13 ms·

but why to ask California State for subsidy? Why not to build it using private funds? I'd imagine that if this is economically sound idea there must be potentia

but why to ask California State for subsidy? Why not to build it using private funds? I'd imagine that if this is economically sound idea there must be potential investors lining up to have their share in the Project? The estimated cost is $7B. Now, Musk just needs to make a few calls to his friends at Google, Amazon, etc. Can't these guys just form a company together just to build it? Maybe I'm naive... or maybe Musk for all his genius is focused on the Government grants too much instead of being focused on the investors in the business world. If this brings profit, everybody want to own piece of the pie, no?

simonw 13y ago
You need government backing to acquire the land.
- LekkoscPiwa 13y ago
  Ah, that's boring. Look, we're talking about progress here, no Government burocrat should be able to stop us. Just $1B extra in "fees" would get us all the Government backing in the world we want. Unless we're not really serious about the whole thing and not really confident about the end result. Or just have Jobs resurrected. This way we save $1B on the "fees" and he'll talk the Government officials into this for free. They'll think they get the best deal in the world once Steve is done talking to them and the Distortion Field is permanently present in the Government heads.
  - saraid216 13y ago
    I'm pretty sure I've seen this plot in an animated series of something...
milesskorpen 13y ago
The proposal calls for the line to built alongside I-5, which requires government involvement.
- btilly 13y ago
  Not alongside. On top of. And all of it needs to be approved for safety in earthquakes. If you're traveling at 600 mph, you do not want to have that tunnel unexpectedly move even a foot sideways during an earthquake.
  - wavesounds 13y ago
    Not to be nitpicky but if you haven't driven the I-5 theres substantial room between each direction of the freeway so I don't think it will actually be above traffic if that's your concern.
    - dredmorbius 13y ago
      At 700+ MPH you'll need more than 100' of freeway median to contain potential incident fallout.
      - Retric 13y ago
        Depends on how strong the tunnel is. Assuming your taking 3/4 atmospheric difference your starting at ~11 pounds per square inch add in a 3-5x safety factor and that tunnel would be one tough son of a bitch. Not to mention it's got to be really close to a strait track so your more dealing with scraping forces than a direct strike.
        jacquesm 13y ago
        Does the minimum bending radius of the tube match the centerline of the highway? If not that might be a real problem.
        ash 13y ago
        Hyperloop proposal contains detailed map of the whole route. Sometimes it follows the highway, other times it deviates from it.
    - 13y ago
dragonwriter 13y ago
> but why to ask California State for subsidy? Why not to build it using private funds? Because you can't, in practice, acquire the rights of way necessary to build a substantial railroad/hyperloop/freeway or other major infrastructure project of that type without government (specifically, without use of eminent domain).
- rinon 13y ago
  But as I recall, the gov't can use eminent domain to give land to a private entity if they're in favor of the idea for the "public good." Or am I way off base here...?
  - bmiranda 13y ago
    Rinon, you are correct. The Supreme Court (perhaps foolishly) decided that private to private transfer of land is permissible under eminent domain. http://en.wikipedia.org/wiki/Kelo_v._City_of_New_London http://en.wikipedia.org/wiki/Kelo_v._City_of_New_London
- deleted 13y ago
  [deleted]
geoffschmidt 13y ago
(1) CA is much better positioned to straighten out the land use issues. It needs to use the existing I-5 right of way, it needs to tunnel through some mountains, and it probably needs to eminent domain some additional bits of land for pylon bases where I-5 curves too sharply. No matter what, this is a project that has to pass the legislature in order to get built. (2) A CA-sponsored bond issue must be by far the lowest cost way to finance a $7B infrastructure project that's amortized over 30 years.
- LekkoscPiwa 13y ago
  Can't (1) and (2) be solved by additional $1b to cover "cost" the Government might have? Just make it easier for them to move it through legislature, mountains, and such ;-)
  - mpyne 13y ago
    You can already get the same effect by having a private investor agree to "pay back" the Government if there are really private investors who want to do that. It's called a "public-private partnership" and it's not completely impossible but it does require some person or persons to cough up the cash.
    - CodeCube 13y ago
      Here's an example of a public-private partnership between Rhode Island and Curt Schilling's 38 Studios - http://www.engadget.com/2012/09/07/38-studios-collapse-and-risk-of-public-private-partnerships/ http://www.engadget.com/2012/09/07/38-studios-collapse-and-r...
thrownaway2424 13y ago
For the same reason that Musk needed a huge, free government loan to get Tesla off the ground: without the government, he'd be less rich.
- LekkoscPiwa 13y ago
  Or maybe - just maybe - without the Government he would have to spend more time and effort to persuade private investors and companies to help him. I think by choosing the Government he choose the path of the least resistance. I don't blame him, just saying, that for the rich getting the money from the Government might be much easier than getting it from the markets. Which would be just another example of why the Government should stay away from the economy.
- pbreit 13y ago
  The government loan was hardly free. Not only did it incur interest, there was an equity component that nearly kicked in had Tesla not had sufficient funds to pay off the loan early.
  - thrownaway2424 13y ago
    Right. If Tesla failed, the people own a worthless company. If it succeeds, Musk retains his stake in a valuable company. Compare what would have happened if Tesla needed to raise $500m from private investment at the start. Musk would have been diluted up front.
    - LockeWatts 13y ago
      You're still missing the part where it incurred interest, so it wasn't free in the least.
      - thrownaway2424 13y ago
        Musk put $40m into Tesla and his stake is worth billions. The people put $465m into Tesla and their stake is worth nothing, after making a paltry $12m in interest. In addition, while Tesla was paying the government 3% on that loan, they were paying Musk 10% on his loans, in effect shoveling government money directly into Musk's account. This is a classic example of socializing the risk while privatizing the profits. Yes, Musk is a smart guy with plenty of great ideas and good execution. But he's also plenty good at funneling government money to himself.
ibudiallo 13y ago
Bill gates can reach for his wallet and fund this. He won't even notice it. Someone get me his phone number right this moment.
- tinco 13y ago
  Bill Gates has more important things to spend his money on than moving rich americans from somewhere in America to somewhere else in America.
  - ibudiallo 13y ago
    I live in los angeles and the proposed price is cheaper than taking a cab from the LAX to my place (4 miles). So no, this is not to help rich americans.
    - tinco 13y ago
      I think anyone who pays money to be transported from one place to another at high speed is too rich to be cared for by Bill Gates, from his perspective :)
    - mcintyre1994 13y ago
      In fairness, compared to the people he helps with his philanthropic work at the moment I'd hypothesise those this will affect are fairly "rich".
    - NoPiece 13y ago
      There is a private bus service the runs between LA and SF for $40, which is probably less than the cab fare to the airport, or what a high speed rail ticket will end up costing. http://www.lowfarebus.com/ http://www.lowfarebus.com/
      - deleted 13y ago
        [deleted]
  - mattermill 13y ago
mehwoot 13y ago
Well the issue, apart from getting the land to build, is probably that the public benefits a great deal more than a company can profit off. There are always going to be intangible benefits from huge infrastructure projects like this that a company can't monetize. Hence what is economically a good idea for the nation or state as a whole, is not necessarily a good idea for a private investor.
riggins 13y ago
the investors in the business world. few investors would touch this. It doesn't fit into any investment category that's approved. There are infrastructure funds but they're looking for sleepy assets. Stuff like toll roads and ports that have an established operating history and are supposed to be low risk. This is a whole different animal. It's almost infrastructure VC. I don't see how this fits in any part of the institutional world. That leaves wealthy individuals and I don't think there'd be a lot of interest there. They're looking at Berkshire and steady growth vs. an investment in speculative infrastructure. I could see $10M investments but I think it'd be hard to get people to put a big chuck of their net worth into it, which is what you need (i.e. you need a couple people putting in $1-2B). Furthermore, historically public transportation hasn't been very profitable. Realistically you probably need the state to build it.

simonw 13y ago

You need government backing to acquire the land.

LekkoscPiwa 13y ago
Ah, that's boring. Look, we're talking about progress here, no Government burocrat should be able to stop us. Just $1B extra in "fees" would get us all the Government backing in the world we want. Unless we're not really serious about the whole thing and not really confident about the end result. Or just have Jobs resurrected. This way we save $1B on the "fees" and he'll talk the Government officials into this for free. They'll think they get the best deal in the world once Steve is done talking to them and the Distortion Field is permanently present in the Government heads.
- saraid216 13y ago
  I'm pretty sure I've seen this plot in an animated series of something...

milesskorpen 13y ago

The proposal calls for the line to built alongside I-5, which requires government involvement.

btilly 13y ago
Not alongside. On top of. And all of it needs to be approved for safety in earthquakes. If you're traveling at 600 mph, you do not want to have that tunnel unexpectedly move even a foot sideways during an earthquake.
- wavesounds 13y ago
  Not to be nitpicky but if you haven't driven the I-5 theres substantial room between each direction of the freeway so I don't think it will actually be above traffic if that's your concern.
  - dredmorbius 13y ago
    At 700+ MPH you'll need more than 100' of freeway median to contain potential incident fallout.
    - Retric 13y ago
      Depends on how strong the tunnel is. Assuming your taking 3/4 atmospheric difference your starting at ~11 pounds per square inch add in a 3-5x safety factor and that tunnel would be one tough son of a bitch. Not to mention it's got to be really close to a strait track so your more dealing with scraping forces than a direct strike.
      - jacquesm 13y ago
        Does the minimum bending radius of the tube match the centerline of the highway? If not that might be a real problem.
        ash 13y ago
        Hyperloop proposal contains detailed map of the whole route. Sometimes it follows the highway, other times it deviates from it.
  - 13y ago

dragonwriter 13y ago

> but why to ask California State for subsidy? Why not to build it using private funds? Because you can't, in practice, acquire the rights of way necessary to build a substantial railroad/hyperloop/freeway or other major infrastructure project of that type without government (specifically, without use of eminent domain).

rinon 13y ago
But as I recall, the gov't can use eminent domain to give land to a private entity if they're in favor of the idea for the "public good." Or am I way off base here...?
- bmiranda 13y ago
  Rinon, you are correct. The Supreme Court (perhaps foolishly) decided that private to private transfer of land is permissible under eminent domain. http://en.wikipedia.org/wiki/Kelo_v._City_of_New_London http://en.wikipedia.org/wiki/Kelo_v._City_of_New_London
deleted 13y ago
[deleted]

geoffschmidt 13y ago

(1) CA is much better positioned to straighten out the land use issues. It needs to use the existing I-5 right of way, it needs to tunnel through some mountains, and it probably needs to eminent domain some additional bits of land for pylon bases where I-5 curves too sharply. No matter what, this is a project that has to pass the legislature in order to get built. (2) A CA-sponsored bond issue must be by far the lowest cost way to finance a $7B infrastructure project that's amortized over 30 years.

LekkoscPiwa 13y ago
Can't (1) and (2) be solved by additional $1b to cover "cost" the Government might have? Just make it easier for them to move it through legislature, mountains, and such ;-)
- mpyne 13y ago
  You can already get the same effect by having a private investor agree to "pay back" the Government if there are really private investors who want to do that. It's called a "public-private partnership" and it's not completely impossible but it does require some person or persons to cough up the cash.
  - CodeCube 13y ago
    Here's an example of a public-private partnership between Rhode Island and Curt Schilling's 38 Studios - http://www.engadget.com/2012/09/07/38-studios-collapse-and-risk-of-public-private-partnerships/ http://www.engadget.com/2012/09/07/38-studios-collapse-and-r...

thrownaway2424 13y ago

For the same reason that Musk needed a huge, free government loan to get Tesla off the ground: without the government, he'd be less rich.

LekkoscPiwa 13y ago
Or maybe - just maybe - without the Government he would have to spend more time and effort to persuade private investors and companies to help him. I think by choosing the Government he choose the path of the least resistance. I don't blame him, just saying, that for the rich getting the money from the Government might be much easier than getting it from the markets. Which would be just another example of why the Government should stay away from the economy.
pbreit 13y ago
The government loan was hardly free. Not only did it incur interest, there was an equity component that nearly kicked in had Tesla not had sufficient funds to pay off the loan early.
- thrownaway2424 13y ago
  Right. If Tesla failed, the people own a worthless company. If it succeeds, Musk retains his stake in a valuable company. Compare what would have happened if Tesla needed to raise $500m from private investment at the start. Musk would have been diluted up front.
  - LockeWatts 13y ago
    You're still missing the part where it incurred interest, so it wasn't free in the least.
    - thrownaway2424 13y ago
      Musk put $40m into Tesla and his stake is worth billions. The people put $465m into Tesla and their stake is worth nothing, after making a paltry $12m in interest. In addition, while Tesla was paying the government 3% on that loan, they were paying Musk 10% on his loans, in effect shoveling government money directly into Musk's account. This is a classic example of socializing the risk while privatizing the profits. Yes, Musk is a smart guy with plenty of great ideas and good execution. But he's also plenty good at funneling government money to himself.

ibudiallo 13y ago

Bill gates can reach for his wallet and fund this. He won't even notice it. Someone get me his phone number right this moment.

tinco 13y ago
Bill Gates has more important things to spend his money on than moving rich americans from somewhere in America to somewhere else in America.
- ibudiallo 13y ago
  I live in los angeles and the proposed price is cheaper than taking a cab from the LAX to my place (4 miles). So no, this is not to help rich americans.
  - tinco 13y ago
    I think anyone who pays money to be transported from one place to another at high speed is too rich to be cared for by Bill Gates, from his perspective :)
  - mcintyre1994 13y ago
    In fairness, compared to the people he helps with his philanthropic work at the moment I'd hypothesise those this will affect are fairly "rich".
  - NoPiece 13y ago
    There is a private bus service the runs between LA and SF for $40, which is probably less than the cab fare to the airport, or what a high speed rail ticket will end up costing. http://www.lowfarebus.com/ http://www.lowfarebus.com/
    - deleted 13y ago
      [deleted]
- mattermill 13y ago

mehwoot 13y ago

Well the issue, apart from getting the land to build, is probably that the public benefits a great deal more than a company can profit off. There are always going to be intangible benefits from huge infrastructure projects like this that a company can't monetize. Hence what is economically a good idea for the nation or state as a whole, is not necessarily a good idea for a private investor.

riggins 13y ago

the investors in the business world. few investors would touch this. It doesn't fit into any investment category that's approved. There are infrastructure funds but they're looking for sleepy assets. Stuff like toll roads and ports that have an established operating history and are supposed to be low risk. This is a whole different animal. It's almost infrastructure VC. I don't see how this fits in any part of the institutional world. That leaves wealthy individuals and I don't think there'd be a lot of interest there. They're looking at Berkshire and steady growth vs. an investment in speculative infrastructure. I could see $10M investments but I think it'd be hard to get people to put a big chuck of their net worth into it, which is what you need (i.e. you need a couple people putting in $1-2B). Furthermore, historically public transportation hasn't been very profitable. Realistically you probably need the state to build it.