Every generation has its inventor-heroes. They inspire us and better our lives by giving us exciting new tools for helping to cope with various aspects of the human condition. The inventor du jour who has seemingly stepped into the chasm left vacant by Steve Jobs is a 43-year old South African-born Canadian-American named Elon Musk.
While he is perhaps best known as one of the founders of the hip electric car company, Tesla Motors, Musk has also had his hand in a few other honorable mentions: SpaceX, PayPal, SolarCity, and the concept of a Hyperloop—a high-speed transportation system that would make modern subways look like steam locomotives—to name a few.
To say Mr. Musk is an accomplished inventor would be an understatement, but what’s unique about him is his ability to bridge so many ideological gaps with his entrepreneurialism.
To wit: those upset with the federal government’s recent parsimony regarding NASA’s space program (just about everyone, Left and Right) are equally thrilled about the brash young inventor who is making a private sector push for deep space exploration.
One side of the political aisle considers solar power, electric cars, and other so-called “green energy” initiatives to be a waste of government resources on technology that has yet to reach economic feasibility. While another side views them as nothing short of humankind’s savior. The divide is stark, unless of course Elon Musk is spearheading those efforts via SolarCity and Tesla, respectively, in which case green goes bipartisan.
And California’s bullet train concept has become a favorite political football of the Right and Left who either condemn it for blowing gaping holes in government budgets or praise it for its “greenness” and efficiency. Elon Musk’s Hyperloop concept for mass transit, however, is a stroke of genius by America’s favorite inventor according to, well, everyone.
Fighting for the common man or empowering The Man?
I confess that I too have a soft spot in my heart for Mr. Musk. His companies make cool cars, launch rockets, and provide some much-needed creative destruction in numerous industries. What kinda guy wouldn’t like that?
Oh, he’s also worth an estimated $7.5 billion, which isn’t terrible.
But all the the while Musk is being hailed as a champion of the do-good little guy out to compete with monopolistic corporate polluters and visionless politicians, some of the precedents being set by him and his companies seem in reality to champion just the opposite—the empowered elite.
Charity for the rich and famous
Consider this: The minimum price of a new Tesla Model S stands at $71,070. Not exactly a car of the people. However, thanks to federal subsidies lobbied for in part by Tesla Motors, the super-rich can get a $7,500 rebate on their electric vehicle purchase. In California, thanks to added state subsidies, the wealthy few can shave a cool $10,000 off the price tag of their new Tesla. For reference, a brand new Mercedes E-Class Sedan will start at around $51,800. Still cheaper than a new Tesla even after considering the subsidies.
But hey, those subsidies go toward the purchase of all electric vehicles, not just Tesla’s. So that’s fair, right?
Not exactly. You see, Tesla isn’t just revolutionizing the type of cars we drive, it is revolutionizing the way we buy our cars too. Tesla, through a series of aggressive lobbying efforts, has secured legislative carveouts in a growing number of states to allow their model of direct-selling from manufacturer to consumer.
Freedom for me, but not for thee
That’s good news, right? This is the twenty-first century after all and we buy things online, direct from the manufacturer if it makes for a cheaper product (outlet stores, anyone?). True, that probably would be good, except that when Tesla secures its carveouts, it typically does so in a way that makes Tesla the only company who can truly benefit. You know, legislation that reads something like “Car manufacturers whose name starts with a ’T’ and ends with an ‘A’ while rhyming with ‘Shmesla’ may sell direct to consumers, everyone else can go pound sand.” Those types of carveouts.
Tesla’s ongoing battles with various state auto dealership associations (read: cartels) angry at being cut out of the transactional loop have been well publicized. And Tesla’s efforts to roll back the good ol’ boy network of dealerships that refuse to allow any competition in their protected industry is actually a noble pursuit. But not when Tesla turns around and installs the identical types of legislative protections to which it purports to be opposed.
When it comes to Musk’s solar energy endeavors, SolarCity follows a similar pattern of seeking out protections and subsidies. Here again, the argument could be made that the net environmental or technological gain from said subsidies outweighs its obvious drawbacks. But at the end of the day, shouldn’t a billionaire like Elon Musk be allowed to go through the same entrepreneurial growing pains that 99% of the rest of America does—without a constant morphine drip of taxpayer-provided venture capital? I’m all for charity, but I can give you 7.5 billion reasons why Elon Musk doesn’t need any.
Every entrepreneur should seek out every legal advantage at his disposal, even stupidly-allocated corporate subsidies for the rich. But Musk crosses a line when he goes from taking advantage of established subsidies to actively pleading with the public to agitate for more handouts for his companies. In economic terms, we’d call that active rent-seeking behavior.
I hope SpaceX puts humans on Mars, I dream of one day seeing gas stations converted into cafes and eateries, and I can’t wait to never pay another electricity bill again. But I’m pretty sure the brilliance of Elon Musk and others like him is sufficient to accomplish those things through on their own merit.
Instead of one inventor leading virtually unchallenged in so many different areas, let’s blow the doors right off every industry and have ten inventors competing for our dollars in solar, e-commerce, cars-of-the-future, and yes, outer space.
At the end of the day, I’ve got a feeling the Elon Musk who has to compete on a level-playing field will inspire us even more than the one we already know so well.
Sam knutsson says
Please change colors.
Blue background with black text, at least of these tones, makes focusing attention on text harder.
Change to a brighter tint of blue behind the text? Same as the tint used in this comment field is good.
Good work on the results of your geek 2 freak experiment!
Thanks for that feedback. Always helpful to hear comments like this from readers, especially on something like colors which can vary so much from screen to screen. I will certainly consider changing the color and or shade.
Would you mind citing the sources for this part of the article? :
“Tesla secures its carveouts, it typically does so in a way that makes Tesla the only company who can truly benefit. You know, legislation that reads something like “Car manufacturers whose name starts with a ’T’ and ends with an ‘A’ while rhyming with ‘Shmesla’ may sell direct to consumers, everyone else can go pound sand.”
Hi again, Jack.
Sure. The language of the bill signed in New Jersey to describe who is able to sell vehicles direct from manufacturer reads as follows: a motor vehicle franchisor licensed pursuant to R.S.39:10-19 on or prior to January 1, 2014 and exclusively manufacturing zero emission vehicles.
That very specific definition, as you can probably guess, only applies to Tesla.
Here are some points in which, partially or not, I disagree with you:
(Sorry for the rant I just wrote :))
[“Charity for the rich and famous
Consider this: The minimum price of a new Tesla Model S stands at $71,070. Not exactly a car of the people. However, thanks to federal subsidies lobbied for in part by Tesla Motors, the super-rich can get a $7,500 rebate on their electric vehicle purchase. “]
Their end-plan is to produce a mass-market affordable electric car. They’re not trying to produce luxury sedans. The goal is to accelerate the advent of the electric car.
The problem is this (quoting Elon here: http://www.teslamotors.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me) “Almost any new technology initially has high unit cost before it can be optimized and this is no less true for electric cars. The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model.”
Now, one with a healthy dose of skepticism could put into question the veracity of this statement declaring the strategy of Tesla.
But here are some evidences indicating that this is probably true:
* They’ve open-sourced their patents. (Pretty stupid thing to do if they wanted to sell Model-S-like cars for the next decade)
* They are currently not profitable. (This is probably because they are sticking to plan and investing in the new low-cost mass-market Model 3…or III, however it’s stylized 🙂 ) (He has said this publicly)
[“But at the end of the day, shouldn’t a billionaire like Elon Musk be allowed to go through the same entrepreneurial growing pains that 99% of the rest of America does—without a constant morphine drip of taxpayer-provided venture capital? I’m all for charity, but I can give you 7.5 billion reasons why Elon Musk doesn’t need any.”]
I believe he definitely has gone trough quite a bit of “glass-chewing” entrepreneurial growing pain. 🙂
But that aside, one point here would be that a lot of his reported wealth is probably in the form of stock in his companies. Which is good. If he’s going to lead these companies, it’s probably better that he holds some equity. Thought one could put this particular point into question. Understandable, it’s not the main point anyway.
And about the rest of his wealth, quite honestly I think it’s good that he has it. 🙂 It’s people like him who push forward human development, who, though admittedly in a broad sense, end up helping humanity – and they need the money to make this happen.
If the government, in hopes of “incentivizing” good things to happen, decides to take some risk (invest) in his stead, great! Or so I think. It’s very likely that he, at some point in the future, will invest more of his capital in his companies (current or future companies that will be *good* for the economy, the state, the country or the world, as cheesy as it may sound).
If I’m not mistaken, he has put all or most of his wealth into his companies more than once in the past. It’s not like he’s planing on retiring to some private paradisaical island in a few years. Or so he claims, and based on his actions, I very much doubt he’s lying. That money will likely be put to good use.
Of course, this is *not* about investing in a guy because he may, in the future, will do good things with it. No. It’s about using taxpayers’ money for things deemed good by society. Like solar, electric car… and new technologies to come or become more known (for which there is obviously no already-written governmental plan of investment, hence, propositions should be made). It’s partially about helping to grow new positive-for-humanity industries.
By the way, it could be argued the the government has already seen some (small, yes) return in their investment. I’m referring to their open-sourcing their “patents”, and to the fact that Tesla has made some of the big guys in the car industry think and invest in the electric car (although… slowly, as it seems). Bob Lutz said: “all the geniuses here at General Motors kept saying lithium-ion technology is 10 years away, and Toyota agreed with us – and boom, along comes Tesla. So I said, ‘How come some tiny little California startup, run by guys who know nothing about the car business, can do this, and we can’t?’ That was the crowbar that helped break up the log jam.”
[“But I’m pretty sure the brilliance of Elon Musk and others like him is sufficient to accomplish those things through on their own merit.”]
I think the brilliance of entrepreneurs like Elon Musk need all the help they can get. Surely, as long as the goals they pursue are noble, push the boundaries of progress and/or benefit humanity. Provided, “all the help”, in a balanced way. We obviously should not pour all our resources into the advent of the electric car, or going to mars.
But I don’t see anything wrong with taxpayers helping a little bit. We would be speeding up the process, no doubt. And I think that’s positive.
[“Instead of one inventor leading virtually unchallenged in so many different areas, let’s blow the doors right off every industry and have ten inventors competing for our dollars in solar, e-commerce, cars-of-the-future, and yes, outer space.”]
I agree, in the sense that I would too like to have more “inventors” in the areas of solar, electric cars, space… the works.
Although, “virtually unchallenged” is in my opinion a bit of a stretch. Specially in outer space, where you have ULA. And well, other government entities.
The only industry where “virtually unchallenged” makes more sense is in the electric cars industry. Hopefully, as time passes, there will be more a more competition in these markets.
Thanks for reading, and again, sorry for the rant.
Thanks for the comment. I rant plenty myself, so I respect a good, well-thought rant.
You make some fair points. And to be clear, I think Elon Musk is a net plus for the world, the economy, etc. He’s clearly a very smart man and I believe he is sincere in wanting to make the world a better place, etc.
I take issue with one point you made about government supporting “things deemed good by society”. That makes me nervous, I would argue that society as a whole is wrong on many things–sometimes dangerously so. “Society” might think that solar panels and lithium-powered batteries are good for the environment and the economy, but I’m not sure that’s been proven. The mining of zinc and lithium (mostly in China) is one of the most polluting industrial processes on earth, just to cite one example.
Lastly, I would say that when the government decides to subsidize one company, they are also potentially killing other companies. Potentially companies with better ideas and more efficient inventions. Audi recently unveiled a synthetic, plant-based fuel that they claim is virtually emission-free. Are electric cars the solution to pollution? I don’t know. But I would rather allow unbiased individuals to make that decision rather than government bureaucrats influenced by unknown machinations.
Thanks for reading!