Additional Issues with the Balance and Accuracy of the Anti-Musk Narrative

After posting my reassessment of Elon Musk yesterday, I saw that the initial responses were mostly positive and to the effect that my reading seemed to be balanced and fair. A couple of interesting issues and angles have come to my attention in the day that has followed.

One topic concerns whether the Tesla Model S is quite as great as some initial magazine reviews suggested. Another is the narrative that Tesla could not survive without subsidies, given the alleged phenomenon of "sales dropping to zero" as soon as subsidies end. The third is a rather surprising turn—evidence that Elon Musk has been speaking out against electric vehicle subsidies and that he has been promoting their abolition.

Not so great?

A reader pointed out that Consumer Reports, after initially reviewing the Model S with glowing superlatives was then forced to remove the car from its recommended list in late 2015. The reason was that poor reliability reports were coming in. Things were breaking and needing fixing at a relatively high rate.

I have seen superior assessments of the Model S on safety, performance, buyer experience, total buyer maintenance cost, and service relationship. That is quite a list of superlatives for an upstart company selling an entirely new type of car. It is the safest car on the road. It has the fastest acceleration. In doing all this, it is quiet. Actually, it can swim in flood waters like a James Bond boat (the manufacturer does not recommended making a practice of this though). In the area of service, Tesla employees show up at people's homes to fix the car and then leave.

Reliability strikes me as just the sort of area that would depend most on improvement over time through iterations of experience. Here we have a completely new company with a completely new type of car up against century-old companies building incremental advancements of century-old types of cars (at least in comparing the Model S to conventional luxury sedans). My prediction would be that the reliability issues should be steadily improving as specific issues are identified and fixed and the company learns from experience, redesigns parts, adjusts suppliers, etc. A small-scale version of this phenomenon is why I never buy a new number release of an iPhone, but always wait for the "S" version. Most major engineering issues are introduced with the whole number redesigns and have been eliminated by the time the upgrade iteration arrives. One can prioritize being first and taking on a higher risk of issues, or wait until the earliest adopters have already served as the Guinea Pigs. It is a matter of personal preference.

Evidence quality behind claim of zero sales without subsidies

As for the narratives that no one would buy Tesla cars without subsidies, here's one specific claim from a recent article: "After Hong Kong rescinded a tax break for EVs effective in April, Tesla sales in April dropped to zero."

I have not researched or considered any detailed multi-country or up-to-date data on this, but looking only at this one statement, it immediately occurred to me that it is quite common for buyers of higher-end items or capital equipment to be aware of the end or the beginning of major tax or subsidy changes and then time their purchases accordingly. Even much more broadly, sales always rise before a sales-tax increase, then drop off for some time after the change takes effect. There is typically some degree of "sales rush" leading up to such a change followed by a sales drop-off and eventually normalization. The particular time scales depend on the specifics of the product.

This makes me wonder just how much of this "sales dropped to zero" narrative might be an artifact of such normal smart-buyer timing. The only surprising outcome would be if buyers of $100,000 items would delay purchases until after an available discount was set to evaporate. To assess this, the whole data series in each case, including well after the change in subsidy, would have to be analyzed to account for this common factor in sales trend analysis. Or one could omit such analysis, cite figures immediately after the end of the subsidy, and thereby appear to have solid evidence for a subsidy-dependency narrative.

Does the alleged subsidy queen actually want subsidies?

The final issue I found was actually quite surprising. With so many critics painting Musk as a subsidy-seeking corporate welfare queen, I just sort of accepted this as though it must be true. I know he is a deal-maker and seeks out the best opportunities to acquire factory land, for example, and this includes getting the best possible deals from governments. But does he actively seek subsidies? According to the anti-Musk narrative, he must, right?

Just before I found the information below, it had already occurred to me on logical grounds that if some subsidies are of fixed amounts per electric vehicle, which many are, they may well have been LESS important to Tesla than to its competitor electric-vehicle makers (of course, this doesn't address the advantage relative to FF vehicles). A $7,500 subsidy on a $100,000 car (Models S and X) is 7.5% of the purchase price, the equivalent of a couple of options more or less. This same subsidy on a $30,000 car is a 25% discount. True, the latter case would now also apply more to the new Model 3, but this has not been the context for these criticisms in the past.

Just after having this thought, a simple search revealed something I did not expect to see at all:

At a May 2017 earnings call, Musk made the following statements:

In fact, the incentives give us a relative disadvantage. Tesla has succeeded in spite of the incentives not because of them...Tesla's competitive advantage improves as the incentives go away. This continues to be something that is not well understood...

I should perhaps touch again on this whole notion of—it's almost like over the years there's been all these sort of irritating articles like Tesla survives because of government subsidies and tax credits. It drives me crazy. Here's what those fools don't realize. Tesla is not alone in the car industry; all those things would be material if we were the only car company in existence. We are not. There are many car companies. What matters is whether we have a relative advantage in the market.

As Anton Wahlman explained (4 May 2017):

Musk's argument is that the tax subsidies are worth more to Tesla's competitors than to Tesla, and that therefore Tesla would be better off without them, relatively speaking. Musk has made this argument in previous forums before, including on a previous earnings call as I recall, in the context of California's ZEV (zero emissions vehicle) credits, which Tesla is able to sell to other automakers as a purely politically engineered 100% gross margin profit. He made the argument on the 1Q 2017 earnings call again. In that ZEV case, his argument is that Tesla sells these $5,000-a-pop credits to other automakers at a discount, whereas those automakers make and consume some of those $5,000-a-pop credits internally without applying such a discount.

If removing subsidies removes a competitive disadvantage for Tesla, this might easily be written off as simply strategic self-interested promotion once again. However, if we are engaging in a moral assessment of Musk the public figure and claiming that he shamelessly seeks to live off the public purse, his active opposition to electric vehicle subsidies still does not fit all that smoothly into the anti-Musk narrative that I sought to qualify in my recent post. In addition, it cannot have been lost on Musk that the end of EV subsidies would also remove a special price advantage over conventional vehicles, against which Tesla also competes.

Interestingly, Wahlman's article went on to explain why other automakers might also be happy to be free of EV subsidies—they come with expensive strings attached.

Elon Musk apparently looks forward to competing in a subsidy-free world (who knew?). But what about the other automakers? Wouldn't lower subsidies for electric cars mean fewer electric cars sold for them?..It sure would. And the other automakers would love it too!

Why? Because under the current regime, they are manipulated by both the U.S. Federal tax code, as well as by California's ZEV mandate, to develop and produce more electric cars than for which there is true natural free-market demand. And that means billions of dollars in investment for products that they eventually have to dump at negative margins.

In writing my reassessment of Elon Musk, I suspected the anti-Musk narrative to be a bit overdrawn, tending too far toward the negative in an imbalanced way that does not do justice to the reality and tends to dismiss valid positives in the sweep of also-valid negatives. The observations and discoveries above now seem to indicate that the evidence and thinking behind the anti-Musk narrative might be even somewhat weaker than I had been suspecting. I think the ultimate point is to strive for a realistic and nuanced assessment: to call the positives positive and the negatives negative and acknowledge that both streams are present in parallel.

A Mixed Hero: A Libertarian Reassessment of Elon Musk

Many libertarians seem to love to hate Elon Musk these days. His crime is to live at the public purse. His companies would be bankrupt without green subsidies and cheap government loans and contracts. He seeks out favorable terms from governments and angles to capture subsidies and cheap loans with no reservation and with vast success at doing so. This situation, along with certain financing practices and relationships among his companies, has led to it becoming fashionable to disdain Musk as a public figure and to characterize him with sweeping put-downs.

I have a more complex assessment of Musk as a figure. I enjoyed listening to his 2015 biography by Ashlee Vance. I tend to look for the positive things in people. One positive quality here is the ability to re-envision products from the ground up in a completely different way. The Tesla is not just the evolution of the car, but a completely new way to think about what a car is. A car is a thing with an engine and a drive train, right? True for a century, but not any more. Musk has done in the fields of cars and rockets, what Steve Jobs did for computers and phones, completely re-envisioned what they could be, how they could be built, and how they could be used.

A second quality is execution under very challenging circumstances. Anyone can have big ideas, but only the few are able to successfully execute on them in the "really existing" world. SpaceX's rocket designs and rocket reuse and the Tesla Model S were almost universally deemed impossible—until the job was actually done. Rocket reuse was just a science-fiction fantasy. SpaceX did it. An electric car "that didn't suck" was also an impossibility—until Tesla built the Model S, which has been assessed by multiple car review magazines as basically the best car in the world, bar none, on both safety and performance. It is not only as good as conventional vehicles, it leaves them all behind, not just on green measures, but on car measures as such.

So from a simple first look, at this level, one could argue that however these things were achieved, they were at least potentially positive achievements (though this assessment will be qualified further below). In addition, Musk cannot be accused of relying on subsidies to the exclusion of also having skin in the game. He has repeatedly staked recklessly large portions of his personal fortune on bridging impossible-looking financial stretches for his enterprises.

I fully support the view that actively advocating for the expenditure of public funds is immoral. The only moral way to advocate for the use of public funds is to argue in favor of their return to the people to whom they rightfully belong, namely those whose wealth was forcibly extracted, mainly the original taxpayers.

On the other hand, if taxpayers in their role as victims of the state accept state handouts that are already flowing—provided they do not actively advocate for the continuation of such handouts—it is perfectly moral for them to take receipt of such funds as a form of limited restitution for other damages they suffer at the state's hands on a constant basis. This includes not only direct taxation but all the myriad seen and unseen harms from the arbitrary "regulation" of many aspects of life and work, all unjust restrictions on the liberties of mutually consensual production, trade, and association.

In this context, Musk's actions in relation to subsidies and government contracts must be viewed as mixed. Green vehicle subsidies, for example, already existed before Tesla. Building a car that would qualify for them does not—in itself—constitute advocating for the subsidy program. Seeing only crappy electric cars receiving subsidies, an entrepreneur could quite reasonably set out to build a better competing car that would also receive these same pre-existing subsidies instead of the crappy golf-cart cars.

Of course, Musk certainly does promote such programs. However, only at the point where he benefits from programs the adoption or maintenance of which was actually influenced by his advocacy—does a moral case against his benefiting from them become unmistakable. The minimal conceptual dividing line is that simply benefiting from subsidies is not objectionable per se, advocating for them is objectionable, and advocating for them and then also receiving benefits as a result of such advocacy is the worst case.

In this view, I suspect that his guilt is far more mixed than a simplistic portrayal of "his company benefits from subsidies, and could not exist without them." His enterprises have surely benefited in all three types of ways, ranging from acceptable to less acceptable to not acceptable.

Context is also important. No car company would exist in its current form and at its current scale without unimaginably massive subsidies continuously provided to all automobiles over many decades, distorting not only the entire structure of transportation, but also the very formation and shapes of cities and communities. This vast structural distortion of the entire transportation industry, which systematically twists spatial relationships between residences and businesses, takes a simple form: the production and maintenance of roads provided free of charge to drivers, financed by taxation. A simple heuristic to consider while commuting is that every time one has to pay by waiting, such as in a long line or in thick traffic, the state is squarely to blame.

In prosecuting Musk for his moral position in relation to the receipt of government support, another "extenuating circumstance" of wider context must be considered. What his companies have done with the money and other advantages he receives from state entities is far more valuable a contribution than almost anything else that follows from other uses of such money and advantages.

Most of the state's money goes to "the production of bads," to use Hoppe's terminology, as opposed to the free market's production of goods. We do not want the production of bads to be carried out more efficiently. Indeed, we do not want bads to be produced at all—less of them is better.

Not only is the money the state extracts from the productive population wasted once when initially extracted, the ways that this money is subsequently used are generally quite wasteful a second time, compounding the damage to society. In the US case, most government money goes to the following types of uses: financing global military interventionism and promoting armed conflict and death all around the world, financing vast bureaucracies that meddle in all aspects of society, undermining healthy natural incentives, promoting fragility, harming employment, limiting innovation, and spreading social and cultural degeneration, high time preference, frailty, and dependency across the population.

Against this backdrop, Tesla has extracted something from the stream of public money and used it as part of a project which has produced arguably the best car the world has ever seen.

Why libertarians should want to focus vitriol on this, one of the best existing uses of the state's handouts is somewhat mysterious. Why not spend the same time complaining about the 99+% of uses of state subsidies and privileges that lead to worse outcomes than this?

It is far easier to criticize than to achieve. A sad and strong cultural tendency is to find flaws in hero figures and emphasize those flaws over their positive characteristics. But what does such cultural cynicism bring?

My approach is the opposite in two ways: focusing on the positive and focusing on qualities. I look for admirable aspects of a person. I look for actions and qualities to which positive adjectives such as heroic can be applied, rather than attempting to apply a blanket noun such as hero (or not a hero) to necessarily multifaceted persons. I always look for what I can admire and/or borrow, in both people and thought systems. If I were to look for the worst in others and focus on that, it would be simple, but would accomplish nothing, since I would always find and focus on negative aspects of persons, aspects which I did not want to emulate. If instead I look for the best in each person, I always have something available to learn from and emulate. Likewise, if I look for the best in each thought system, and dismiss the rest, I always have one new puzzle piece to add to my own global knowledge synthesis.

I agree that Musk is guilty of actively seeking to gain from state handouts. However, this is partly mitigated in that at least some of these handouts were already being handed out, and could therefore be legitimately captured as partial restitution for other damages that the state continuously inflicts. It is also partly mitigated in that the uses to which these funds are being put are arguably positive developments relative to the worse outcomes that result from almost all other uses of money derived from state coffers.

It should be made clear that extenuating circumstances do not make it morally acceptable to advocate for the receipt of subsidies from the state. Nevertheless, guilt on this count (albeit probably somewhat more mitigated guilt than some critics have implied) should not be interpreted such as to invalidate the man's positive attributes and accomplishments.

As I read Musk's biography a couple years back, I came to view him more as the type of mixed Randian semi-hero who blends a certain heroic genius in some areas with serious flaws elsewhere. His genius is a vision- and engineering-driven entrepreneurship that has proven able to repeatedly achieve "the impossible" in practice in productive sectors of technological achievement (mainly transportation). One of his flaws is being all too gleeful in his pursuit of capturing ill-gotten gains from the state as one of the means he uses in this process.

The purest of the Randian superheroes all went on vacation from their professions in an exclusive mountain resort. Engaging with the real world to achieve great things today is often messy and complex. This is not an excuse to soften one's moral principles in action. However, Musk's own moral worldview contains no compunctions about attempting to influence state and regulatory actions, including in favor of his own enterprises. He can therefore be accused of being morally mistaken on this topic. Yet this amounts to the relatively simple claim that he is not a libertarian, which I do not think is in dispute.

I do not buy into the bases of some of Musk's bigger-picture motivations, above all global warming death hype. In addition, I argue in "The Unbearable Lightness of Martian Gravity" that his Mars colonization vision could very well turn out to be a dead-end, not on technical grounds, but on biological ones. That said, I do not criticize in order to take down a hero figure. I acknowledge and appreciate the heroic aspects of the figure, while also acknowledging the flaws and pointing out what I believe to be the errors.

Ron Paul said that if we are reducing the size of the state, the place to start is not with old ladies' state pension checks, but with outlandish militarism and a state-orchestrated monetary system that enables virtually unlimited debt financing for the state and its cronies. Probably one of the last things to cut out in dismantling the interventionist state is old ladies' pension checks, and this after other policies that have undermined responsible private retirement saving, real insurance, and natural multi-generational care practices have been long since eliminated.

Likewise, libertarians complaining about uses to which government money is being put might consider that Tesla subsidies could well be among the best uses to which such money is currently being put. They might therefore redirect their attention and vitriol to the widespread mass production of unmistakable "bads" financed by the state, those that are far worse than some of the more impressive American engineering innovations in recent memory.

SpaceX can get there, but biology a probable Mars residence limiter

SpaceX chief Elon Musk laid out a long-term vision for regular interplanetary transport and colonization in a 27 September presentation at the International Astronautical Congress. Details and vision alike were further steps along the path SpaceX has been pursuing for years, as it repeatedly counters naysayers by taking up the so-called impossible—and getting it done.

Yet while Musk concentrated on engineering, propulsion, efficiency, and finance, the toughest limiters on long-term Mars habitation may well turn out to be biological. Could life evolved on Earth, especially more complex organisms such as ourselves, thrive there indefinitely and across generations?

Musk’s aim is to make humanity a multiplanetary species. He envisions a city of a million people on Mars that could become “self-sustaining.” In other words, if Earth becomes uninhabitable, humanity would have a second home, and avoid extinction.

Most of the technical issues with Mars habitation can be addressed with technical means. Radiation can be shielded against. Water, air, and regulated temperatures can be produced, and chemical plants such as for ship propellant can be built. Psychological and other factors in long-term, small-scale hab confinement have already been under study both in space and in remote desert sims.

The gravity of the situation

However, the harshest sticking point for a colonization plan could be something that Musk mentioned, but characterized only as a source of fun—38% Earth gravity on Mars. He presented images of jumping high and lifting heavy things with ease.

The possible problems would only appear, as they so often do, over the longer term. Research on the health effects of low gravity has already begun to suggest a quite unfavorable pattern. Much of this research as been done in zero g, but long-term exposure to 38% Earth gravity—Mars g—could well produce many similar effects along the same spectrum, just more slowly.

Zero g has been found to produce not only the expected muscle atrophy in astronauts, but a host of other health issues, which isometrics and exercise bikes can only partially limit. Research on both astronauts and lab animals point to falling bone mineral density and circulatory issues, including impaired heart health.

Limited research to date thus already suggests negative effects on three major physical systems. Yet muscular, skeletal, and circulatory systems are hardly footnotes to transporting brains; they are most of what a complex organism consists. Moreover, there is no reason to expect nervous and reproductive systems to get free passes either, especially over years and decades.

Studies of zero-g animal embryonic development raise even greater concerns for long-term Mars colonization. Reproduction among spacefaring rodents has gone quite badly. Experiments with mice on a Space Shuttle mission resulted in normal embryos for the earthside controls and no growing embryos in zero g. Rat groups sent into orbit produced some weightless pregnancies, but with no resulting births. The pregnancies spontaneously terminated—all of them.

Evolutionary and developmental processes could always assume 1g

Simple organisms such as bacteria are the least likely to be bothered by gravity changes. The more complex the developmental process, however, the more likely that aspects of this process will be fine-tuned to happen in 1g. That said, Mars g could well be better for development than zero g because it would at least supply developmental processes with some vertical orientation, an up and a down, albeit with a much weaker signal.

The plans encoded in DNA for growing an organism are completely unlike engineering plans. They are decentralized developmental instructions. Each cell responds to its immediate environment. It takes cues from the type of cell it has become, from the types of cells around it, and from the specific chemistry and hormones in its blood supply. The so-far unquestioned constant has been that all earthly life has evolved in 1g (with very tiny variations) and every embryonic developmental process has evolved to take place in this 1g.

What about adaptation? As powerful a force as evolution by natural selection is, it tends to require extremely long time scales, on the order of thousands and more generations, especially for larger-scale adaptations. Too great a change—or an entirely unprecedented type of change—and a species will simply not make it.

Adaptations to something so pervasive and otherwise constant as gravity would have to proceed in steps. If a hypothetical planet’s gravity were to (somehow) shift to 38% of its former level, but do so over several million years or more, then life there would have a decent chance of adapting because any given generation would only be subject to minute changes. However, by the time gravity reached 95% of its former level, organisms then would already tend to be optimally adapted to that new 95% level. Checking in again a thousand generations later, organisms would tend to be well adapted to the newly current 90% gravity, and so on as gravity crept down. In contrast, evolution copes far less well with sudden large jumps, which tend to be associated with mass extinctions.

Temperature variation is a variable to which earthly life is widely adapted, both across species and to a lesser degree within each organism. Temperature has changed remarkably and continuously throughout Earth’s 4.5 billion year history and it also varies starkly with season and geography. Temperature adaptation therefore has a vast range of evolutionary precedent. Atmospheric composition, pressure, and radiation levels have also changed back and forth over geologic history.

What earthly life has never had to do, not even once, is what a Mars relocation would ask of it. Low g is something that evolution has had no opportunity to tackle. One of the few rough constants throughout the 3 billion or more years of earthly life has been 1g.

This still does not make some degree of individual gravity adaptation impossible now, but it does suggest that this could be a very serious issue for colonization and a potential deal-breaker for both indefinite stays on Mars and natural reproduction of future generations there.

The probably need for artificial gravity and how to produce it

For long-term extra-terrestrial colonization, artificial structures capable of producing artificial gravity that approximate 1g seem more promising. One concept involves large cylindrical spacecraft on axial rotations. The interior surface of the cylinder can be built to a size and given a rotation to approximate 1g over a large habitable interior surface area. That would be another huge engineering challenge. Yet SpaceX’s work in interplanetary transport, along with advancements in asteroid mining, would help lead to a future in which this too could become more feasible.

Given the grave potential health and reproductive risks of long-term exposure to zero g and/or Mars g for Earth-evolved organisms, those interested in space colonization ought to assign a high priority, alongside ongoing engineering work, to low- and zero-g health research. Critical for colonization are three research areas: effects of Mars g on the health of Earth-leavers, likely health of long-term Mars residents upon potential return to Earth, and effects of low and no g on embryonic and childhood development.

Getting people to Mars is an engineering challenge. Musk, SpaceX, and collaborators are up to the task and well on their way. But the length of time that hopeful new Martian arrivals can expect to live there, in what state of health, and with what likelihood of producing healthy offspring, are critical questions in need of serious research and consideration in relation to any developing colonization plans. Early animal and astronaut studies combined with an evolutionary perspective suggest that shorter-term Mars visits are likely to be far more feasible from a health perspective, that natural reproduction among colonists might well be out of the question, and that the development of spacecraft and stations with artificial gravity is likely to be a biological priority for any future long-term extra-terrestrial residents.

This provides a more realistic base scenario from which to refine the engineering details of an early Mars transport and habitation system. It may well be that 1g environments would have to be available at least part of the time to support health longer term. The most realistic approach to creating artificial gravity is a rotating habitat, but this could well prove easier to achieve in space than on a planet with gravitational and atmospheric resistance, albeit both much lower than Earth’s.

At minimum, it should be clear that lab mice and rats ought to be the first serious colonists on Mars—and this for quite some time. Their mission: to live where no earthly creature has lived before. Godspeed to those pioneering rodents; I suspect they’ll need it.