Strangely, super entrepreneur Elon Musk proves government is necessary for economic growth. To explain, federal loans fuel Musk’s growing industrial empire, and the tens of thousands of jobs it creates.
For example, Musk bought the first Tesla (NASDAQ: TSLA) factory with a $465.50 million federal loan in 2010. Moreover, the Mises Institute estimates Tesla received over $280 million federal tax incentives in 20018. Plus, Tesla vehicle owners received a $7,500 federal tax break in 2018.
Predictably, the austerity hawks at the Mises Institute consider any money given to Tesla a waste. However, there is evidence ordinary people, taxpayers, and investors benefit from Tesla’s success.
Is Elon Musk Proving Modern Monetary Theory at Tesla?
First, Tesla paid back the $464.50 million loan in 2013; nine years early, Clean Technica reports. Second, Tesla (TSLA) employed 48,016 people in 2019.
Meanwhile, Tesla shareholders enjoyed a $2,023.34 share price and a $377.07 billion market capitalization on 25 August 2020. Hence, Uncle Sam’s $465.50 million investment in Tesla a decade ago created $377.07 billion in wealth for investors 10 years later.
Moreover, Tesla Inc. (NASDAQ: TSLA) reported annual revenues of $24.578 billion, on 31 December 2019. In addition, Tesla had $38.135 billion in total assets and $8.08 billion in cash and short-term investments on 30 June 2020. In addition, Tesla reported a quarterly operating cash flow of $8.457 billion on 31 March 2020.
Thus, Tesla could prove one of the ideas behind of Modern Monetary Theory (MMT). Essentially, MMT teaches that can government can create money and grow the economy through deficit spending.
Another way to view MMT is to think that you need to spend money money to make money. Or that spending can create money.
What about SpaceX?
Thus, the billions the federal government is paying Musk’s SpaceX could be money well spent. In 2018, SpaceX had received over $5 billion and the Mises Institute was claiming Musk’s Falcon rockets were less reliable than competitors.
On 30 May 2020 SpaceX’s Crew Dragon became the first new spacecraft in 17 years to carry people into orbit. Thus, Musk accomplished his goal and received created 8,000 jobs at SpaceX.
Therefore, I think we should welcome Musk’s decision to seek $16 billion in federal grants for SpaceX’s Starlink satellite internet scheme
Will Starlink and SpaceX make Money?
To explain, the Federal Communications Commission (FCC) will let SpaceX compete for money from its Rural Digital Opportunity Fund, The Motley Fool reports. The Fund contains $16 billion in subsidies.
The Fund pays for high-speed internet in underserved rural areas of the United States. Musk hopes Starlink will transmit internet to people on Earth from 12,000 to 42,000 satellites in orbit.
Hence, Starlink could create tens of thousands of jobs building the satellites and launch rockets. In addition, Starlink could create tens of billions of dollars’ worth of share value and market cap for investors.
Thus, Musk could repeat his Tesla success at Starlink and SpaceX. Hence, the $316 million the U.S. Space Force plans to pay SpaceX for launches could be a wise investment.
Can we protect our economy from the Austerity Vultures?
Musk’s triumphs at Tesla (TSLA) and SpaceX justify the Trump administration’s decision to lend the Eastman Kodak Company NYSE: KODK) $765 million to manufacture ingredients for generic drugs.
Unfortunately, the austerity vultures are already criticizing the Eastman Kodak deal. To elaborate, austerity are politicians who use deficit fearmongering to mask their cynical efforts to serve wealthy special interests. Disturbingly, the deficit hawk attacking Eastman Kodak is U.S. Representative Jim Clyburn (D-South Carolina).
Clyburn, a self-proclaimed progressive and former Civil Rights leader, attacked the Eastman Kodak deal on a recent episode of the Skullduggery podcast. Clyburn’s complaint is that Eastman Kodak executives could make money from the deal.
Disgustingly, Clyburn revealed he knows nothing about Kodak or its business. For instance, Clyburn told Skullduggery, “Kodak makes great cameras.” For the record, Kodak as not manufactured a film camera since January 2004, over 16 years ago. Hence, Clyburn displays his ignorance about a business he wants to regulate.
In addition, Clyburn does not realize Kodak has been in the chemical business since George Eastman founded the company in 1888. To explain, they made camera film from chemicals. Hence, ingredients for generic drugs also chemicals are a logical business for Kodak.
To explain, Clyburn could hope to keep drug prices high; and his cash rolling in, by restricting the supply of cheap generic drugs. Clyburn and his corporate masters could fear more generics will drive down drug prices which will reduce their profits.
Disturbingly, Clyburn is a close political ally of Democratic presidential candidate Joe Biden (D-Delaware). Many pundits credit Clyburn for Biden’s Democratic primary victory. To explain, Clyburn rescued Biden’s dismal presidential campaign by delivering South Carolina’s primary votes.
Joe Biden Austerity Vulture
Frighteningly, Biden; who could become America’s next President, could be an austerity vulture. The Jacobin’s David Sirota alleges “Biden’s inner circle appears wedded to the ideology of austerity.”
Austerity is the dogma that government cannot create money and all government spending is wasteful. Austerity appeals to libertarians who want weak government and wealthy campaign donors who want low taxes.
Biden minion Ted Kaufman told The Wall Street Journal : “When you see what Trump’s done to the deficit…forget about Covid-19, all the deficits that he built with the incredible tax cuts. So we’re going to be limited.”
I don’t know if Biden shares Kaufman’s beliefs, however, Biden has a long history of deficit hawkery. In fact, The Intercept alleges Joe Biden has advocated Social Security cuts for 40 years. Conversely, Biden’s campaign is touting a $3.5 trillion spending program and a $200 a month Social Security raise.
Will Biden Grow the Economy?
Thus, Sirota’s allegations frighten me. Instead of growing the economy, Biden could shrink it with a Herbert Hoover (R-California) style program of austerity. Hence Biden could make America poorer while inflicting enormous amounts of misery on ordinary people.
Hopefully, Sirota is wrong and Biden will make many enormous loans to entrepreneurs to expand America’s economy. Or make cash payments to ordinary Americans to increase consumer spending and grow the economy.
Notably, there is speculation that Biden could appoint failed presidential candidate and basic income advocate Andrew Yang (D-New York) to the cabinet. However there is no evidence Yang is part of Biden’s inner circle.
Finally, it must be noted that the U.S. President has little control over spending and economic policy. Under the Constitution, all the President can do is to make spending recommendations to Congress. Instead, the President can only spend the money the Congress gives him.
Does Trump believe in Modern Monetary Theory?
I think the current President Donald J. Trump (R-Florida) believes in MMT and wants to spend more. Unfortunately, Congressional austerity vultures; including U.S. Speaker of the House Nancy Pelosi (D-California) and U.S. Senate Majority Leader Mitch McConnell (R-Kentucky), prevent Trump from spending.
Consequently, Biden’s beliefs could be meaningless because Pelosi and McConnell could still be in charge on Capitol Hill in 2021. Thus, the austerity vultures will be in a position to block future spending and keep America poor for years to come.
I think Elon Musk’s success shows MMT works. Unfortunately, few people in Washington notice Musk’s success.