The Value of Everything: Making and Taking in the Global Economy

by Mariana Mazzucato

Similar situations have occurred with banks which are affected by bad loans, such as RBS in the UK. Such banks end up with balance sheets full of worthless loans that then prevent the banks in question from making any further loans. The default answer in such cases has often been to take out all the toxic assets from the ‘good’ part of the bank, and to put them in a government-run ‘bad bank’. The idea is that doing so will allow the private bank to get back on its feet, with the taxpayer taking on the responsibility of managing or selling off the bad assets. But this has resulted in the socialization of risks and privatization of rewards that we examined in Chapter 7: in the same way that the US government picked up the bill for the failed Solyndra, and let the profits from the similar investment made in Tesla go private, the taxpayer picks up the bill for those parts of public assets that are less efficient, and sells off the better bits to the private sector–and often at a garage sale discount. Similar examples have occurred in other companies: in 2014 Italy’s national airline Alitalia was split into a good company, sold privately, and a bad company which remained in government hands.