> Second, when you're logged in, stories on /newest and on /item pages have 'past' and 'web' links. Click on 'past' to search HN for previous stories with that title. This helps with finding duplicates. Click on 'web' go to a Google search for the story title. This helps with finding better sources and catching spam.
PSA time: The new way to get around the WSJ paywall is to add /amp before /article... which will show you the complete Accelerated Mobile Page (which, frankly, looks way better anyway)
This question makes sense to me. I believe this question, after considering the challenges of monetizing media while maintaining journalistic quality and integrity, is worth considering seriously and deeply.
Money value changes though. In the internet text is so cheap that its unreasonable to ask for money for it. That's just how it is. I personally, don't like rain clouds, but I have to accept that water makes me wet. Get over it.
Man, comments on that article are certainly ugly. I wonder why subsidies for Solar/EVs are viewed so negatively while ones for farming/oil/etc are almost ignored.
I don't think many people realize how prevelant this is. PR firms try to move public opinion by making their clients interests seem like popular opinion.
Every year of delay in renewables supplanting fossil fuels means hundreds of billions of dollars to the fossil fuels industry.
While the west has removed subsidies on oil mostly (but don't tax it either), developing countries over the world have spend a considerable portion of their budget subsidizing the oil industry.
Renewable energy subsidies are not even 1% of them aggregate.
I'm not sure what you mean by the west doesn't tax oil. Just off the top of my head, oil is subject to the following taxes:
* Consumer purchases of the final products of oil are heavily taxed (especially in Europe).
* Oil companies pay significant income tax. Exxon alone paid over $5.5B, or about 25% of net profit, in taxes last year, while in 2013 they paid closer to 42%. [1]
* After they pay income tax, their dividends are taxes again.
I'm sure there are other invisible taxes throughout the production and rights-acquisition process.
Car ownership is extremely broad across all income groups in the United States, see http://www.newgeography.com/content/002666-how-lower-income-.... The overwhelming majority of income taxes are paid by high earners, with the the top 10% paying close to 70% of all income taxes. If roads are subsidized by income taxes in addition to gas taxes, they are being paid for in an extremely progressive way. Effectively, roads are provided for free to over half the population.
Or maybe I misunderstood and you are trying to make a different point?
Half the population doesn't pay gas taxes? You're aware that they do. That was a silly thing to say. Gas taxes may be trivial to the portion of the population that pays most of the income taxes, but I doubt the bottom half thinks of them that way.
You need to show what portion of the road cost is paid for by income taxes before you can claim the rest.
I don't understand why you brought any of this up. A subsidy is a subsidy no matter who pays.
You are correct that I made an error in my calculation, but my point still largely stands.
I took the parent at face value for the claim that 50% of roads are funded by use fees. That means the other 50% are paid for with general income taxes. Nearly all income taxes are paid for by the top half of earners. If we assume that everyone drives about the same amount, then the bottom half of the country gets the full value and use of roads while only paying for 25% of the total cost.
I bring this up because the parents point seemed to be that road subsidies are an implicit subsidy to oil companies. But people need to get around somehow, and the current way of funding roads should be perfectly compatible to conventional morality.
At the same time, I oppose all subsidies and can only imagine the amazing methods of transport that would exist if the government did not actively interfere and manage this market.
Please point out a specific military intervention that was intended to protect the property rights of American oil companies. I am not sure I've ever seen one, quite the opposite. The United States has, in every instance, left oil companies to defend themselves when their facilities and technology are nationalized by foreign nations.
The GP's point is that there are signficant Oil subsidies. But the data in that link indicates that the overwhelming majority of subsidies are going directly to renewables and energy efficiency.
What is the salient data point from that link that you would like to highlight?
> The study found that oil, natural gas, and coal received $369 billion, $121 billion, and $104 billion (2010 dollars), respectively, or 70% of total energy subsidies over that period. Oil, natural gas, and coal benefited most from percentage depletion allowances and other tax-based subsidies, but oil also benefited heavily from regulatory subsidies such as exemptions from price controls and higher-than-average rates of return allowed on oil pipelines.
There really isn't enough detail there, but what detail there is suggests those numbers are completely made up.
You left out the part where the report covers the period of 1950-2010 - a 60 year period. A multi-decade accounting isn't useful when we are discussing the current state of subsidies across industries.
The tax-based "subsidies" appear to just be referring to the ability to write off expenses, an aspect of the tax code that is nearly universal to every industry in all nations. There are very, very few examples of income taxes that do not allow the write-off of expenses.
The second part of that summary, referring to "exemptions" from economic regulations, is bizarre. We don't generally have price controls or limits on the rate of return in the United States. It seems like that report probably just chose arbitrary numbers for what it felt the profit rate should have been, and added the difference between that and the real numbers into the subsidy number. That is more an argument for communism than anything related to a discussion about subsidy policy.
You also left out the part where the real subsidies, those to the renewables industries, are actual giveaways of money.
I'm not sure how an honest inquiry could make these mistakes and engage in these false comparisons, which probably explains why you used a throwaway account to post.
The wikipedia article has citations and external links, which are far more trustworthy than your hand waving and bullshit which you just made up on the spot.
> There really isn't enough detail there, but what detail there is suggests those numbers are completely made up.
Read the report, it has plenty of details, I don't really feel like spoonfeeding an ignorant and dishonest bullshitter.
> A multi-decade accounting isn't useful when we are discussing the current state of subsidies across industries.
Of course it's useful, just because it doesn't agree with your opinion doesn't make it irrelevant.
> The tax-based "subsidies" appear to just be referring to the ability to write off expenses, an aspect of the tax code that is nearly universal to every industry in all nations.
No, there are specific tax subsidies, which is why it is mentioned explicitly. Not sure why you are handwaving and trying to imagine a reality which agrees with your retarded opinion.
> There are very, very few examples of income taxes that do not allow the write-off of expenses.
Blah blah. Not even worth arguing.
> The second part of that summary, referring to "exemptions" from economic regulations, is bizarre. We don't generally have price controls or limits on the rate of return in the United States.
There are many price controls in the US, once again you are showing your extreme ignorance.
> It seems like that report probably just chose arbitrary numbers for what it felt the profit rate should have been, and added the difference between that and the real numbers into the subsidy number.
No, it's just that you are very stupid and dishonest.
> That is more an argument for communism than anything related to a discussion about subsidy policy.
The International Monetary Fund had a detailed report. Here is a Guardian article about it (admittedly, not the most impartial one either, but the report speaks for itself):
That is a terrible report. The numbers are entirely made up. And its condemnation of China is shockingly immoral, essentially calling for policy changes that would amount to genocide.
The WSJ editorial line is to get rid of all of the subsidies, so you can't fault them there. Unfortunately, subsidies have constituencies, and challenging farm subsidies is considered to be political suicide for both parties. Interestingly, Ted Cruz was able to win the Iowa primary this year despite being an advocate for abolishing farm subsidies.
Repealing farm subsidies isn't the best way to use your precious political capital as President. The fact that these programs are so hard to repeal is the reason why Republicans are obstructionists. A government program is the closest thing to eternal life in this world, so the best chance to stop it is at genesis. An honest leftist understands this too and accounts for it in their policies.
Also, it's not really true that oil is that subsidized in the US. Most of the headline numbers include general foreign tax credits and business expense and R&D write-offs, which have nothing to do with oil in particular, as well as heating assistance for poor families.
Does their editorial line include cutting the implicit subsidy of allowing people to pollute without paying for the costs, or do they consider that to be in the "not a subsidy" category?
Right-wing media (Not this article, but the outlet is owned by Rupert Murdoch) generally paints solar with a broad brush as an industry relying purely on government subsidy for its existence and removal of such would = their demise. There is of course large conflicts of interest because fossil fuel interests are politically aligned with conservatives in America (I'd assume so in the EU too?).
Is your claim that solar energy would not collapse if subsidies were removed? I can think of a few examples of solar firms that failed even after being given massive subsidies.
I'm not sure to which conflict you refer when you mention an alignment of interests between fossil fuels and conservatives.
And I'm not sure how the conflict, whatever it is, relates to whether or not solar companies have a viable business model.
> I can think of a few examples of solar firms that failed even after being given massive subsidies.
Many car companies have collapsed over the last century. I assume the intention of a subsidy is to support the industry as well as the specific company?
Farm subsidies are justified based on a perception of unfair competition. That farmers would make a loss without help.
You can actually make exactly the same argument about renewable energy. We invested in clean energy because it is a superior, but more expensive product. Fossil fuels are able to compete unfairly by selling a dirty product for less. Without subsidies solar would be forced to track the price of fossil fuels. As oil gets cheaper, solar becomes less profitable.
I've heard a number of arguments in favor of farm subsidies, but never one based on "unfair" competition. I'm curious about what you mean. American farmers are incredibly competitive and efficient, so I'm not sure who they could be threatened by.
And I'm not sure how you are relating that point to "clean energy". You say solar should be subsidized because it is a superior product. Are American farm products somehow superior as well? Is grain from the mid-west some how better than grain from Europe? Or is corn syrup cleaner than sugar cane from Cuba?
Farmers make no money. The government-supported crop insurance means they don't lose money as fast.
And unfair? We use that word to describe cars, steel, electronics but not grain? A Brazilian farmer can grow grain, haul it using donkeys to a barge, sail it down river to the coast, pay for shipping on a grain scow, and load it on a train to Chicago, for less than farmers in Iowa can afford to grow it. Its got to mean miserable working conditions for people in that whole chain. Is this any different from clothing or iPhones?
My roommate in college worked on his parents farm every summer and while he worked a lot of hours, he made would make about $25,000 dollars. That's more than any of anyone I know made during the summer except for me (I only made more cause my company paid for my hotel that I lived in plus the taxes on it which were both ludicrous).
My family. Our neighbors. The farm accountant, who says nobody he works for makes any money. Sure its just a few data points, but its darn hard to profit with erratic markets and weather. Maybe make money one year in three.
Farm subsidies are why farmers are poor, often working at a loss. That's because farm subsidies means you need to plant either corn or soy, just like everyone else, dropping the price of corn or soy, making farmers rely even more on subsidies and planting even more corn or soy. And people are right, you'll be working at a loss, if you plant corn or soy. Of course the solution would be to break the cycle, but then CAFOs would be in trouble without so much cheap corn to feed their cattle, they'll wonder how to achieve those liver abscesses, which in turn will strike a blow to big pharma.
Fossil fuels compete unfairly by deferring externalities to future generations. The full cost of coal electricity would price in the Manhattan seawall and the complete reconstruction of Miami not to mention whatever ocean acidification does (scarier than climate IMHO).
I strongly assert that you do not understand the political impetus behind farm subsidies, the damage they do, and the strong economic case that they should not exist
I know, right?? I was perusing them in disbelief. They seem planted. It's just amazing to me.
People focus on SpaceX's government contracts, disregarding the MASSIVE subsidies ULA receives and disregarding the fact that SpaceX is dropping the price of rocket launches like a brick off a cliff, which will (obviously??) save far, far more taxpayer money in the long run than if SpaceX had not done this.
People focus on Tesla's subsidies, but ignore the massive bailouts given to the other auto manufacturers and ignore the future potential of Tesla to bring large amounts of jobs and money into the US as the cars are exported around the world. They ignore how much money will be saved by a cleaner environment in the long run, in healthcare costs and environmental costs. They overlook that Tesla paid back all its government loans with interest, making it a solid investment. They ignore everything relevant.
And with SolarCity, people focus on it having received some small amount of subsidies while disregarding the fact that a future where we don't have to pay electric bills or gas bills will save us all far more than we might have to spend in taxes now.
These people seem to imagine that Musk's companies are taking up valuable money that could have been used elsewhere, but truly, what better use for money than to break the mold of dysfunctional legacy infrastructure?
Lobbying groups are known to pay people to comment spam like this. The irony is too great though, the oil/gas industry has about $6 trillion in subsidies per year when you factor in environmental damage.
If the companies are creating products that do health/environmental damage that the taxpayers have to fix, how is it silly? Say a given Toyota does $500 worth of environmental damage in its lifetime, and the government pays to repair it. Is that not a $500 subsidy, a fee handled by taxpayers which the responsible party (Toyota) is somehow permitted to ignore?
If the companies are creating products that do health/environmental damage that the taxpayers have to fix, how is it silly?
A few reasons why it's silly. You can't accurately measure it, so it's a somewhat useless metric. Also, everything is interdependent if you look at it that way.
Rich people are being subsidized by landlords due to rent control!
Alcohol companies are being subsidized because they don't pay for crashes caused by drunk drivers.
I've seen research indicating that tobacco users actually cost the Canadian healthcare system less overall: they die ~5 years younger, and healthcare costs go up with age.
You're comparing a statistic of one population (smokers) with a different stat of another (general population). There's no conclusions to draw from that.
E.g. healthcare costs go up with age because that's when people start dying. Smokers die at an earlier age, so they experience those costs earlier. Is this correct? Who knows, but it's one of the many ways in which the argument you wrote could be invalid.
You are quite right and I could have been more clear. In this case they specifically looked at the total healthcare costs and still concluded it was cheaper. Unfortunately I don't have a link and feel a strong [citation needed] flag is warranted.
Furthermore, healthcare costs don't reflect the complete picture. Firstly, lost productivity is an issue. Secondly, we may not want a society where ritual suicide is encouraged at a pre-determined age with the goal of reducing healthcare costs.
The same is certainly true in Australia. Smokers cost the healthcare system far less because they die sooner and faster. Of course, the value and efficiency of a healthcare system isn't measured in how little you can spend per a person but instead at what cost can you keep people healthy. In the case of smokers there's no way at any price point for the healthcare system to provide long term positive outcomes so it ends up being cheaper. That's not a good thing.
Obviously I know this isn't what you're arguing. You're right in saying that alcohol and tobacco taxes aren't used to offset higher costs to healthcare. In most cases they're supposed to be a cost pressure to change consumption.
> and ignore the future potential of Tesla to bring large amounts of jobs
Once Tesla stabilises, they'll be looking to move manufacturing jobs offshore, just like any other manufacturer. 'Future manufacturing jobs aplenty', without some significant social changes, is a pipe dream.
>Once Tesla stabilises, they'll be looking to move manufacturing jobs offshore
I'm sure that some jobs will be created offshore, but I doubt that the worlds largest battery factory is just going to be shut down and moved to Shenzhen.
I understand when he puts his money where his mouth is, but is it ok for him to fund one company with another when they're in different businesses and he's not the only shareholder?
I don't know all the details, but it seems a little strange.
The article lists out several unusual practices. Buying bonds was just one of them.
The bond purchase would have been approved by the board which would have considered if it was a good investment, those details we do not have. Maybe they were tax exempt, highly rated, secured and carried higher interest?
The bonds are great for investors because most of the the terms in there are designed to screw over the customer. These bonds are securitizations of SolarCity leased solar panel rooftop systems. The salesmane I met with in NY told me that was the only way I could get SolarCity panels installed at my home is if I signed the solar lease agreement (which would then be securitized into these bonds).
The lease says that if you default on the lease, by missing a single payment, SolarCity has the right to take back the panels, but you are still liable for the remainder of the lease payments even though you no longer have the panels.
Holds up just fine if you default on a vehicle lease (repossession, you're on the hook for the remaining balance). Why would solar panels be different? Because its on your roof instead of in your garage?
Hm, in section 16 you also have to pay them for all costs, and you still owe for the rest of the lease, plus compensation for loss of their investment tax credits.
Default is also triggered if you sell the house, the person buying it assumes the lease, but later has his credit rating drop.
Does anyone know if there are cases of that being enforced? It sounds to me like the sort of thing that is thrown in by some overzealous lawyers just because they can.
Still, definitely not a good thing to sign though.
Is there an ELI5 version of this somewhere ? I understand some part of it but as a non-native english reader and not-so-financial guy it makes it hard to grasp it all.
ELI5: Musk borrows money from banks for his companies. He uses his own stock in these companies as a collateral, which means that they bank can claim the stock from him if he fails to repay them in the long run. It also means that if the stock starts dropping in value, the banks can take it from him and sell it as a precautionary move, since if it dropped too much they would have nothing.
If the banks were to do this, in theory this would hurt the companies. Right there is where my understanding drops off. Can someone else finish the narrative? Why would the banks selling off the stock collateral hurt Tesla ? How is it any different from me selling my stocks and someone else buying them? How does Tesla lose anything there?
Just speculating from what you said because I don't have a WSJ subscibtion but it could be that if the banks sell Musk's stock he can't call the shots anymore and bad decisions happen.
That and if people hear that the banks are selling stock they could think: omg must sell now before loosing everything because they must have reasons to sell it
It hurts the other shareholders a lot more than it hurts the companies. The stock price would drop precipitously if a huge block of shares was sold like that. The main way I see it hurting the companies is that stock price is a proxy for the value of the companies that can affect their ability to borrow or raise more capital through selling stock.
Sigh! tbh the wsj comments on this particular issue are mostly accurate, though the other issues are debatable.
1. Tsla is quite volatile.
2. If it drops significantly by some Y%, Musk's shares which are used as collateral would be called.
3. When that margin call gets triggered he'd be forced to sell X shares to meet it.
4. X is very large.
5. Since X is large, you have a ton of tsla on the market with no demand. Price will drop like a rock, by some Z%.
6. Say I and you hold Tsla shares. Obviously we are OK with a price drop of Y%, because we know the damn thing us volatile, yet we chose to buy into it because we believe in its upside.
7. But just because we are OK with Y% drop due to some macro event doesn't mean we are OK with this Z% additional drop due to the way Musk structured his personal investments.
In other words, ordinary investors could end up losing a ton of money (y + z) for no fault of their own, than if they had just lost y% which they had signed up for. Depending on what numbers you attach to y and z, you can make the case this is unfair or very unfair.
For his part, Musk claims the probability of the above is low, though definitely nonzero in today's uncertain market conditions.
I understand and at the same time there's one little thing I'm missing which has always mystified me about stocks:
Who sets "the price"?
I understand that if a large amount of shares appear on the market with no demand, the entity selling them will lower the price in an effort to sell them. But how does that factor into "the price" that the stock is worth across the market from any/all sellers? How is that calculated? Is it just whatever the stock last sold for?
Yes, the stock price represents the last transaction.
If you are looking at a stock trading platform, you will usually also see "Current Ask" and "Current Bid" representing standing sell and buy prices (respectfully) for the stock.
Re: the last transaction, what if I sell someone a couple shares of Microsoft stock for $1? That obviously wouldn't affect the stock. Is there some mathematical expression of amount of stock that has to be sold to impact the price? Or is it a question of the sale being done by certain authorized entities?
BTW, if you don't see "reply" under this comment like I don't for yours, you can go to my profile page and "comments" and then you will see the "reply" link.
I think if you're a member of the public trading on an exchange, all you can do is ask an authorised entity to accept the "bid" or "ask" price (mentioned by brwnll above), which are set by other authorised entities. Maybe you can trade at another price by not using the exchange, in which case the market price would not reflect that trade, but I imagine that it would typically be difficult to find someone to trade with unless (maybe even if) you set a generous price.
I don't know, but maybe donating securities to charity and accepting a takeover bid could be considered examples of off-exchange trading.
If an authorised entity wanted to set an unusual "bid" or "ask" price, I think that would either trigger a trade (if it made the "bid" higher than the "ask") or (otherwise, assuming other authorised entities don't follow suit) merely signal that particular entity's unwillingness to trade that security at that the prevailing market price and have no effect on the market price.
I don't know whether this differs from exchange to exchange.
To put it simply, the price is chosen to allow the biggest number of transactions or, alternatively, the biggest turnover at any given moment.
Example:
Price Buy Sell
124 € 130 pcs 50 pcs
125 € 120 pcs 90 pcs
126 € 70 pcs 90 pcs
127 € 30 pcs 100 pcs
In this case, the price would be 125 €. 90 transactions can happen at this price; there is no other price which allows more transactions to happen because of the supply and demand constraints.
A mass selloff would depress the stock price, which in turn could lead to more people dumping the stock, creating a downward spiral. Not only would this hurt the company's investors, it would seriously impact their ability to raise capital in the future.
(Though that's probably true anyway if the banks decide to call the loan. By doing so they're basically saying they don't believe the company can repay its debts, and other potential lenders would either stay away or demand more onerous terms.)
Note I said "could" -- the actual effects depend on how much stock is being pledged and how quickly banks would try to dump it. Regardless, it would be huge negative news and affect the stock price negatively. Look at how Apple's stock got punished because iPhone sales have stopped growing.
> He has had a string of triumphs lately... Tesla shares are up 77% since Feb. 10.
Seems a bit disingenuous to cite a stock price recovery without mentioning its preceding collapse. (they do have a more balanced chart later on in the article)
Not only is there a chart, but the article also includes the sentence "Tesla fell 40% from the end of December to February, but has since erased those declines."
WSJ has a target on Elon Musk's back. Every week they post something negative about him or his companies. I have a couple of conservative friends who have an irrational hatred for Elon. They rail how everything Elon Musk does is a "scam". The WSJ comments are a reflection of that mindset. More broadly, I wonder why WSJ and some conservatives set a target on Elon. There are literally a gazillion subsidies, tax credits, offshore accounting going around. For example, Hollywood shoots their movies wherever they get tax credits. Texas has attracted large back office operations using tax credits. Data center locations are chosen based upon which state government throws in the most benefits. It seems odd that they would spent so much energy on Musk, whose subsidies are probably a rounding error. It makes me wonder if there are bigger things at stake. Are the WSJ overlords really scared that he is making material changes to energy and transportation that could hurt them ?
LA Times is pretty conservative too. I have friends and family in LA who are, fairly liberal, and they pay for the New York Times rather than get local bias.
Ha ! When did I generalize conservatives ? I said a couple of my conservative friends have this line of thought aligned with the comments. I was also just commenting on WSJ's motivation and not conservatives in general. Obviously not all conservatives are anti-Musk. I am not even sure that majority are. But there is no denying that there is a strain of conservatives who have strong anti-Musk sentiments.
Let's replace CONSERVATIVES by WHITES in your statement. You tell me if you generalized.
"WSJ has a target on Elon Musk's back. Every week they post something negative about him or his companies. I have a couple of WHITE friends who have an irrational hatred for Elon. They rail how everything Elon Musk does is a "scam". The WSJ comments are a reflection of that mindset. More broadly, I wonder why WSJ and some WHITES set a target on Elon. There are literally a gazillion subsidies, tax credits, offshore accounting going around. For example, Hollywood shoots their movies wherever they get tax credits. Texas has attracted large back office operations using tax credits. Data center locations are chosen based upon which state government throws in the most benefits. It seems odd that they would spent so much energy on Musk, whose subsidies are probably a rounding error. It makes me wonder if there are bigger things at stake. Are the WSJ overlords really scared that he is making material changes to energy and transportation that could hurt them ?"
>I wonder why WSJ and some conservatives set a target on Elon.
Because he has made some very powerful enemies. SpaceX encroached on ULA's turf in the military satellite launch business with a vastly more cost-effective solution. SolarCity is making energy utilities across the country nervous because it threatens their monopoly (just read about the so far successful push from Buffett's NV Energy to stop the advance of distributed solar in the state of Nevada). Tesla just sent Detroit into catatonia with the Model 3 launch and their (almost sure to be a) half-million reservations for a car that will exist only in two or more years.
None of these forces will go silently into the night. This feels like a deliberate, coordinated attack that hits Musk personally, and all three of his companies at once.
WSJ is owned by Rupert Murdoch, who has done very little positive in his career other than sell trashy newspapers, diminished those media who once were decent, manipulate political power (Tony Blair, Thatcher etc) for his own commercial interests - including pushing UK away from the EU. His newspapers were shut down as they were involved in phone hacking dead children, amongst other things.
Elon Musk wants to tackle climate change, build safe open artificial intelligence and go to Mars...
>I wonder why WSJ and some conservatives set a target on Elon.
Conservation as a general concept is about preservation, tradition, limiting change. I'm sure there's plenty of people who align with conservative values for other reasons (as I'm sure most don't have a problem with Elon), but that doesn't change the fact that a lot of people are opposed to change in general. They like the way things have been and the way things are. They have a good thing going. They don't want to risk a future they might not like. They don't want to have to learn a new future. They don't want to have to worry or think about learning a new future.
Hell, I get it and I consciously chose to go in to web dev! I can find out about a new tool that will make my life easier and still have an initial reaction of "damn it, not another one!".
I've noticed that too with some friends. Tesla has been a really popular short position for traders over the past year and (you guessed it) they're all taking a bath right now. It'd be interesting to see what role WSJ coverage has in that.
Is that true? The topic page linked in the article http://topics.wsj.com/person/E/Elon-Musk/1173 presents a variety of articles. Using SpaceX money to buy SCTY's unrated bonds is a fairly questionable maneuver - were investors from SpaceX's last round aware the money would be used this way, and if so, why didn't they just purchase SCTY bonds directly?
WSJ was also super-negative on Theranos, just to throw it out there, as tech press was being busy singing accolades to yet another unicorn.
In general, a responsible CEO should utilize any legally defensible opportunities to operate the company profitably.
By subsidizing Tesla, the Federal Government is effectively investing in it. Tesla then utilizes tax concessions from Nevada to reduce the cost of building and operating the gigafactory. So in a sense, Tesla is spending the money invested by the Federal Government wisely.
If voters are not happy about the subsidy strategies of the government in general, they should be aiming their ire at their political representatives, not the companies that benefit from the subsidies.
>The financial transactions have raised questions on Capitol Hill, where some lawmakers are concerned that money from federal contracts with SpaceX could be used to help SolarCity.
Do these people not understand that money is fungible? It's like pouring two glasses of water into a pitcher and then trying to separate them again.
127 comments
[ 4.2 ms ] story [ 174 ms ] thread> Second, when you're logged in, stories on /newest and on /item pages have 'past' and 'web' links. Click on 'past' to search HN for previous stories with that title. This helps with finding duplicates. Click on 'web' go to a Google search for the story title. This helps with finding better sources and catching spam.
Every year of delay in renewables supplanting fossil fuels means hundreds of billions of dollars to the fossil fuels industry.
Perhaps you would explain to which oil subsidies you are referring?
Renewable energy subsidies are not even 1% of them aggregate.
* Consumer purchases of the final products of oil are heavily taxed (especially in Europe).
* Oil companies pay significant income tax. Exxon alone paid over $5.5B, or about 25% of net profit, in taxes last year, while in 2013 they paid closer to 42%. [1]
* After they pay income tax, their dividends are taxes again.
I'm sure there are other invisible taxes throughout the production and rights-acquisition process.
[1]: https://finance.yahoo.com/q/is?s=XOM+Income+Statement&annual
Or maybe I misunderstood and you are trying to make a different point?
You need to show what portion of the road cost is paid for by income taxes before you can claim the rest.
I don't understand why you brought any of this up. A subsidy is a subsidy no matter who pays.
I took the parent at face value for the claim that 50% of roads are funded by use fees. That means the other 50% are paid for with general income taxes. Nearly all income taxes are paid for by the top half of earners. If we assume that everyone drives about the same amount, then the bottom half of the country gets the full value and use of roads while only paying for 25% of the total cost.
I bring this up because the parents point seemed to be that road subsidies are an implicit subsidy to oil companies. But people need to get around somehow, and the current way of funding roads should be perfectly compatible to conventional morality.
At the same time, I oppose all subsidies and can only imagine the amazing methods of transport that would exist if the government did not actively interfere and manage this market.
For this sub-thread, that is where. Unless you think the US military is out defending foreign oil companies?
What is the salient data point from that link that you would like to highlight?
Which part confuses you?
You left out the part where the report covers the period of 1950-2010 - a 60 year period. A multi-decade accounting isn't useful when we are discussing the current state of subsidies across industries.
The tax-based "subsidies" appear to just be referring to the ability to write off expenses, an aspect of the tax code that is nearly universal to every industry in all nations. There are very, very few examples of income taxes that do not allow the write-off of expenses.
The second part of that summary, referring to "exemptions" from economic regulations, is bizarre. We don't generally have price controls or limits on the rate of return in the United States. It seems like that report probably just chose arbitrary numbers for what it felt the profit rate should have been, and added the difference between that and the real numbers into the subsidy number. That is more an argument for communism than anything related to a discussion about subsidy policy.
You also left out the part where the real subsidies, those to the renewables industries, are actual giveaways of money.
I'm not sure how an honest inquiry could make these mistakes and engage in these false comparisons, which probably explains why you used a throwaway account to post.
http://www.imf.org/external/pubs/cat/longres.aspx?sk=42940.0
> There really isn't enough detail there, but what detail there is suggests those numbers are completely made up.
Read the report, it has plenty of details, I don't really feel like spoonfeeding an ignorant and dishonest bullshitter.
> A multi-decade accounting isn't useful when we are discussing the current state of subsidies across industries.
Of course it's useful, just because it doesn't agree with your opinion doesn't make it irrelevant.
> The tax-based "subsidies" appear to just be referring to the ability to write off expenses, an aspect of the tax code that is nearly universal to every industry in all nations.
No, there are specific tax subsidies, which is why it is mentioned explicitly. Not sure why you are handwaving and trying to imagine a reality which agrees with your retarded opinion.
> There are very, very few examples of income taxes that do not allow the write-off of expenses.
Blah blah. Not even worth arguing.
> The second part of that summary, referring to "exemptions" from economic regulations, is bizarre. We don't generally have price controls or limits on the rate of return in the United States.
There are many price controls in the US, once again you are showing your extreme ignorance.
> It seems like that report probably just chose arbitrary numbers for what it felt the profit rate should have been, and added the difference between that and the real numbers into the subsidy number.
No, it's just that you are very stupid and dishonest.
> That is more an argument for communism than anything related to a discussion about subsidy policy.
Hahahaha.
http://www.theguardian.com/environment/2015/may/18/fossil-fu...
Repealing farm subsidies isn't the best way to use your precious political capital as President. The fact that these programs are so hard to repeal is the reason why Republicans are obstructionists. A government program is the closest thing to eternal life in this world, so the best chance to stop it is at genesis. An honest leftist understands this too and accounts for it in their policies.
Also, it's not really true that oil is that subsidized in the US. Most of the headline numbers include general foreign tax credits and business expense and R&D write-offs, which have nothing to do with oil in particular, as well as heating assistance for poor families.
Is your claim that solar energy would not collapse if subsidies were removed? I can think of a few examples of solar firms that failed even after being given massive subsidies.
I'm not sure to which conflict you refer when you mention an alignment of interests between fossil fuels and conservatives.
And I'm not sure how the conflict, whatever it is, relates to whether or not solar companies have a viable business model.
Many car companies have collapsed over the last century. I assume the intention of a subsidy is to support the industry as well as the specific company?
You can actually make exactly the same argument about renewable energy. We invested in clean energy because it is a superior, but more expensive product. Fossil fuels are able to compete unfairly by selling a dirty product for less. Without subsidies solar would be forced to track the price of fossil fuels. As oil gets cheaper, solar becomes less profitable.
- Harmful emissions killing thousands [1]
- Degradation of environment such as water contamination.
- Geo-political implications.
[1] - http://www.ehhi.org/reports/exhaust/summary.shtml
And I'm not sure how you are relating that point to "clean energy". You say solar should be subsidized because it is a superior product. Are American farm products somehow superior as well? Is grain from the mid-west some how better than grain from Europe? Or is corn syrup cleaner than sugar cane from Cuba?
And unfair? We use that word to describe cars, steel, electronics but not grain? A Brazilian farmer can grow grain, haul it using donkeys to a barge, sail it down river to the coast, pay for shipping on a grain scow, and load it on a train to Chicago, for less than farmers in Iowa can afford to grow it. Its got to mean miserable working conditions for people in that whole chain. Is this any different from clothing or iPhones?
Source?
My roommate in college worked on his parents farm every summer and while he worked a lot of hours, he made would make about $25,000 dollars. That's more than any of anyone I know made during the summer except for me (I only made more cause my company paid for my hotel that I lived in plus the taxes on it which were both ludicrous).
I strongly assert that you do not understand the political impetus behind farm subsidies, the damage they do, and the strong economic case that they should not exist
People focus on SpaceX's government contracts, disregarding the MASSIVE subsidies ULA receives and disregarding the fact that SpaceX is dropping the price of rocket launches like a brick off a cliff, which will (obviously??) save far, far more taxpayer money in the long run than if SpaceX had not done this.
People focus on Tesla's subsidies, but ignore the massive bailouts given to the other auto manufacturers and ignore the future potential of Tesla to bring large amounts of jobs and money into the US as the cars are exported around the world. They ignore how much money will be saved by a cleaner environment in the long run, in healthcare costs and environmental costs. They overlook that Tesla paid back all its government loans with interest, making it a solid investment. They ignore everything relevant.
And with SolarCity, people focus on it having received some small amount of subsidies while disregarding the fact that a future where we don't have to pay electric bills or gas bills will save us all far more than we might have to spend in taxes now.
These people seem to imagine that Musk's companies are taking up valuable money that could have been used elsewhere, but truly, what better use for money than to break the mold of dysfunctional legacy infrastructure?
Your argument seems a little silly.
That seems much more clearcut than who exactly benefits from various economic policies and government actions.
A few reasons why it's silly. You can't accurately measure it, so it's a somewhat useless metric. Also, everything is interdependent if you look at it that way.
Rich people are being subsidized by landlords due to rent control!
Alcohol companies are being subsidized because they don't pay for crashes caused by drunk drivers.
It goes on and on and it doesn't add much value.
E.g. healthcare costs go up with age because that's when people start dying. Smokers die at an earlier age, so they experience those costs earlier. Is this correct? Who knows, but it's one of the many ways in which the argument you wrote could be invalid.
Furthermore, healthcare costs don't reflect the complete picture. Firstly, lost productivity is an issue. Secondly, we may not want a society where ritual suicide is encouraged at a pre-determined age with the goal of reducing healthcare costs.
Obviously I know this isn't what you're arguing. You're right in saying that alcohol and tobacco taxes aren't used to offset higher costs to healthcare. In most cases they're supposed to be a cost pressure to change consumption.
Smokers are subsidizing everyone!! How do you solve for that?
is a really impressive moment in history
Once Tesla stabilises, they'll be looking to move manufacturing jobs offshore, just like any other manufacturer. 'Future manufacturing jobs aplenty', without some significant social changes, is a pipe dream.
I'm sure that some jobs will be created offshore, but I doubt that the worlds largest battery factory is just going to be shut down and moved to Shenzhen.
I don't know all the details, but it seems a little strange.
edit: (It does also mention the large personal loans)
The bond purchase would have been approved by the board which would have considered if it was a good investment, those details we do not have. Maybe they were tax exempt, highly rated, secured and carried higher interest?
The lease says that if you default on the lease, by missing a single payment, SolarCity has the right to take back the panels, but you are still liable for the remainder of the lease payments even though you no longer have the panels.
https://www.solarcity.com/sites/default/files/sc-contract-re...
Default is also triggered if you sell the house, the person buying it assumes the lease, but later has his credit rating drop.
Still, definitely not a good thing to sign though.
If you follow TSLA, they play with their financials as well; unusual metrics, things vaguely reported, metrics disappearing.
At best, it's risky. Personally, I think it's a tad shady. But around here it's fine, because it's Elon Musk not a banker.
If the banks were to do this, in theory this would hurt the companies. Right there is where my understanding drops off. Can someone else finish the narrative? Why would the banks selling off the stock collateral hurt Tesla ? How is it any different from me selling my stocks and someone else buying them? How does Tesla lose anything there?
That and if people hear that the banks are selling stock they could think: omg must sell now before loosing everything because they must have reasons to sell it
That's my 2 cents not an economist in any way
1. Tsla is quite volatile. 2. If it drops significantly by some Y%, Musk's shares which are used as collateral would be called. 3. When that margin call gets triggered he'd be forced to sell X shares to meet it. 4. X is very large. 5. Since X is large, you have a ton of tsla on the market with no demand. Price will drop like a rock, by some Z%. 6. Say I and you hold Tsla shares. Obviously we are OK with a price drop of Y%, because we know the damn thing us volatile, yet we chose to buy into it because we believe in its upside. 7. But just because we are OK with Y% drop due to some macro event doesn't mean we are OK with this Z% additional drop due to the way Musk structured his personal investments.
In other words, ordinary investors could end up losing a ton of money (y + z) for no fault of their own, than if they had just lost y% which they had signed up for. Depending on what numbers you attach to y and z, you can make the case this is unfair or very unfair. For his part, Musk claims the probability of the above is low, though definitely nonzero in today's uncertain market conditions.
Who sets "the price"?
I understand that if a large amount of shares appear on the market with no demand, the entity selling them will lower the price in an effort to sell them. But how does that factor into "the price" that the stock is worth across the market from any/all sellers? How is that calculated? Is it just whatever the stock last sold for?
If you are looking at a stock trading platform, you will usually also see "Current Ask" and "Current Bid" representing standing sell and buy prices (respectfully) for the stock.
BTW, if you don't see "reply" under this comment like I don't for yours, you can go to my profile page and "comments" and then you will see the "reply" link.
I don't know, but maybe donating securities to charity and accepting a takeover bid could be considered examples of off-exchange trading.
If an authorised entity wanted to set an unusual "bid" or "ask" price, I think that would either trigger a trade (if it made the "bid" higher than the "ask") or (otherwise, assuming other authorised entities don't follow suit) merely signal that particular entity's unwillingness to trade that security at that the prevailing market price and have no effect on the market price.
I don't know whether this differs from exchange to exchange.
Example:
Price Buy Sell
124 € 130 pcs 50 pcs
125 € 120 pcs 90 pcs
126 € 70 pcs 90 pcs
127 € 30 pcs 100 pcs
In this case, the price would be 125 €. 90 transactions can happen at this price; there is no other price which allows more transactions to happen because of the supply and demand constraints.
(Though that's probably true anyway if the banks decide to call the loan. By doing so they're basically saying they don't believe the company can repay its debts, and other potential lenders would either stay away or demand more onerous terms.)
Note I said "could" -- the actual effects depend on how much stock is being pledged and how quickly banks would try to dump it. Regardless, it would be huge negative news and affect the stock price negatively. Look at how Apple's stock got punished because iPhone sales have stopped growing.
Seems a bit disingenuous to cite a stock price recovery without mentioning its preceding collapse. (they do have a more balanced chart later on in the article)
https://en.wikipedia.org/wiki/Newspaper_endorsements_in_the_...
>I wonder why WSJ and conservatives set a target on Elon.
"WSJ has a target on Elon Musk's back. Every week they post something negative about him or his companies. I have a couple of WHITE friends who have an irrational hatred for Elon. They rail how everything Elon Musk does is a "scam". The WSJ comments are a reflection of that mindset. More broadly, I wonder why WSJ and some WHITES set a target on Elon. There are literally a gazillion subsidies, tax credits, offshore accounting going around. For example, Hollywood shoots their movies wherever they get tax credits. Texas has attracted large back office operations using tax credits. Data center locations are chosen based upon which state government throws in the most benefits. It seems odd that they would spent so much energy on Musk, whose subsidies are probably a rounding error. It makes me wonder if there are bigger things at stake. Are the WSJ overlords really scared that he is making material changes to energy and transportation that could hurt them ?"
Because he has made some very powerful enemies. SpaceX encroached on ULA's turf in the military satellite launch business with a vastly more cost-effective solution. SolarCity is making energy utilities across the country nervous because it threatens their monopoly (just read about the so far successful push from Buffett's NV Energy to stop the advance of distributed solar in the state of Nevada). Tesla just sent Detroit into catatonia with the Model 3 launch and their (almost sure to be a) half-million reservations for a car that will exist only in two or more years.
None of these forces will go silently into the night. This feels like a deliberate, coordinated attack that hits Musk personally, and all three of his companies at once.
Elon Musk wants to tackle climate change, build safe open artificial intelligence and go to Mars...
Conservation as a general concept is about preservation, tradition, limiting change. I'm sure there's plenty of people who align with conservative values for other reasons (as I'm sure most don't have a problem with Elon), but that doesn't change the fact that a lot of people are opposed to change in general. They like the way things have been and the way things are. They have a good thing going. They don't want to risk a future they might not like. They don't want to have to learn a new future. They don't want to have to worry or think about learning a new future.
Hell, I get it and I consciously chose to go in to web dev! I can find out about a new tool that will make my life easier and still have an initial reaction of "damn it, not another one!".
Elon Musk is the symbol for a lot of change.
Or that if Tesla issues more shares for capital, Elon Musk is the primary buyer.
Or that if there really WAS a costly issue that made the shares plummet, they will plummet further when he gets a margin call.
WSJ was also super-negative on Theranos, just to throw it out there, as tech press was being busy singing accolades to yet another unicorn.
By subsidizing Tesla, the Federal Government is effectively investing in it. Tesla then utilizes tax concessions from Nevada to reduce the cost of building and operating the gigafactory. So in a sense, Tesla is spending the money invested by the Federal Government wisely.
If voters are not happy about the subsidy strategies of the government in general, they should be aiming their ire at their political representatives, not the companies that benefit from the subsidies.
Do these people not understand that money is fungible? It's like pouring two glasses of water into a pitcher and then trying to separate them again.