Crony Capitalism and the Spigot of Government Subsidies



Narcissist and ego-maniac Musk should not get to exploit the tax payers for his own self-glory on

needless “look-at-me” technologies!

Crony Capitalism and the Spigot of Government Subsidies

By Veronique de Rugy

Creating something that people want is how one gets wealthy in a market economy. Sadly, there's

another way to get rich. It's called cronyism, and it can make billions for the lucky businesses that get

government support — whether their products are profitable or not. In the process, the taxpayers foot

the bill.

Taxpayer insurance against unprofitability takes many forms, from loan guarantees to grants, which

provide a no-lose scenario for beneficiaries. If the business is profitable, then the corporation makes

massive profits. If the business goes bust, then the taxpayers take a hit. Either way, the crony capitalist


Perhaps the most prominent case of cronyism in modern history is Elon Musk. A brilliant entrepreneur,

Musk founded the online payment company with profits he made off the sale of Zip2 — another

profitable company and the first online version of the Yellow Pages. eventually merged with

Confinity and became the wildly successful PayPal.

And there were many other successful ventures that made Musk into one of the most successful

businessmen in the world. According to Forbes, Musk is worth $14.3 billion. Much of his wealth is the

result of producing brilliant ideas, creating value for others and revolutionizing the way we do


More recently, however, Musk has used his wealth to invest in space travel, solar panels and electric

cars. There wasn't anything wrong with that until Musk dragged the government into it. Tesla Motors,

SolarCity and SpaceX — a few of his highest-profile projects — have relied heavily on government

subsidies. According to a 2015 article in the Los Angeles Times, these three companies "together have

benefited from an estimated $4.9 billion in government support." And though none of these projects is

profitable on its own, Musk is making a mint.

Tesla secured nearly $1.3 billion in benefits from a variety of sources, including money from Nevada

to set up a car battery factory, federal subsidies through the U.S. Department of Energy's Advanced

Technology Vehicle Manufacturing program, and a number of federal and state tax breaks for the

purchase of Tesla vehicles (such as the $7,500 federal tax credit and a $2,500 California rebate). Why

would so much in government subsidies go to produce a car that only a few Americans can afford? The

new Tesla Model S ranges from $80,000 to nearly $115,000 before tax credits and rebates.

SolarCity got over $300 million in federal grants and tax incentives, in addition to state and local

subsidies meant to create an artificial demand for solar energy. In a funny twist, the company even

moved in to old office space from Solyndra, the bankrupt crony solar panel company run by large

donors to President Barack Obama's campaigns and subsidized by the infamous Department of

Energy's 1705 loan program.

The Los Angeles Times shed some light on the state and federal cronyism involved in SpaceX: "On a

smaller scale, SpaceX, Musk's rocket company, cut a deal for about $20 million in economic

development subsidies from Texas to construct a launch facility there. (Separate from incentives,

SpaceX has won more than $5.5 billion in government contracts from NASA and the U.S. Air Force.)"

And why are the taxpayers subsidizing a company that specializes in commercial space travel when the

United States has a hard enough time balancing a budget?

The SpaceX website says: "SpaceX designs, manufactures and launches advanced rockets and

spacecraft. The company was founded in 2002 to revolutionize space technology, with the ultimate goal

of enabling people to live on other planets." U.S. taxpayers shouldn't be on the hook for space travel

and other ideas of private purpose that won't benefit many, if any, taxpayers.

Musk is a billionaire many times over. If he thinks colonizing other planets is a profitable idea, then he

should put up his own money. The taxpayers shouldn't be forced along as passengers on his expensive

and risky experiments.

Elon Musk made his fortune by inventing products commonly used by consumers every day. Now he

has resorted to taking billions in government cash and subsidies to work on ideas that probably won't

return a profit to the taxpayer. He's using his friendships in government, as well as some high-priced

lobbyists, to keep the spigot of government money going his way. Though it has been profitable for

him, Musk is a case study in cronyism and a shining example of a rich individual abusing his influence

to make taxpayers pay for risky investments.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. To

find out more about Veronique de Rugy and read features by other Creators Syndicate writers and

cartoonists, visit the Creators Syndicate Web page at

opinion conservative money taxpayers crony capitalism


Is it any wonder that green energy is all the rage in Democratic Party circles? Anybody who is somebody is in on the scam. Solar energy companies are cleaning up on guaranteed loans issued by the Department of Energy, if they are politically connected. How so do you ask? Well, here is an excerpt from the Weekly Standard:

SolarReserve LLC, a closely held renewable energy developer, received a $737 million U.S. Energy Department loan guarantee to build a solar-thermal project in Nevada.
The 110-megawatt Crescent Dunes project, near Tonopah, Nevada, will use the sun’s heat to create steam that drives a turbine, the agency said today in a e-mailed statement. SolarReserve is based in Santa Monica, California.

SolarReserve's website is a list of "investment partners," including the "PCG Clean Energy & Technology Fund (East) LLC." As blogger American Glob quickly discovered, PCG's number two is none other than "Ronald Pelosi, a San Francisco political insider and financial industry polymath who happens to be the brother-in-law of Nancy Pelosi, the Minority Leader of the United States House of Representatives."

And if you’re from Missouri, I’ve got something to show you:

And for good measure, it's also noteworthy that Obama is about to hold a big money fundraiser at the home of Tom Carnahan in St. Louis:

Carnahan, a member of the prominent Missouri Democratic family, has been tapped by the Obama campaign as its chief Missouri fundraiser. He is chairman of the board of Wind Capital Group, a wind energy company that makes it corporate headquarters in St. Louis. He formerly was president and CEO of the company.


Last year, Wind Capital's Lost Creek Farm facility in northwest Missouri received a $107 million tax credit from the Treasury Department, among many such wind operations receiving support from from stimulus funds.

Tom Carnahan is the son of former Missouri governor Mel Carnahan and former U.S. senator Jean Carnahan. He's also the brother of current Missouri secretary of state, Robin Carnahan

Those Carnahans sure are a busy family; busy screwing over the taxpayers.

I wonder if the convenient store 7/11 can come up with a new Slurpee in honor of the Democratic Party’s new slush fund. I can envision something green and somewhat energetic.







Stay in touch with the latest news and subscribe to the RSS Feed about this category

Comments (0)

Comments are closed

No attachment

You might also like