Can we wean Elon Musk off government support already?

http://thehill.com/blogs/pundits-blog/economy-budget/345338-can-we-wean-elon-musk-off-government-support-already

by towndrunk • 9 years ago

33 43 9 years ago

sp3323• 9 years ago

Ugh, what a bad-faith argument. The whole reason government puts subsidies on things is to encourage those things. The article starts with the assumption that market distortion is always has a bad outcome, but it's going to have to back that up. It also assumes (at the end) that our representatives in Congress can't possibly really be representing us.

The rebates and tax cuts are working as intended. For example, by paying $7,500 for a certain class of electric vehicle, we tip the balance for people considering buying a somewhat less expensive internal combustion car. Just by tipping the scales, we shift a significant fraction of the demand from IC to electric, which makes a huge difference in the market, and therefore capital investment in manufacturing. Just doing this for a few years gets us decades ahead of where we would be in terms of electric vehicle technology.

Corruption is always possible but it's not a given. For an old rebuttal, Musk's "The House Always Wins" essay still applies. https://www.tesla.com/blog/house-always-wins

P.S. The tax credit already get phased out above 200,000 vehicles per manufacturer, so it's not going to apply to all 500,000 pre-orders (even assuming they all become sales). https://energy.gov/eere/electricvehicles/electric-vehicles-t...

merpnderp• 9 years ago

I'm not saying the government subsidies are wrong, but a counter case might be what if the government subsidized scientifc GPU's at the turn of the century over gaming GPU's? Would gaming have grown as big as it is without modern GPU's targeted at gaming? Would we have gotten such cheap GPU compute power without the massive investment in gaming? Would the government subsidy have ended up hurting long term advancement in GPU's?

sp3323• 9 years ago

There's always a chance of unintended consequences. But of course doing nothing isn't always the right answer.

AbstractCache• 9 years ago

Do you have any historical examples of where government subsidies were "wrong"? It might present a stronger argument than one based on a "what-if".

brightball• 9 years ago

Probably a better counter point would be for somebody to provide some examples where market distortion hasn't had a bad outcome.

knieveltech2• 9 years ago

How about some examples of "undistorted markets" resulting in unambiguously good outcomes first?

fnord123• 9 years ago

Government regulations on cleanliness in restaurants completely destroyed the rat shit covered segment of the restaurant market and marginally increased the costs of running a restaurant.

CabSauce• 9 years ago

The assumption that the car market is "free" and not distorted is is already a pretty silly idea. The largest reason for promoting electric vehicles is that the cost of pollution isn't taken into account within the market for internal combustion cars. There's already a substantial distortion. With all costs included, electric cars may already be "cheaper".

JackFr3• 9 years ago

But consider that Elon Musk has recently come out vocally agains the subsidy.

He feel's that rather than an electric car subsidy, carbon should be taxed and 'let the market decide'. https://twitter.com/elonmusk/status/338108608430632960

That is what a bad faith argument looks like. Having taken the subsidy for years, as all of the other major car maker are starting to offer an electric model, he gets religion and wants the subsidy eliminated. That is, once it starts to benefit competitors more than Tesla, it's a market distortion.

I don't begrudge him playing the game better than others, but don't pretend he's not playing the game.

sp3323• 9 years ago

There might even be a good argument against subsidies. But the article was not it.

wnevets• 9 years ago

Can we wean oil & farm companies off of government support first?

fhood• 9 years ago

Hey! I really like my cheap produce.

jetti• 9 years ago

You'd still get it cheap it just wouldn't be US grown

wlesieutre• 9 years ago

Cheap meat is more likely to take a hit if we cut farm subsidies; feed crops are the biggest beneficiary (mostly corn).

The data on wikipedia[1] is from 2004, but I haven't heard of any major reforms since then. From greatest to least, subsidies went to: corn, cotton, wheat, rice, soybeans, dairy, peanuts, sugar, minor oilseeds, tobacco, wool and mohair, vegetable oil products, and honey. Anything else is in the remaining 2%.

[1] https://en.wikipedia.org/wiki/Agricultural_subsidy#United_St...

EDIT: Note that sugar and onward are individually <2% (smaller than the "anything else" bucket)

devmunchies2• 9 years ago

Most of the government ag subsidies go towards meat, dairy, and corn. Gotta keep that bacon and high fructose corn syrup flowing into Americans, and corn flowing into the animals.

JackFr3• 9 years ago

You understand that subsidies create a price floor.

Your produce would be cheaper in their absence.

dawnerd• 9 years ago

I'd love to see the subsidies instead given to small urban farmers to help push more local food sources.

hfourm• 9 years ago

Probably would conflict with the massive agri/farming industry lobbies

knieveltech2• 9 years ago

40% of the earth's land area is currently used for agriculture. This is the kind of scale required to feed the population the world has now. Comparatively "small urban farmers" ability to produce foodstuffs is, and always will be, a rounding error when compared to the scale of industrial farming.

aianus• 9 years ago

Without enough domestic farms and oil fields the US would be extremely vulnerable to foreign sanctions etc. in times of conflict. The subsidies are intended to keep some of these unprofitable operations running domestically.

stuaxo• 9 years ago

Maybe that would be an incentive against conflict ?

justin66• 9 years ago

Without enough domestic farms and oil fields the US would be extremely vulnerable to foreign sanctions etc. in times of conflict.

By treating agriculture as a free market, without protectionism and subsidies, we'd allow the developing world to actually develop, reducing the frequency of "times of conflict."

As a practical matter, the argument you've given is just a (common enough) red herring. Stopping the United States from trading with its primary trading partners would be somewhat less practical than trying to keep Rome at its peak from importing grain from Egypt.

ufmace2• 9 years ago

I don't know about farming, but where's the evidence that oil companies are on some kind of special Government support? This StackExchange answer[0] goes into a decent amount of detail on exactly what "subsidies" Shell is receiving and why.

[0] https://skeptics.stackexchange.com/questions/39112/does-shel...

mcguire3• 9 years ago

Policies of foreign governments contrary to US oil companies' interests (and in fact the interests of many large corporations) have a strange tendency to attract the attention of the US military.

simplicio• 9 years ago

I mean, Plan A to achieve the same goals with regards to electric cars and solar without gov't subsidies was a cap-and-trade or carbon tax, but since the articles author's group helped shoot that possibility down, we're left with less market oriented, less elegant approaches, like direct gov't subsidies on companies that develop the necessary tech.

I'd certainly be happy to go with the more free market oriented approaches, but that doesn't seem likely to be possible in the US in the near future.

norswap• 9 years ago

As wide-ranging as these various entrepreneurial ventures may be, they all have one thing in common – not a single one of them would get funding in a competitive private capital market if it weren’t for massive (and I do mean massive) taxpayer-funded government subsidies.

Correct, but that's a problem of the current incentive structure in the market (some would say it's a problem of capitalism... I wouldn't go that far). The government isn't tied to those incentives, and so can (and should) use its money to promote initiatives that have large expected payback in the long run.

jostmey• 9 years ago

Elon Musk has earned every tax payer dollar he has received. From what I can tell by reading the news, the man works himself and his companies insanely hard. Perhaps this argument could be made about any other organizations or institutions, but not Elon Musk and his companies

turc16562• 9 years ago

"Elon Musk has earned every tax payer dollar he has received."

By definition you do not earn a handout. You merely conform to the requirements of receiving it, which he has. "Earn"? Definitely not the word to use for him. We're talking about money that he has taken from all taxpayers to fund the pursuit of his dreams. His dreams get funded because they are approved by the government. There are ~156 million adults employed full time. On average, this equates to ~$32 every single taxpayer has paid to Musk. If you are a higher earner, which I suspect is true of many here on HN, Musk has "earned" somewhere between $50 and $100 of your money.

ryandvm• 9 years ago

Blech. Enough with the breathless fanboyism.

Isn't it a little odd that every one of Musk's ventures is either heavily subsidized or directly paid for with government dollars? It's the old Ross Perot playbook. There is no greater spendthrift and hence more profitable customer than the U.S. government.

I think his companies are doing amazing technical work, but let's be honest, profit is absolutely priority number #1. Saint Musk isn't trying to kickstart an international colonization of Mars because it's a sensible Plan B (hint: it's not). I'm guessing the real motive is that it would involve more money than any project in the history of mankind.

jeffreportmill1• 9 years ago

Don't forget that the US military is a huge subsidy to the oil and gas industry and conventional auto industry. I'm sure Tesla would gladly do away with subsidies if Exxon/GM gave up theirs. In any case, I'll bet GM/Toyota have received more electric car subsidies than Tesla. Ridiculous article.

brianolson• 9 years ago

This is a misleading partisan hit piece. The R party has decided they don't like Musk and this is part of their noise war.

Some of the dollars are indeed shameful, but standard business practice that we need to shut down _everywhere_. If SpaceX is getting 'subsidy' dollars I'm sure it's not 1/4 as much as Boeing/Lockheed and the rest of the defense contractor crowd get. If Tesla factories are getting tax breaks that's because there's a nationwide race to the bottom with every local jurisdiction falling over themselves to give away breaks in hope of luring just this sort of thing. We need to stop that race to the bottom _everywhere_.

And solar subsidies I'm for. F' CO2 emitters.

scottLobster• 9 years ago

Keep in mind the source:

"Jenny Beth Martin (@JennyBethM) is president and co-founder of Tea Party Patriots."

The Co-founder of the tea party patriots thinks any and all financial government support is bad? I'm shocked I tell you.

british_india2• 9 years ago

The author is another scumbag Republican looking to shit on anything that helps the environment. Fuck you, Jenny Beth. I'm sure you're fine with fossil fuel exploration subsidies on the taxpayer's dime.

british_india2• 9 years ago

The author is another Republican looking to dump on anything that helps the Environment.

Jump in a lake, Jenny Beth. I'm sure you're a-okay with subsidies to Petroleum companies on the taxpayer's dime.

IshKebab• 9 years ago

This site has an actual popup advert.

TYPE_FASTER• 9 years ago

What a crappy article. Including SpaceX contracts as a subsidy? Seriously?

turc16562• 9 years ago

I am pretty sure they are not including the contacts. They are only including the subsidies. As far as contracts go, SpaceX landed deals totaling more than 5.5 billion from the US Air Force and NASA alone.

Can we wean Elon Musk off government support already?

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