Should Taxpayers Back Cars Only the Rich Can Afford? 752
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."
Not Really (Score:5, Interesting)
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
Woa woa, let's step back (Score:5, Interesting)
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:Not Really (Score:5, Interesting)
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 (Score:2, Interesting)
Then by all means, invest your money if you think it's worth doing. Using tax money for this is immoral, not to mention unconstitutional.
-jcr
I'm not sure if "unconstitutional" was a typo or not, but I suspect it would be pretty difficult to find anything in the constitution that would go against using money from a bill that passed Congress to do what the bill specified.
As to immoral, is the assumption that using taxpayer money for anything other than core government services (defense, courts, etc) is immoral? From a "get back to basics" standpoint the argument against using ANY taxpayer money for anything other than these core things would make sense, but otherwise I think it's fair to say that the role of government has evolved to include acting as an incubator for future economic success. NASA is not a core service, but it is kept alive because of the technology it generates (amongst other reasons). College loans are not a core government service, but the US benefits greatly from having an educated workforce. Similarly, providing incentives to automakers to develop new technologies drives the industry in a direction that offers great potential benefit, and I'm personally excited that the government is actually including smaller companies that could potentially change old industries in some of the most recent programs. Tesla may not succeed, but if they do then this $400 million loan may some day be regarded as one of the best uses of taxpayer money that the government has ever committed to. Provided you can include investing in the economy among the roles that the US government has then this would seem to be a very "moral" use of taxpayer money.
Re:Mischaracterized (Score:2, Interesting)
Plus, the established auto makers research is primarily still into improving ICEs, which is inherently, horribly inefficient. We've had over a hundred years of research and development into improving the ICE and it's still AT BEST only 25% efficient. We don't need any more ICE development, thank you very much.
ICEs aren't horribly inefficient. Something like a 25% efficiency is the maximum possible allowed by thermodynamics. By that standard, the modern automobile engine is quite efficient, especially if driven correctly to maintain it in the optimum efficiency band.
If you used that same gallon of gasoline to power a generator to charge your electric car, you wouldn't get any more efficiency--the opposite, in fact, due to losses in the conversion and storage process for electricity. The main benefit of electric cars is diversity of sources (and being able to take advantage of more efficient generators, which still aren't going to magically beat the limit imposed by the Carnot cycle), not that they're so vastly more energy-efficient than gasoline cars (because holistically, they're not).
Comment removed (Score:5, Interesting)
Get rid of regulation! (Score:1, Interesting)
Why does it cost Tesla $200 million to bring ONE car to market?
Corrolary: why is the Tesla Roadster 10% heavier than originally designed?
Why does it cost GM billions to survive?
Corrolary: why do cars look increasingly alike?
Answer: government regulations dictating design of everything right down to the armrests, not to mention buttloads of useless safety gear (are cars *really* safer now than 10 years ago?). We've made the barrier to entry way too high that you simply can't have a small automotive startup.
If you really want to spur the industry to life you'd start repealing car design legislation.
The secondary advantage is you'd no longer be dependent on companies "too big to fail".
Re:Not Really (Score:5, Interesting)
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.
Comment removed (Score:1, Interesting)
Bailout and making changes to the system (Score:1, Interesting)
Tesla is the tip of the iceberg. The big traditional car companies should have made the transition to new technologies and electric cars long time ago. For some reason it did not happen. At the time of handing out taxpayers bailout, would be a perfect occasion to start a congressional hearing to find out why all this did not happen. This would be the perfect time to find out if there were any conspiracies, collusion with the oil industry, killing innovations which could have made difference.
This would be a good time to find out why the car industry did not make the changes which would have avoided to find themselves where they are now. Maybe it's also the time to name names and make changes to legislation that would avoid to get into the same situation and to create a system where people in charge of making critical mistakes for any reason can be charged.
Re:Mischaracterized (Score:3, Interesting)
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.
Comment removed (Score:4, Interesting)
Re:Mischaracterized (Score:3, Interesting)
Re:Mischaracterized (Score:3, Interesting)
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.
I can see this argument, but I doubt that's why government is bailing them out. I think it's a combination of wanting to look like they're doing something for constituents and brokering resources for special interests. Personally, I think it's better to just pull the plug. Sure it'll be a bit difficult for the three million people, but collectively they'll be doing more productive work.
Re:Not Really (Score:5, Interesting)
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:Taxpayers shouldn't be bailing out any of these (Score:5, Interesting)
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/ [gas2.org]
Fascism vs. Socialism: false dichotomy (Score:5, Interesting)
If you read about fascism from the horse's mouth [hitler.org], you'll see, that there is no difference. Here, I picked the most familiar-sounding items put forth 88 years ago:
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.
Comment removed (Score:3, Interesting)
Re:Taxpayers shouldn't be bailing out any of these (Score:1, Interesting)
The freemarket decided we should be the bitches of OPEC. I disagree with those results and as such, I am more than happy to fund research the freemarket won't.
The freemarket didn't fund the national freeway system. Thank God the government did, else our economic power would never have reached the heights it did.
Re:Not Really (Score:4, Interesting)
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 (Score:4, Interesting)
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.
Who is worthy of this grant if not Tesla ! (Score:1, Interesting)
Re:More than all of Detroit combined (Score:3, Interesting)
They aren't really zero emission. They are just moving the emissions down the line, which is good in that it gives you more flexibility in how you generate the electricity, but could be extremely bad if you pick the wrong method.
If its coming from hydroelectric, solar, wind or nuclear you might say they are zero emission, though nukes are emitting some fairly nasty radioactive waste out the back end and some pretty nasty waste at the front end to produce the fuel if its coming from enriched uranium.
If the electricity is coming from natural gas is is still most definitely emitting CO2 so its not really the answer to global warming if that's what you are trying to accomplish. Natural gas is a pretty clean fuel so maybe its a net win, but it is releasing a greenhouse gas and its still burning fossil fuel which is eventually going to run out. It would probably be better to use the natural gas we have to make fertilizer and plastics.
If the electricity is coming from coal fired power plants migrating to electric cars is a environmental screwup of epic proportions. So unless you are also ruthlessly preventing building new coal fired power plants and replacing the ones we have with something cleaner, electric cars aren't solving the problem.
The other down side to electric cars is that, unless you are charging them from solar or wind in your back yard, they will require a major expansion in the grid if everyone starts driving them, and that means a lot more really ugly high voltage power line strung across the country.
Urbanites probably don't care because most of the power plants and power lines get inflicted on the people outside the cities.
Re:RAISE THE GAS TAX! (Score:3, Interesting)
Just because something is regressive taxation *does not* mean that it's a bad idea. Especially in the case of taxes designed to change economic incentives, the regressiveness of the tax is solidly a secondary concern - and one that can be easily solved by cutting income tax further for the lower brackets.
Re:Not Really (Score:4, Interesting)
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:It's more of an investment (Score:3, Interesting)
Will this R&D make these cars affordable to people in China or India? No. Will R&D make zero emission power plants affordable to China and India? No. Will the cars if, made better and mass produced, have any impact on global emissions? No.
So what exactly is the point of giving money to a company that markets and sells guiltlessness to rich people in rich countries?
Re:no (Score:4, Interesting)
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.
Then, to avoid unemployment and crime (Score:3, Interesting)
How about this:
Take the money they are requesting and instead use it to fund the foundation of a brand-new, American-based, car manufacturing company. This new company will not only be able to hire all (or at least most of) the workers that the current ones lay off, but it will also re-introduce some competition in the industry (which, incidentally, is the lifeblood of capitalism).
That should both ease the economic crisis and help reduce the negative economic impact of the current auto cartel, while not rewarding the current industry controllers for their demonstrated financial incompetence (thus keeping the taxpayers less pissed off).
Sounds like a win all around, eh?
Re:Fascism vs. Socialism: false dichotomy (Score:2, Interesting)
Let's have a few examples then and we'll see if my 38 years' experience is trumped by how ever long you've been alive.
Re:Not Really (Score:5, Interesting)
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)
Re:Taxpayers shouldn't be bailing out any of these (Score:2, Interesting)
Toyota pays an average of $30 at it's largest plant, compared with $27 at GM.
reference [aftermarketnews.com]
Re:Fascism vs. Socialism: false dichotomy (Score:2, Interesting)
I see nothing in there about liberal ideals: human rights, equality before the law,
Historically, the left has been opposed to such policies. The Democrats promoted slavery. After it was abolished the southern Democrats viciously opposed equal voting rights and anti-lynching legislation. The left's modern day pro-abortion stance stems from their historical promotion of Eugenics, a so called "humane genocide" where abortion is encouraged among members of "inferior" races and lower classes, which in all practical senses, is essentially the function abortion performs today, since its primary victims are lower class and minorities. The left's historical support for discrimination still is not dead, as reverse racism policies, euphemistically referred to as "affirmative action" policies are still promoted by the left, despite the devastation they have caused. The most "favored" group by affirmative action is Native Americans, though funding to help them keeps increasing, they continue to grow poorer. The same can be said of blacks. While reverse racism may have a positive intent in mind, the effect has been disastrous.
right to conscientious objection,
The right has done you one better. Unlike many unnecessary wars started by democrats (WWI, Korea, and Vietnam, come to mind) the GOP's War's in Iraq and Afghanistan have not required a draft, so only those wanting to serve are serving.
freedom of religion, freedom of thought, environmentalism, peace. Read some Marx.
Funny you should end that with "Read some Marx". On the subject of religion, Marx called it the "oppiate of the masses" and promoted a ban on religion. As for freedom of thought, he promoted what eventually evolved into the "party line", which was essentially political correctness on steroids. It was that people who were not high ranking members of the communist party would not be allowed to question the party's views. It would be inappropriate and unacceptable to do so. As for environmentalism, well, I don't know that Marx said anything about this, but communist states tend to have a pretty poor record here. Chernobyl is probably the most famous example of a communist created environmental catastrophe (and the fact that the USSR controlled Ukrainian government hid what had happened at first and then refused to clean it up afterwards didn't exactly help), but there are plenty of other examples ranging from throwing used nuclear reactors in the ocean to pouring toxic chemicals in streams and lakes, it is no coincidence that many of the most polluted places in the world lie in current or former communist nations. Capitalist simply do a better job on the environment than communist. Peace is another strange thing for you to say when mentioning Marxism. Marx promoted the violent overthrow of capitalist governments and the Soviet Union wasn't exactly peaceful (nor is communist China, or North Korea, or many other communist).
Re:RAISE THE GAS TAX! (Score:3, Interesting)
If you're not making enough to pay any taxes, you're not making enough to own a car. Yes, the tax funds should go into mass transit.
Re:Fascism vs. Socialism: false dichotomy (Score:3, Interesting)
The people's car (Score:3, Interesting)
The Ford Model A was an unsophisticated vehicle except where it counted ---
in that tough, damn near indestructible, little four-cylinder engine.
If there are no trained mechanics outside the major cities, than you build a car that doesn't need a trained mechanic.
A car that can be built on an assembly line without skilled labor.
If the roads are mud, you build for mud.
You don't build for speed.
You need only the simplest of transmissions. You need only the simplest of mechanical brakes.
Ford understood that he could leverage the lack of infrastructure to support the automobile to his advantage.
The Ford Model A and Model T were basic transportation.
They were easily and cheaply "modded" into pick-up trucks, delivery fans, campers - anything you needed. The farm tractor. The stationary engine on wheels. It had everything but a PTO.
The railroads put them on tracks. Rural libraries used them as bookmobiles. The shopkeeper put his grocery or general store on wheels.
One traveling evangelist and his wife built a tiny church on a Ford body, and took to the road with a pump organ and a fold-down steeple.
That I would like to have seen, both for its innocence and its imagination.
Re:Fascism vs. Socialism: false dichotomy (Score:3, Interesting)
My solution: Any company "too big to fail" is too big. Any company that is bailed out gets broken up as part of the deal.
Re:Fascism vs. Socialism: false dichotomy (Score:4, Interesting)
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:Fascism vs. Socialism: false dichotomy (Score:3, Interesting)
But we are not talking about breaking up a monopoly here - we are talking about a company judged "too big to fail". If you break it up, then the various parts are no longer too big to fail - and so if mismanagement continues, those parts are allowed to die.
These are companies that have a substantial negative competitive advantage - in other words, their competitors are eating them alive. That's why they need a bailout - they cannot compete. Its not like Toyota needs a bailout...