I get what you're saying but I really wish people would quit bandying about the "government has guns" line. I'm one of the zillions working in the USG and I can tell you that the left hand doesn't hardly even know what the left finger is doing most of the time, let alone the right hand (and this is often by design, to avoid exactly what you're talking about).
If you want to discuss hypotheticals of gov't gone astray then that's fine but then we could also discuss those hypothetical meteors that might hit your corporate HQ (hope you've been doing your disaster recovery planning).
Or we could quit acting like starting a business in the U.S. is really just like starting a business in a country run by a junta, or that investing in civilian-run businesses that further a societal and national goal is just like establishing a command economy.
The bobbies patrolling the streets in the U.K. are unarmed but people still seem to respect the rule of law over there, companies can still be seized, etc.
In fact there are probably even a few Western democracies without so much as a military that still could pass laws to nationalize a business.
"Guns" are the least of your problems with government from a day-to-day point of view.
(I don't necessarily mean "you" literally, but surely we've seen enough guns-r-bad silliness online to know that it exists.)
They have the power to send in the SWAT teams and not vice versa. Try fighting USG on anything of substance and police will quickly appear, and with them guns, and then your choice is to die, to be imprisoned, or to submit.
The Buckyballs owner just had to submit. CPSC put him out of business:
http://thechart.blogs.cnn.com/2012/11/02/magnetic-buckyballs...
This is one of the stories that made the papers. Most don't. FDA alone issued 10000+ 483s in 2011:
http://blog.fdazilla.com/2011/09/fda-will-issue-10000-483s-i...
mpyne, because you are within the federal government you don't see its bad side. Most of your work is just office work. Your agency is not about to be banned by another agency. The worst thing that can happen is that the budget is not substantially increased.
Things are a sight more dangerous for non-government businesses in the US today, at least those which are in politically unfavored categories (like Keystone XL) rather than politically favored ones (like the green energy companies).
While once in a while it so happens that political favor coincides with technological merit, as in the case of Tesla, most of the time innovation means pissing people off. Innovation and consensus are antonyms. Innovation is not democratic, committees don't make breakthroughs, and it'd be nice to not have to deal with a regulator waving a gun in one's face when your disruption disrupts their assumptions.
Or we could quit acting like starting a business in the
U.S. is really just like starting a business in a country
run by a junta
http://dealbook.nytimes.com/2009/05/04/chryslers-holdout-len...
In a long document filed Sunday evening, Chrysler asked a
judge to approve a sale of most of its assets and some of
its liabilities for $2 billion to an entity formed by Fiat,
the United Auto Workers’ retirement trust and the United
States and Canadian governments.
But in Monday’s objection, a group of debt holders advised
by the law firm White & Case criticized the proposal as too
rushed, arguing that it was unreasonable to rule on the
merits of the sale on “15 hours’ notice.”
Moreover, they said the sale was really a reorganization
plan in disguise — one that flouts the basic rules about
which creditors get priority under the federal bankruptcy
code. The proposed sale attempts to put social goals ahead
of bankruptcy law, and should not be approved, the
objection said.
The Keystone XL extension was proposed in 2008.[6] The
application was filed in September 2008 and the National
Energy Board of Canada started hearings in September 2009.
[16] On March 11, 2010 the Canadian National Energy Board
approved the project.[2][3][17] The South Dakota Public
Utilities Commission granted a permit on February 19, 2010.
[18]
On July 21, 2010, the Environmental Protection Agency said
the draft environmental impact study for Keystone XL was
inadequate and should be revised...
The Environmental Protection Agency revoked the permit for
one of the nation’s largest mountaintop-removal coal mining
projects on Thursday, saying the mine would have done
unacceptable damage to rivers, wildlife and communities in
West Virginia. It was the first time the agency had
rescinded a valid clean water permit for a coal mine...
Environmentalists welcomed Thursday’s decision. But the
mining company and politicians in West Virginia expressed
fury, saying the action was an unprecedented federal
intrusion, an economic catastrophe for the state and a
dangerous precedent for all regulated industries.
Did MIMvista ever make it into the AppStore?
Mobile MIM was available at the launch of the App Store.
The app was free and included sample patients for people to
try it out for themselves.
Why did MIMvista remove the app from the store? (or was it
forced out?)
In August of 2008, we submitted our first 510(k). ... To
be honest, this dramatically new direction for our
company, and the speed at which it occurred, left us ill-
prepared for the scope of the regulatory process that would
unfold. Within only a few weeks of submitting, we were
contacted by the FDA and told that our app could not be on
the app store (despite the fact that it was both free and
labeled as “not intended for diagnostic use”) because it
served as marketing for a device that was not cleared for
marketing. We promptly removed it.
Then, over the next few months, we discovered that our
proposed device raised more questions than we had
anticipated. In order to make their determination, the FDA
wanted more information than we had provided. The process
stalled out as we reviewed what we would have to do next.
This 510(k) was declared not substantially equivalent (NSE)
because of insufficient data.
The Consumer Product Safety Commission on Wednesday sued
the maker of the popular magnetic desk toy Buckyballs to
stop the sale of the product because of the risks posed to
children...
Responding to a request for comment, the company sent a
press release headlined, "CPSC: Thank you for trying to
drive a $50 million New York-based consumer product company
out of business." Buckyballs and Buckycubes are Maxfield &
Oberton's sole products; 2.5 million sets have been sold
since 2009.
Government loans and subsidies like this only make sense exactly when they are for high risk ventures where what they provide may be very unlikely to provide a good direct return on the initial investment itself, but where the potential societal benefits in the long term can be great (e.g. improved environment, or kickstarting an entirely new market).
1. The government, which can be considered as a sovereign corporation, has a moral obligation to run at a loss because certain ventures are "inherently unprofitable"
2. If Tesla is a big success, the tax revenues from the increased capital in the market (directly from Tesla itself but also all the things it influences) will pay for the losses in the loans to other companies.
I don't particularly fancy Argument 1, but do you think Argument 2 holds any water? If Tesla pays back their loan and the others you mentioned are total washes, it's "only" about $1bn, what do you think about how hard is it realistically to make that back? Tesla already has a multi-billion dollar market cap and is looking to grow.
But one can also point to companies like Google which received only $25M in venture funding and certainly went on to create ridiculous amounts of wealth by any measure. And I believe this is the ecosystem argument you're getting at, if I'm not mistaken?
So now it becomes a quantitative question. Economics is notoriously resistant to controlled experiments, but I think that in the main the experience of the 20th century has showed us that you want to have most wealth allocated by the market. If you look at all Eastern Bloc nations, the Soviet Union, North Korea, pre-Deng China, pre-reform Vietnam, and so on down the list...and then compare them to West Germany, South Korea, Taiwan, Hong Kong, and Singapore, you've got a pretty good case for less government intervention in the market.
The few countries that do government/tech investments reasonably well are pretty small countries like Singapore run by technically savvy guys, and there too the government is keenly aware of the fact that it needs to treat companies well or they will leave.
So, for what it's worth, regarding this point:
the tax revenues from the increased capital in the market
(directly from Tesla itself but also all the things it
influences)
Put it this way: when the ref has bet $500M on your competitor, there is no point in playing.
> Then it's not a fair fight anymore
That's missing the point. Government interventions of the type in this thread are aimed at providing a fighting chance for the guy that doesn't have the money for a gym or a trainer, to see if his unorthodox ideas of how to fight will actually prove to be worth anything.
There might very well be arguments against these types of interventions, but it will have to be a different argument than against what we usually consider bailouts.
Bailouts for failed businesses employing well established existing technology is an entirely different beast.
Put another way, if we could pay $50 billion to develop a renewable, clean energy source right now, then it would probably be worth it -- even if it would take Elon Musk only 10 years to do it and for $50 million.
Comparing strategic DOE loans in energy to Stalin and Mao is going a bit far, btw.
I should note that I agree that Romney probably did not know much about Tesla besides the name. But most politicians don't know much about technology. Last I looked, I believe we have only one scientist in the entire House of Representatives (Rush Holt, D-NJ?).
I wish everyone who thought, "I wish people in office were more like me" actually ran for office. That's the best way to get people like you in office. Age requirement for the House is only 25.
I've actually ran in and won an election at the local level back when I lived in massachusetts. So I'm familiar with the process. Are you? How do you get your message out to that many people without money? How do you beat an established incumbent with a ton of relationships and a warchest? Knocking on doors doesn't do it at that level.
If you're feeling idealistic, get involved yourself next cycle. I usually do. Find a candidate you like and volunteer for them, you'll accomplish a little good and learn a lot about what campaigns do, make some connections in the process. It generally involves cold-calling households and knocking on doors.
But to answer your questions, you don't. You lose the first round. The first round is about becoming a credible threat as a nobody. You spend that first round, however, building up relationships: it's about no longer being a political nobody. Then you maintain those relationships for the next few years until it's time to campaign again, and then you leverage them into money and votes.
Besides, I don't actually want people like me in office. I'm a philosopher who doesn't like Plato; why would I endorse a philosopher king.
Your points regarding state-owned companies is more a case against equity investment and a defense of the loan model. The US government isn't going to go to extreme measures to recoup a billion dollars and because it doesn't have any additional equity there's no other real incentive to prop up the companies that it has loaned money to. The free market is an extremely powerful system that is capable of remarkable things but it's not perfect and there are problems that the free market won't address on it's own (climate change being a poster boy example).
I don't really think you can evaluate government loans the
same way you would as a private investor.
Another point of view looks at the largest and most successful companies (like Apple, Google, et alia) and compares them to the smallest countries (like Iceland). Interestingly, you can do the math to see that Iceland gets about $5.6B of tax revenue with a population of 320,000, while Apple makes $156B with an employee base of about 73,000. This indicates that Apple is about 120X more efficient in terms of dollars generated per person; indeed, significantly more so in that tax payments are more on the involuntary side while Apple purchases are more on the voluntary side.
You can extend the same kind of analysis to Fortune 500 companies and many small countries. This is a very interesting exercise because no one disputes that the Fortune 500 companies can be evaluated by private investors, or that the countries have flags, fiscal policies, and the like. And yet the former outperform the latter by a lot on metrics like this.
So, that's the point of view that says that governments should be evaluated in the same way you'd evaluate companies. One not-so-bad way to think of it is that a citizen is buying a huge package of goods from the government, like cable bundling on steroids, and can only switch service providers by moving.
But, in any case, because we disagree on that point we'll probably also disagree on others. For example, the senior equity thing...are you stating the USG can exercise eminent domain and/or nationalize a company at will? I agree that in practice they have done this, but I at least don't believe this is a good thing.
Anyway, yeah, that's the crux of it: one group does not believe governments should be judged like companies, another group believes they should. Hopefully you can at least see our point of view even if you don't decide to convert :)
Trivially, corporations are amoral entities that have the ability, and sometimes the obligation, to jettison lines of business that lose money or simply don't contribute enough profit, whereas governments often have the legal or moral obligation to maintain or expand "lines of business" whose purpose does not coincide with the generation of cash. Civilization necessitates at least some pursuits that will never make a profit, and governments are the major organizational entities (yes, there are some others) that are often left to such pursuits.
I'm almost certain you're not arguing that "dollars
generated per person" is the only valid measure of the
success of a government
So how do you factor in all the other measures of success
in such an evaluation?
Trivially, corporations are amoral entities that have the
ability, and sometimes the obligation, to jettison lines of
business that lose money or simply don't contribute enough
profit, whereas governments often have the legal or moral
obligation to maintain or expand "lines of business" whose
purpose does not coincide with the generation of cash.
Civilization necessitates at least some pursuits that will
never make a profit, and governments are the major
organizational entities (yes, there are some others) that
are often left to such pursuits.
[I might also quibble with your use of the term "amoral" to describe businesses and "moral" to describe governments, as most of the millions of people dead in the 20th century were killed by governments. You have to kind of go back to the East India Company to find something comparable for businesses (and even that was a public/private hybrid). Anyway, digression, my apologies.]
Trying to tiptoe away from Godwin, I'll agree the use of moral/amoral is worth the quibble. Certainly it's people who have morals, and institutions that have, at best, ethics or principles. I'm not trying to argue that governments are moral, although they do take on responsibilities that corporations cannot or would not, and that such responsibilities can create something like a moral obligation -- operating on an axis that does not include a profit factor -- without imbuing the institution with "morals" per se.
Another way to express what I'm saying is this:
Individuals do lots of things that aren't directly for profit, like open source or art or helping out a friend. But over the long term they need to create more wealth (apples, chairs, computers, etc.) than they consume.
Groups of various kinds (companies, etc.) do lots of things that aren't for profit, like throwing birthday parties for their members or having their people sponsor charity runs for research. Yet they too need to have wealth creation exceed wealth consumption to survive in the long run.
Municipalities and local governments -- ditto. Municipalities provide services in exchange for property taxes, and they can/do go bankrupt. We're seeing that happen to CA cities now.
Now, a federal government is definitely special in some key ways: it can order guys with guns to your house and coordinates national defense. But you can still model this as a municipality that is competing with other national governments for your tax dollars. Immigration is in part about getting a better deal from country A and moving from country B.
This is not how we've been raised to think about government. Many on the broad political right are sort of emotional about the federal government's defense efforts; many on the broad political left are sort of emotional about the federal government's non-defense efforts. And in our current world it is kind of unpatriotic to just think of them as a service provider: "are they keeping the peace at low cost? are they pursuing the right strategy for long term health?".
There are macroeconomic arguments as well about whether the "government is or should be modeled as a company", but really you do get at a good point in that the idea that government is just a service provider cuts against the grain of American thought, both left and right.
However, it is an interesting line of analysis that is gaining in currency. See for example KP's "USA Inc.", which looks at the USA as if it was a company:
images.businessweek.com/mz/11/10/1110_mz_49meekerusainc.pdf
While physical proximity will always mean banding together for common defense (so long as we are corporeal beings!), I'd argue that the internet makes migration-to-a-better-service-provider a much more feasible option. Facebook facilitates transnationalism: your friends are sometimes nearby, sometimes on other continents, but they often aren't your neighbors. Skype and all these telecommuting tools allow you to work remotely as well.
Moving doesn't have the same cost that it used to. Making the cost of migration plummet could be very important.
There is a difference between saying that the government should invest in and fund all companies and saying that there are cases where the free market will not act in the national best interest on it's own and the government can. The underlying issue here is that oil is subsidized in the US. It's not just the tax benefits to oil companies, it's all the military spending required to maintain undisrupted oil flow from the most unstable regions in the world. We've gotten to the point where we can't just stop cold turkey; so you've got to invest some money to clean up a mess made in the past. I'd love to get to the point where all our energy choices were on a level playing field so the free market could do the work but that just doesn't seem plausible today.
It's cliche at this point, but the space program and DARPA/ARPA investments led to a lot of the technology that enabled the formation and/or success of companies like Apple and Google.
This is off topic but with regard to your some of your other points, it's completely true that the federal government doesn't have to treat it's debt the same way a household does. That doesn't mean it should spend as much as it wants, but it does mean that it can spend a little more than it brings in forever. By senior equity I meant that the government's claims to profits(taxes) are senior to other equity holders.
If governments should be evaluated in the same way you'd evaluate companies, then companies should be evaluated in the same way you'd evaluate governments. Otherwise you're putting down a double standard.
http://en.wikipedia.org/wiki/Bain_Capital#1984_founding_and_...
Regarding the clean energy investments, I think we will both see qualitative aspects of this differently. I don't think you dispute that $90B was spent on green energy, and there were several very high profile busts; similarly I don't dispute that most of those companies are still going concerns, or many of the points in that link.
Lest we forget, Romney is/was a pretty great investor and entrepreneur himself, just like Elon Musk. It's unfortunate that Romney included Tesla in his list of green losers - he did start this fight - but Tesla is the exception that proves the rule. The government has not come close to making money on its green energy bets, and will not even if Tesla is a massive success. It has lost $535M on Solyndra, $249M on A123, and $400M on Abound Solar. Even if Tesla is profitable enough to pay back its $465M loan, this is a very poor risk-adjusted return. Many of the other companies in the green energy portfolio are reportedly quite sick as well; we shall see what happens to the 26 that received loan guarantees in five years.
The dismal history of Russian and Chinese state-owned enterprises should be sufficient to give us pause, but the reasons that people oppose government funding of companies like this are several fold:
One can go further, but it is striking to see how companies like Uber or AirBnB run into political roadblocks, while other companies receive $500M loans. The government is not just any old company or investor, the government has guns and can compel action in a way that others cannot. As such it is very powerful to have as a investor and very dangerous to have as a competitor. Too dangerous.