Stop Griping About Musk, Start Spending on R&D Again

By | 2017-06-02T18:30:05+00:00 November 17, 2017|
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Conservatives are angry about Elon Musk and all of the subsidies his companies receive from the federal government. Musk reaps hundreds of millions of taxpayer dollars, whether it’s lucrative contracts for SpaceX from NASA or energy rebates and other incentives to manufacture his Tesla electric sports cars. To many Americans on the right, it smacks of corporate welfare. And why in the world should the federal government subsidize a product—in this case, an electric car costing upwards of $135,000—that few people want and even fewer can afford?

But Musk’s critics miss the mark. The reason to back Musk and his ventures isn’t so one-percenters can get a discount on a new Model S. More important than the products he makes are the research and development he undertakes. Musk’s ideas will very likely result in everything from cheaper rockets and smaller, higher-capacity batteries.

Yes, of course, Musk stands to become even wealthier than he is today. But that kind of R&D is gold for the country that adopts harnesses the resulting technology first. Properly understood, R&D isn’t corporate welfare—it’s an investment in the future.

U.S. Lags in New Innovation
A generation ago, the United States led the world in semiconductor and fiber-optic technologies that fueled the information revolution. Much of the research that made those innovations possible was government-funded.

Today, China is in danger of overtaking the United States with advances in quantum computing, nuclear fusion, and renewable energy development. America is lagging in those and other fields of cutting-edge research, in no small part because we’ve let research and development slip away while our international competitors have stepped it up.

Without question, China, not the United States, is leading the way in technological innovation. A recent KPMG tech innovation survey of 841 international technology industry leaders found that most believe Shanghai, not Silicon Valley, would lead the world in innovation by 2020.

Meanwhile, China has surpassed the United States as the leader in global patent applications. Hong Kong has been ranked as the “most economically free” place in the world for the 22nd year in a row. The United States, on the other hand, is ranked 17th . . . and falling. Since the 1980s, despite billions of dollars and innumerable fads passing for “reform,” the U.S. education system largely has failed in terms of preparing Americans to compete in the global market. This, at a time when China is surging forward in producing the world’s next great innovation leaders.

And, it’s not just in the science and technology fields that Chinese students are besting their American counterparts. For instance, you’re looking for young people studying and performing the music of Bach and Beethoven, they are most likely in Shanghai, not San Francisco.

Historians once credited Islam with “preserving” part of Western civilization during the so-called “Dark Ages” in Europe. Similarly, China might one day become the place where American children from elite families go to learn and experience the treasures of the West, as Western Civilization declined into mediocrity—unless we start getting more competitive in the new global information and technology economy.

Certain Investment, Uncertain Outcome
As the United States has consistently underfunded R&D, our economy has suffered. The industries of the future all have some technological component that, if not developed fully, will hamstring the entire economy—and
weaken our national security.

Elon Musk and others like him recognize the value of developing and testing new technologies that many today consider unnecessary or haven’t bothered to consider.

The thing about innovation is that nothing is certain. Trying really does count. Ask yourself: how many people attempted to build a working flying machine before the Wright Brothers pulled it off? Did the Wright Brothers simply invent the technology from nothing, or did they build upon theories and concepts that others had tested?

Fact is, most great innovations are the result of years of trial and error. Innovation is hard to follow and, given the requirements in today’s technical world, it is an extremely onerous—and expensive—task. Yet, it is the sine qua non of a modern economy. We should be celebrating the few who have the gumption and willingness to try, not relishing in the defeats of those innovators.

Learn to Stop Worrying and Love (Some) Subsidies
Philosophically, I understand and share in a distaste for government subsidies to industry. But innovation is indispensable for remaining competitive in the world today. We should be helping innovators whenever possible, not griping about the subsidies.

Historically speaking, subsidizing successful innovations has proven to be the silver bullet for maintaining America’s overall dominance. The Chinese have no qualms about fully supporting their tech innovators—no matter how many failures those innovators may suffer before they create the next “killer app” (emphasis on “killer”).  

Here’s another fact: nonrenewable sources of energy, such as oil, natural gas, and coal, despite their popularity today, are declining in terms of availability. This explains why Russia and ExxonMobil are racing to the inhospitable Arctic in search of new oil and natural gas fields (and if they ever can tap them fully, where do they go when these new Arctic sources have been depleted in 30 or 40 years?). It’s also why Saudi Arabia is trying desperately to cut its reliance on the petro-economy by 2030. In 2015, Goldman Sachs reported that we reached peak coal, and thus far no data has arisen disproving this assessment. This also explains why China has been seriously squawking about reducing their own considerable reliance on coal.

All of this indicates that the world is going to need new sources of energy outside of fossil fuels. Neither wind nor solar are practical solutions (despite what several people, including Musk, argue). Nuclear fusion is likely going to be our future. Even if solar and wind do end up working as advertised, America will be increasingly dependent on things like electric cars. So, Tesla’s commitment to developing the electric car is a net benefit for society.

Otherwise, We Lose
Without greater direct investment in R&D, however, the only incentive the government can offer is in the form of subsidies and tax breaks. Whatever happens with the profitability of Tesla Motors, the research that Tesla has done will go a long way into making electric cars more efficient in the years ahead. As society moves closer toward fully embracing electric cars and renewable sources of energy, American firms might just have a decisive advantage, since groups like Tesla were experimenting with the technology before the Chinese ever took the product seriously.

Elon Musk isn’t our savior. And for the record, Musk this summer insisted the federal government stop subsidizing Tesla Motors. (Despite what many conservatives argue today, Tesla’s subsidies are nothing compared to the subsidies other industries receive.) Nevertheless, Musk and other innovators like him will be responsible for keeping America competitive—and dominant—in the global tech economy.

America doesn’t win just because we used to win in the past. Winning the future means making an investment today (and adapting to the new, competitive international environment, where state-owned enterprises are serious competitors for American firms). The country needs Elon Musk and the few others who are like him, and we need to help them remain competitive against cutthroat international opponents.

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About the Author:

Brandon J. Weichert
Brandon J. Weichert is a contributing editor to American Greatness. A former Republican congressional staffer and national security expert, he also runs "The Weichert Report" (www.theweichertreport.com), an online journal of geopolitics. He holds master's degree in statecraft and national security from the Institute of World Politics in Washington, D.C. He is also an associate member of New College at Oxford University and holds a B.A. in political science from DePaul University. He is currently completing a book on national security space policy due out next year.
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28 Comments

  1. Anne Miller November 18, 2017 at 4:47 am

    This author would apparently like the ideas of Stalin’s Five Year Plans. They included so much brilliant R&D paid for with the generous donations of the good Soviet people, freely and cheerfully. Only a former Congressional staffer could come up with such pure tripe.

    • Brandon Weichert November 18, 2017 at 12:23 pm

      Your facts sound like opinions–which, they are. Please Google the Goldman Sachs reports that I’m talking about. Whatever problems there may be with groups like Goldman, the people who write these reports have but one interest: making money. At the end of the day, if they’re wrong they lose themselves and their clients much money, and risk their business. Believe me, these guys don’t write bold statements without having done the research. Please follow the link to my recent lecture on Iran, Russia, and the high price of nonrenewable fossil fuels today (and how everyone is scrambling for what’s left). Check out ANYTHING written by Michael T. Klare on the issue. What is it with conservatives sounding like Liberals? The Liberals–“The Party of Tolerance”–call me a “Nazi” for my beliefs and the CULT OF FREE TRADE/ONE TRUE CONSERVATISM, INC. call me a “Communist” because I am FACTUALLY pointing out how government investment into R&D helped to create America’s vaunted superpower status (and how the lack of investment over the last 20 years has crippled us at a time when America’s rivals and competitors are doubling down on their own investment in such tech). I can assure you that, while China is likely the most evil and repressive regime in the world today (something that “TRUE CONSERVATIVES” like NEVER admit to because it would negatively impact the bottom line, better to attack Russia, a dying power), China IS NOT the Soviet Union–we’d never be so lucky. Also, I said NOTHING about subsidizing ethanol in my piece. In fact, I specifically called out the sops that are wind and solar energy as being wastes (contrary to what Elon Musk believes). Nuclear fusion is the only and best way forward. But, please, keep building the straw men to tear down. If you don’t like Elon Musk, my recommendation would be to support actual funding of R&D by the government so we don’t lose our competitive edge to the Chinese (which we are). Until then, tax breaks and subsidies for private sector R&D in new tech innovation is what we’re left with. But, hey, stick to your orthodoxy. It’s really helped the United States out thus far.

      Thanks for the read, though. Good day.

      P.S. I worked for one of the most conservative, Tea Party members of Congress and fought every day for the principles that got Trump elected. #MAGA

      https://uploads.disquscdn.com/images/ea0b2e307001391af8acb1a212ccc1ec518d95e141d10fb94f638ff60dfd9b0b.png https://uploads.disquscdn.com/images/ab41b93a377c405e3cbffb9384b7381804a2de4358b4695435765ed1bacbc285.png https://uploads.disquscdn.com/images/c13bf23ab945d0f37b8fed6bf8f9f9a5bc5f7d678ffdd0a00d8e8eeb1b6cefd5.png

      • Jo Jo Cintia November 18, 2017 at 8:36 pm

        Yeah they lose money and the TAXPAYER bails these idiots out. They lose money and don’t care because they have TAXPAYERS bailing them out. Musk is a fraud and a phony. His electric cars take too long to charge at home and building tons of “electric charging stations” would cost Billions. Now that Oil is damn cheap and fracking gives us more Oil than Saudi Arabia, this idiot has to push “Climate Change” to get tax dollars pursuing unnecessary crap. His SpaceX has done NOTHING. Having a rocket that lands vertically is USELESS. All the fuel gets burned on takeoff. You cannot land a rocket vertically unless it has fuel. That would seriously reduce the payload from excess weight. This idiot wants to use these stupid VTOL rockets to replace airplanes, while complaining about “emissions” from automobiles. Musk is a FRAUD.

        • Anne Miller November 19, 2017 at 6:02 am

          And you don’t even mention the inconvenient issue of where the power comes from to charge the moronic Musk/Weichert cars. But your points are true.

      • Anne Miller November 19, 2017 at 6:01 am

        Please provide facts on the current known oil reserves versus the known oil reserves in 1980.

        You make a lot of bold assertions with no fact base.

        • wildbillcuster November 19, 2017 at 4:58 pm

          He has a habit of doing this.

      • zoomie November 19, 2017 at 7:05 am

        Dear Mr. Weichert,

        You have written a fine article, well reasoned and for the most part accurate. If I may, please allow me to take one exception. Fusion energy. There is a joke, at least a decade since I heard it first. Fusion is the power of the future, and always will be.

        In order to commercially use fusion, power plants all over the world would need a design that, lets face it, the guys that run coal and natural gas plants would be able to maintain.

        The actual engineering challange, when thought of in this very real world constraint are likely to be located near the town of Utopia.

        In the space of a very limited distance, the hottest temperatures that can ever be crated by man, must be transferred some how to heat some material, these days it is water, that will be routed to something that turns, a turbine.

        Some how this heat must be transferred through the actual mechanism, structure, that created the conditions for a small fusion reaction.

        The folks at the glow lab, not too far from where I live, have achieved only the first step after decades of effort. They created a small fusion reaction.

        And very few people have heard anything since. Why ? It is the transfer question. That problem, I hate saying never, will be insurmountable. And do you really think the guys from Pacific Gas and Electric will ever be able to maintain the equipment ?

        I often look at the world from a national security viewpoint. It is a very concise, admittedly somewhat narrow view. However the time frame is further than the next quarterly earnings releases. Fwiw, in the long term, renewables and fission, along with whatever hydroelectric and perhaps a little wind is where the future will be.

        To conclude, at a certain point, there will come a time where there will be a very concerted effort to design fisson reactors that effectively have a bullet proof , maintainable, modular design.

        It certainly will not be easy, given the mis information being spewed about. Try not to be part of the mis spewers, if you are in fact able.

        Best Regards,
        Zoomie

      • VF-143 Pukin' Dogs November 19, 2017 at 12:56 pm

        Ooh, look he has charts that predict the future accurately. Amazing, it looks like oil runs out about the same time the ice caps melt. Those boys in lab coats at the NSF sure do know a lot about oil and gas reserves and they aren’t like those other government boondoggles throwing away tax dollars and producing nothing of any value, right?

    • Sylvia November 21, 2017 at 6:09 am

      Google is paying 97$ per hour,with weekly payouts.You can also avail this.
      On tuesday I got a great New Land Rover Range Rover from having earned $11752 this last four weeks..with-out any doubt it’s the most-comfortable job I have ever done .. It sounds unbelievable but you wont forgive yourself if you don’t check it
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  2. Mark Sullivan November 18, 2017 at 9:16 am

    This is why I don’t complain about Musks. The man actually creates things. As for the reserves of gas and oil being the greatest in history. Oh, no. The world is not like a chocolate truffle full of oil and gas. Eventually it will get scarce. Frackers are getting whats left. There will always be oil and gas, but not in the amounts needed for many billions of people in growing economies. Besides the fact that fossil fuels have all kinds of problems, pollution in the air land and sea, and by the way, you ever seen a mountain removed to get coal?, Or an oil spill? Or miles of land used up in oil and gas wells? Do you really want to chase the last oil well into the last wilderness areas? There is nothing sacred about fossil fuels, they did not come down from the mountain with Moses. Its just energy. Which can be created in many ways. Fossil fuels had an important run building western civilization, but and will for some time, but new technologies will replace them,{ we don’t use steam engines, if you noticed,} with better things. The transcontinental railroad was built with government help, for instance. We subsidized the highway system too. In both of these individuals, and their companies benefited, but so did everybody else. Sometimes government policies that subsidize things, really do pay off if directed at brilliance. And whatever you think about him, Musk is brilliant.

    • Vinny James November 19, 2017 at 5:29 pm

      Creating things with confiscated citizens money is not capitalism, and Musk nor anyone else is entitled to “create” with my money! Unless I choose to invest with said person or company! What the hell is with all the commies here?

  3. Deserttrek November 18, 2017 at 10:14 am

    NO … musk is getting rich off the backs of everybody else
    did Thomas Edison get huge tax subsidizes? NO
    did Ford and the Dodge Brothers, Boeing, Lockheed, Donald Douglas, Cessna in the 20’s and 30’s, NO
    he is a big idea person , and many have had the same ideas
    stop worshiping this guy and let THE PEOPLE have and spend their own money and stop stealing from them to subsidize ANYBODY or ANYTHING

    • Brandon Weichert November 18, 2017 at 12:49 pm

      All of these corporations received help from the government in one form or another. Every single one of them. The early “Robber Barons” essentially bought and paid for the government; Boeing and Lockheed–two companies I respect but recognize are HUGELY problematic if one is pure Free Market ideologue (ever hear of the United Launch Alliance?)–are the most elemental examples of public-private coops. It has NOTHING to do with Musk and everything to do with the fact that most of his products are researched and developed in the United States and contribute directly to the American economy, giving America the almighty First-Mover Advantage in the global competition for dominance in the New Innovation Economy–without these folks, the Chinese would have already defeated us. Subsidies are the alternative to direct gov investment into new R&D (without those investments, the Manhattan Project, Apollo Project, computers, and the internet would have NEVER gotten off the ground), since it’s usually Free Market ideologues who care little for what happens to the United States in a Chinese-dominated international order. I wonder how willing you’d be to cut subsidies for the major oil companies (especially knowing how the cost would skyrocket to consumers)? Oh, and at that point, you can bet your bottom dollar that we’ll all be thankful that Musk and others were investing in R&D here and now, since we could leapfrog the Chinese and other actors, who would immediately start expanding on their investment into R&D. There is no argument against what I’m talking about–especially since I want limits and real metrics for determining the amount, feasibility, and duration of those subsidies. I’m not some Lefty who just wants to hand over taxpayer dollars to any group (so long as they support my party’s electoral agenda, as Obama did with Solyndra). I want limits. But, I also want to be able to promote AMERICAN-based innovators and companies. Also, like Musk, I want those subsidies to be self-terminating as soon as the new tech is scalable, and the companies involved in them can stand on their own.

      • Deserttrek November 18, 2017 at 3:02 pm

        NO subsidies for any reason

        good day

        • Vinny James November 18, 2017 at 11:28 pm

          Amen brother! This guy is a sellout too bad he had some solid pro Trump articles however he has lost ALL credibility! Anyone who is pro corporate welfare for any reason is NOT a conservative but a communist / socialist.

      • Vinny James November 18, 2017 at 11:26 pm

        No they did not! Eminent domain is not corporate welfare and shouldn’t exist in the first place! As many others have pointed out the various companies / enterprises used capital investment! The US government didn’t have enough tax revenue at the dawning of the industrial revolution to give out any subsidies. Your a yuppie wanna be who thinks backing Musk with our money makes him enlightened and hip! Your an ass!

      • Anne Miller November 19, 2017 at 6:04 am

        Odd to see a graduate of the Elizabeth Warren school of “you didn’t build that” making a home here at American Greatness. Very sad.

    • Brett baker November 18, 2017 at 5:04 pm

      They used “The American System” of manufacturing, developed by John Hall, master gunsmith atHarper’s Ferry Armory, a Federal employee.

      • Vinny James November 18, 2017 at 11:22 pm

        Has nothing to do with “R&D” What’s your point?

        • Brett baker November 20, 2017 at 1:52 pm

          It took a lot of R&D to develop the American System of manufacturing.

    • zoomie November 19, 2017 at 7:44 am

      To be accurate, Mr. Musk got rich off of Paypal. A middleman transaction fee. In the mean time he has decided to do something besides buy a Dallas basketball team and a 757 to fly them around the country.

      As well, the aviation industry was supported by the government after WW1. They called it air mail, and no one got rich from it. But there were enough people who saw what should have been obvious to anyone.

      In the current crop, decades now, of MBA’s, please do not count the future of your country to those peeple to allocate R&D resources.

      Respectfully Yours,

      • Deserttrek November 19, 2017 at 9:39 am

        P T Barnum would be proud of musk. in my opinion he is a cancer on society

        Stay well

  4. Brett baker November 18, 2017 at 2:38 pm

    Quit confusing facts with TRUTH. Some readers won’t like it. The anti-R&D people are generally part of the parasite economy, unwilling to acknowledge that they are dependent upon those of us in agriculture, mining, manufacturing, and transportation. They can’t grasp their services won’t support the economy, let alone allow it to thrive. And Don’t dare point out the subsidies their industries receive.

    • Vinny James November 18, 2017 at 11:21 pm

      No one here is anti RD jackass! Companies should pay for their own RD and everything else! The govt has no business picking winners and losers by deciding who gets what if any subsidies.
      The country and the technologies that built it were developed in the private sector with private investment capital! That’s why it’s called capitalism! Anything else is communism, fascism, socialism.

  5. Vinny James November 18, 2017 at 11:16 pm

    This author is nothing short of a moron! You claim to be a conservative and are making excuses, lame excuses for corporate welfare? Corporate welfare should not EXIST period! Henry Ford, Thomas Edison, Marconi, Zenith, GM (pre bailout), Apple, Microsoft etc need corporate welfare? So I and the rest of us are supposed to work our asses off to give money to this jackass for a product where zero demand exists for his toy cars?
    Send him your paycheck jack! And what a disgrace to this formerly great magazine for allowing such drivel to be published here!
    Keep it up you’ll lose a loyal customer!

  6. VF-143 Pukin' Dogs November 19, 2017 at 12:34 pm

    “Here’s another fact: nonrenewable sources of energy, such as oil, natural gas, and coal, despite their popularity today, are declining in terms of availability.” Did you learn that at the “Institute of World Politics in Washington, D.C.” Perhaps they missed out on the whole Fracking/Horizontal Drilling thing. Please provide data on the oil and gas reserves on federal land in the U.S. Elon Musk is just another P.T. Barnum including the stench of elephant feces. Where is Elisabeth Shue and her “Cold Fusion” device when we need her? Stick to your worthless areas of expertise and stop babbling about the real world which you know nothing about.

  7. ADM64 November 19, 2017 at 3:19 pm

    There are a handful of good points in this article but much that is wrong.

    Subsidies were not, historically, the silver bullet in our rise to industrial prominence. Quite the opposite. Government played no role in the development of any of the industrial technologies that created the 19th century and early-mid 20th century industries and products that made us first in the world, not unless you count the tariff. Major capitalists bankrolled universities, libraries, scholarships and established an immense R&D infrastructure that was entirely private. It was the existence of that foundation that allowed us to convert our civilian know-how into military power in WWII. The four transcontinental railways in the 19th century that government did sponsor, all went bankrupt quickly. The only wholly private one came in on time, on budget – and then was attacked under the anti-trust laws! Even the Wright brothers did it on their own dime and their own time.

    The author also comes dangerously close to making the Obama “You didn’t make that argument” by claiming in effect that it was government and not private enterprise that made the country great economically. This is not a road conservatives want to tread because it is both wrong and counterproductive.

    It should be obvious why government does so poorly at this. First, no one has a crystal ball and politicians usually have whatever they claim theirs is clouded by politics and special interests. This incidentally applies to for-profit businesses too. Goldmach Sachs, whom the author quotes about peak coal did not see the 2008 crisis coming and indeed contributed to it. Bankers, like many businessmen, tend to follow the consensus and conventional wisdom – which is why they are often blindsided by new developments as much as politicians. Second, a true market lets people try things out and see which ones actually work. R&D is part of this but it cannot be centrally planned. Anyone who has run a business understands this. Even with good will, best practices, a commitment to innovate and strong incentives to do so, no one gets it right. When they have the ability to suck up cash the government draws out of the private market, both they and the politicos have strong incentives to keep on with what they’re doing even if it doesn’t work. Third, subsidies do in fact compete with private capital and ultimately drag other areas down. We are seeing this with Dodd-Frank, where the large politically connected banks are making money lending to the government while regional banks are being killed by the regulations. We are also seeing that without strong capital accumulation, which depends on savings, there is no sustainable basis for investment. China, communist though it is, has little in the way of a social safety net, so everyone saves for their old age. The result, is they have the highest savings rate in the world, and massive amounts of capital with which to fuel their industrial and technological development. Our entitlements take 13% right off the top, and our savings rate is about 2%. in the 1950’s, those numbers were largely reversed. Draw your own conclusions.

    Where the author does have a point is education. Our public education system used to be very good – I went through it at the tail end of the 1960s early 1970s and when I later attended a private Catholic high school what struck me was that the teaching philosophies and methods were actually the same. That is no longer the case today. Our educational system, which is a government responsibility under the current political environment is a total failure, and in some cases (e.g. the universities) a national danger.

    What government can do in this instance is get the hell out of the way. Provide a good public education system, keep taxes and government spending low, reduce if not dismantle the entitlement programs – which are killing us – protect intellectual property by keeping our patent system strong, secure the borders so labor rates aren’t driven down, encourage savings, and cut most regulations. Those things will work and we will be way more dynamic than China.

  8. tassius November 20, 2017 at 6:53 am

    Musk is a huckster and clueless. If you’re going to back somebody go with Dyson (as in the vacuum cleaners) who actually has a positive track record.

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