By Mason Mohon | @mohonofficial
Elon Musk is a brilliant man. His work ethic, entrepreneurial spirit, and idealism make him a major role model in my life. He looks at things differently than anyone else and builds things other people fear to even imagine building.
But maybe there is a reason other people fear to imagine the things he creates. And it may be because nobody actually wants them. Years ago, LA Times released the notorious breakdown of the governmental assistance Musk and his empire have been receiving. When totaled up, Elon is receiving a hefty sum of nearly $5 Billion (probably over that by now) from the government. Which in turn, means out of the pockets of the taxpayer.
I do not hear the end of remarks of Musk’s cronyism when I bring him up in Libertarian circles. People jump on the opportunity to belittle and deride him for his acceptance of the state’s money. But I don’t think this is the attitude that one should take about Elon. Instead of one of anger, it should be one of regret and pity, because Elon has found himself in a bad situation, and he may even know it.
Free market capitalism shines through the greatest whenever the brilliant ideas of an entrepreneur meet the demands of the consumers. It is how the market is hard-wired to work. An entrepreneur has an idea, and this idea will only be profitable if and only if it is designed to satisfy the needs or wants of consumers.
A business will go bankrupt if it does not sell things that consumers desire. That is the beauty of the market. Some call it forced altruism, some praise how it ties selfishness to helping others. All I care is that every single party is made better off by its workings.
There is, though, one exception to this matter. That exception is the state. When the state apparatus gets involved in the matters of a company by means of handing out money in one form or another, this distorts the entire system. If a company receives money from the government, their burden to serve consumers is lifted. This is because now the company only has to fulfill some arbitrary obligation to the state to now receive its paycheck.
The state has many more means of funding a business than the American consumer. The state has the option of inflating the currency, deficit spending, or just taxing citizens to garner funds for any project. What all three of these methods have in common, though, is harm to the consumers.
So when a business gets government funds, it flips the entire game on its head. Rather than helping consumers, they only begin to harm consumers. Jenny Beth Martin stated on the same subject:
Crony capitalism relies on government picking winners and losers. It depends on government choosing to move resources to a favored enterprise, even as it refuses to move resources to disfavored enterprises.
By definition, that distorts the marketplace, and warps investment decisions better made by private stewards of finance unencumbered by political considerations, whose only fiduciary responsibility is to those whose funds they manage. By adding the political calculus to the decision-making matrix, it alters outcomes, and prevents the most economically efficient deployment of limited financial resources.
The problem is pretty clear.
One may object “but consumers do want electric cars, so it is all ok.” Maybe consumers do want electric cars. I would gladly take a Tesla. But the problem is that nobody wants an electric car at the price point that Musk is selling them at. Denmark removed subsidies from Tesla, and henceforth Tesla began to suffer in Denmark.
So why shouldn’t we hate Musk, and why should we pity him instead? Because the guy is one of a kind. Very few individuals have the drive and idealism that he has. There are geniuses, entrepreneurs, and intellectual superstars in the world, but very few compare to Elon Musk.
So he should have the play the same game as the rest of us. He has brilliant ideas, but they are being wasted away on things that consumers don’t exactly want. If the government subsidy safety net was pulled away from the Musk business empire, imagine the consumers that would be served and innovation that would occur. The man would be able to do unimaginable things for our society.
Maybe what he is doing right now could work for society. But the government gets in the way of that once again. The state really likes oil. It has since good ol’ Texas Oil Man Bush Senior took the White House, and then started to take the Middle East. The subsidies Musk receives are dwarfed by the subsidies that the oil and gas industries receive.
The answer is to put the electric car industry and the non-renewable resource based cars on equal footing. But that does not mean give them both billions of dollars; doing that would only distort the market more.
Rather, the total amount of money both industries should receive is a grand total of zero dollars.
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