The American Farm Economic Association, Menasha, Wisconsin. (Verified with scans) ↩︎
- 1953 October 13, The Reporter, Volume 9, Number 6, The State of the Community: Last Reprieve for Europe by Max Ascoli, Start Page 8, Quote Page 9, Column 2, Fortnightly Publishing Company, New York. (Verified with scans) ↩︎
- 1971, House of Representatives, Ninety-Second U.S. Congress, First Session, Hearings Before the Subcommittee On Mines and Mining of the Committee On Interior and Insular Affairs, Regulation of Strip Mining, Date: October 26, 1971, Statement of James Branscome, Director of Save Our Kentucky, Start Page 539, Quote Page 542, U.S. Government Printing Office, Washington D.C. (Google Books Full View) link ↩︎
- 1971, House of Representatives, Ninety-Second U.S. Congress, First Session, Hearings Before the Subcommittee On Mines and Mining of the Committee On Interior and Insular Affairs, Relating To the Regulation of Strip Mining, Date: November 30, 1971, Statement of Harry M. Caudill of Whitesburg, Kentucky, A Plea for a National Policy on Surface Mining, Start Page 810, Quote Page 814, U.S. Government Printing Office, Washington D.C. (Google Books Full View) link ↩︎
- 1972, United States Senate, Ninety-Second Congress, Second Session, Hearings Before the Ad Hoc Subcommittee of the Committee On the Judiciary, Cyclamate Compensation, Date: September 8, 1972, Statement of Erma Angevine Executive Director of the Consumer Federation of America, Start Page 254, Quote Page 255, U.S. Government Printing Office, Washington D.C. (Google Books Full View) link ↩︎
- 1974 August 12, The New Yorker, The Talk of the Town: Coupla Tourists in London Again, Start Page 28, Quote Page 1, The New Yorker Magazine Inc., New York. (Online New Yorker archive of digital scans) ↩︎
- 1975 February 15, Forbes, As I See It: Interview with Felix Rohatyn conducted by Geoffrey Smith, A prominent Wall Streeter defends his proposal for a revived Reconstruction Finance Corporation, Start Page 46, Quote Page 48, Forbes Inc., New York. (Verified with scans) ↩︎
- 1977, House of Representatives, Ninety-Fifth U.S. Congress, First Session, Hearings Before the Subcommittee On General Oversight and Renegotiation of the Committee On Banking, Finance and Urban Affairs, The Renegotiation Reform Act of 1977, Date: March 31, 1977, Statement of Rear Adm. Gene R. La Rocque, U.S. Navy (Ret.), Director, Center for Defense Information, Start Page 354, Quote Page 356, U.S. Government Printing Office, Washington D.C. (Google Books Full View) link ↩︎
- 2024 June 23, The Kansas City Star, Letters To the Editor, Letter Title: Taxpayers’ due, Letter From: Mike Schilling of Springfield, Missouri, Quote Page A16, Column 3 and 4, Kansas City, Missouri. (Newspapers_com) ↩︎