When we had the massive “bank bailout” in 2008 many people on the left and right were incensed that taxpayer money was used to prop-up the “bad guys”. They indignantly faulted the politically entrenched “establishment” that voted to spend on banks in trouble. Whatever philosophical problems one may have had with that bailout, every dollar, and in many cases plus interest, was paid back to the American people.
Only in the case of the Obama General Motors bailout was the taxpayer on the hook for loses. In order to satisfy the unions Obama played fast and lose with the bankruptcy laws by screwing the bondholders and eventually selling tax payer funded G.M. stock at a loss of 10.5 billion dollars.
But today I draw your attention to a very popular recipient of crony capitalism. Environmentalists and especially millennials seem unmoved by the never get paid back scheme to promote electric cars. A guru named Musk mesmerizes with visionary tales of an electric car future. He is inspiring as the leader of the cutting edge of a clean energy electric self-driving automobile revolution. It is a very compelling but superfical message. One that I’d have no problem with if Mr.Musk various enterprises were capable of sustaining themselves without my involuntary monatary contribution.
The problem is that his vision has consumed 4.9 billion dollars in taxpayer subsidies, tax breaks and guarantees that will never be paid back.The average hardworking middle class taxpayer is giving wealthy car buyers 10,000 dollars per unit to help them buy a 90,000 dollar car that the average guy could never dream of affording.
Does anyone remember the dozens of “solar” companies, many of whom had investors who by coincidence were big contributors to Obama’s election? They all went broke? They too were given government guarantees. Solyndra was merely the most visible of the government backed failures. Has anyone noticed that those 5 million green jobs never materialized?
Tesla Motors, Solar City and Space X have combined to take, I’ll say it again, 4.9 billion dollars from other Americans via wrong-headed federal, state and local government policy. Tesla, after taking all the free money, managed to lose 254 million dollars in 2012 and piled on additional losses to the tune of 880 millions dollars in 2015. They also lost big money every year along the way. Mr. Musk’s projections and timetables on income, automobile delivery, sales and self-sustainability have come up short every time. Even with a subsidy Tesla loses 3-4,000 dollars on the sale of each car.
The State of New York is spending 750 million dollars to build a Solar City solar panel factory. San Mateo California will lease a building for 1 dollar a year to Solar City.
The Feds also provide grants and tax credits amounting to 497 million dollars. The list of grants, subsidies and guarantees seems endless. I have no problem if investors choose to take the risk by buying an interest in a company that to date has never shown a profit and has missed all its projections. In a free market one can choose to make a risky bet. But with taxpayer dollars and with no prospect for a return on investment its pure crony capitalism? It’s a gift, not an investment. And the giver has no say in the matter.
I find it particularly objectionable when government at any level risks taxpayer money with no possibility of a return on investment. Either Mr. Musk’s various ventures can make it on their own with venture capitol, stock sales or by actually making a profit on the products they sell or they go out of business like every other business that can’t make money. That’s how our system works or should work. The government should play no role in picking favorites to prop-up and ignore other businesses that struggle.
Government officials are counting on the fact that most people aren’t paying attention. The environmental kooks couldn’t care less about profits or loses that result when legally confiscated tax dollars of ordinary people are given to industries favored by activists. That’s an area where they exhibit zero compassion for hardworking Americans. Their environment religion takes precedent over everything else.
The irony is that the entire concept is flawed. Oil and natural gas are extremely cheap at the moment. The use of natural gas over the last ten years is the single biggest reason carbon dioxide omissions have been cut. And where pray tell does all that electricity needed to charge those cars come from? The same people who kvell over Tesla have “moral” objections to the use and development of the natural gas,clean coal and nuclear energy that will be necessary to charge all those elite people’s luxury automobiles. Since windmills and solar panels can only at most supply a fraction of our energy needs, the whole enterprise is a bit of a fraud. When the media frames the issue as big bad bankers vs a young hip visionary futurist, image wins over economic common sense and the proper use of other peoples money. To hell with who pays, if the taxpayer will ever be reimbursed or if the enterprise can make money.
I can’t tell you how many people have no idea that their money is being employed to subsidize the purchase of fancy cars being sold by a company that can’t make a buck. For some reason the “big banks” that provide the lubricant for business success and formation that were pressured into making bad loans by the government are the enemy, while companies that can’t sustain themselves without the taxpayer money deserve to be bailed out.
Hillary, Bernie and Donald exploit the anti-big bank rhetoric to garner political support but are silent if not supportive of Mr. Musk’s losing enterprises that would not be in business without the government. That’s the Soviet and Chinese model. History has shown us that the when businesses are build on the false premise of what the government wants rather then the free market; waste, fraud, abuse and failure ensues. Imagry and ignorance seems to be winning over truth and free markets.
For those who love Mr. Musk’s various companies I suggest they put their private dollars to work by investing and leave the rest of us alone.