Jun. 27th, 2013

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In a conventional socialist arrangement, the one everyone thinks of when they think "socialism," a worker works but does not keep the profits from his work. The profits--the results of his labor--are distributed across the population.

In the inverted socialism that comes along with lax regulation of environmental and social practices, a business keeps the profits from its work, but the costs associated with doing business are distributed across the population. This artificially increases the business' profit; the socialization of risk means that some of what would otherwise be the business' expense are paid by the community--even those who do not work for that business--and by other businesses impacted by the first business' practice. Profit is not distributed, but cost and risk are.

This socialization of risk amounts to a subsidy paid by the people surrounding the business which inflates the business' worth and increases its profits without increasing production or efficiency. Because the risks are subsidized and the costs associated with those risks are socialized, businesses which operate in a manner that socializes risk end up at a competitive advantage over businesses which shoulder the full costs of doing business.

http://tacit.livejournal.com/235532.html

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