Rooting for Elon


Andrew Elrod in the Boston Review:

For the past fifty years, after all, among the easiest and most widely accepted formulas for people to work together to change their futures has been through patterns of personal consumption. We invest our savings, purchase private equipment, place our bets in the enthralling spectator sport that is the clash of powerful personalities and organizations—and then we wait.

It is this sleek, efficient temple of opportunity and security that Musk has cultivated and we have bought in to that justifies the massive government spending behind his projects. Indeed, the most potent collective action behind Musk’s success has come from the state. In today’s political climate, projects such as his, which promise a return on investment and private-management practices, are the only ones deemed worthy of public investment. The states of California, Nevada, New York, and Oregon, have all joined the federal government in offering direct grants and loans to Musk’s companies, and hundreds of millions of dollars in consumer rebates are ultimately paid into Tesla through consumers (the federal government, for example, pays a $7,500 tax credit to purchasers of electric cars; California pays a further $2,500). As early as 2015, the Los Angeles Times attempted to sum the total public aid to Musk’s operations and arrived at $4.9 billion.

Yet Musk’s profitability—his success by the conventional standard—still hasn’t materialized. Tesla was run at a $671 million loss in the third quarter of 2017—$117 million paid in interest on the company’s debts alone. In fiscal year 2017, losses summed to $2.2 billion, about three times what the company lost in 2016.

Moreover, Tesla has repeatedly missed every deadline promised to its customers and is currently under investigation by the National Labor Relations Board for denying employees the right to collective bargaining. The company faces numerous shareholder lawsuits alleging managerial violations of fiduciary duty, with a raft of class-action suits following a recent investigation by the Securities and Exchange Commission.

Musk’s career thus illustrates the central challenge of U.S. industrial planning. Because of taboos against government ownership and income-tax financed public services, the public must find ways of persuading businessmen to manage private property to meet public objectives.

More here.