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Elon Musk and the Questionable Good of Government Subsidies

To many, technological visionary Elon Musk, who has promised to birth such marvelous feats as “space internet,”  embodies the American spirit of entrepreneurial innovation.

While the federal government traps itself in the quagmire of over-regulation and bloated spending in green energy and interstellar research, Musk’s endeavors in commercial space flight and driver-less electric cars seem to be the rallying point for advocates of free market solutions to society’s exigent crises.

However, the delineation between private and public sectors is not so clear cut. Recently, $465 million in low-interest loans from the Department of Energy have led to the questioning of Tesla’s real merit. And, of course, much of SpaceX’s success is due to its contract with the government to launch supply missions to the International Space Station.

All of this begs the question: what is the proper relationship between private business and the government?

Congress does have some interest in business since Article I, Section 8 gives the legislature the authority “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” However, to suggest that the government then has any interest in underwriting the success of innovation by using taxpayer money to subsidize services politicians deem to be in the nation’s “general welfare” is obviously an over-extrapolation of a very limited power.

The Obama administration’s electric-car subsidy debacle has incontrevritably proven what happens when government becomes a venture capitalist. The underwriting of green-energy companies ended in taxpayers seeing red. One by one, the government’s pet investments, most infamously Solyndra, folded to an unwritten universal economic truth- market demand cannot be artificially stimulated.

Tesla, however, managed to survive, pay back its loan and is now estimated to be worth $12 billion. The fact that is survived while other electric car company failed is perhaps a testament to Musk’s ingenuity and somewhat invalidates questions of the company’s true merit.

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But, if Tesla’s model really is that good, free market principles dictate it should have been able to survive without government support. Could it have? Impossible to say because the subsidies cast a pall over market functions, ultimately making trends harder to analyze.

SpaceX presents a similar problem for the delineation between private and public markets. While questions about the desirability of electric cars to average consumers exist, there is no doubt that most people have no needs serviceable by space flight.

Yet, there is scientific good, the benefits of which to the lifestyle of the average American cannot be tangibly measured, in exploration.

The contract SpaceX has with NASA is helping to fund other research and missions. And Musk’s ultimate aim, incredible though it seems, is to one day open up mining colonies on Mars. Just four years ago, Newt Gingrich was mocked in a GOP debate for suggesting such a possibility. Today, one of America’s preeminent thinkers is actively working to make this a reality.

At the same time, other byproducts, such as the “space internet” Musk suggests could provide fast, cheap access to the web for people around the world, present a free market solution to supposed problems the government is threatening to regulate into parity.

It would be an interesting upending of centuries of state-capitalism, to see government contracts subsidize market innovation. If anyone is poised to do so, Musk is that person. Should he succeed, the monopoly of government force over economic powers will be irrevocably severed.

But the question of morality still remains. And while it’s easy to run away with fanciful dreams of science-fiction made reality, the government, since it is funded by the hard-earned money of its citizens, owes it to them to ground its decisions in practicality.

The ultimate outcome, and the morality of the degree to which it is underwritten by public dollars, remain to be seen.

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About Katherine Revello

A recent graduate of the University of Maine, where she majored in journalism and political science, Katherine Revello is an aspiring political commentator. Her focuses include theory, the philosophy of money and populism. Currently, she is a graduate student at Villanova University. She is the founder of The Politics of Discretion, a blog dedicated to advancing her philosophy of discretionism. Follow her on Twitter: @MrsWynandPapers