On Tuesday, Tesla CEO Elon Musk made a virtual appearance at The Wall Street Journal’s CEO Summit where he called for the government to end subsidies for something that might seem surprising—electric cars. But that opposition to supporting a product sold by his own company seems a lot less puzzling when expressed in these terms: Now that he has climbed to the top, Musk is extremely anxious to burn the ladder below him.

The Build Back Better bill which passed the House and is now under consideration in the Senate, with hopes of final passage before the end of the year, provides as much as $12,500 in incentives for the purchase of an electric vehicle. That bill would also provide monies for building out the charging infrastructure that give consumers the confidence to replace gas-powered vehicles with electric alternatives as their primary means of getting around.

But Musk is against both of those things. In fact, he calls for an end to all government subsidies … which is a quite a statement considering that Tesla built its business on subsidized vehicles. Not to mention that the company itself was built on a government loan that it received at a critical point in the company’s history. Without government funding and subsidies, there would be no Tesla. The same is true of Musk’s other company, SpaceX, which not only developed its rockets on the back of government funding, but is still getting subsidies for it’s Starlink space-based internet service and seeking even more. 

In both cases, Musk did what America so often applauds entrepreneur for doing—he took tremendous risks and succeeded, making himself enormously wealthy in the process. But Musk was only able to succeed because of government loans and subsidies. Without them, he would be Elon who?

Government subsidies and loans are an investment meant to improve the nation and increase opportunities going forward. That’s why they exist. Like any investment, they’re not always successful; the government frequently hands out subsidies and awards contracts to companies that ultimately prove unable to produce the product or service they were subsidized to provide. Those are investments that failed—though even then, they’re not always bad investments.

Occasionally, these investments by the government succeed spectacularly, creating whole new industries. 

And sometimes, the government don’t even have to hand out cash to get results. Just the promise that the government will buy a product or service when it becomes available, can be the instrument that a start up can carry to the bank, or to investors, to get the funds necessary to fulfill that a government goal.

Subsidies take a lot of other forms than just cash on the barrelhead. They can come in the form of the cheap government land that made oil and gas drilling wildly profitable, or as federally funded highway infrastructure that allowed cars to definitively outpace trains as the nation’s primary means of transportation … after other government subsidies first made those trains possible. Every dollar the government spends, like every dollar any consumer spends, ultimately subsidizes something.

Subsidies that succeed in funding a breakthrough can easily stoke a “gilded age” as those first up the government ladder find access to whole new realms of wealth. It happened with trains. It happened with cars. It happened with the internet. It’s happening again with electric vehicles, renewable energy, and space—all the industries where Elon Musk happens to operate.

Back in 2015, the Los Angeles Times detailed the billions in government funding that had underwritten Musk’s efforts. That includes tax abatements that saw a Tesla HQ avoid property tax for 20 years. Musk’s connection to government subsidies has continued, right up to funds that are right now subsidizing SpaceX’s space-based internet gamble:

The battery factory that Tesla has in Nevada was built on hundreds of millions of dollars in subsidies.
The launch tower that SpaceX is building right now in Texas is being built using $20 million in subsidies.
Every car that Tesla sold from 2008 <a href="https://mashable.com/article/tesla-federal-ev-tax-credit-runs-out-2020">right up through 2020 came </a>with a government subsidy.

As finical analysis firm Space Angels pointed out in 2019, SpaceX was just one of 67 space companies which together received $7.2 billion in government funding between 2000 and 2018.  SpaceX was one of those who succeeded. Many of them did not.

Both SpaceX and Tesla are great success stories, not just for Musk, but for the power of timely investment by the government. Both of those companies exist because of loans, incentives, and contracts provided to them precisely because government analysts saw the potential. 

There are forms of government subsidies—such as tax abatements for locating factories or offices within a specific state or area—that have no redeeming value. In fact, these subsidies reward companies while creating tremendous burdens. Tax abatements don’t unlock a competition to create new technologies, or even generate economic improvement. They’re just a competition between politicians eager to talk about “job creation” that ultimately carries a price tag far above their worth.

Also, like any portfolio of investments, the subsidies that government provides need constant review. We’re long past the day when we should be providing assistance to oil, gas, and coal industries. One day, we’ll be past the point where we need to provide subsidies to accelerate the use of renewable energy or encourage the move to electric vehicles. We’re just not there yet.

And we shouldn’t let the man who has the most to gain by locking in the status quo determine when that day comes. That’s especially true given that the subsidies in Build Back Better provide support for something else that Musk really doesn’t like—union jobs that provide fair wages, good benefits, and job safety.