Sunday, September 23, 2012

New York Times Columnist David Brooks Analyzes What is Wrong With the U. S. Economy

And Naturally Gets It Wrong

One of the house Conservatives at the New York Times is columnist David Brooks.  Mr. Brooks has his job because occasionally he is entertaining and correct.  For example he labeled Mr. Romney the Thurston Howell III candidate after Mr. Romney’s disastrous remarks on the 47% of the population who don’t pay income taxes.  Now Mr. Brooks thinks he knows what’s wrong with the U. S. economy.  We need more grandiosity, whatever that means.

Today, grandiosity is out of style. We’ve just been through a financial crisis fueled by people who got too big for their britches. We’ve got an online and media culture that specializes in ridiculing grand people.

As an example of what is need Mr. Brooks cites the case of Elon Musk.

For those who don’t read the financial press or the gossip blogs, Musk is a 41-year-old entrepreneur who grew up in South Africa. At 15, he migrated to Canada, worked on farms and at a lumber mill and then got into Queen’s University in Ontario.

After two years, he transferred to Penn, earning degrees in economics and physics. While there, as he recently told Jon Stewart, he concluded that the three areas that would most transform humanity were the Internet, sustainable energy and space exploration.

He dropped out of a graduate physics program at Stanford to help start an Internet map and directory company called Zip2, which was sold to Compaq for more than $300 million.

He took his share of that money and helped create PayPal, serving for a time as its chief executive. When that was sold, he poured his share of his money into SpaceX, a space exploration company; Tesla, an electric car company; SolarCity, a solar power company; and Everdream, a data-center software firm.

SpaceX is the first private company to send a rocket into space. Already profitable, it has a long line of orders to take things into space. Tesla is selling its second model for about $55,000 each. Musk decided to revolutionize three industries all at once and is sort of doing it. His net worth is estimated to be about $2 billion.

Wow, that sure sounds like a great story.  But a couple of questions arise.  How, for example did Mr. Musk pay for attending Penn, a very expensive private school.  And what about all the help Mr. Musk has gotten from government?  And why did he do all this in the "high tax" United States?  Even Mr. Brooks has to acknowledge the role that government played in this success (reluctantly so since in the world of Conservatives government doesn’t help anyone except the undeserving), but notice he does so in parentheses.

But, if growth is ever going to rebound, the U.S. will need a grandiosity rebound and the policies that encourage rich people with brass: immigration policies that attract people like Musk, tax rates that encourage risk and government policies that boost them along (SpaceX has benefited greatly from NASA, and Tesla received a big government loan).

But wait a minute.  Aren’t those huge government spending programs that made Mr. Musk’s projects a success under attack by Republicans?  And what about the need for lower tax rates, didn’t Mr. Must succeed in spite of U. S. tax laws which according to Conservatives take every cent an entrepreneur like Mr. Musk makes and gives it to the moocher class?

So yes, Mr. Musk’s success is a great example, but not an example that something is wrong with American policy.  Instead it is an example of how if Conservative policies are implemented there will be fewer rather than more Mr. Musk’s as all that government aid that Mr. Musk received to create his companies is gone.  And does anyone think the future of the U. S. economy is in commercial space travel (for billionaires with no better use for their money) or $55,000 electric cars?  Mr. Musk is a wealth creator all right, for himself that is, but not a job creator.

As for the future of Mr. Musk, well here is what he thinks

Musk also told Businessweek about two other project designs he is working on. The first is something called the Hyperloop, a tube capable of taking people from downtown Los Angeles to downtown San Francisco in 30 minutes. The second is a vertical lift-off supersonic passenger jet that would surpass Boeing. He also hopes to open up a space colony on Mars within 10 or 15 years.

And where will that funding come from?  Well it is obvious no sane or rational investor would put money in projects like those, and given that he has earned billions it is pretty clear Mr. Musk is smart enough not to put his own money into a space colony on Mars.  So, gosh, yes, Mr. Musk will look to the taxpayers, like he looked to the taxpayers for money for Tesla and his space travel company.

Ironic isn’t it?  

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