Man who climbed government-funded ladder approves ladder on fire now he’s safe atop

Government grants and loans are an investment meant to improve the nation and increase opportunities in the future. That’s why they exist. Like all investments, they are not always successful; the government frequently grants subsidies and awards contracts to companies which ultimately prove unable to produce the product or service for which they were subsidized. These are investments that have failed, even if, even so, they are not always bad investments.

Sometimes these government investments succeed dramatically, creating whole new industries.

And sometimes the government doesn’t even have to distribute money to get results. Just the promise that the government will buying a product or service when it becomes available can be the instrument that a start-up can provide to the bank, or to investors, to obtain the funds necessary to achieve this government objective.

Subsidies take many other forms than cash on the barrel. They can take the form of cheap government land that has made oil and gas drilling extremely profitable, or federally funded road infrastructure that has allowed cars to permanently overtake trains as the country’s primary form of transportation. … After other government grants made these trains possible. . Every dollar spent by government, like every dollar spent by a consumer, ultimately subsidizes Something.

Grants that succeed in funding a breakthrough can easily fuel a “golden age,” as the first to rise through the ranks of government gain access to whole new areas of wealth. It happened with the trains. It happened with cars. It happened with the Internet. It’s happening again with electric vehicles, renewables, and space, all of the industries where Elon Musk operates.

In 2015, the Los Angeles Times detailed the billions of dollars in government funding that had secured Musk’s efforts. This includes the tax breaks that have allowed a Tesla headquarters to avoid property taxes for 20 years. Musk’s link with government grants continued, until the funds that are at present subsidize SpaceX’s space Internet bet:

  • Tesla’s battery plant in Nevada was built with hundreds of millions of dollars in grants.
  • The launch tower that SpaceX is currently building in Texas is being built with $ 20 million in grants.
  • Every car Tesla has sold since 2008 until 2020 has come with a government grant.

As a financial analysis firm Space angels highlighted in 2019, SpaceX was just one of 67 space companies that together received $ 7.2 billion in public funding between 2000 and 2018. SpaceX is among those who have succeeded. Many of them did not.

SpaceX and Tesla are both big hits, not just for Musk, but for the power of timely government investment. Both of these companies exist on loans, incentives, and contracts given to them precisely because government analysts saw the potential.

There are forms of government grants, such as tax breaks for setting up factories or offices in a specific state or region, that have no cash value. In fact, these grants reward companies while creating huge burdens. Tax breaks do not unlock competition to create new technologies, or even generate economic improvement. They are just a competition between politicians eager to talk about “job creation” whose price is ultimately much higher than their value.

In addition, like any investment portfolio, government grants must be constantly reviewed. The days when we should be providing aid to the oil, gas and coal industries are long past. Someday we will be past the point where we need to provide subsidies to accelerate the use of renewables or encourage the switch to electric vehicles. We are not there yet.

And we shouldn’t let the man with the most to gain from locking himself into the status quo determine when that day comes. This is especially true given that the Build Back Better grants support something else Musk really doesn’t like – union jobs that offer fair wages, good benefits, and job security.

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