ROMNEY: ... to oil, to tax breaks, then companies going overseas. So let's go through them one by one.
First of all, the Department of Energy has said the tax break for oil companies is $2.8 billion a year. And it's actually an accounting treatment, as you know, that's been in place for a hundred years. Now...
OBAMA: It's time to end it.
ROMNEY: And in one year, you provided $90 billion in breaks to the green energy world.
Now, I like green energy as well, but that's about 50 years' worth of what oil and gas receives. And you say Exxon and Mobil. Actually, this $2.8 billion goes largely to small companies, to drilling operators and so forth.
ROMNEY: But, you know, if we get that tax rate from 35 percent down to 25 percent, why that $2.8 billion is on the table. Of course it's on the table. That's probably not going to survive you get that rate down to 25 percent.
But don't forget, you put $90 billion, like 50 years' worth of breaks, into -- into solar and wind, to Solyndra and Fisker and Tester and Ener1. I mean, I had a friend who said you don't just pick the winners and losers, you pick the losers, all right? So this -- this is not -- this is not the kind of policy you want to have if you want to get America energy secure.
The second topic, which is you said you get a deduction for taking a plant overseas. Look, I've been in business for 25 years. I have no idea what you're talking about. I maybe need to get a new accountant.
LEHRER: Let's...
ROMNEY: But -- but the idea that you get a break for shipping jobs overseas is simply not the case.
(CROSSTALK)
Regardless, I won't comment on this myself since I can't imagine any thread on this article staying clean...
I figure given the speed of writing, it was a poorly written article to take a soundbite and put it to a pre-existing opinion. It gets clicks and maybe a quick scan without providing the actual context. This is just one example of the next 24 hour news cycle from both side's news outlets. Job numbers hit Friday, so I only expect a day of it.
Romney is comparing money loaned ($90 billion) to money spent ($2.8 billion). As an investor Romney knows the distinction; as a politician he knows that many voters will not.
There's no energy-related company named Tester, though. So I think that was a transcription error by ABC (which does not make the context any less important).
This article is wrong. He wasn't calling them losers he was saying that politicians in general don't have the ability to pick the winners, they can only pick the losers through their policies. He was basically saying that Obama was trying to pick the winners in green but that it wasn't working because the market isn't ready (basically claiming he is failing because government can't make an industry a winner through policy). He was also probably implying that Obama was purposely choosing Oil as the loser.
> This article is wrong. He wasn't calling them losers
He pretty clearly is rattling off a list and then naming them as (a) Obama/gov't picks and (b) losers. Really, the best defense you can get of his comment is "well, that's what Romney said his friend said, not what he personally said."
> He was basically saying that Obama was trying to pick the winners in green but that it wasn't working because the market isn't ready (basically claiming he is failing because government can't make an industry a winner through policy).
Is he correct? Over in a parallel discussion, someone pointed at this piece:
Romney's statement was in the context of his reference to someone's joke making fun of Obama for picking losing companies. He was clearly calling Tesla a loser.
If the government is bad (or simply worse than the free market) at developing new industries, should it stay out of the business of giving subsidies to groundbreaking companies? Should this be left to chance? I suppose a more direct question is this: should we just sit it out and wait for green tech to be right? (Or for oil to be so costly that any alternative is better?)
What about the numerous areas in which government investment/research has paid off (eg. computing)? Could or should the free market today replace this type of public investment?
Not to pick one side or the other, but Tesla was made possible by artificial means, not market demand. The time will come when batteries are cheap and powerful enough that you could buy an electric car for $10k, but that time is not now and the government should not be an investor - historically it has both a bad record of managing budgets and delivering innovation per the dollar...And don't start with arguments about the internet - it was actually Xerox that largely made the internet possible:
http://online.wsj.com/article/SB1000087239639044446430457753...
Edit: overall, I have to concede, it is kind of dumb to attribute the internet to a single entity or person - it was a pretty natural progression of technology - basically the digital evolution of phone lines. Could you imagine trying to patent the internet?
If the government really wants to help out with energy, it should loosen environmental restrictions. I am as much a supporter of green tech and protecting the environment as the next guy, but there is something like 1000x the volume of natural gas under our soil as all the oil in the world combined. The sheer amount of wealth generated from tapping that resource could fund all kinds of green tech, and lessening foreign dependence creates jobs here and makes us stronger politically.
> If the government really wants to help out with energy, it should loosen environmental restrictions. I am as much a supporter of green tech and protecting the environment...
It's not about protecting the environment in the abstract. It's about who bears the costs of industrial activity. Loosening environmental reactions doesn't reduce costs, it shifts costs from polluters to the general public, particularly to the poorest people.
Polluting the air you breathe is no different than any other injury--if the government has any function it is to protect your bodily integrity. It is a failure of organized society when a company can profit by physically hurting you, and it's economically inefficient to allow polluting industries to shift the inherent costs of their activity onto other people. It causes companies to pick the technologies that have the most costs that can be passed to other people, not the technologies that are the most absolutely efficient.
The oil, coal, etc, industries were made possible by the intervention of government. Did you know that in the 1600s in American law pollution was basically illegal? E.g. if water ran through your property, it had to leave as clean as it went in. Allowing people to pollute during the industrial revolution was actually a tremendous government subsidy of industry.
The larger "government shouldn't pick winners and losers" meme is idiotic in the context of alternative energy and green tech. It's basic economics that the market fails to pick efficient winners and losers in industries that involve large negative externalities.
Most economists do not accept that direct government subsidy to businesses leads to an economically efficient outcome, even in cases of negative externalities. Many economists would say that Pigovian taxes or creation of markets in the externality are likely to be more efficient. Bottom line: market failure does not mean that government solutions are automatically better. Government failure exists too!
I disagree. If you don't like the external costs of a particular form of energy you can tax it directly. Taxing things you don't want is different than subsidizing particular companies offering particular alternatives (i.e. picking winners and losers) since it does not favor one solution over another. Government should act as referee, not venture capitalist.
One irony to Tesla is that while they do benefit from loan programs they would have been much better off if GM and Chrysler had been allowed to fail. As it is now Tesla has to compete with companies with strong government support.
Whether or not the government should pick winners and losers is separate and unrelated to the question of market efficiency. Why can't I simultaneously acknowledge that externalities produce less than efficient markets and that government subsidies produce deadweight loss?
You need to examine the legal statutes governing each industry in question and develop measures of the ease at which claimants can receive compensation for damages to determine whether the observed externalities are intrinsic to the industrial process or whether the externalities are intrinsic to the legal process.
Meh. Tesla is still in debt (and had to renegotiate their loan at that), so Romney's technically correct about that. The major benefit I see from the Tesla project is it puts pressure on other companies to make better electric cars.
I really hope they go mainstream, but it seems they're not targeting the average Joe. If it's going to be an "energy" project, it needs to go mainstream, like the Nissan Leaf or the Chevy Volt. I just don't see why the government should be sponsoring a company that will probably only ever sell to upper and upper-middle class customers.
Don't get me wrong, I love the Tesla company, but I think there were more interesting points of the debate than this. To be fair, Romney didn't single out Tesla; it was lumped in with other projects that haven't proven successful yet.
Just because a venture fails for its investors doesn't mean it's a failure for the economy as a whole. NeXT was a colossal flop, and yet look what came out of it in the end.
Interesting. Musks' political contributions are widespread, not to one single party, but apparently none for Romney, allowing him to make such a comment:
Politics aside, Tesla is not the future either. At least not with their current models or anything derivable. Sure, they're doing a great job building battery powered electric cars but personally I don't see how they can work for everyone in the same way that fossil fuel powered cars do today.
I'm driving a diesel (being european this isn't too odd) and I'm driving a lot of long distances. The beauty about the fossil fuel powered car is, that I can drive some 800km on a tank, stop for fuel which takes me about 5 minutes and then carry on. Tesla claims a 3-3.5h charge time. Even if the range was the same, which it isn't, this just isn't gonna work for anyone who drives across a country rather than through cities. To this day I haven't heard of any battery powered car that is charging in acceptable time compared to filling up a fuel tank.
Don't get me wrong, in a way I like electric motors. The torque they produce is amazing! What bothers me is the use of batteries. The technology I personally saw most potential in was the use of hydrogen fuel cells. The tank is filled with hydrogen, the fuel cell powers the electric motor. I'm not for a second suggesting hydrogen is a good "fuel" in the sense that we can just dig it up somewhere and get additional energy. What hydrogen is good at though, is storing energy and because filling a tank with it happens in a matter of minutes it's a whole lot better than carrying thousands of laptop batteries in your car.
I'd wager that most automobile use day-to-day doesn't come close to 800km stretches. Would it not be interesting enough if electric cars managed to replace all the fossil-fueled, city-driving cars?
Even with that point aside, I don't think one can write off Tesla based on a snapshot of charging infrastructure at this instant. There are already concepts like Better Place that involve swapping out batteries instead of waiting to charge the one in your vehicle. A little less ambitiously, DC Fast charging stations (already installed in places like Los Angeles, Wash. state and Oregon) charge EVs up to roughly 80% of capacity in around 30 minutes. My point isn't that the system is perfect, or that these concepts completely solve the range issue with EVs. Comparing charging options now to even one or two years ago shows a substantial difference in potential (heh), so it seems a little myopic to say "I can't do this right now perfectly so it will never happen".
BetterPlace has come up with a way to solve that problem (rapidly interchangeable batteries), and now they just have to execute on their vision.
If you switch every gas station in the country for a place that swaps and charges batteries, electric cars are completely workable. The only question is how we get there from here.
Headlines like this always remind me of the term wikipedia taught me: "Disambiguation". A simple Mitt Romney Calls Tesla Motors a 'Loser' would have clarified in the headline whether the author meant Tesla (the person), or Tesla (the car company). Leaving it vague probably gets more clicks.
While clarity is nice, it probably isn't necessary in this case. Heck, they could have left off "Mitt" and we could still safely assume the article wasn't about George Romney bagging on ol' Nikola.
Oh I'm sure they are counting on the rageviews. It is unfortunate for Tesla that part of the price of getting the loan from the DOE was to open themselves up more widely to the political process.
Will probably get downvoted, but my first thought when reading the headline was, "Why would Romney call Nikola Tesla a loser, posthumously? Is it because Edison had been able to turn his inventions into economic successes, while Tesla died penniless? Not very nice of him to add insult to injury."
After I clicked it, at first I wondered why there is a picture of a car on top of the article. And then I realized what an idiot I am.
> When the government set up and fostered the development of the Internet, was it picking winners and losers then, too?
The total expenditures then were a small fraction of what we're spending now.
Do you really think that the ROI today is as high as it was then?
Do you really think "govt spent money well once" implies "govt money spent now is well spent"? (It's also false that "govt money was spent badly in the past" implies "govt money spent now is badly spent".)
The constant dissonance between "don't you dare touch all the subsidies we give the petro" industries and the "dont you dare waste money on any alternatives" is just dumbfounding. I mean, the stuff is orthogonal to politics (or at least it should be).
i think, all this interest around for Tesla, grants and Obama associated with election president program. I like Teslo but it is too early say about loosers or winners Teslo.
[+] [-] kgermino|13 years ago|reply
(CROSSTALK)
ROMNEY: ... to oil, to tax breaks, then companies going overseas. So let's go through them one by one.
First of all, the Department of Energy has said the tax break for oil companies is $2.8 billion a year. And it's actually an accounting treatment, as you know, that's been in place for a hundred years. Now...
OBAMA: It's time to end it.
ROMNEY: And in one year, you provided $90 billion in breaks to the green energy world.
Now, I like green energy as well, but that's about 50 years' worth of what oil and gas receives. And you say Exxon and Mobil. Actually, this $2.8 billion goes largely to small companies, to drilling operators and so forth.
ROMNEY: But, you know, if we get that tax rate from 35 percent down to 25 percent, why that $2.8 billion is on the table. Of course it's on the table. That's probably not going to survive you get that rate down to 25 percent.
But don't forget, you put $90 billion, like 50 years' worth of breaks, into -- into solar and wind, to Solyndra and Fisker and Tester and Ener1. I mean, I had a friend who said you don't just pick the winners and losers, you pick the losers, all right? So this -- this is not -- this is not the kind of policy you want to have if you want to get America energy secure.
The second topic, which is you said you get a deduction for taking a plant overseas. Look, I've been in business for 25 years. I have no idea what you're talking about. I maybe need to get a new accountant.
LEHRER: Let's...
ROMNEY: But -- but the idea that you get a break for shipping jobs overseas is simply not the case.
(CROSSTALK)
Regardless, I won't comment on this myself since I can't imagine any thread on this article staying clean...
[+] [-] protomyth|13 years ago|reply
[+] [-] comicjk|13 years ago|reply
[+] [-] anigbrowl|13 years ago|reply
[+] [-] nwienert|13 years ago|reply
[+] [-] wwweston|13 years ago|reply
He pretty clearly is rattling off a list and then naming them as (a) Obama/gov't picks and (b) losers. Really, the best defense you can get of his comment is "well, that's what Romney said his friend said, not what he personally said."
> He was basically saying that Obama was trying to pick the winners in green but that it wasn't working because the market isn't ready (basically claiming he is failing because government can't make an industry a winner through policy).
Is he correct? Over in a parallel discussion, someone pointed at this piece:
http://www.greentechmedia.com/articles/read/what-abound-sola...
which seems to indicate that the DOE loan program is actually pretty good at loaning to if not outright producing successes.
[+] [-] rayiner|13 years ago|reply
Romney's statement was in the context of his reference to someone's joke making fun of Obama for picking losing companies. He was clearly calling Tesla a loser.
[+] [-] possibilistic|13 years ago|reply
What about the numerous areas in which government investment/research has paid off (eg. computing)? Could or should the free market today replace this type of public investment?
Just curious.
[+] [-] mistercow|13 years ago|reply
[+] [-] gavanwoolery|13 years ago|reply
Edit: overall, I have to concede, it is kind of dumb to attribute the internet to a single entity or person - it was a pretty natural progression of technology - basically the digital evolution of phone lines. Could you imagine trying to patent the internet?
If the government really wants to help out with energy, it should loosen environmental restrictions. I am as much a supporter of green tech and protecting the environment as the next guy, but there is something like 1000x the volume of natural gas under our soil as all the oil in the world combined. The sheer amount of wealth generated from tapping that resource could fund all kinds of green tech, and lessening foreign dependence creates jobs here and makes us stronger politically.
[+] [-] rayiner|13 years ago|reply
It's not about protecting the environment in the abstract. It's about who bears the costs of industrial activity. Loosening environmental reactions doesn't reduce costs, it shifts costs from polluters to the general public, particularly to the poorest people.
Polluting the air you breathe is no different than any other injury--if the government has any function it is to protect your bodily integrity. It is a failure of organized society when a company can profit by physically hurting you, and it's economically inefficient to allow polluting industries to shift the inherent costs of their activity onto other people. It causes companies to pick the technologies that have the most costs that can be passed to other people, not the technologies that are the most absolutely efficient.
The oil, coal, etc, industries were made possible by the intervention of government. Did you know that in the 1600s in American law pollution was basically illegal? E.g. if water ran through your property, it had to leave as clean as it went in. Allowing people to pollute during the industrial revolution was actually a tremendous government subsidy of industry.
[+] [-] VikingCoder|13 years ago|reply
http://articles.latimes.com/2012/jul/23/news/la-mo-who-inven...
http://blogs.scientificamerican.com/observations/2012/07/23/...
http://www.scientificamerican.com/article.cfm?id=internet-pi...
http://arstechnica.com/tech-policy/2012/07/wsj-mangles-histo...
And most importantly:
http://news.cnet.com/8301-1023_3-57479781-93/no-credit-for-u...
[+] [-] nodata|13 years ago|reply
But you did.
> And don't start with arguments about the internet - it was actually Xerox that largely made the internet (sic.) possible:
But you did: "Don't do X - X."
NIST is government funded. Are they also magically excluded from having done good things?
[+] [-] VikingCoder|13 years ago|reply
Don't tell these companies, because they sell $10k electric cars right now:
http://www.getkurrent.com/
http://www.flybo.cn/
http://www.polaris.com/en-us/gem-electric-car/Pages/Home.asp...
I wouldn't want to drive any of them. I wouldn't want to drive ANY $10k car. But you do not get to pretend "that time is not now."
[+] [-] rayiner|13 years ago|reply
[+] [-] othermaciej|13 years ago|reply
[+] [-] tupuli|13 years ago|reply
One irony to Tesla is that while they do benefit from loan programs they would have been much better off if GM and Chrysler had been allowed to fail. As it is now Tesla has to compete with companies with strong government support.
[+] [-] grantismo|13 years ago|reply
[+] [-] davidhollander|13 years ago|reply
Real life is not so simple, as negative externalities can also be generated by legal frameworks such as http://en.wikipedia.org/wiki/Limited_liability .
You need to examine the legal statutes governing each industry in question and develop measures of the ease at which claimants can receive compensation for damages to determine whether the observed externalities are intrinsic to the industrial process or whether the externalities are intrinsic to the legal process.
[+] [-] MartinCron|13 years ago|reply
[+] [-] beatgammit|13 years ago|reply
I really hope they go mainstream, but it seems they're not targeting the average Joe. If it's going to be an "energy" project, it needs to go mainstream, like the Nissan Leaf or the Chevy Volt. I just don't see why the government should be sponsoring a company that will probably only ever sell to upper and upper-middle class customers.
Don't get me wrong, I love the Tesla company, but I think there were more interesting points of the debate than this. To be fair, Romney didn't single out Tesla; it was lumped in with other projects that haven't proven successful yet.
[+] [-] tantalor|13 years ago|reply
Yes, they have debts, about $505M.[1] They also have $700M in assets.[2] Calling them a "loser" implies bankruptcy or insolvency.
[1] http://www.crunchbase.com/company/tesla-motors
[2] http://en.wikipedia.org/wiki/Tesla_Motors
[+] [-] biscarch|13 years ago|reply
Quick search turns up this: http://www.plugincars.com/tesla-reveals-lower-priced-fourth-...
As I understand it their plan was high-price/low-volume to start and progressing towards high-volume/low-price as time went on.
[+] [-] lukifer|13 years ago|reply
[+] [-] dr_|13 years ago|reply
http://www.opensecrets.org/usearch/index.php?q=elon+musk&...
[+] [-] tsahyt|13 years ago|reply
I'm driving a diesel (being european this isn't too odd) and I'm driving a lot of long distances. The beauty about the fossil fuel powered car is, that I can drive some 800km on a tank, stop for fuel which takes me about 5 minutes and then carry on. Tesla claims a 3-3.5h charge time. Even if the range was the same, which it isn't, this just isn't gonna work for anyone who drives across a country rather than through cities. To this day I haven't heard of any battery powered car that is charging in acceptable time compared to filling up a fuel tank.
Don't get me wrong, in a way I like electric motors. The torque they produce is amazing! What bothers me is the use of batteries. The technology I personally saw most potential in was the use of hydrogen fuel cells. The tank is filled with hydrogen, the fuel cell powers the electric motor. I'm not for a second suggesting hydrogen is a good "fuel" in the sense that we can just dig it up somewhere and get additional energy. What hydrogen is good at though, is storing energy and because filling a tank with it happens in a matter of minutes it's a whole lot better than carrying thousands of laptop batteries in your car.
[+] [-] wutbrodo|13 years ago|reply
[+] [-] krschultz|13 years ago|reply
If you switch every gas station in the country for a place that swaps and charges batteries, electric cars are completely workable. The only question is how we get there from here.
[+] [-] sudonim|13 years ago|reply
[+] [-] fletchowns|13 years ago|reply
[+] [-] wwweston|13 years ago|reply
[+] [-] wmf|13 years ago|reply
[+] [-] ChuckMcM|13 years ago|reply
[+] [-] madiator|13 years ago|reply
[+] [-] smartician|13 years ago|reply
[+] [-] michaelfeathers|13 years ago|reply
[+] [-] gaius|13 years ago|reply
[+] [-] nicolaus|13 years ago|reply
[+] [-] anamax|13 years ago|reply
The total expenditures then were a small fraction of what we're spending now.
Do you really think that the ROI today is as high as it was then?
Do you really think "govt spent money well once" implies "govt money spent now is well spent"? (It's also false that "govt money was spent badly in the past" implies "govt money spent now is badly spent".)
[+] [-] zeruch|13 years ago|reply
[+] [-] grkovalev|13 years ago|reply
[+] [-] temp1111|13 years ago|reply
[+] [-] protomyth|13 years ago|reply
[+] [-] benologist|13 years ago|reply
Fixed the title.