Is that not the reasoning that we started subsidizing oil also? We needed to keep our goods and services and industry competitive on the world market. Keeping fuel prices lower made us more competitive, but not the right way to do it IMO.
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Is that not the reasoning that we started subsidizing oil also? We needed to keep our goods and services and industry competitive on the world market. Keeping fuel prices lower made us more competitive, but not the right way to do it IMO.
dflye
S Sig Perf 414, VIN 814
This isn't really just a debate on investment in green energy research; the broader topic is whether or not the government should invest in R&D in new technology.
For the most part, true innovation occurs when a country is either under extreme pressure (various innovations during wartime) or when there is an endless supply of money to fund what appears to be absolutely crazy research, as it does in fact infrequently produce amazing results.
These days there are too many monopolies out there; they don't innovate unless they absolutely have to -- instead they purchase small innovative companies outright at top dollar to crush the threat of anything counter to their current product line seeing the light of day. Far cheaper to crush the new idea than implement it on the production line.
I'm not sure if the odds of success that venture capitalists bet on are better or worse than the odds of a government funded R&D project producing something useful, but I think that even if only a few government funded projects bear fruit, it is likely worth the expense.
For the most part, true innovation occurs when a country is either under extreme pressure (various innovations during wartime) or when there is an endless supply of money to fund what appears to be absolutely crazy research, as it does in fact infrequently produce amazing results.
These days there are too many monopolies out there; they don't innovate unless they absolutely have to -- instead they purchase small innovative companies outright at top dollar to crush the threat of anything counter to their current product line seeing the light of day. Far cheaper to crush the new idea than implement it on the production line.
I'm not sure if the odds of success that venture capitalists bet on are better or worse than the odds of a government funded R&D project producing something useful, but I think that even if only a few government funded projects bear fruit, it is likely worth the expense.
artsci
Sponsor
And the airline industry, the oil industry, the big banks etc, etc. All are sucking on the teat of the taxpayer.
Apparently you do not understand the difference between a subsidy (money handed out, ie Solyndra, Fisker) and a legal tax deduction.
Revenue not collected is neither a subsidy nor a government expenditure.
ChadS
Last tank of gas: March 2009
You are correct in strict terms that economists use, but if the corporation gets more, and the government gets less, lay people (which most of us here are) call it a subsidy because the end result is exactly the same - so the semantic difference is not of interest. As was recently shown in another thread, people using the word "subsidy" this way includes economists and financial reporters like Bloomberg. You are technically correct, but Artsci's message is still correct too.
And as was also noted in another thread, some of the oil subsidies are real subsidies specifically for their industry, and not just standard tax deductions. The Heartland Institute document that you posted agreed with that (it just made the same point about terminology for the deductions).
By the way, Fisker got a loan, not a subsidy. But I agree with you that if they don't pay it back, it works out to the same thing...
And as was also noted in another thread, some of the oil subsidies are real subsidies specifically for their industry, and not just standard tax deductions. The Heartland Institute document that you posted agreed with that (it just made the same point about terminology for the deductions).
By the way, Fisker got a loan, not a subsidy. But I agree with you that if they don't pay it back, it works out to the same thing...
That's exactly the point I was trying to make. $5 billion is a small amount for the oil industry (but a large amount of money that could be used for other things including roads, bridges, green energy projects...etc) so makes me question why such a highly profitable industry needs tax breaks and why there isn't some consistency in the outrage and reporting when they complain about the ATVM loan (leaving Ford and Nissan out of course) but ignore the billions and billions of energy tax breaks and gifts the oil and gas industry as well other fuels (ethanol) get.
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Apparently you do not understand the difference between a subsidy (money handed out, ie Solyndra, Fisker) and a legal tax deduction.
Revenue not collected is neither a subsidy nor a government expenditure.
But revenue not collected is money not collected. This money could have been used to pay down the debt, pave roads...etc
lolachampcar
Well-Known Member
lolachampcar
Well-Known Member
Arnold Panz
Model Sig 304, VIN 542
Liberal bloggers are on the case!
Tesla At War With Sleazy Auto Dealers
Seriously, if this gets enough traction it could end up a national story, and free market supporters will have a very tough time justifying support for this dumb law in NC.
bollar
Disgruntled Member
The oil companies have been getting breaks for 100 years. They have built and continue to build empires with the money compounding annually. The new company just getting it's first helping hand has a century of catching up on funding as well as everything else.
To be fair though, Fox Business News has had several positive segments on Tesla over the years, including interviews with Elon and Steve Jurvetson.
Arnold Panz;341761 [COLOR=silver said:
If one cannot get the loan one wants at the rate one wants, there still exists usually a rate at which one can get funds: this is what the junk bond and credit card debt markets offer. In Tesla's case, they could not get a loan of the size they wanted at the lowest market rates. They probably could not even get that much at junk bond rates: the loans were highly speculative, as Fisker's failure shows. The Energy Department loans were a subsidy: the government got too little interest for the level of risk they assumed in making the loan.
This is just basic economics.
Arnold Panz
Model Sig 304, VIN 542
This isn't about economics, it's about public policy. There wasn't a junk bond market for Tesla (or any of these other alternative energy companies) at any price. There's a reason that start-ups rely on venture capital firms and not Wall Street for seed capital -- for the amount of money these companies needed to get going the private markets were inadequate because the money simply wasn't there. The payoff timeline is too long for junk bond folks, but venture capitalists usually have the proper time horizon to let these companies grow.
From a public policy perspective, the US government had good reasons to create this fund and make these loans -- not only would new companies (or old companies with new products, like Nissan or Ford) create jobs and new industries in growth areas in the US, but these companies were going to be creating and scaling new alternative technologies. This used to be the purview of the government during the space race and Cold War, but everyone thought it would be better and more efficient to have private industry do it (remember, the ATSV program was bi-partisan and enthusiastically endorsed by Bush and Congresional Republicans).
So, in the case of Tesla, instead of the US government trying to improve battery technology, they gave Tesla a loan, which we all make a profit on, and they've helped create thousands of jobs and jump start a whole new sector of the car market. If you were a politician, wouldn't this be viewed as an unqualified success? On the other hand, what do we (as taxpayers) get for the subsidization if the oil industry?
Remember that new and emerging industries don't, by definition, have entrenched interests and lobbyists on their side like established industries and companies do. The loan program helps to level the playing field just a bit, and that's a good thing.
Krugerrand
Meow
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