Elon Musk Gets Free Funds From California Gov. Brown
|July 19, 2014||Posted by Staff under Editorials|
This 2014 excerpt of the Sacramento Bee, Jly 15, is by Dan Walters.
Economist Anne Osborn Krueger coined the term “rent-seeking” in 1974, the year in which Jerry Brown was first elected governor of California. There is a connection between those two events.
“Rent-seekers” came to mean those who use government spending to enhance their private investments, giving hundreds of millions of dollars in subsidies from the state treasury and consumers’ wallets to a favored few.
At Brown’s behest, the Legislature abolished two long-standing subsidy programs that had been largely controlled by local governments, redevelopment and “enterprise zones.”
The rationale was that they had become expensive boondoggles that rarely, if ever, resulted in the private, job-creating investment and urban renewal they were supposed to produce.
They were to be replaced, although it wasn’t apparent at the time, with state-controlled “incentives” for investment, including a sales tax break for manufacturing equipment and a special pot that Brown could use to lure and/or retain business.
Simultaneously, the state was embarking on a massive overhaul of its electric power system, aimed at replacing fossil fuel and nuclear generation with “renewable” power and providing billions of dollars in subsidies, either from taxpayers or utility ratepayers.
And it also was pushing alternatives to gasoline-powered cars, such as electric vehicles, again with subsidies. Elon Musk is building Tesla electric cars. They get direct injections of money and zero-emission credits that Tesla sells to other firms.
Musk’s Solar City has become the state’s leading installer of photovoltaic electric panels, his SpaceX firm aspires to be the nation’s leading conveyor of satellites, and he’s planning an immense battery factory.
This year alone, Brown signed one budget “trailer bill” that extends subsidies for solar panels, another that exempts some SpaceX property from taxes, and a third to subsidize construction of a new strategic bomber. It includes an obscure amendment to subsidize a battery factory. Legislators were never told about that provision.
Ed. Notes: If Musk needs state favors, how good are his ideas? If investors won’t make them happen, why should taxpayers? Sure, I’d love to live in an economy with industries that were lean and clean. But to get there, I’d rather make polluters pay than let insiders engorge. I’d make only polluters, extractors, site-occupiers, and privilege-holders pay and not tax anyone’s buildings, purchases, or valid earnings or over-charge for permits. To top it off, I’d disburse surplus revenue to citizens as a dividend. Receiving such support, independent inventors would be freed to contribute their, often break-thru, ideas. The liberated market — not political dealing — would provide the technological progress the environment needs.