I don't trust the government to manipulate the free market efficiently. It's comprised of hapless morons who don't know what they're doing and whose favor is for sale to the highest bidder. Case in point are the tremendous number of bankrupt alternative energy companies built upon favorable treatment by the government. Market intervention doesn't suddenly become justifiable simply because the outcome of advancing the sustainability agenda is positive.
> Case in point are the tremendous number of bankrupt alternative energy companies built upon favorable treatment by the government
That's like saying the top VC firms are all inept because most of the startups they fund fail.
It has often been the role of our government to make risky bets in order to advance step-changes in our society's progress. Those bets have resulted in such things as spaceflight, modern telecommunications, lasers and the internet to name just a few.
If Tesla indeed transforms the world as they are poised to do, their success will far exceed the cumulative failures of Solyndra and the like.
Not to mention, Tesla's competition are subsidized in many ways, most of which are more subtle than the tax credits for alternative fuels that you allude to. Failure to price in the health and climate externalities of fossil fuels amounts to subsidy, as do the trillions of dollars spent on overseas entanglements to secure fossil fuel supplies.
DARPA et al do not represent an analogous scenario. As for portfolio theory: I'm not questioning something that fundamental. I'm saying the government has little to no hope of deploying it efficiently. If you had a technocracy of highly intelligent people perfectly resilient to corruption, then this might be a different story. And if you know anything about VC, you know that there's a long tail of failing ones that underperform standard benchmarks (you probably do know; that's why you said "top VCs"). Also, if you want to view USG market interventionism as an aggregate portfolio, guess which way that's going to go.
I love it when people champion entities like Tesla benefiting from incentive structures when it's conveniently aligned with their personal beliefs about the superiority of the tech industry, their political agendas, and/or the idolzation of people like Musk, but forget that there's a far broader and more insidious reality here.
Reply to Below: Not libertarian. I believe strongly in government regulations where appropriate and that limiting our personal liberties in certain ways is essential to guaranteeing economic and physical security. I happen to agree with the sustainability agenda as well. I disagree with the mechanism being employed to advance it. USG should instead focus on taxing/penalizing for carbon emissions as a negative externality, which would have an ancillary benefit of making alternative energy companies overall more competitive. Asking the government to make decisions about structuring incentives, by contrast, is positively asinine (you get things like ethanol). Furthermore, I have a serious problem with the government deploying tax dollars to directly benefit corporations when there is no immediate and tangible return, regardless of the context.
The last sentence of your post is strange and difficult to parse. You love it when people communicate in ways that align with their worldview? OK fair enough.
But you're really just throwing around a bunch of innuendo and five-dollar words to suggest the incentive structure that Tesla (and all other automakers) have at their disposal is bogus. You've provided no evidence, and Occam's Razor offers a much more reasonable explanation: becoming energy independent and sustainable would be in our national interest in a massive way, and policymakers decided these incentives offer a reasonable risk / reward for accelerating that goal.
If you object on some philosophical / libertarian grounds then fine, I disagree with you but can understand where you're coming from. But don't throw around unsubstantiated claims of corruption and "insidious realities" and expect anyone to be sympathetic to your argument when you're not actually saying anything of substance.
And I don't trust that a profit-based only incentive is good overall, for example: if it wasn't for governments meddling with making oil less desirable as an energy resource (higher taxes, stricter regulations about pollution, more incentives for alternative technologies) we wouldn't be seeing a shift so early as we still have plenty of oil to burn and it's very profitable to do it.
These blanket statements are often wrong, there are really bad instances of a government trying to manipulate markets but there are also instances where it is needed to keep businesses in check.
I would rather live in the world as it is right now than in a Corporatocracy.
> It's comprised of hapless morons who don't know what they're doing...
This sounds exactly like the free market to me. Hapless morons who don't know what they're doing—but try to reach their goals nonetheless—as far as the eye can see.
You'd be surprised what happens when people are risking their own money. But now we're just getting into Capitalism 101..
Edit: I feel like I have to clarify this everywhere perhaps because it's an unorthodox viewpoint: of course companies need to be regulated; I'm arguing against government-sponsored incentives and subsidies. Stick to making it more expensive to burn fossil fuels, thereby increasing receipts (use it to fund alternatives research, studies, etc similar to how Big Tobacco has to pay for anti-smoking ads) instead of less expensive to buy someone's product, at the cost of taxpayer dollars.
More electric vehicles will get on the road when there is a realistic economic rationale to buy them. Without the subsidy, an $80,000 car that can only go 200 miles is a lot less appealing.
Hence they are subsidized. People with a bit of forward vision realize that without an economic incentive today, there may not be an economic rationale tomorrow, since the technology will not miraculously develop itself.
What I think people do not realise is that incentives to adopt cleaner car are just one side of a coin.
The alternative would be making petrol-car drivers paying for the actual costs of cars including healthcare for diseases related with pollution, possibly at any level of the production chain and so on.
Hidden costs are often cut away and offloaded on community (I couldn't find anything specifically related with cars (didn't have time to look for), but for comparison here's a short video that shows the real costs of meat https://www.youtube.com/watch?v=uZDsSnpYZrw). Incentives make it a little bit more explicit. While it may be true claiming that Teslas cost would be higher without incentives, for sure Ford's car would be way more expensive if everything had been taken into account.
Exactly. Maybe I should have been more clear earlier that I'm referring to incentives- driven intervention. Penalizing companies for the negative externalities they inflict on society is practically a first principle of good governance, and USG has failed dramatically.
What's sad is that so many people seem to take an all-or-nothing stance on this politically. Either laissez faire or nanny state. Moderation is a dying art.
Yes, moderation is dead. To embrace moderation one need to have doubt about his beliefs, to accept that someone else might hold a part of the truth. It's difficult and tiring and imply to constantly change one's state of mind and ideas. Moreover, it's much more fun and easy to treat everything as a sport match where you choose one side and you are against the other side.
In some way I notice the irony that these incentives for automakers (aimed to reduce pollution, to keep jobs, to communitize part of the drawbacks related with cars, ecc...) are a form of socialism in the US. Well done Yankees.
> there may not be an economic rationale tomorrow, since the technology will not miraculously develop itself
And if we don't invade country X, it may come back to bite us some day, right? And if we don't prop up the auto industry buying clunkers and robbing shareholders to pay union reps top dollar, people will have to start riding bikes and millions will be out of work, right?
If you're hoping for miracles, the government would be the last place to go looking for them. Necessity is the mother of invention, and while one could argue that our society "needs" this technology just like it "needs" to invade other countries, centralized decision making never leads to optimal outcomes, let alone "miracles".
