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Do you have any idea whatsoever how hard it is to have a successful venture in the automotive industry? You really should watch the Bloomberg Risk Takers docum

Do you have any idea whatsoever how hard it is to have a successful venture in the automotive industry? You really should watch the Bloomberg Risk Takers documentary on Elon. I'm against handouts as much as anyone (it's a loan though), but try making a comment like this afterward. The difficulties he went thru to keep Tesla afloat were outrageous. By this time he been dumping his fortune into both this and SpaceX and was essentially at the point of personal bankruptcy (ie. was friends/associates time to keep moving, no one was willing to continue investing). Note in the article the sentence "Last month, Mercedes’ parent company Daimler also invested $50 million for a 10 percent stake in Tesla." Do yourself a favor and learn what Tesla actually did to make this happen. Yes, you may have heard they retrofitted Smart Cars with the Tesla power train, but how they did that is a breathtaking example of innovation and teamwork for a company at the brink of death. In short, this loan saved the company. This article we're discussing right now would not exist. Tesla Motors would be another footnote in history that people could point to - "automotive startups are a losing proposition, do not invest". Would you rather the government bet on a guy like Elon who's actually putting his all into carrying out on a promise to change the game, or industry stalwarts who pissed away good will by incompetence and greed?

thematt 14y ago
How about a third option? The government doesn't bet on anybody and let's the market sort out the winners.
- benajnim 14y ago
  While this would be a good option in the spirit of the free market, many parts of the transportation industry are subsidized already making the play-field unfair to begin with.
- king_magic 14y ago
  Does the market always pick the highest quality of winners? I really don't think it does. I'm not saying government does either - TBH I don't really have faith in either the market or the government to accurately pick winners.
  - nathan_long 14y ago
    Define "highest quality". I'd say "of most utility to the largest number of people." By that metric, the market picks the highest quality of winner pretty much by definition. Exceptions I can think of are cases where individuals don't have enough info to decide (eg, a product will cause cancer, but the company can get rich before consumers find out) and Tragedy of the Commons issues (eg, every individual has incentive to pollute and only collectively do we have incentive to prevent it). You might argue that the pollution exception applies here, but I'd still want the market involved. For instance, "the government will award $LargeAmountOfMoney to the first company who sells X vehicles meeting the following efficiency requirements..."
    - king_magic 14y ago
      > By that metric, the market picks the highest quality of winner pretty much by definition. I dunno, Windows and Internet Explorer has been the "winner" for the past few decades ;-) By the metric you mention ("of most utility to the largest number of people."), yes, they are "high quality". By many other metrics, they are not the highest quality products. Jokes aside, I absolutely want the market involved as well. I think the market is fairly efficient, but it has it's downsides (e.g., the great patent wars - I'd hardly call that market efficiency). I don't think the government has all the answers - but I don't think the market does either.
      - nathan_long 14y ago
        >> I think the market is fairly efficient, but it has it's downsides (e.g., the great patent wars - I'd hardly call that market efficiency). I agree, but since patents are government-granted monopolies, that's really an example of government intervention rather than market freedom >> I don't think the government has all the answers - but I don't think the market does either. Agreed. By itself, the market can be ruthless. One proper role of government, in my view, is to ensure fair play. Another is to provide incentives, when necessary, for research and infrastructure needed by society at large. ARPANET is a good example: a government initiative carried out by private contractors which never would have been undertaken by entrepeneurs.
- jbooth 14y ago
  Well, they've already built an interstate highway system and the US state dept and military are already going to bat for us worldwide ensuring access to oil. But yeah. THIS is the real case of the government getting too involved in the market.
  - deleted 14y ago
    [deleted]
- stfu 14y ago
  I am okay with governments betting on winners as long as these were similar to the Ansari X Prize. Any government interventions should be there to stimulate and reward competition and not to decide winners and losers.
- Sumaso 14y ago
  Government doesn't bet than society as a whole loses out. Ideally your government should be attempting to maximize everyone's utility (read:society). Private corporations are attempting to maximize their utility (In the case of modern economies: money). Having an organization giving money to projects that are a net monetary loss, but provide a social benefit is the core reason why we have a government in the first place.
  - dkokelley 14y ago
    I disagree. The core function of government is to provide a social order. Police enforce rule of law, and legislatures write the law. Military protects our sovereignty against outsiders, and citizens pay taxes for these benefits. While military and police spending fit your description (they are not necessarily profitable but provide a social benefit), I argue that social order is the primary function of government. In the U.S.'s case, our government happens to do much more than this, but this is not the core of why government exists.
    - Retric 14y ago
      Governments have been involved in 'public works' for at least the last 10,000 years. Without it you end up with a weaker society with a weaker military which is then easy pray to invaders. It may have started out as roads, bridges, defensive structures, and irrigation systems. But the CDC is well within that domain.
      - dkokelley 14y ago
        I agree that the CDC is a legitimate example of something that only government can afford to offer. But we can have a government without the CDC. We can have government without welfare or social security. We can take many things away from government and still call it a government. Taking this to its extreme, if we remove the social order provided by police or the sovereign protection provided by military, laws and borders become meaningless and our government becomes anarchy. This is not to day that we should or shouldn't take these things away (or add more, for that matter), but that the core of government's purpose is social order for its citizens.
- enraged_camel 14y ago
  Horrible idea. Especially in industries that are capital intensive (i.e. high starting costs), the markets heavily favor the existing players, who have a vested interest in preserving the status quo. In such markets, if you want innovation then you need government assistance for startups.
  - tjic 14y ago
    So you're arguing that the search engine space, or new computer manufacturers, or rocket ships did better before venture capital and startups got involved?
    - enraged_camel 14y ago
      What?

thematt 14y ago

How about a third option? The government doesn't bet on anybody and let's the market sort out the winners.

benajnim 14y ago
While this would be a good option in the spirit of the free market, many parts of the transportation industry are subsidized already making the play-field unfair to begin with.
king_magic 14y ago
Does the market always pick the highest quality of winners? I really don't think it does. I'm not saying government does either - TBH I don't really have faith in either the market or the government to accurately pick winners.
- nathan_long 14y ago
  Define "highest quality". I'd say "of most utility to the largest number of people." By that metric, the market picks the highest quality of winner pretty much by definition. Exceptions I can think of are cases where individuals don't have enough info to decide (eg, a product will cause cancer, but the company can get rich before consumers find out) and Tragedy of the Commons issues (eg, every individual has incentive to pollute and only collectively do we have incentive to prevent it). You might argue that the pollution exception applies here, but I'd still want the market involved. For instance, "the government will award $LargeAmountOfMoney to the first company who sells X vehicles meeting the following efficiency requirements..."
  - king_magic 14y ago
    > By that metric, the market picks the highest quality of winner pretty much by definition. I dunno, Windows and Internet Explorer has been the "winner" for the past few decades ;-) By the metric you mention ("of most utility to the largest number of people."), yes, they are "high quality". By many other metrics, they are not the highest quality products. Jokes aside, I absolutely want the market involved as well. I think the market is fairly efficient, but it has it's downsides (e.g., the great patent wars - I'd hardly call that market efficiency). I don't think the government has all the answers - but I don't think the market does either.
    - nathan_long 14y ago
      >> I think the market is fairly efficient, but it has it's downsides (e.g., the great patent wars - I'd hardly call that market efficiency). I agree, but since patents are government-granted monopolies, that's really an example of government intervention rather than market freedom >> I don't think the government has all the answers - but I don't think the market does either. Agreed. By itself, the market can be ruthless. One proper role of government, in my view, is to ensure fair play. Another is to provide incentives, when necessary, for research and infrastructure needed by society at large. ARPANET is a good example: a government initiative carried out by private contractors which never would have been undertaken by entrepeneurs.
jbooth 14y ago
Well, they've already built an interstate highway system and the US state dept and military are already going to bat for us worldwide ensuring access to oil. But yeah. THIS is the real case of the government getting too involved in the market.
- deleted 14y ago
  [deleted]
stfu 14y ago
I am okay with governments betting on winners as long as these were similar to the Ansari X Prize. Any government interventions should be there to stimulate and reward competition and not to decide winners and losers.
Sumaso 14y ago
Government doesn't bet than society as a whole loses out. Ideally your government should be attempting to maximize everyone's utility (read:society). Private corporations are attempting to maximize their utility (In the case of modern economies: money). Having an organization giving money to projects that are a net monetary loss, but provide a social benefit is the core reason why we have a government in the first place.
- dkokelley 14y ago
  I disagree. The core function of government is to provide a social order. Police enforce rule of law, and legislatures write the law. Military protects our sovereignty against outsiders, and citizens pay taxes for these benefits. While military and police spending fit your description (they are not necessarily profitable but provide a social benefit), I argue that social order is the primary function of government. In the U.S.'s case, our government happens to do much more than this, but this is not the core of why government exists.
  - Retric 14y ago
    Governments have been involved in 'public works' for at least the last 10,000 years. Without it you end up with a weaker society with a weaker military which is then easy pray to invaders. It may have started out as roads, bridges, defensive structures, and irrigation systems. But the CDC is well within that domain.
    - dkokelley 14y ago
      I agree that the CDC is a legitimate example of something that only government can afford to offer. But we can have a government without the CDC. We can have government without welfare or social security. We can take many things away from government and still call it a government. Taking this to its extreme, if we remove the social order provided by police or the sovereign protection provided by military, laws and borders become meaningless and our government becomes anarchy. This is not to day that we should or shouldn't take these things away (or add more, for that matter), but that the core of government's purpose is social order for its citizens.
enraged_camel 14y ago
Horrible idea. Especially in industries that are capital intensive (i.e. high starting costs), the markets heavily favor the existing players, who have a vested interest in preserving the status quo. In such markets, if you want innovation then you need government assistance for startups.
- tjic 14y ago
  So you're arguing that the search engine space, or new computer manufacturers, or rocket ships did better before venture capital and startups got involved?
  - enraged_camel 14y ago
    What?