Friday, February 28, 2014

Musk, The Rent Seeker, Posing as Visionary -

Musk, The Rent Seeker, Posing as Visionary -

"It was about the fact that all of his companies were heavily dependent
on government subsidies and support.  This support socialized the
potential losses, and allowed Musk (and other major investors, notably
Goldman) to capture the upside.  My point was if his products and
business models were so great, he could succeed on his own, by
attracting private capital."

"...SpaceX, his  space launch venture.  Inevitably, this company is
dependent on government contracts, given that a very large fraction of
space launches carry government payloads.  This is something different
from Solar City and Tesla, where the government is providing subsidies
but not receiving any product or service in return.  But still, it means
that Musk depends crucially on cultivating government support.
 Government contracting-especially big ticket contracting-is hardly a
pristine activity.  A firm does not succeed or fail at it primarily on
the basis of the superiority of its product, but instead on the basis of
its ability to influence politicians and bureaucrats.  And a lack of
scruple is often a feature not a bug in that regard.
was  looking for a commercial launch site, and  seeking state subsidies
in order to build it.  The company has been playing states off against
one another, looking for tax benefits

"Cynically, Musk focused on one of the poorest parts of the
state-Brownsville-and dangled the prospect of a mere 600 jobs, in
exchange for  $20 million dollars or so in tax benefits.  Some of which
will come from the taxpayers of that very poor community.  And sadly,
the state legislature has succumbed."


The poorest people in Brownsville will not benefit the slightest from
the SpaceX venture.  But he and his lobbyist successfully importuned
the state and county to take taxpayer money and give it to SpaceX by
invoking their poverty.  It was utterly cynical for a billionaire to
extract tens of millions from Texas taxpayers in the name of the poor
Mexican Americans of Brownsville.

I know this is the way the game is played.  And that’s the problem:
the game is cynical and wrong.  It is mere rent seeking.  Musk is
particularly appalling because he is a rent seeker posing as a
technological visionary.  His businesses all depend on extracting rents
from the government, which he pockets.

But he has a cult of personality that portrays him as some towering visionary genius."