Should Taxpayers Back Cars Only the Rich Can Afford?

theodp writes "The NY Times questions the $400M in low-interest federal loans requested by Tesla Motors as part of the $25B loan package for the auto industry passed by Congress last year. 'The program is intended to encourage automakers to improve fuel efficiency, but should it be used for a purpose like this, as the 2008 Bailout of Very, Very High-Net-Worth Individuals Who Invested in Tesla Motors Act?' Tesla says it is assembling about 15 cars a week and has delivered about 80 of its $109,000 base-price Roadsters to date, many of which have gone to the Valley's billionaires and centimillionaires who are Tesla investors as well as early customers. We discussed the company's financial difficulties last month."

Comments

Not Really

[MrCawfee]

Tesla's request was so they could design and build a much cheaper electric family sedan; i personally believe that it is a good investment even if the car costs 50k.

It seems unlikely that tesla will mass produce a car, but it does seem likely that they will be gobbled up by a larger company that will.

It would be money well spent

Re:Not Really

[TooMuchToDo]

Frankly, it is his money, and my money, and everyone else's money. Welcome to a democracy. Going to war on my dime to the tune of $1 trillion+? That's immoral. Lying why we went and having tens of thousands of people die because of it? That's immoral. Lending half a billion dollars to a company that's jumpstarting the electrification of transportation? Well that's just good sense right there. So take your libertarian viewpoint to a country that cares.

Re:Not Really

[jcr]

Going to war on my dime to the tune of $1 trillion+? That's immoral.

Yes, that's immoral too.

Lending half a billion dollars to a company that's jumpstarting the electrification of transportation? Well that's just good sense right there.

You were doing so well, and then you went off into the weeds.

If electric cars (or ethanol, or any other possible replacement for gasoline-powered vehicles) makes sense, it won't take tax money to get it into widespread use.

-jcr

Re:Not Really

[TooMuchToDo]

If electric cars (or ethanol, or any other possible replacement for gasoline-powered vehicles) makes sense, it won't take tax money to get it into widespread use.

Bullshit. The market is manipulated by interests to make investing in renewable energy and electric vehicles infeasible. Price of oil goes up, investment in renewables and electric vehicles shoots up. Price of oil drops, investment dries up. An unregulated market is rarely the answer, as shown by the deregulation in the financial sector.

You may disagree with me, but I'm fairly confident as an American that the new US policymakers in play are going to make the correct decision to push electric and plug-in hybrid electric vehicles.

Re:Not Really

[zolltron]

Contemporary libertarians remind me of children who never learned to share. Or more on point, people who never learned the difference between possession and ownership.

John Locke, who was one of the first to defend property rights, required that privatizing natural resources required that you leave "as much and as good" for others. He recognized that allowing individuals to monopolize particular types of property would be disastrous. Ironically, monopolies are exactly what would result if contemporary libertarians were to succeed at achieving the "free" markets they desire.

Regarding "your" property. While you happen to currently possess lots of it, it's not clear that it is necessarily yours. Given the history of property acquisition in the US, I'm guessing it probably isn't. Do you currently possess land? Likely that land was owned by native Americans before it was stolen by someone. That money you "own"? There is a good chance it was acquired by someone at sometime through some practice that would void their right to property (recall the 20s, slavery, theft from natives, war, etc.).

Personally I would be surprised if even 10% of the stuff you currently possess isn't tainted by some action in the past that would void one of the previous "owners" right to property. Which, according to Locke, voids your right to property as well since the object is currently the property of the person from whom it was stolen.

Re:Not Really

[copponex]

If you can't figure out for yourself that taking money by force is immoral, I really don't think I can help you.

-jcr

If you don't think you will have to compromise to live in any modern society, I don't think you can be helped, either.

In another thread you state, "Taxation is moral only to the extent that the revenues raised are used to secure our rights. As soon as government steps beyond the powers that we have granted to it, it is immoral." In more civilized societies, people believe that all of it's citizens have a right to health care, education, as well as equal protection under the law. If you live out on a country road that serves only your family, I am paying for it. Likewise if I live in a city being choked by pollution, you pay for studies on how to lower that pollution. This is why all modern nation states are doing so well - they operate on the very fact that free markets do not work, because the free market lives in a fantasy land that begins and ends with the phrase, "all else being equal." Libertarianism and communism have good ideas, but like all ideals, they are more or less useless in reality.

In this case, a private company is seeking public money to develop technology, and I actually agree with you that it is immoral, but only because any company that receives public subsidies should be transparent and owned by the people who subsidized it. If we want to publicly fund the development of an electric car, since no private corporation is willing or able, I don't see a problem with it.

The reason the US transportation system is so bad is because our mass transit systems, which were unfairly efficient in the eyes of auto companies, were destroyed. A single rule from CARB, decried as impossible by those same auto companies, produced electric vehicles ten years ago that were viable options then and still are today. Once the board was filled with business friendly and socially unconscionable interests, the rules were repealed, the cars were destroyed, and the battery technology from the EV1 was bought and buried by Exxon Mobil.

Re:Not Really

[Teancum]

The "unregulated market" in the financial industry was hardly unregulated. Just ask Martha Stewart who spent time in prison for her "unregulated" actions.

The problem that created the current mess came from regulators who didn't step in and use the authority that they had to stop some of the practices that caused huge problems, and a congress that pushed these regulators into give "easy credit" to new home buyers.... particular in congressional districts and constituent groups that favor certain... er... political viewpoints.

It is particularly telling that the congressmen who are demanding regulatory reform are the ones that largely caused the current mess in the first place through specific laws and other political pressure on the regulators to make the risky loans they are complaining about in the first place.

I think throwing tax dollars into the economy in this way is a waste of tax dollars down into a giant economic black hole that will gobble everything up with it, but if they are going to throw money around in this manner they should at least be consistent and not favor one company or group of individuals over somebody else. It isn't like Tesla is asking for the same size of a loan that GM wants.

Re:Not Really

[maxume]

Poor regulation, not no regulation. You used the poor regulation to argue that unregulated industries can't work. There were billions of dollars of government funds sloshing around the mortgage market, and apparently, companies were acting as if they were going to get a government bailout if they screwed up (the mortgage money is germane, as a great deal of the risk that the CDOs were supposed to be backing was in MBSs).

To a great extent, the unregulated hedge funds did a better job than the regulated investment banks (whether what they did was particularly good for society is a different discussion). Some of them made enormous sums of money playing the fools in the CDO market.

Re:Not Really

[Roblimo]

I live in Manatee County, Floriduh, one of the places Real Estate Madness hit hardest and that has, hence, been hit hardest by its end.

I do not recall seeing a whole lot of poor and/or minority taxpayers pulling mortgage frauds in order to buy little houses for themselves in not-great neighborhoods like East Bradenton.

I do, however, recall seeing lots and lots and lots of speculators and slumlords, the vast majority of them good white Republicans, bidding up the prices on little working-class houses to the point where none of the people who actually do the Real Work (trash collection, policing, teaching, retail sales, etc.) could possibly buy them. And oh weren't those white Republicans just so proud of the Free Market System and big on boasting about how much money they were making and on laughing at the suckers who actually worked at jobs like teaching or writing for newspapers or cleaning the streets or doing carpentry instead of being Investors, as if Investors were the highest possible form of life and should be bowed down to by all others.

'Course then a local mortgage company called Brasota went broke because it was essentially a ponzi scheme -- and shockingly, it was not run by poor and/or minority working liberals but primarily by (I know this is hard to believe) Rich White Republicans, hardly any of whom lived in the neighborhoods where they loaned mucho bucks to "investors" who didn't live in them, either.

And some local banks have failed, and a lot of local businesses, and now all the Rich White Republicans who ran their ponzi schemes and created their silly tulip-bulb bubble, except with houses, are running around blaming Democrats and liberals who thought that, just maybe, it might be a good idea to stop Rich White Republicans from discriminating against poor and/or minority workers when it came to making home loans.

The CRA (Community Reinvestment Act) that is being blamed by the Rich White Republicans for the collapse of their house of cards was all about ending discrimination in mortgages. Those Free Market Rich White Republicans had long had a bad habit of happily approving loans for white people in white neighborhoods while denying loans to black people in black neighborhoods even if the black people happened to have more stable jobs and wanted to borrow less than their white equivalents.

Listen, Rich White Republicans (and libertarians/Somalians and the rest of your crowd), if you want to see who created the current economic crisis, get a mirror and look in it. Don't keep trying to blame your problems on the blacks or the Jews or the liberals or whatever other group you're in the mood to victimize this week. It wasn't a "homosexual agenda" that created the obviously-insane (and unregulated) derivatives market, and it wasn't pro-choice agitators who ran the rating companies that assigned silly-high values to "bundled" mortgages.

Y'all ran our country for a good while, and basically you screwed it up big-time.

Quit whining. You had your chance. A lot of you got rich, and many of you will stay that way.

But don't try to pass your failures off on others. Man up, and face the fact that most of you got most of your money from some sort of scam, and that you have no right to complain now that you've been caught out.

And now, I need to get back to work. No government bailout for the likes of me, y'know.... GM, Ford, Citi, Chrysler and maybe Tesla -- and one can hope perhaps some other innovative car companies and a whole lot of "financial service" operations will get money. My tax money. Sucks, don't it? But otherwise, I suppose things might even be worse.

Can't win for losing, can we? (sigh)

     

Woa woa, let's step back

[Arthur B.]

Should taxpayers back car makers first of all. Propping up failing industries with cash is like trying to fight gravity by throwing things up in the air. Should productive people pay for the calamitous ruin produced by government backed union thugs? So politicians bought michigan votes and now it's time to pay, only the payers will be the people living in the US. Uh uh.

Should we pay for the cars of the wealthy... ooooooh the wealthy. Yeah right, this is about the wealthy. Wait, no. Actually this is about the fucking Marxists who believe in unions, who believe in a socialized banking system.

Taxpayer should not back anything, and that includes the most bankrupt and morally corrupt company of all, the US government. Who will bail out the US government? Ponder this.

Re:Mischaracterized

[maxume]

No one gives a damn about efficiency. Sure, given equal performance and convenience, most people will choose the more efficient option, but the performance and convenience damn well better be equal.

The point of bailing out the big 3 is to slow down the rate at which they dissolve, giving the 3 million people that are nearly directly dependent on them for employment more time to find other jobs, retrain or die. The thought is that the ongoing inefficiency is less costly than the other way round.

Re:RAISE THE GAS TAX!

[jcr]

We should raise the gas taxes.

NO.

As P. J. O'Rourke said, giving money to governments is like giving whiskey and car keys to adolescents. The proper role for taxation is to raise the funds necessary for the government's constitutional powers, not to manipulate the behavior of the public.

-jcr

Re:Taxpayers shouldn't be bailing out any of these

[Bught_42]

If I understand it correctly the $25 billion fund is for advanced technologies not a bailout. It would be hard to argue that Tesla isn't using some rather advanced technologies. And when a technology is new it's expensive, however with enough research and mass production prices drop and the technology becomes a viable alternative.

I find this interesting after there was a story on Digg yesterday about Tesla complaining that the car companies wanted this $25 billion to bail them out rather than use it for what it was intended for. I think it's pretty shifty since this fund was set up last year and in no way was meant to be a bailout.

Here's the link to that story:

http://gas2.org/2008/11/28/tesla-says-money-shouldnt-be-diverted-to-bailout-car-makers/

Fascism vs. Socialism: false dichotomy

[mi]

That's not socialism that's evidence of fascism

If you read about fascism from the horse's mouth, you'll see, that there is no difference. Here, I picked the most familiar-sounding items put forth 88 years ago:

THE COMMON INTEREST BEFORE SELF-INTEREST - THAT IS THE SPIRIT OF THE PROGRAM. BREAKING OF THE THRALDOM OF INTEREST - THAT IS THE KERNEL OF NATIONAL SOCIALISM.

....

• 7. We demand that the State shall make it its primary duty to provide a livelihood for its citizens.

  ....

• 10. It must be the first duty of every citizen to perform physical or mental work. The activities of the individual must not clash with the general interest, but must proceed within the framework of the community and be for the general good.

  We demand therefore:
  ...

• 11. The abolition of incomes unearned by work.

  The breaking of the slavery of interest

• 12. ... personal enrichment from war must be regarded as a crime against the nation. We demand therefore the ruthless confiscation of all war profits.
• 13. We demand the nationalization of all businesses which have been formed into corporations (trusts).
• 15. We demand the extensive development of insurance for old age.
  ...
• 16. We demand the creation and maintenance of a healthy middle class
  ...
• 18. We demand the ruthless prosecution of those whose activities are injurious to the common interest. Common criminals, usurers, profiteers, etc., must be punished with death, whatever their creed or race.
  ...
• 20. The State must consider a thorough reconstruction of our national system of education (with the aim of opening up to every able and hard-working German the possibility of higher education and of thus obtaining advancement). The curricula of all educational establishments must be brought into line with the requirements of practical life. The aim of the school must be to give the pupil, beginning with the first sign of intelligence, a grasp of the nation of the State (through the study of civic affairs). We demand the education of gifted children of poor parents, whatever their class or occupation, at the expense of the State.
• 21. The State must ensure that the nation's health standards are raised by protecting mothers and infants, by prohibiting child labor, by promoting physical strength through legislation providing for compulsory gymnastics and sports, and by the extensive support of clubs engaged in the physical training of youth.
• 22. We demand the abolition of the mercenary army and the foundation of a people's army.

Had it not been for Hitler's bizarre obsession with genocide — which, as Franco and Mussolini demonstrated, is not an inalienable part of Fascism — the Left would've considered Hitler as a perfectly respectable source of quotes and inspiration, along with Lenin, Mao, and Karl Marx.

Re:Fascism vs. Socialism: false dichotomy

[sumdumass]

The problem with Marxism is that it only work if everyone participating voluntarily submits to it.

In reality, emotions like envy and greed make that impracticable and unlikely over the long run. It also required people to do more then they think they need to which means you will need some central power controlling people.

The results of this means that outside of isolated hippy communes, eventually someone either gets corrupted by the power or they end up needing to enforce their power with violence. While it is a good idea in theory, no one has ever been able to implement it and no one will be because it just can't deal with human emotions. These emotions are present and you will see them everywhere. In about every work place there are people who think someone makes to much money for the work they do, there are people who think they do more work then others and there are people who think they aren't making enough for the amount of work they are doing. Of course there are more examples but those are the obvious ones. None of that will magically go away with Marxism which is why it will never work without a violent means of enforcement. When I'm saying violent, I'm talking about imprisonment, people with guns and so on.

Re:no

[shutdown -p now]

Ford didn't start out with expensive fancy cars that no one could afford, they changed the industry with a cheap car, built the base and then started making luxury models.

But Tesla isn't inherently a luxury model. It's only so expensive because the fundamental technology for this kind of car is so expensive, not because they wanted to make a car specifically for the rich market. In that sense, they're really doing what the very first car manufacturers were doing - first make something that generally works, no matter the price; then, develop the technologies to get the price down and expand the target market.