Comment by tankenmate | Hacker News Reader

Comment by tankenmate | Hacker News Reader

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Let me fix that for you; "Elon Musk is just another capitalist who likes money."

Minor snark aside, Musk's companies have not availed of any government money that wasn't available to others. And in many cases Musk's companies weren't even the beneficiaries of said government money, quite often that money went to the purchasers of products made by Musk's companies (Tesla, electric car subsidies go to car owners, not manufacturers; Solar City, feed in payments go to the owners of the solar equipment (and yes I realise sometimes that is to finance companies and/or to Solar City)). In other cases like SpaceX they have competed for government contracts and won those contracts.

But at the end of the day Musk's companies typically attract less subsidies (Tesla / Solar vs other car companies / oil / gas / coal companies) or charge the government less for the same work than others (think ULA). So in effect they are better for the government's stated goals than a lot of other companies. And yet at the end of the day Musk's companies need money to survive and grow just like any other company; government or otherwise, and compared to many other companies in their respective arenas their revenue from government contracts can be substantially smaller pro rata.

So in the end Musk's companies will use whatever influence they can (this is called hustle in start ups), and they need money (and do whatever they can to avoid being solely dependent on government cash). And to top it off they actively support competition, even when they could afford to stand still and reduce the rate of innovation.

No argument that he is a Capitalist that likes money. Just emphasizing that he is a special type of Capitalist who is willing to engage closely with government to obtain benefits. The fact that other businesses in his industry may also obtain these benefits he lobbied for is in fact on the spectrum of cronyism in practice:

"Crony capitalism exists along a continuum. In its lightest form, crony capitalism consists of collusion among market players which is officially tolerated or encouraged by the government. While perhaps lightly competing against each other, they will present a unified front (sometimes called a trade association or industry trade group) to the government in requesting subsidies or aid or regulation." https://en.wikipedia.org/wiki/Crony_capitalism

Actually the push for NASA to use commercial style contracting was started under President Regan (Commercial Space Launch Act of 1984 and followed by further laws under G H W Bush in 1990), while Elon was at Pretoria Boys High School (Transvaal, South Africa); so to say that his lobbying had anything to do with NASA moving to awarding competed fixed price contracts for orbital services rather than using the previous cost plus model of contracting amounts to crony capitalism is entirely wide of the mark and bordering on wholly false.

EDIT: fixed grammar

I don't disagree with the main point of your post, but I do disagree on this minor statement here:

    > electric car subsidies go to car owners,
    > not manufacturers

I don't know the specifics of buying an electric car, but most tax-break subsidies like this do in fact end up going to the manufacturer, just indirectly.

How? Say it costs $10K to make an electric car, and the manufacturer thinks the market will support a 50% profit margin, so they price the car at $15K. Now the government wants to induce consumers to buy this car, so they offer a $5000 tax rebate if you purchase one. The goal is to incentivize customers to think "Wow, I can get this car for 2/3 of what it would otherwise cost me." And if the only two actors in the scenario were the government and the consumer, it would work that way. But the manufacturer is not naive. If they thought consumers were willing to purchase it at $15K outright, they'll still be willing to purchase it at $20K (less the $5K tax rebate). In effect, the price of the subsidized good goes up by some amount close to the subsidy.

I'm not merely theorizing here. I built a house in 2011 and was pricing out HVAC solutions. My subcontractor said conventional heat+AC would cost me $7,000. Geothermal (the energy-saving option) would cost me $21,000. The hard costs of a geothermal system are twice as much as a conventional system (it costs the HVAC subcontractor ~$3,500 in materials for conventional and ~$7,000 for geo), yet the cost to me was 3X! I got similar quotes from multiple subs.

I questioned this price difference, and all the subs said, "Yeah, it's 3X, but there's currently a 30% tax break if you buy the geo system, so it's like it's really only $14K, or 2X".

There should be an economic proficiency test that all legislators are required to pass. sigh

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