Low Risk Venture Capital Investing
November 15, 2011 12:47 PM Subscribe
Solyndra used to make thin-film solar cells, but they could not make any money. The Department of Energy tried to help with a $535 million “Green” loan guarantee but the DOE missed the memo that says EBITDA needs to be in the black if they expect to keep taxpayers out of the red. Private investors kicked in another $70 million eventually but only after the DOE primed itself. As White House economic advisor Larry Summers noted, “…[government] is a crappy vc [venture capitalist]…" Thanks to the DOE though, 40 employees and 150 contractors got to keep their jobs for an extra week last year according to the WaPo.
Man, Summers has a weird view of what venture capital is for. The renewable energy loan guarantees were used to serve exactly the purpose of VC - to provide funding for projects that had the potential to be transformative, but also were likely to fail and therefore unable to get enough investment from traditional private channels. The program was designed to have a high failure rate. In fact, upwards of 20% non re-payment - the program, designed by both Bush and Obama DOEs, planned for $2.5 billion in losses. If you look at the total loan guarantees, and the amount that will eventually be lost from the Solyndra bankruptcy, they're currently well below that.
posted by one_bean at 12:57 PM on November 15, 2011 [8 favorites]
posted by one_bean at 12:57 PM on November 15, 2011 [8 favorites]
On the Presidential scandal meter of 1-10, Solyndra is maybe a 2. Yet notable given Obama has had so few.
posted by stbalbach at 12:59 PM on November 15, 2011 [2 favorites]
posted by stbalbach at 12:59 PM on November 15, 2011 [2 favorites]
Axe-grindey post is axe-grindey. Also, little to see here. The Republicans are latching onto it like my dog latches on to toys, but it's only because they have nothing of substance to attack.
This has had Tulsa all atwitter because a local billionaire, George Kaiser, was one of the big Solyndra investors.
posted by wierdo at 1:07 PM on November 15, 2011 [1 favorite]
This has had Tulsa all atwitter because a local billionaire, George Kaiser, was one of the big Solyndra investors.
posted by wierdo at 1:07 PM on November 15, 2011 [1 favorite]
Solyndra used to make thin-film...but they could not make any money.
They should do this. (spoiler: link goes to the post on the new Canadian currency--hardy har har).
posted by etc. at 1:11 PM on November 15, 2011
They should do this. (spoiler: link goes to the post on the new Canadian currency--hardy har har).
posted by etc. at 1:11 PM on November 15, 2011
Just to put this in perspective, $535 million is between 1/6th and 1/75th the cost of the cleanup of the BP oil spill (depending on who you believe) or 1/14th what was spent to bail out Bank of America.
This is my apathetic face.
posted by Kid Charlemagne at 1:14 PM on November 15, 2011 [4 favorites]
This is my apathetic face.
posted by Kid Charlemagne at 1:14 PM on November 15, 2011 [4 favorites]
Solyndra is the new Acorn for Republicans to kick around.
posted by dances_with_sneetches at 1:23 PM on November 15, 2011 [6 favorites]
posted by dances_with_sneetches at 1:23 PM on November 15, 2011 [6 favorites]
Just to put this in perspective, $535 million
would also pay for a great number of primary school teachers.
posted by three blind mice at 1:25 PM on November 15, 2011 [1 favorite]
would also pay for a great number of primary school teachers.
posted by three blind mice at 1:25 PM on November 15, 2011 [1 favorite]
In a saner world, David Roberts' analysis of this non-scandal over at Grist more than a month ago would've been the last word on this sorry subject.
There would be no carbon capture research without billions in public funding. There would be no nuclear industry without piles of public money invested worldwide across decades. (There's a defensible argument to be made that there really is no such thing as a private nuclear company, since they rely on governments to back them up in the absence of private insurance.) The direct and indirect subsidies to fossil fuels worldwide still outpace renewables by a ratio of 6:1 at minimum.
There's no such thing as a free market in energy. No entity in the energy sphere competes solely on its own merits. The game's rigged. Solyndra's a footnote in a modest attempt to tip the tilted field slightly away from the direction of catastrophe.
posted by gompa at 1:27 PM on November 15, 2011 [21 favorites]
There would be no carbon capture research without billions in public funding. There would be no nuclear industry without piles of public money invested worldwide across decades. (There's a defensible argument to be made that there really is no such thing as a private nuclear company, since they rely on governments to back them up in the absence of private insurance.) The direct and indirect subsidies to fossil fuels worldwide still outpace renewables by a ratio of 6:1 at minimum.
There's no such thing as a free market in energy. No entity in the energy sphere competes solely on its own merits. The game's rigged. Solyndra's a footnote in a modest attempt to tip the tilted field slightly away from the direction of catastrophe.
posted by gompa at 1:27 PM on November 15, 2011 [21 favorites]
I've been half paying attention to this for a few month since the righty blogs on Memeorandum have been up in arms about it but there doesn't seem much to it.
posted by octothorpe at 1:42 PM on November 15, 2011
posted by octothorpe at 1:42 PM on November 15, 2011
What till everyone finds out what the panels were really made of.
posted by Edogy at 1:58 PM on November 15, 2011 [5 favorites]
posted by Edogy at 1:58 PM on November 15, 2011 [5 favorites]
Aside from the fact that the government regularly invests in money losing ventures, some of which might be entirely worthwhile, there seems to be quite a few insinuations that the DOE gave Solyndra the money to protect private investors from losses, and some of those private investors were Obama backers. There might be a place for government investment in risky ventures but that generally doesn't include bailing out venture capital firms. One could argue the original loan guarantee was the right thing to do but the DOE's decision to allow itself to be primed is a giveaway of $70+ million to the well connected. Where are all the giant paper mache heads and placards?
posted by otto42 at 2:01 PM on November 15, 2011 [1 favorite]
posted by otto42 at 2:01 PM on November 15, 2011 [1 favorite]
"but the DOE's decision to allow itself to be primed is a giveaway of $70+ million to the well connected"
Nobody is going to lend more money to a venture unless their debt is superior to what has already being put in. It's really very simple, you as the earlier investor are given a choice, a) let the company close now, b) put the $70M in yourself or c) let somebody else put the the $70M in and go ahead of you in the queue - there is no option d).
"[government] is a crappy VC"
Well there was far more private VC money lost in Solyndra than there was government money. So it's hard to argue that the real VC's were any smarter in this case.
The sad fact is that Solyndra was a great idea when it was launched. But the world changed and the prices of traditional silicon solar panels fell far faster than anyone expected (arguably due to a huge overbuild of manufacturing capacity in China fueled by very cheap capital from the Chinese government). If there was any fault it was that it took too long to realize that and shut it down sooner. Many of us in the Silicon Valley solar business could see this coming from a long way away. But to those in the trenches its very hard to to make that call.
I think that in many ways taking the DOE money sealed Solyndra's fate. Once they had it their mission was also "create US jobs". So they spent the money building a beautiful factory in Fremont with 100% US content. For example they selected US built industrial controllers rather than cheaper foreign competitors. Perhaps they could have saved the business if they had built a much cheaper plant overseas and used cheap labor in place of expensive robots. But politically that was impossible once they had DOE money. I personally would like to see the jobs here, but if that's not possible then at least I'd like to see a great US owned company that lived to fight another day with some jobs here. Instead we have no jobs and no company.
posted by Long Way To Go at 2:23 PM on November 15, 2011 [5 favorites]
Nobody is going to lend more money to a venture unless their debt is superior to what has already being put in. It's really very simple, you as the earlier investor are given a choice, a) let the company close now, b) put the $70M in yourself or c) let somebody else put the the $70M in and go ahead of you in the queue - there is no option d).
"[government] is a crappy VC"
Well there was far more private VC money lost in Solyndra than there was government money. So it's hard to argue that the real VC's were any smarter in this case.
The sad fact is that Solyndra was a great idea when it was launched. But the world changed and the prices of traditional silicon solar panels fell far faster than anyone expected (arguably due to a huge overbuild of manufacturing capacity in China fueled by very cheap capital from the Chinese government). If there was any fault it was that it took too long to realize that and shut it down sooner. Many of us in the Silicon Valley solar business could see this coming from a long way away. But to those in the trenches its very hard to to make that call.
I think that in many ways taking the DOE money sealed Solyndra's fate. Once they had it their mission was also "create US jobs". So they spent the money building a beautiful factory in Fremont with 100% US content. For example they selected US built industrial controllers rather than cheaper foreign competitors. Perhaps they could have saved the business if they had built a much cheaper plant overseas and used cheap labor in place of expensive robots. But politically that was impossible once they had DOE money. I personally would like to see the jobs here, but if that's not possible then at least I'd like to see a great US owned company that lived to fight another day with some jobs here. Instead we have no jobs and no company.
posted by Long Way To Go at 2:23 PM on November 15, 2011 [5 favorites]
Where are all the giant paper mache heads and placards?
Where was the outrage of the right wing when George W. Bush sent cargo planes full of currency to Iraqi warlords?
There really is no limit to the amount of hypocrisy and sanctimony that the right can stomach, is there?
posted by goethean at 2:37 PM on November 15, 2011 [4 favorites]
Where was the outrage of the right wing when George W. Bush sent cargo planes full of currency to Iraqi warlords?
There really is no limit to the amount of hypocrisy and sanctimony that the right can stomach, is there?
posted by goethean at 2:37 PM on November 15, 2011 [4 favorites]
I still love you, ARPA-E. And not just because you're paying me to.
posted by maryr at 3:16 PM on November 15, 2011
posted by maryr at 3:16 PM on November 15, 2011
(Although that's grants, so I guess it's unrelated...)
posted by maryr at 3:18 PM on November 15, 2011
posted by maryr at 3:18 PM on November 15, 2011
My understanding is that the DOE's hit rate with its renewable energy investments is currently strikingly higher than the average private sector venture capitalist's. See e.g. this analysis.
Ahhh, this link is bogus (someone is wrong on the internet). It tries to make the claim that because Solyndra is bankrupt, the other 98.6% of money earmarked went to "winners". VCs traditionally define "winner" as "we made 500% or more return on our money".
We won't know the results of this program for decades; it's waaaay too early to be claiming either victory or defeat.
posted by RobotVoodooPower at 3:40 PM on November 15, 2011 [2 favorites]
Ahhh, this link is bogus (someone is wrong on the internet). It tries to make the claim that because Solyndra is bankrupt, the other 98.6% of money earmarked went to "winners". VCs traditionally define "winner" as "we made 500% or more return on our money".
We won't know the results of this program for decades; it's waaaay too early to be claiming either victory or defeat.
posted by RobotVoodooPower at 3:40 PM on November 15, 2011 [2 favorites]
This Solyndra "scandal" is a great example of what happens when public discourse devolves into making false equivalencies between the two major political parties. In terms of outrage, this controversy has nothing on... anything, yet there's this pressure to turn it into Whitewater II or something.
posted by dixiecupdrinking at 3:41 PM on November 15, 2011 [2 favorites]
posted by dixiecupdrinking at 3:41 PM on November 15, 2011 [2 favorites]
Putting all that aside, I would think, first of all, that (intellectually honest (I know, big caveat)) conservatives would actually like this kind of program. Realistically, we are going to need to develop green technologies and so on; do you want the government doing it, or do you want private entities doing it? Due to free rider problems and the abilities of existing energy sources to externalize problems (pollution etc.), there is going to be private underinvestment in clean energy. This is exactly the kind of market failure that government ought to be trying to rectify.
Secondly, I would be surprised if there are any worthwhile high tech companies out there that have not donated to Democrats.
posted by dixiecupdrinking at 3:46 PM on November 15, 2011 [1 favorite]
Secondly, I would be surprised if there are any worthwhile high tech companies out there that have not donated to Democrats.
posted by dixiecupdrinking at 3:46 PM on November 15, 2011 [1 favorite]
there seems to be quite a few insinuations
There seems to be insinuations??? Christ, is that all they've got? Enough weasel; did they or didn't they, and was it illegal. Lotta people donated to Obama campaign, not suprisingly some of them also invest in green tech, really, is it?
posted by smoke at 3:47 PM on November 15, 2011 [1 favorite]
There seems to be insinuations??? Christ, is that all they've got? Enough weasel; did they or didn't they, and was it illegal. Lotta people donated to Obama campaign, not suprisingly some of them also invest in green tech, really, is it?
posted by smoke at 3:47 PM on November 15, 2011 [1 favorite]
Guys, just because intellectually dishonest idiots are trying to make political hay out of the Solyndra thing, and just because those same intellectually dishonest idiots have done much, much worse things themselves, doesn't mean this kind of stuff isn't problematic.
Specifically, it seems really clear that there was a (relatively minor) conflict of interest in the dispersal of the money to Solyndra. More generally, though, as Long Way to Go mentions above, they were forced to be uncompetitive because of the slogan-turned-policy of "Green American Jobs". It doesn't serve progressive interests to have good alternative energy companies go out of business due to bad policy, even if the bad policy temporarily made a few workers better off.
posted by downing street memo at 4:08 PM on November 15, 2011 [1 favorite]
Specifically, it seems really clear that there was a (relatively minor) conflict of interest in the dispersal of the money to Solyndra. More generally, though, as Long Way to Go mentions above, they were forced to be uncompetitive because of the slogan-turned-policy of "Green American Jobs". It doesn't serve progressive interests to have good alternative energy companies go out of business due to bad policy, even if the bad policy temporarily made a few workers better off.
posted by downing street memo at 4:08 PM on November 15, 2011 [1 favorite]
My understanding is that the DOE's hit rate with its renewable energy investments is currently strikingly higher than the average private sector venture capitalist's. See e.g. this analysis. And that's leaving aside the fact that the govt. is not in the business in order to turn a profit.
posted by yoink at 12:54 PM on November 15 [18 favorites +] [!]
The DOE's hit rate is higher because they have the financial ability to fund losers until the end of time, like Amtrak, or the Post Office. When you don't have to show a profit you can sell your product or service at any price, or even pay someone to take it if no one wants it. Success! We don't make any money but we are still in business. (Lloyd Braun rings the bell.) "Put another check mark in the winner column Secretary Chu and cut another check for Green Corp. so they make payroll next week."
posted by otto42 at 4:16 PM on November 15, 2011 [1 favorite]
posted by yoink at 12:54 PM on November 15 [18 favorites +] [!]
The DOE's hit rate is higher because they have the financial ability to fund losers until the end of time, like Amtrak, or the Post Office. When you don't have to show a profit you can sell your product or service at any price, or even pay someone to take it if no one wants it. Success! We don't make any money but we are still in business. (Lloyd Braun rings the bell.) "Put another check mark in the winner column Secretary Chu and cut another check for Green Corp. so they make payroll next week."
posted by otto42 at 4:16 PM on November 15, 2011 [1 favorite]
"Guys, just because intellectually dishonest idiots are trying to make political hay out of the Solyndra thing, and just because those same intellectually dishonest idiots have done much, much worse things themselves, doesn't mean this kind of stuff isn't problematic."
I won't call some members of the left of intellectual dishonesty, but many seem intellectually naive. If the OWS crowd needed a rallying point about the immorality of crony capitalism, this is it. Goldman Sachs version of crony capitalism might be worse, but it is subtle, and no one on the left has the ability to articulate to the great unwashed why it is wrong. Solyndra is easy to explain because it is so blatant.
posted by otto42 at 4:28 PM on November 15, 2011
I won't call some members of the left of intellectual dishonesty, but many seem intellectually naive. If the OWS crowd needed a rallying point about the immorality of crony capitalism, this is it. Goldman Sachs version of crony capitalism might be worse, but it is subtle, and no one on the left has the ability to articulate to the great unwashed why it is wrong. Solyndra is easy to explain because it is so blatant.
posted by otto42 at 4:28 PM on November 15, 2011
The DOE's hit rate is higher because they have the financial ability to fund losers until the end of time, like Amtrak, or the Post Office. When you don't have to show a profit you can sell your product or service at any price,
otto, some services are supplied to lubricate the economy. If Amtrak bothers you, you must be livid over how little profit is made paving the roads of your city.
posted by benito.strauss at 4:36 PM on November 15, 2011 [13 favorites]
otto, some services are supplied to lubricate the economy. If Amtrak bothers you, you must be livid over how little profit is made paving the roads of your city.
posted by benito.strauss at 4:36 PM on November 15, 2011 [13 favorites]
Cripes, otto42, that doesn't make any sense.
Solyndra is in the news because the DOE didn't "fund it to the end of time, like Amtrak, or the Post Office," nor did they "even pay someone to take [Solyndra's product] if no wants it."
If you're suggesting that the other companies DOE backed, and who are still in business, remain so solely -- or largely -- as a result of continued payments from DOE and/or subsidized sales, that would be news.
But it would also mean that the sexy bits of the Solyndra scandal -- that the Administration stepped into the process and directed the DOE to fund Solyndra so that certain Obama friendly investors could get their money out before the BK -- aren't really that sexy. After all, if the DOE can just keep shoveling money into green energy companies in perpetuity, why let Solyndra fail at all?
posted by notyou at 4:37 PM on November 15, 2011 [1 favorite]
Solyndra is in the news because the DOE didn't "fund it to the end of time, like Amtrak, or the Post Office," nor did they "even pay someone to take [Solyndra's product] if no wants it."
If you're suggesting that the other companies DOE backed, and who are still in business, remain so solely -- or largely -- as a result of continued payments from DOE and/or subsidized sales, that would be news.
But it would also mean that the sexy bits of the Solyndra scandal -- that the Administration stepped into the process and directed the DOE to fund Solyndra so that certain Obama friendly investors could get their money out before the BK -- aren't really that sexy. After all, if the DOE can just keep shoveling money into green energy companies in perpetuity, why let Solyndra fail at all?
posted by notyou at 4:37 PM on November 15, 2011 [1 favorite]
So, what happened to Solyndra's design? It sounds like a good product, and I hope it can be manufactured or improved upon should China stop subsidizing old-fashioned solar panels so much (which sounds unsustainable to me).
posted by mccarty.tim at 4:49 PM on November 15, 2011
posted by mccarty.tim at 4:49 PM on November 15, 2011
The US government is investing our money in ventures that are bound to fail. Solyndra had to hire electrical engineers and semiconductor physicists in Silicon Valley, who probably start at $150k and average more like $250k including benefits. So the $500 million probably only bought 2,000 person-years of research.
Instead, they should have just invested $250 million in a Chinese company, which could have probably gotten 50,000 person-years out of the same investment -- surely enough to actually make the technology work. Of course people would cry foul about how they're killing American jobs, which is why they'd spend the other $250 million to hire and train ten thousand electricians in places like Akron and Flint. After all, we'll need a hell of a lot of electricians to wire up all those cheap Chinese-made solar panels that will be flooding the market.
posted by miyabo at 5:11 PM on November 15, 2011
Instead, they should have just invested $250 million in a Chinese company, which could have probably gotten 50,000 person-years out of the same investment -- surely enough to actually make the technology work. Of course people would cry foul about how they're killing American jobs, which is why they'd spend the other $250 million to hire and train ten thousand electricians in places like Akron and Flint. After all, we'll need a hell of a lot of electricians to wire up all those cheap Chinese-made solar panels that will be flooding the market.
posted by miyabo at 5:11 PM on November 15, 2011
The DOE's hit rate is higher because they have the financial ability to fund losers until the end of time, like Amtrak, or the Post Office.
FFS.
posted by goethean at 5:47 PM on November 15, 2011 [3 favorites]
FFS.
posted by goethean at 5:47 PM on November 15, 2011 [3 favorites]
mccarty.tim wrote: should China stop subsidizing old-fashioned solar panels so much (which sounds unsustainable to me)
It's not so much direct subsidization as the Chinese solar firms making stupid deals with silicon ingot manufacturers. They projected much higher demand than has actually materialized, and subsequently contracted for far too much silicon, so they've been having to sell at well below cost just to get the cells out the door so they can take the next bite of the shit sandwich, always hoping for more demand to materialize from somewhere.
In the US, they'd just declare bankruptcy and be done with it. I wouldn't be surprised to learn that the Chinese government is subsidizing them to some degree so as to keep production in China, but I haven't seen any reports of that actually being the case.
posted by wierdo at 5:59 PM on November 15, 2011
It's not so much direct subsidization as the Chinese solar firms making stupid deals with silicon ingot manufacturers. They projected much higher demand than has actually materialized, and subsequently contracted for far too much silicon, so they've been having to sell at well below cost just to get the cells out the door so they can take the next bite of the shit sandwich, always hoping for more demand to materialize from somewhere.
In the US, they'd just declare bankruptcy and be done with it. I wouldn't be surprised to learn that the Chinese government is subsidizing them to some degree so as to keep production in China, but I haven't seen any reports of that actually being the case.
posted by wierdo at 5:59 PM on November 15, 2011
The Post OffIce and Amtrak don't get to use all the gimmicks that big corporations get to use to show their p&L to investors. If they did they probably would be profitable.
posted by humanfont at 6:22 PM on November 15, 2011
posted by humanfont at 6:22 PM on November 15, 2011
Solyndra had to hire electrical engineers and semiconductor physicists in Silicon Valley, who probably start at $150k and average more like $250k including benefits.
I know that it sometimes seems like Silicon Valley lives is a magical mythical world that floats in a sea of its own hype. But really, it's a very rare electrical engineer that makes $250K. A pretty senior engineer/scientist with a PhD and 15 years of work experience might start at $150K in a start-up like Solyndra. To get much higher than that they would have to be in senior (VP & up) management.
I would take 2,000 person-years of the USA's best over 50,000 of what I could get in China. Believe me many of the best Chinese engineers & scientists graduated from US universities and still live here.
posted by Long Way To Go at 7:33 PM on November 15, 2011
I know that it sometimes seems like Silicon Valley lives is a magical mythical world that floats in a sea of its own hype. But really, it's a very rare electrical engineer that makes $250K. A pretty senior engineer/scientist with a PhD and 15 years of work experience might start at $150K in a start-up like Solyndra. To get much higher than that they would have to be in senior (VP & up) management.
I would take 2,000 person-years of the USA's best over 50,000 of what I could get in China. Believe me many of the best Chinese engineers & scientists graduated from US universities and still live here.
posted by Long Way To Go at 7:33 PM on November 15, 2011
Fox News, call your doctor. Because the erection you currently have is going to last longer than 4 hours.
posted by homunculus at 12:30 AM on November 16, 2011
posted by homunculus at 12:30 AM on November 16, 2011
As White House economic advisor Larry Summers noted, “…[government] is a crappy vc9 out of 10 VC projects fail. Republicans are going after this because it's something they can make 'look bad' (apparently), it's too technical for people to realize it was fine, and it's also related to something from "the left" -- global warming mitigation.
Also, it's ridiculous for them to complain. Conservatives who aren't outright global warming deniers say we need "Technology" to solve the problem, rather then carbon controls. (Nevermind that carbon controls would incentivizes the market to figure out the technology itself) Now here we have an example of someone trying to fix it by innovating technologically, the result is republicans bitching about the fact that people might make money off it (nevermind the vast fortunes made on government subsidized oil)
One good thing, though: the problem with Solyndra wasn't that no one was buying solar panels, but that the Chinese had gotten the price of 'traditional' polysilicon down quite a bit.
would also pay for a great number of primary school teachers.
Or one and a half F-22s!
I won't call some members of the left of intellectual dishonesty, but many seem intellectually naive. If the OWS crowd needed a rallying point about the immorality of crony capitalism, this is it. Goldman Sachs version of crony capitalism might be worse, but it is subtle, and no one on the left has the ability to articulate to the great unwashed why it is wrong. Solyndra is easy to explain because it is so blatant.Goldman Sachs former CEO was the treasury secretary during the bailouts. They were allowed to convert from being an investment bank to a commercial bank so they could borrow from the fed, despite the fact they didn't have any depositors. The crony capitalism was very obvious. And this was involving hundreds of billions, if not trillions of dollars. Plus other bullshit like cheating their investors buy shorting the stuff they were selling them.
The Solyndra thing doesn't seem blatant at all. The government should be investing in clean tech. This is a problem that needs to be solved. The Chinese government is pumping billions of dollars into solar energy capacity, which is why prices have been tanking. That's good for the world, but it's pretty bad for the global position of the U.S. compared to China.
So, what happened to Solyndra's design? It sounds like a good product, and I hope it can be manufactured or improved upon should China stop subsidizing old-fashioned solar panels so much (which sounds unsustainable to me).What they're subsidizing is the creation of solar panel factories
posted by delmoi at 2:26 AM on November 16, 2011 [1 favorite]
otto, some services are supplied to lubricate the economy. If Amtrak bothers you, you must be livid over how little profit is made paving the roads of your city.
posted by benito.strauss at 4:36 PM on November 15 [10 favorites +] [!]
There is a pretty big difference between the government's roll in paving roads and Amtrak. There is no substitute for paved roads. There are plenty of substitutes for Amtrak. Plenty of ways exist to get from NYC to DC besides Amtrak including planes, buses and cars. Any Amtrak route not currently served by the alternatives will be supplied by the alternatives if the demand is there. If there is no demand for a route once served by Amtrak then its not worth supplying.
posted by otto42 at 3:28 AM on November 16, 2011
posted by benito.strauss at 4:36 PM on November 15 [10 favorites +] [!]
There is a pretty big difference between the government's roll in paving roads and Amtrak. There is no substitute for paved roads. There are plenty of substitutes for Amtrak. Plenty of ways exist to get from NYC to DC besides Amtrak including planes, buses and cars. Any Amtrak route not currently served by the alternatives will be supplied by the alternatives if the demand is there. If there is no demand for a route once served by Amtrak then its not worth supplying.
posted by otto42 at 3:28 AM on November 16, 2011
Plenty of ways exist to get from NYC to DC besides Amtrak including planes, buses and cars.
Cars and buses run on government roads and plane travel is subsidized by government in ten different ways (who do you thing builds airports?). Why pick on Amtrak?
posted by octothorpe at 4:53 AM on November 16, 2011 [1 favorite]
Cars and buses run on government roads and plane travel is subsidized by government in ten different ways (who do you thing builds airports?). Why pick on Amtrak?
posted by octothorpe at 4:53 AM on November 16, 2011 [1 favorite]
There is no substitute for paved roads.
People moved around and conducted business before there were paved roads, so there are substitutes. But people (through the institutions of governments on multiple levels) decided that paved roads have the proper mix of efficiency, usability, etc. that it is worth providing them as a general service. In some places people can also decide that trains are worth providing.
Heck, you could repeat your argument and say that there's no substitute for electricity. So we should get rid of private electric companies and have everyone use municipal electric power. Are you advocating that?
otto, if you believe (from some personal conviction, not just arguments about efficiency) that it's wrong for the government to provide any services that a private corporation could conceivably provide, then 1) it's probably not worth discussing this further, and 2) you must be driven mad with irritation the minute you step out the door each morning.
posted by benito.strauss at 6:33 AM on November 16, 2011 [1 favorite]
People moved around and conducted business before there were paved roads, so there are substitutes. But people (through the institutions of governments on multiple levels) decided that paved roads have the proper mix of efficiency, usability, etc. that it is worth providing them as a general service. In some places people can also decide that trains are worth providing.
Heck, you could repeat your argument and say that there's no substitute for electricity. So we should get rid of private electric companies and have everyone use municipal electric power. Are you advocating that?
otto, if you believe (from some personal conviction, not just arguments about efficiency) that it's wrong for the government to provide any services that a private corporation could conceivably provide, then 1) it's probably not worth discussing this further, and 2) you must be driven mad with irritation the minute you step out the door each morning.
posted by benito.strauss at 6:33 AM on November 16, 2011 [1 favorite]
Also worth noting that in many cases Municipal power systems restored service faster than private utilities during the recent New England snow storm. Travel was much less frequent and more expensive before the Federal government subsidized airports, passenger rail and massive road building projects. No major infrastructure in the world has been built without public funds. Every railroad right of way, every major dam, every highway and bridge has government money in it somewhere. John Gault never existed and if he did and he disapeared no one would notice.
posted by humanfont at 10:58 AM on November 16, 2011 [1 favorite]
posted by humanfont at 10:58 AM on November 16, 2011 [1 favorite]
"Plenty of ways exist to get from NYC to DC besides Amtrak including planes, buses and cars."
Which are all subsidized heavily by the government.
Do you have an actual argument?
posted by klangklangston at 12:01 PM on November 16, 2011
Which are all subsidized heavily by the government.
Do you have an actual argument?
posted by klangklangston at 12:01 PM on November 16, 2011
Which are all subsidized heavily by the government.
Do you have an actual argument?
posted by klangklangston at 12:01 PM on November 16 [+] [!]
The argument is that without a government subsidy, paved roads (at least most or many) would not exist. It would therefore not be possible to get from point A to point B.
Alternatively, without a government subsidy, Amtrak (at least most or many routes) would not exist. However, it would still possible to get from point A to point B.
What is the point of providing a subsidy to Amtrak if no one is going to miss it, if it is gone?
Greyhound will get you from Chicago to Denver in the same amount of time as Amtrak for $33 cheaper. So what is the point of Amtrak subsidies?
posted by otto42 at 1:37 PM on November 16, 2011
Do you have an actual argument?
posted by klangklangston at 12:01 PM on November 16 [+] [!]
The argument is that without a government subsidy, paved roads (at least most or many) would not exist. It would therefore not be possible to get from point A to point B.
Alternatively, without a government subsidy, Amtrak (at least most or many routes) would not exist. However, it would still possible to get from point A to point B.
What is the point of providing a subsidy to Amtrak if no one is going to miss it, if it is gone?
Greyhound will get you from Chicago to Denver in the same amount of time as Amtrak for $33 cheaper. So what is the point of Amtrak subsidies?
posted by otto42 at 1:37 PM on November 16, 2011
There is a pretty big difference between the government's roll in paving roads and Amtrak.You're just not thinking clearly here. They could be provided by free-market toll roads. The government's road monopoly is hurting potential entrepreneurs right now!
Also, the US government is required to run a postal system by the constitution. What do you have against the founding fathers!?
The argument is that without a government subsidy, paved roads (at least most or many) would not exist. It would therefore not be possible to get from point A to point B.No, you could take the train. You could also get around on foot or with an off-road vehicle.
And there's no reason to think the free market couldn't provide roads if the government wasn't involved. They would have to negotiate for all property to put the roads on, rather then use eminent domain, however.
Here's the thing. You're arguing that the government shouldn't do some things, but shouldn't do other things, based on the fact that there are 'alternatives' that are available. But most of those alternatives (buses, trains, airplanes, etc) rely on on massive government subsidies. Air travel probably requires the smallest government foot print: just airports, and air traffic control. Buses and cars require you to use the government paid for roads.
Ultimately though the only reason you can't see 'alternatives' to government paid for roads is your own impoverished imagination.
posted by delmoi at 8:40 PM on November 16, 2011
Greyhound will get you from Chicago to Denver in the same amount of time as Amtrak for $33 cheaper. So what is the point of Amtrak subsidies?The government pays for the roads greyhound uses.
posted by delmoi at 8:41 PM on November 16, 2011
delmoi wrote: The government pays for the roads greyhound uses
And paying for trackage rights outside of the parts of the NEC they own is a significant cost for Amtrak, since those tracks are owned by private railroads. Pay for roads, pay for track, it's all the same.
posted by wierdo at 10:21 PM on November 16, 2011
And paying for trackage rights outside of the parts of the NEC they own is a significant cost for Amtrak, since those tracks are owned by private railroads. Pay for roads, pay for track, it's all the same.
posted by wierdo at 10:21 PM on November 16, 2011
"The argument is that without a government subsidy, paved roads (at least most or many) would not exist. It would therefore not be possible to get from point A to point B."
Unless you took the train or flew. Or rode a horse.
"Alternatively, without a government subsidy, Amtrak (at least most or many routes) would not exist. However, it would still possible to get from point A to point B."
You've set up a false dichotomy.
"What is the point of providing a subsidy to Amtrak if no one is going to miss it, if it is gone?"
What is the point of pretending you want to make an argument when you instead beg the question?
"Greyhound will get you from Chicago to Denver in the same amount of time as Amtrak for $33 cheaper. So what is the point of Amtrak subsidies?"
Using fare prices as indicative of total cost, especially when discussing subsidies, is like using ticket prices as indicative of total movie cost.
posted by klangklangston at 11:31 PM on November 16, 2011
Unless you took the train or flew. Or rode a horse.
"Alternatively, without a government subsidy, Amtrak (at least most or many routes) would not exist. However, it would still possible to get from point A to point B."
You've set up a false dichotomy.
"What is the point of providing a subsidy to Amtrak if no one is going to miss it, if it is gone?"
What is the point of pretending you want to make an argument when you instead beg the question?
"Greyhound will get you from Chicago to Denver in the same amount of time as Amtrak for $33 cheaper. So what is the point of Amtrak subsidies?"
Using fare prices as indicative of total cost, especially when discussing subsidies, is like using ticket prices as indicative of total movie cost.
posted by klangklangston at 11:31 PM on November 16, 2011
Greyhound is massively subsidized too. They don't lay those roads themselves.
posted by effugas at 4:17 AM on November 17, 2011 [1 favorite]
posted by effugas at 4:17 AM on November 17, 2011 [1 favorite]
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