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I’d argue he offsets his risks (but not profits) to the taxpayer. His high-risk bets have largely been buoyed by government contracts, subsidies, and borderline

by bumby 2y ago

I’d argue he offsets his risks (but not profits) to the taxpayer. His high-risk bets have largely been buoyed by government contracts, subsidies, and borderline crony-capitalism. In many respects, that’s not always bad for the taxpayer when he delivers, but it’s not the same as being a free-market risk taker.

WalterBright 2y ago
I recommend reading a biography of him. He did not offset risks to the taxpayer. SpaceX, for example, got contracts from NASA. He delivered on those contracts. If he hadn't, he would have gone bust, not the taxpayer. At one point with Tesla he was within hours of business and personal bankruptcy, before making a deal with an investor. The investor wasn't the government. The taxpayer never assumed a risk there. > but not profits) to the taxpayer He pays taxes on profits like anyone else.
- bumby 2y ago
  You may want to familiarize yourself with counter examples from Musk biographers, like Seth Abramson. Musk said himself SpaceX would’ve gone bankrupt without NASA contracts. He needed those contracts because Spacex was too high of a risk at the time for private business. NASA is self-insured. This is the the way the government supports high-risk nascent industries, because they are the only institution capable of shouldering that risk. It’s well-established that the solvency of his companies are tightly coupled, just like TFA. Further, Tesla is made competitive by subsidies for EVs and manufacturing. Not necessarily bad, but the success isn’t occurring in a free-market vacuum. When companies accepting subsidies go under, the govt doesn’t typically get that money back, at least not in full. (See the faux Solyndra “scandal”) I know that doesn’t fit the preferred narrative of the mythical free-market iconoclast succeeding in spite of the govt, but that’s reality. On the profit side, I should have said he gets a disproportionate amount of profit and the taxpayer gets a disproportionate amount of risk.
  - WalterBright 2y ago
    > Musk said himself SpaceX would’ve gone bankrupt without NASA contracts. And he wasn't paid until he delivered, like any contract with a business. The taxpayers were never at risk. It was not a subsidy. Yes, Tesla benefited from EV subsidies, like all the electric car makers. He'd be stupid not to take the subsidy. > You may want to familiarize yourself with counter examples from Musk biographers, like Seth Abramson. I read "Elon Musk" by Ashlee Vance.
    - bumby 2y ago
      >The taxpayers were never at risk I’d implore you to research more about how the CCP is administered. There are payments before any astronaut gets a ride. Meaning if the company goes out of business beforehand, the taxpayers lost that money without receiving the actual service intended. That’s also why NASA selected two CCP contractors, it distributes the risk. Maybe you think socializing risk to the taxpayer makes him a smart businessman, I just wish people would comes to terms with the fact that his wealth is inextricably linked to taxpayers. Like I said before, it’s not even necessarily a bad thing but call it what it is. I personally think the hybrid public-private arrangement works well when it’s not being abused. Regardless of all that, the point was that Musk is not a paragon of free-market capitalism. Nothing you’ve pointed out negates that point, yet people still cling to that narrative for…reasons. I suspect it has more to do with cognitive biases than reality.
      - WalterBright 2y ago
        My house was built to my specification. The general contractor required that I make progress payments. He wanted to be sure he wouldn't be left holding the bag for all of it after I moved in (and he also needed cash to buy supplies and hire subcontractors). I took a risk he didn't just disappear with the up front payment. When I had the roof replaced, I had to pay half up front. And so on. This is normal business practice. There is nothing not free market about progress payments. (Besides, if NASA was fronting all the money, SpaceX wouldn't have gone bankrupt if the rocket blew up. But what I've read was Musk bet the company on it not blowing up.) I decided to check one detail. The EV subsidy came in the form of a tax credit to the buyer, it is not paid to the car manufacturer. Musk had nothing to do with it. > I suspect it has more to do with cognitive biases than reality. Imagining oneself as dealing in reality rather than cognitive bias is yet another cognitive bias. Everything written about Musk is subject to cognitive bias one way or another.
rayiner 2y ago
> buoyed by government contracts, subsidies, and borderline crony-capitalism What you're describing is Lockheed, Boeing, Rockwell Collins, etc. SpaceX is the opposite--it provided NASA a service that was necessary for NASA to operate, at a fraction of the cost of competitors: https://ntrs.nasa.gov/citations/20200001093 https://ntrs.nasa.gov/citations/20200001093. The fact that NASA makes interim payments on the contracts doesn't turn a purchase of services into a subsidy. "Free market" does not mean "off the shelf." It's extremely common in B2B settings for buyers to shoulder some up-front costs to develop products or services that aren't available in the market. For example, Apple made a large up-front payment to a supplier to speed up development of sapphire glass: https://www.cultofmac.com/apple-history/iphone-sapphire-glass-bankruptcy https://www.cultofmac.com/apple-history/iphone-sapphire-glas.... Buyers take-on some risk when they do that, but that doesn't make it a subsidy. In Apple's case, they take on the risk in return for the bet that a supplier can provide them with huge volumes at a low price. In NASA's case, it took on some development risk because SpaceX promised a large reduction in launch costs.
- bumby 2y ago
  I agree it applies to other contractors. My point is that the success is tightly coupled to the willingness of taxpayers to fund the operations. You’re muddling points. I’m not saying the NASA contract was a subsidy. Tesla is a better example of subsidies. No private capital was willing to contract to SpaceX until the risk was lowered. They’ve succeeded in doing so and deserve credit. However, they would have never gotten to that point without taxpayer dollars. Governments were the only institutions capable and willing of taking on that high initial risk. That point still stands. It’s odd that your stance denies that when Musk himself has admitted it.
  - WalterBright 2y ago
    Musk founded SpaceX with $100m along with other investors providing another $100m. The payoff for government was getting rockets at 10% of the cost of other rockets.
    - 2y ago
testing22321 2y ago
> been buoyed by government contracts, subsidies, and borderline crony-capitalism The government pays spacex to complete contracts. They pay tens of thousands of companies the same way - defence, bridges, trains, roads, etc. in fact, every government does this. It’s also worth pointing out spacex have completed those contracts much cheaper than competitors who have not delivered (ie star liner). As far as the gov giving out contracts for space stuff, spacex are literally the best option, and directly save taxpayers money. Tesla gets subsided because the government wants to encourage EVs. Oil extraction and refining, corn, education, healthcare, defence and literally thousands of other sectors are also heavily subsidized. Again, every government in the world does this for sectors they want to encourage. You are so hell bent on your “Musk bad” line you didn’t realize it has nothing to do with him or his companies. You are angry at how governments around the world pay for and subsidizes sectors every single day.
- bumby 2y ago
  No, the Commercial Crew Program is fundamentally different than the way NASA has previously done business. They are buying a ride, not a rocket. Because it’s a service contract, it’s much more hands-off. We agree the government supports sectors they want to encourage. See my previous comments about supporting high-risk nascent industries. That’s a different point than the one I was making, which is that support is a large part why those industries can exist during their initial high risk phase. My point is he is not a paragon of free-market capitalism because they rely on government support during high-risk stages. Both points can coexist. It also doesn’t imply I think he is “bad”. You are trying to shoehorn a different discussion. I’ve never said Musk is bad. In fact, I’ve said he’s a once in a generation entrepreneur and that his companies have delivered wonderful things to the taxpayer. My claim is that his success is not the free-market ideal because it relies on government largesse. In your head, you appear to view it through a completely different lens because you seem to want to construct this “good vs bad” false narrative. The fact that you are bypassing the points reiterated multiple times isn’t conducive to a curious, nuanced, and thoughtful discussion
  - testing22321 2y ago
    > Commercial Crew Program is fundamentally different than the way NASA has previously done business It is exactly the same for SoaceX and Boeing, other than Boeing getting way more money for the same job. Free-market capitalism is like the Easter bunny - a nice bedtime story for children. It doesn’t exist.

by bumby 2y ago

WalterBright 2y ago

I recommend reading a biography of him. He did not offset risks to the taxpayer. SpaceX, for example, got contracts from NASA. He delivered on those contracts. If he hadn't, he would have gone bust, not the taxpayer. At one point with Tesla he was within hours of business and personal bankruptcy, before making a deal with an investor. The investor wasn't the government. The taxpayer never assumed a risk there. > but not profits) to the taxpayer He pays taxes on profits like anyone else.

bumby 2y ago
You may want to familiarize yourself with counter examples from Musk biographers, like Seth Abramson. Musk said himself SpaceX would’ve gone bankrupt without NASA contracts. He needed those contracts because Spacex was too high of a risk at the time for private business. NASA is self-insured. This is the the way the government supports high-risk nascent industries, because they are the only institution capable of shouldering that risk. It’s well-established that the solvency of his companies are tightly coupled, just like TFA. Further, Tesla is made competitive by subsidies for EVs and manufacturing. Not necessarily bad, but the success isn’t occurring in a free-market vacuum. When companies accepting subsidies go under, the govt doesn’t typically get that money back, at least not in full. (See the faux Solyndra “scandal”) I know that doesn’t fit the preferred narrative of the mythical free-market iconoclast succeeding in spite of the govt, but that’s reality. On the profit side, I should have said he gets a disproportionate amount of profit and the taxpayer gets a disproportionate amount of risk.
- WalterBright 2y ago
  > Musk said himself SpaceX would’ve gone bankrupt without NASA contracts. And he wasn't paid until he delivered, like any contract with a business. The taxpayers were never at risk. It was not a subsidy. Yes, Tesla benefited from EV subsidies, like all the electric car makers. He'd be stupid not to take the subsidy. > You may want to familiarize yourself with counter examples from Musk biographers, like Seth Abramson. I read "Elon Musk" by Ashlee Vance.
  - bumby 2y ago
    >The taxpayers were never at risk I’d implore you to research more about how the CCP is administered. There are payments before any astronaut gets a ride. Meaning if the company goes out of business beforehand, the taxpayers lost that money without receiving the actual service intended. That’s also why NASA selected two CCP contractors, it distributes the risk. Maybe you think socializing risk to the taxpayer makes him a smart businessman, I just wish people would comes to terms with the fact that his wealth is inextricably linked to taxpayers. Like I said before, it’s not even necessarily a bad thing but call it what it is. I personally think the hybrid public-private arrangement works well when it’s not being abused. Regardless of all that, the point was that Musk is not a paragon of free-market capitalism. Nothing you’ve pointed out negates that point, yet people still cling to that narrative for…reasons. I suspect it has more to do with cognitive biases than reality.
    - WalterBright 2y ago
      My house was built to my specification. The general contractor required that I make progress payments. He wanted to be sure he wouldn't be left holding the bag for all of it after I moved in (and he also needed cash to buy supplies and hire subcontractors). I took a risk he didn't just disappear with the up front payment. When I had the roof replaced, I had to pay half up front. And so on. This is normal business practice. There is nothing not free market about progress payments. (Besides, if NASA was fronting all the money, SpaceX wouldn't have gone bankrupt if the rocket blew up. But what I've read was Musk bet the company on it not blowing up.) I decided to check one detail. The EV subsidy came in the form of a tax credit to the buyer, it is not paid to the car manufacturer. Musk had nothing to do with it. > I suspect it has more to do with cognitive biases than reality. Imagining oneself as dealing in reality rather than cognitive bias is yet another cognitive bias. Everything written about Musk is subject to cognitive bias one way or another.

rayiner 2y ago

> buoyed by government contracts, subsidies, and borderline crony-capitalism What you're describing is Lockheed, Boeing, Rockwell Collins, etc. SpaceX is the opposite--it provided NASA a service that was necessary for NASA to operate, at a fraction of the cost of competitors: https://ntrs.nasa.gov/citations/20200001093 https://ntrs.nasa.gov/citations/20200001093. The fact that NASA makes interim payments on the contracts doesn't turn a purchase of services into a subsidy. "Free market" does not mean "off the shelf." It's extremely common in B2B settings for buyers to shoulder some up-front costs to develop products or services that aren't available in the market. For example, Apple made a large up-front payment to a supplier to speed up development of sapphire glass: https://www.cultofmac.com/apple-history/iphone-sapphire-glass-bankruptcy https://www.cultofmac.com/apple-history/iphone-sapphire-glas.... Buyers take-on some risk when they do that, but that doesn't make it a subsidy. In Apple's case, they take on the risk in return for the bet that a supplier can provide them with huge volumes at a low price. In NASA's case, it took on some development risk because SpaceX promised a large reduction in launch costs.

bumby 2y ago
I agree it applies to other contractors. My point is that the success is tightly coupled to the willingness of taxpayers to fund the operations. You’re muddling points. I’m not saying the NASA contract was a subsidy. Tesla is a better example of subsidies. No private capital was willing to contract to SpaceX until the risk was lowered. They’ve succeeded in doing so and deserve credit. However, they would have never gotten to that point without taxpayer dollars. Governments were the only institutions capable and willing of taking on that high initial risk. That point still stands. It’s odd that your stance denies that when Musk himself has admitted it.
- WalterBright 2y ago
  Musk founded SpaceX with $100m along with other investors providing another $100m. The payoff for government was getting rockets at 10% of the cost of other rockets.
  - 2y ago

testing22321 2y ago

> been buoyed by government contracts, subsidies, and borderline crony-capitalism The government pays spacex to complete contracts. They pay tens of thousands of companies the same way - defence, bridges, trains, roads, etc. in fact, every government does this. It’s also worth pointing out spacex have completed those contracts much cheaper than competitors who have not delivered (ie star liner). As far as the gov giving out contracts for space stuff, spacex are literally the best option, and directly save taxpayers money. Tesla gets subsided because the government wants to encourage EVs. Oil extraction and refining, corn, education, healthcare, defence and literally thousands of other sectors are also heavily subsidized. Again, every government in the world does this for sectors they want to encourage. You are so hell bent on your “Musk bad” line you didn’t realize it has nothing to do with him or his companies. You are angry at how governments around the world pay for and subsidizes sectors every single day.

bumby 2y ago
No, the Commercial Crew Program is fundamentally different than the way NASA has previously done business. They are buying a ride, not a rocket. Because it’s a service contract, it’s much more hands-off. We agree the government supports sectors they want to encourage. See my previous comments about supporting high-risk nascent industries. That’s a different point than the one I was making, which is that support is a large part why those industries can exist during their initial high risk phase. My point is he is not a paragon of free-market capitalism because they rely on government support during high-risk stages. Both points can coexist. It also doesn’t imply I think he is “bad”. You are trying to shoehorn a different discussion. I’ve never said Musk is bad. In fact, I’ve said he’s a once in a generation entrepreneur and that his companies have delivered wonderful things to the taxpayer. My claim is that his success is not the free-market ideal because it relies on government largesse. In your head, you appear to view it through a completely different lens because you seem to want to construct this “good vs bad” false narrative. The fact that you are bypassing the points reiterated multiple times isn’t conducive to a curious, nuanced, and thoughtful discussion
- testing22321 2y ago
  > Commercial Crew Program is fundamentally different than the way NASA has previously done business It is exactly the same for SoaceX and Boeing, other than Boeing getting way more money for the same job. Free-market capitalism is like the Easter bunny - a nice bedtime story for children. It doesn’t exist.