When a company gets bailed out with taxpayer money, why is it not owned by the public now?
In: Economics
It depends how they do it. When the [NZ government bailed out Air NZ in 2001](https://en.wikipedia.org/wiki/History_of_Air_New_Zealand), that’s exactly what happened. The government gave them $885m and got an 80% shareholding in return.
There are of course a lot of different ways it can be done
Bail-out mechanisms differ from country to country. Not every country will directly invest into these companies but some intermediate institution or a bank for example. Often it is only taking over a debt or guaranteeing for it to be paid back but doesnt acquire actual shares in a company.
That’s often exactly what happens. In the crash of 2008, the UK government bought lots of shares of RBS (a bank) to make it majority publicly owned.
Sometimes “bail out” is not a free cash, it’s a high interest short loan. Most companies pay it back.
So you need to see how exactly bail out happened.
Better question: why will the government bail out shitty run companies with tax payers money but will crucify a small business if tax payments are late?
When government bails out any Private company, It will almost always appoint a new team/commission to bring the company back on track. Once the company is out of danger, the money spent is either retrieved with hefty interest or the government will continue as a major shareholder.
Where I live a bail out is a loan.
The banks we “bailed out” have repaid the money + very big portion of interest.
In Australia we bailed out during the covid crisis big time but didn’t ask for ownership or even a claw back if they ended up not needing the money. The government just basically used those cash spraying guns everywhere
Bailouts aren’t usually the size of the company itself, and most bailouts are actually just loans that get paid back. The government profits from them and society benefits in general from companies being saved from exceptional circumstances.
The problem arises if it becomes routine and companies start to flout risk management knowing they’re too big too fail.
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