Elon Musk - The Role of Government

Elon Musk - The Role of Government

Elon Musk has become a public figure, and his latest source of attention is his bold claim that he can shrink the government. This is interesting, given how much he depends on it and how little he doubtless pays in taxes for all he has made, largely with government support.

According to Wikipedia, Elon comes from a wealthy South African Family. After college, he became involved in several online business projects, one of which became PayPal, where he made his initial fortune. Looking for a way to build on his fortune, Musk started SpaceX in 2002. By 2006, SpaceX had spent nearly $100 million developing the Falcon 1 Rocket, which had yet to fly when the company landed a $396 million contract with NASA. That same year, Musk became the majority investor in Tesla Motors, taking control from the original creators in 2007.

SpaceX won another government contract from the Dept. of Defense for launch services using its Falcone 1 rocket, but all three initial launch attempts between 2006 and 2008 were failures, and Tesla, with $187 million dollars invested, had only delivered 147 cars by the end of 2008. Both companies were on the verge of bankruptcy when SpaceX won a $1.6 billion NASA contract, and in June 2009, Tesla obtained a government loan for $465 million. With no working rocket and having only made a token number of two-seat roadsters, Musk’s companies were into the Federal Government by something more than two trillion dollars.

The above only includes the direct investments made by the government in Musk’s enterprises up to 2009. There has been much more since. But how about the indirect investments? We all forget the actual role of government in forming our civilization and making wealth possible. Set aside the obvious and essential functions of defense, police, and fire protection and consider the other ways the government has subsidized Musk’s empire for a moment.

Let’s start with the very existence of the concept of a corporation, which is a government invention that makes it possible to build the fictional legal entities necessary to amass large financial resources to do what Musk has done. How corporations are formed, governed, and operated, and how they raise money and otherwise do business, are all defined by laws created by government. Patents, copywrites, and trademarks that allow the creation of wealth from creativity and invention are made by the government. The money and banking system that all this relies on, and that his original investment was a novel part of, is also designed, regulated, and maintained by the government. In fact, his initial online banking concept arose from the Internet, invented by the government. All the billions of contractual agreements that have occurred in his businesses are made meaningful by commercial laws established by government and made enforceable in government courts. The weights and measures that define the designs and facilitate the construction of everything his businesses make are defined by and regulated by government. The time of day to a billionth of a second is determined by government and used by the GPS system that his cars and rockets navigate with. When a decision is being made about whether to launch one of his rockets, the weather data comes from the government, using a forecast model developed by government, run on a digital computer, a concept paid for by government.

The employees his companies depend on are, by and large, either educated at public subsidy or immigrants who work for reduced wages under a government visa program. When he started SpaceX, just about everything the engineers he hired knew about how to build a rocket had been paid for by government. In fact, the government has pioneered the whole space industry, and the communication satellites he has been putting up run on a communication frequency system defined by government. The cars he sells, the trucks that ship them, and the materials they and his rockets are made of, and his employees who report to work use the public ground transportation system owned, designed, and maintained by government. Similarly, packages and people moved by air in relation to his businesses do so on a system owned, designed, and maintained by government, and when one of his rockets is recovered by barge at sea, it navigates over the inland, coastal, and intercoastal waterway system designed, owned, and maintained by the government. All this is almost entirely free.

Civilization is a creature of government; it cannot exist without it, and fortunes are impossible without both. People who tell you that government is in the way, or the problem, or a burden on the economy are either ignorant or lying. Some people and most corporations will do anything for an extra dollar of profit if they can get away with it. The government stands between greed and the worker, the consumer, and the environment and is, therefore, inherently in the way of heedless greed when serving the common interests.

The difference between a first-world economy and a third-world one is a quality functioning government that is built on and enforces the rule of law. Musk did what he did here, not somewhere else, precisely because we have the greatest government in the world. Let’s hope he does not screw it up with his arrogant ignorance.