“And he wasn't paid until he delivered, like any contract with a business”
I don’t know the specifics of these contracts, but I very much doubt it based on my experience. That’s not how any Government development contract I’ve ever worked on has worked… There are startup payments, payments for milestones (including many at the start for various design stages before anything was built), payments at varying levels of build, etc… - often more than half (sometimes more than three quarters) of the contract value was paid before the final product was delivered.
We did some pretty cool things too (this was in defence satellite communications) but various Government customers took like 80% of the risk on the development most of our big products (obviously we had already proven our design abilities with smaller components but much smaller scale), which we would then sell to them and other Governments.
I’d implore you to research more about how the CCP is administered. There are payments before any astronaut gets a ride. Meaning if the company goes out of business beforehand, the taxpayers lost that money without receiving the actual service intended. That’s also why NASA selected two CCP contractors, it distributes the risk. Maybe you think socializing risk to the taxpayer makes him a smart businessman, I just wish people would comes to terms with the fact that his wealth is inextricably linked to taxpayers. Like I said before, it’s not even necessarily a bad thing but call it what it is. I personally think the hybrid public-private arrangement works well when it’s not being abused.
Regardless of all that, the point was that Musk is not a paragon of free-market capitalism. Nothing you’ve pointed out negates that point, yet people still cling to that narrative for…reasons. I suspect it has more to do with cognitive biases than reality.
My house was built to my specification. The general contractor required that I make progress payments. He wanted to be sure he wouldn't be left holding the bag for all of it after I moved in (and he also needed cash to buy supplies and hire subcontractors). I took a risk he didn't just disappear with the up front payment.
When I had the roof replaced, I had to pay half up front.
And so on. This is normal business practice.
There is nothing not free market about progress payments.
(Besides, if NASA was fronting all the money, SpaceX wouldn't have gone bankrupt if the rocket blew up. But what I've read was Musk bet the company on it not blowing up.)
I decided to check one detail. The EV subsidy came in the form of a tax credit to the buyer, it is not paid to the car manufacturer. Musk had nothing to do with it.
> I suspect it has more to do with cognitive biases than reality.
Imagining oneself as dealing in reality rather than cognitive bias is yet another cognitive bias. Everything written about Musk is subject to cognitive bias one way or another.
You order an uber. You aren’t expected to make progressive payments so the driver can buy the car, get gas, etc. That’s the more appropriate analogy. As I said, CCP is a service contract, not a product. A house is a product so it even if the contractor goes out of business, you still have the foundations, studs, etc. ie your payments cover the partial product you are actually contracted to receive. A house is a misapplied analogy that belies some ignorance on the commercial crew program.
Businesses can leverage POs to fund operations. That’s why the NASA contract matters.
Yes, the EV subsidy goes to the buyer. The point was it makes the product more competitive at its price point. That point still stands. Besides, Tesla also benefited from multiple other taxpayer benefits. For example, they get hundreds of millions in tax incentives for their factories. Again, their profitability is propped up by taxpayers.
I’ve never claimed to be completely unbiased. However, we do have the benefit of testing out narratives with facts. The mental gymnastics needed to deny that these ventures/profits are somehow not related to taxpayers is, in a word, “nuts”
> You order an uber. You aren’t expected to make progressive payments so the driver can buy the car, get gas, etc. That’s the more appropriate analogy.
It's utterly inappropriate. First, your card is submitted and approved prior to you getting the ride. The uber is going to get that payment, you have no choice. Second, I wouldn't be surprised if the amount is put on hold with the credit card company before the ride begins - I know gas stations do this. Third, it's a trivial amount of money compared with buying a house. Fourth, the uber driver cannot operate if he hasn't already bought the car and the gas.
> That point still stands.
Musk had no control over it. The tax credit was given to the consumer. It also was for all EVs, it was not targeted at Musk.
> they get hundreds of millions in tax incentives for their factories. Again, their profitability is propped up by taxpayers.
A tax abatement is not a subsidy. A subsidy is a payment. Tax abatement is not "propped up" by other taxpayers, they did not get their taxes raised by it, and the company was not previously paying taxes for that location.
I'm curious why you (apparently) think that anyone could have done what Musk did? Why didn't you (or anyone else) get those subsidies and tax credits and contracts and create Tesla and SpaceX? I've read that Musk is an imbecile who somehow failed into being the richest entrepreneuer on Earth?
Tesla + SpaceX is worth about $1.2 trillion dollars. If the government started it with a billion dollars, consider all the taxes Tesla + SpaceX + Musk + employees + investors has paid since. Wow what a return on investment! And as a bonus, NASA gets to shoot off rockets that cost only 10% of NASA-built rockets.
C'mon, this is bordering on a disingenuous argument. You can't acknowledge the different between a service and a product. That's literally the novelty of the CCP. In general practice, you don't pay for a service until after its rendered. But not the case in the NASA contract. If your Uber doesn't show up, you'll get reimbursed whatever small hold they put on. You're only out the service. If SpaceX went belly-up, NASA isn't getting milestone payments back and they don't get their ride. They're out payment and service.
>Musk had no control over it.
Are you claiming that subsidies don't get factored into a business plan? Again, the point is government action makes the business more competitive/profitable. Subsidies to the consumer absolutely impact that. Tesla's own filing acknowledge this point. E.g., they mention regulatory credits add $2.7B to their revenue. They also mention how consumer subsidies impact consumer demand for their cars, and how tax abatements are fundamental to projected operating expenses and financial obligations. Their own statements run afoul of the narrative you're defending.
>they did not get their taxes raised by it, and the company was not previously paying taxes for that location.
Correct. We agree the taxpayers are losing an income stream. If your house was built in a location, do you think you could claim "well there was nothing here before, so not paying income taxes is of no consequence"? It's a weird take if you think the public isn't offering something of value with beneficial tax breaks. If they are offering something of value, they are helping the business. I also agree the taxpayers can benefit from it, I don’t think they have to be in conflict, just acknowledged.
>I'm curious why you (apparently) think that anyone could have done what Musk did?
I've never claimed that, you seem to border on fanboy admiration of him. I think Musk is a once in a generation entrepreneur. I also think his business MO is heavily reliant on government contracts and special treatment. Those two aren't necessarily mutually exclusive. But the latter is contradictory to free-market ideals. That's the point that you're constantly side-stepping. Worship him if you want, but also acknowledge his success is tightly coupled to governmental help.
SpaceX has done amazing things. Buit I'm going to venture we have different opinions why. IMO, t's because they get to operate under different rules. I think the main advantage that NASA is buying is a plausible way to skirt a lot of the rules (political and technical) they must abide by. CCP does not, and that's largely why they can do things differently. That's not a guarantee of success (see: Boeing) but it sets the table.
You may not realize it, but we've had this same tired discussion a while ago. At that time, I said we will see Musk's business acumen with what he does with Twitter. Apropos of TFA, that doesn't currently put him in good light. 6 months ago it was valued at $9B, and then shortly later valued at $45B so that he could essentially sell it to himself at that valuation. At the very least, that indicates a lot of uncertainty. That is a suspect valuation, but to be generous there are some differential outcomes: 1) xAI becomes profitable largely due to the synergies from the sale of Twitter/X, 2) xAI is profitable in spite of the purchase, 3) xAI does not become profitable. It will be interesting to see, and I will be interested to see if we'll ever get insight into the private company to find out. It will also be interesting to see if future success is still coupled to government/political help; I suspect that's a drug hard to break from.
> his business MO is heavily reliant on government contracts and special treatment
He sells rockets to the government at 10% of what it would cost the government to buy them elsewhere. It's clearly Musk helping the government. Besides, Musk did not get subsidies for SpaceX nor special treatment.
> Are you claiming that subsidies don't get factored into a business plan?
No, I claimed that Musk had no control over the EV subsidy, which was given to buyers of electric cars from any company.
> acknowledge his success is tightly coupled to governmental help
Making a better, cheaper rocket is helping the government save tens of billions of dollars.
> contradictory to free-market ideals
The government keeps taking our economy farther and farther from the free market. Government taxes, subsidizes, and regulates. It isn't really possible to run a free market business in the US.
I know it's cool these days to dump on Musk and denigrate his achievements with "you didn't build that" (as if anyone else could have done it), but history will show him to be the greatest entrepreneuer the world has ever seen.
The government has subsidized other companies. None of them succeeded like Musk did. Not remotely. The idea that the government created Musk is just nonsense.
And he wasn't paid until he delivered, like any contract with a business. The taxpayers were never at risk. It was not a subsidy.
Yes, Tesla benefited from EV subsidies, like all the electric car makers. He'd be stupid not to take the subsidy.
> You may want to familiarize yourself with counter examples from Musk biographers, like Seth Abramson.
I read "Elon Musk" by Ashlee Vance.