I haven’t looked into it, but my guess is that the “profit” is an accounting gymmick that only counts a portion of what AIG really received.
BUT – lets stipulate that, in this instance it really is a “profit.”
What does that prove? Not much, really; – it’s a “statistical outlier” when it comes to government “investments.”
Look, they (“they”) could point to the TVA being a “successful investment of government funds” – how they did that was 1) not count all the subsidies 2) not count the way they stacked the regulatory deck in favor of TVA and against its market competitors and 3) shennanigans.
Now, when it comes to even, say, the executives of Solyndra or LightSquared, *they* turned a profit, even while the firm failed (and they shoveled money into various campaign chests, so it was a success all around!)
But at the foundation of this example is that it only looks at part of the picture; in voluntary exchanges on the free market, we know that all participants in an exchange come out ahead, by their own lights. We also know that the most efficient firms tend (tend) to succeed and the less efficient are weeded out.
But in cases such as this, where a firm is given billions of dollars coercively taken from others, well the fact that the firm advantaged by such subsidies is able to pay back it’s patrons says nothing about the overall social/market gains or losses; a firm that otherwise would have failed or restructured to be more efficient was propped up, at the expense of. . .what? The “what” is invisible. But that “what” may be better firms that would have taken the place of the current market leaders, the ones with a favorable relationship to government (and who now look to government as their “Consumer-is-Sovereign,” because that government is their most important “customer,” bar none. The rest of us? We can go hang).
But lets go back to that “statistical outlier” thing; the fact that some firms are able to use their special relationship with government and funds wrested from people invollentarily in order to rake in the dough at the expense of existing and potential rivals will be used by state officials & their courtiers to say “see? this works! Lets do more of it!” – all the billions upon billions that will never be paid back, all the uncounted failures that are slipped down the memory hole, to the contrary notwithstanding.
The amazing thing, rather, isn’t that AIG was able to give back to its patrons in government. I mean, I would hope that if I had a pipeline to billions upon billions of dollars and an effectively unlimited line of credit to the guys with the money machine, I’d be able to crush market rivals who didn’t have that sweet advantage, and return some of the swag to my patrons. Oh, no – the amazing thing isn’t that this “works” sometimes for the insiders. The amazing thing is how often it fails.
(One guess is: when it “fails” – the Solyndras that outright declare bankruptcy, – it was never meant to “succeed” in the first place. Otherwise, there would have just been another line to free money. Rather, as with any grift, even these “succeed” in the way they were meant to – the grifters just move on to the next racket, and leave the suckers holding the bag. Just ask John Corzine how that works out; millions of dollars, millions of dollars! but for the suckers who trusted him with their money? The bag.)
This is a racket where the club members are winners – but that doesn’t mean the economy as a whole, or the “general public” comes out ahead. And, yes, sometimes they will have “demonstration projects” where the books are finagled so that it looks like the government (which are not all the payers) “came out ahead,” but that’s to keep the suckers lining up for more. Even guys setting up a three-card monty racket on the streetcorner know that you have to let the marks win once in awhile so they keep their interest.
But that doesn’t mean the game isn’t rigged. All it means is that the carnival barkers were given some good materiel to work the crowd with so they’ll be ready for more of the same.