Before you read on, decide for yourself what the two headlines mean. Knowing that Solyndra lost the government a lot of money, I took them to mean that the government lost even more money dealing with Tesla, at least a billion dollars. I assumed then it was an expose that showed Tesla paid back government loans via some surreptitious transfer of government funds.
The article itself is badly written and stupid, but it doesn't say what the headlines claim (and I assume Woolley didn't write the headers). The article admits that contrary to Solyndra, the US government made money from Tesla, but it could have made more money if it had structured the deal as an investment instead of a loan. It skates over what else might have changed, but mainly it fails to address the government was trying to promote technological change, not act as a VC company. I only assume Woolley has busted an artery for every government grant that ended up making money for recipients (maybe he should look into the lost patent opportunities in the fracking research grants). He should have many busted arteries.
I also welcome links where Woolley and Slate wrote in 2009 as opposed to long after the fact that the deal should have been structured to allow conversion of the loan to options.
The deal was a success, and slate-pitching a contrarian viewpoint shouldn't cross over into deception like they did here.
Who was it that said :
ReplyDelete"We must demand that the liberal left keep their hands off of our wallets. Not one dime of the carbon fee should be used to make the government bigger. One hundred percent of the money must go to the public.
Nor should any of this money be used for subsidizing research on specific government-selected industries.
The government is not competent to choose the best technologies—let them all compete. There are existing government resources and departments for research, development and demonstration, which can assist early development of candidate technologies"
http://vvattsupwiththat.blogspot.com/2013/05/the-truth-that-sets-men-free-is-seldom.html
Sub-editors, eh?
ReplyDeleteThough it's really not that far from the message of the article.
Let's all imagine the headline had the 'Venture Capital' investment turned out like, well, Solyndra.
In glorious retrospect how inadequate the govt.'s psychic powers were! The role of the government is now to back winners and to know the outcome in advance!?
You can imagine the Foxwits cheerfully regurgitating the headline as a cherished slogan, and whoever wrote it must have deliberately courted this. (Except now that Musk's company's raking it in hand-over-fist and making rich investors richer they're virtuous, aren't they, so surely it's all a bit difficult to know how to spin it for Fox?!)
Most people accept that foregone profit is hardly a cost; certainly not in the sense that Solyndra was!
I dunno. The headline got my attention; otherwise I probably wouldn't have read it. The point of the article is simply raise a question: if corporations are going to get away with paying so few taxes, perhaps they should share their profits with those (we the people) that invested in them. Just like I am supposed to give all the data I produce -- funded scientific work by gummit grants -- to Steve McIntyre! I'm not a fan of turning the gummint into a VC but there are at least some questions to ask here about the right balance of give and take between gummit (we the people) and corporations.
ReplyDeleteI agree that there is an interesting question here, but I think by pitching it as "losing money we could have made" and "Tesla vs. Solyndra" didn't really emphasize what to me would be the key points:
ReplyDeleteA) Given a fixed pot of money with which to invest in exciting research, would the government be able to make more investments if it got money back from the successful ones?
B) Are there any moral or economic issues involved in the government acting like a venture capitalist?
-MMM
The framing of the article really is stupid, given that the government has never operated as a venture-capital investor, and neither party would dream of claiming a share of profits that could be simply left on the table for individual capitalists to appropriate. If there is a decent point to be made here, it might be that government support for new technology development should be treated as a venture-capital investment. And maybe, if the government claimed a share in every internet company for its contribution to the internet's development of the internet people would stop claiming that government 'doesn't ever make jobs' and represents a drag on the economy that should be cut to the minimum required to protect whatever rich entrepreneurs have managed to acquire. (Well, no, I don't think the usual suspects would ever stop saying those things.)
ReplyDeleteDear Prof Wabbet,
ReplyDeleteIf SLATE fired all the people who wrote sensational, misleading, and dumb headlines they would be out of headline writers very quickly.
B) Are there any moral or economic issues involved in the government acting like a venture capitalist?
ReplyDeleteNo moral issues that I see, but the practical one that government isn't likely to be very good at being a venture capitalist, seeing that turning a profit and understanding how to do that, is not their core competence.
Now if the construction would be that government rides coat-tails on the judgement of venture capitalists by demanding a share of any profit that may arise, well they're already doing it. It's called taxation :-)
If you want to see a government doing 'venture capitalism' you should watch Rick Perry in Texas. Funny how all the best ventures come from his campaign contributors, and funny how it dries up research money to universities...
ReplyDelete"No moral issues that I see, but the practical one that government isn't likely to be very good at being a venture capitalist, seeing that turning a profit and understanding how to do that, is not their core competence."
ReplyDeleteany number of amazing successes will be completely ignored, but a single failure will never be forgotten. so no, they're not cut out to be VCs ;-)