The responses Elon has previously written to criticisms have been very concise and convincing. This article isn't too far off the mark, but I do feel his frustration for the petty politics he deals with shows through the article.
Is it even necessary for him to respond to petty accusations such as the inflated claims that he's masterminding Nevada's politics? Wouldn't it benefit him more to let the nay-sayers nay say?
I agree. In the past the responses have always been to things that actually seem worth responding to (though there's plenty of disagreement about specific responses). In this case, I haven't seen any of these negative articles, so anecdotally, it seems perhaps not widely-reported enough to be worth a public blog post.
Furthermore, while I think describing why the deal is a good idea is reasonable, that whole lead-off with "haha they're gamblers, you think Tesla could pull a fast one on them?" is kind of strange. It's basically an appeal to authority, where the "authority" is people who oversee the gambling industry, and the claim is that because casinos are really good at not being tricked, then their overseers (i.e. the Nevada legislature) must be even better. Except it doesn't work like that, the casinos are not gambling with the state, or trying to pull a fast one on the state at all. And the Nevada legislature doesn't directly oversee the casinos anyway; they simply tax them. It's the Nevada Gaming Commission that does the actual regulation of the casinos.
Basically, that second paragraph is just a combination of multiple rhetorical fallacies intended to imply that it's preposterous to claim that Tesla could ever get the Nevada legislature to agree to a bad deal. And for any readers who recognize this, it only serves to weaken the rest of the blog post. If that entire paragraph (and the single word "Moreover" from the start of the next paragraph) were to be deleted from the post, the post would make just as much sense and would have a stronger, more focused point. And it would also make Elon look better by virtue of being willing to just state the facts and let them speak for themselves.
I think Elon Musk chooses a narrative for each post that supports the overarching image of Tesla and also couches the points he is going to make for public consumption. One major component of that is presenting an image to organize everything else around. "The House Always Wins" is a powerful one. Rhetoric involves more than just logos but also pathos and ethos.
Called it, 2.5 months ago. Most of HN said I was wrong.
If the 1.25B tax break causes a net gain in tax receipts due to the expansion of the economy, then the deal is a net positive for everyone, job-seekers, Nevada, and Tesla.
No one loses when the economic pie gets bigger. Economics is not zero-sum.
gph's reply to you was reasonable, and you made no counter. It's a pretty obviously a difference of opinion (and politics), and reasonable points were made in either direction.
So now two months later, you paint a picture wherein you've been vindicated - using the proof that Elon Musk says that the deal Elon Musk made is good for everyone.
What was he going to say; the ink's dry on our signatures now, Nevada, so I can admit I totally screwed you over and there's nothing you can do about it? Come on.
Maybe you are right, maybe not, but no new information has come to light since the last discussion, and claiming victory based on a press release is intellectually dishonest.
As a general rule I don't participate in HN arguments, which is why I didn't reply to GPH. There is nothing I could have really added to the discussion and it would have simply devolved into a shouting match over which economic pet theories were HN's favorite. I am not really interested in shouting the loudest, it's a poor way to win arguments.
I am replying to you, because there is something I can add. My explanation of why I avoid replies. Take it as you want.
You are still wrong, because "net gain in tax receipts for Nevada" is not identical to a net gain in the economic pie. It's not necessarily better for the USA, and if a loss of benefits per capita is realized, might not even be better for Nevada.
You are correct when you say economics was not zero-sum, and according to some people the government is too big, but that wasn't what your claim was about.
Economics is easy for people who can faultlessly predict the future. But who is that? Lots of states a lot of the time make tax-incentive deals with business corporations that may or may really make the economic pie bigger. (Well, almost all of those deals make the economic pie bigger for the business corporation, at least in the short term, but the question is always whether they really make the pie bigger for an individual taxpayer like you or me who isn't a direct party to the deal.)
Yes, it gave me a pause too. The trick is "our factory" represents current factory state, but it was not claimed that it has been "our factory" for 60 years, just that it operated for 60 years. Indeed, they took over from previous owner, but Musk puts it in a way that casual reader may conclude they somehow contributed to the whole lifespan, which is not true, obviously. Still, the larger point - that the factory can provide jobs and tax revenue long after the credits expire - is valid.
> If I paid $1 for something and today's market price is $10 then I got a bad deal if I sell it for $5, even though I made a profit.
That depends on the circumstances. If you paid $1 for something, and someone else went in on the deal with you for 50% of the revenue if it went up but 100% of the loss if it failed, then selling it for $5 for you and $5 for the person shouldering the risk is not a bad deal for you at all.
It was a simple example used to illustrate that there are obvious situations where you get a bad deal even though you profit. You can also create other examples that do different things and aren't germane to that point.
what is wrong with such deals is that one needs to be big (and/or extremely politically connected) to get one. I.e. the game is tilted. I mean why a small shop should pay higher taxes than a big one? How is that good for economy/society?
You can not get money of politics if major part of politics is deciding who gets billions of money. If Nevada has power of taxation (and thus of tax breaks) and somebody comes and says "give me 1bn of tax breaks for next 20 years and I'll put $lots_of_money of new taxable income in your state budget, and that wouldn't cost you anything to current budget" their voice would be heard by Nevada politicians much louder than a voice of somebody whose yearly revenue doesn't break into six figures. As long as the politicians have their hands in the economy (and they do quite a lot) it would be negligent for them not to listen to major economic movers. It's their (budget) money that are on stake, of course they'd listen.
Exactly. All the benefits Nevada gains from this deal would equally apply to a small business albeit at a much smaller scale. It's hard to blame Elon though, he is just playing the game.
>It's hard to blame Elon though, he is just playing the game.
of course. Anybody is entitled to whatever break/deal he can get. It is just that government is [in the naive theory of "we the people"] exactly there to keep the playing field level/fair, to not allow big players to tilt it in their favor.
I had never read much Elon Musk before but I am incredibly impressed with his Elon Musk's eloquent Elon Musk is. This deal is undoubtedly good for Nevada. These tax incentives always seem to me to be a zero sum game. They benefit large corporations who have the ability to negotiate with states at the expense of smaller corporations who do not have that ability. In essence they cause small corporations, or individuals to subsidize large corporations.
These deals are net positive for Nevada (tax breaks don't really hurt them that much if they wouldn't have gotten the facility anyway), and net negative for the US overall (revenue wise, at least). If nobody engaged in these kinds of deals then Tesla would surely pay more tax.
I don't blame Nevada for engaging in it, and I think they probably won overall.
Other factors (cheap land, regulatory, etc) almost definitely came into play but nobody is really complaining about those.
It's hard to say if Tesla paid more tax, as Tesla might not build the factory at all, or could build it in other country. The thing is there's nothing sacred in current level of taxation, so I personally consider tax breaks the least evil form of subsidizing, especially if the tax is not a purpose tax for shared resource (e.g., if there's a property tax to finance common school and somebody uses the school but doesn't pay the tax, all others pay more) but a tax break on indefinite further earnings which may not have happened without the tax break. Yes, it looks like crony capitalism and sometimes it is, but if the opportunity cost is low (i.e., nothing really was being built there otherwise) then I don't see why Nevada shouldn't do it.
> I take serious issue with the statement that "Nevada is the entertainment capital of the world."
I wouldn't worry about it, Americans are notorious for saying "world" when they mean "country", because they're usually not thinking about anything or anyone outside their borders.
Americans are notorious for saying "world" when they mean "country", because they're usually not thinking about anything or anyone outside their borders.
You write like someone who has not been to Las Vegas, Nevada as recently as I have. When you write something like that, I wonder where you have been in the world. I was in Las Vegas for the first time since the 1980s just more than a year ago, to meet up with high school classmates of my wife--who attended high school in Taiwan. The classmates we met were not the only Chinese-speaking visitors we encountered who had just flown across the Pacific to be in Las Vegas, not by far.
I actually don't have a particular place in mind as I read the phrase "entertainment capital of the world," but I'm not sure I would say off-hand that there is any place that outranks one city or another in the United States for that designation. The United States is, after all, second only to France in the number of international tourist visitors it receives each year, and at least some of the tourists who come here come for entertainment of one kind or another. Many consumers of mass media entertainment in other parts of the world consume quite a lot of entertainment that is produced in the United States (although not so much that is produced in Nevada, methinks, as contrasted with California or New York).
In the context of the article kindly submitted here to open the thread, it is clear that Musk could have written "gaming capital of the world" (that's the Nevada way of saying it) or "legalized gambling capital of the world" (that's how I'd say it, to be clear what kind of "gaming" is being written about), and then he would have been both more coherent with the point he was making and less likely to cause topic drift like the topic drift found in the subthread here. His argument is that a state that regulates a lot of gambling knows how to bet wisely in its state regulations.
AFTER EDIT: Hat tip to the other participant in this same subthread who pointed out that Las Vegas uses the term "entertainment capital of the world" as a promotional slogan.[1] But people outside Las Vegas refer to Los Angeles with that designation.[2]
In any case, it doesn't matter. As you say, of course Musk's point was that Nevada has a lot of experience regulating the gambling industry, which is undeniably true.
> You write like someone who has not been to Las Vegas, Nevada as recently as I have. When you write something like that, I wonder where you have been in the world.
I've lived for more than 7 years each in Australia and Canada and 2 years in the USA (east and west coast). I've lived more than 4 months in Ecuador and Argentina and I spent 1-2 months passing through every country from Alaska to Argentina (I drove). I've been to Japan, Hong Kong and Fiji for a month each.
I've been to Vegas 4 times, most recently in May 2014.
What would you say is the entertainment capital of the world? I live in Los Angeles, and at one time in the past I would have associated this city with entertainment. But it's been many years since our business climate was especially amenable to film and television production; now much of what we used to do here is done out of state, in Canada, or overseas.
I suppose it depends on how you'd even define something like that - headquarters, production, shooting, effects.. it's all so distributed now. Consider SohoNet's reach, as a network provider that specialises in high capacity connections to studios, effects houses, et al:
That said, I'd wager you could ask people around the world, and they'd still say "Hollywood", though plenty of folk are, I'd imagine, aware of Vancouver's popularity for doubling as many US cities, Pinewood Studios, and WETA.
As I just wrote in this same thread,[1] Musk's argument is based on the idea that Nevada is experienced in regulating gambling, which it is. So perhaps he should written "Nevada is the legalized gambling capital of the world," and then you would have nothing to take issue with in this statement by Musk.
What's a better candidate for world entertainment capital? Dubai? Maybe they have taller/more entertainment buildings? I seem to recall adultery, premarital cohabitation, having a shared bank account with a woman you're not married to, and looking at a woman will get your hands chopped off or some such nonsense. That kind of takes it out of the running for me personally.
Bullshit. There are always externalities in these deals. Since I do not know the details, I can.not say. But what about things like pollusion and waste. These are negatives to the people of nevada that are most likely not accounted for. Also work olace hazards ir worse damage, explosions, etc.
Also what about surrounding infrastructure like roads, sewage, etc. Who is paying for that?
I would argue that they are. States competing on deals like this is bad. If no state gave an incentive, they'd have to pick one at full price anyway. Also, if the deal is good with Tesla, why not give similar deals to every company that wants to put up a building? In the end states will just forego corporate taxes altogether and get all their revenue from the people. Is that bad? I'd have to think harder before answering that, but I'm inclined to say yes. Corporations don't retire, people do. People need to be able to get of the monetary treadmill, but companies don't.
>> If no state gave an incentive, they'd have to pick one at full price anyway
Or build it in another country and people could scream at them for being unpatriotic.
>> Also, if the deal is good with Tesla, why not give similar deals to every company that wants to put up a building?
You are arguing for lower taxes. This is a noble goal, but much harder to achieve than such deal. As Bismarck said, politics is the art of the possible. It's not ideal, but given current situation it's also not the worst outcome.
>> In the end states will just forego corporate taxes altogether and get all their revenue from the people.
Corporate taxes are about 10% of budget income, despite US corporate tax rates being one of the highest in the world. So it's neither unprecedented not unimaginable to have lower corporate tax rates. As for the people, corporations are ultimately owned by people, so it's still tax on people, just certain kind of people - doing business in the US. Every dollar taken as corporate tax is not paid as dividend, not invested in hiring another worker, not spent on buying supplies or services. So ultimately it's people all the way down.
>> Every dollar taken as corporate tax is not paid as dividend, not invested in hiring another worker, not spent on buying supplies or services.
Sure it is, just not spent by the corporation. The government will spend it - they can't seem to help themselves. The only thing taxes change is who gets to control where the money goes.
One can just as easily say "tax corporate revenue" and not paychecks, since it's allegedly circular with money going back and forth between people and companies (people all the way down). I'm not advocating this of course, but we're living in a time when your assertions about profit going to hiring, supplies, and services are clearly false. It happens, but it's certainly not a given.
We were talking about the revenues - the idea was that all tax revenue ultimately comes "from people", every economic decision affects people - because people are the only willful agents in the economy, there's nobody else.
>>> The only thing taxes change is who gets to control where the money goes.
Not entirely. The government usually proves to have quite inefficient with how it spends revenues. Sometimes it is necessary - i.e., feeding the destitute produces no money, but has a humanitarian value. Sometimes, it is not - like spending billions on bridges to nowhere and crony projects that collapse the minute government financing is withdrawn. So we also have to consider the destruction of value that the government involvement usually brings about. Of course, corporations can destroy value too - but usually can't survive for very long once they started to do it unless they manage to stop. For the government, it has to be extraordinarily destructive to collapse, for a company, the bar is much lower.
>>> your assertions about profit going to hiring, supplies, and services are clearly false. It happens, but it's certainly not a given.
Err, I'm not sure where your "clearly false" comes from. Is it clear to you that corporations do not spend money on hiring, supplies and services? How they then manage to have people show up to work and suppliers to give them supplies and services, if they don't pay for it? Also, if some fairyland corporation ever managed to pull off such impossible trick, it still wouldn't change a thing, as that would only mean entire revenue goes to the corporation owners - i.e., again, "people".
You are not arguing against Tesla. You seem to be arguing against industry and materialism in general. Any industry will lead to some pollution in any state.
Is it even necessary for him to respond to petty accusations such as the inflated claims that he's masterminding Nevada's politics? Wouldn't it benefit him more to let the nay-sayers nay say?