Nilatai wrote:
someproteinguy wrote:
Nilatai wrote:
Someone tl;dr that for me?
TL:DR = If you subsidize a product the company is much less likely to improve it to a point where it's profitable without the subsidy.
Or that's what I got at least.
Edited, Oct 25th 2011 1:35pm by someproteinguy Oh. Well that's a stupid argument. Easily fixable too, you start off subsidising and then gradually reduce the subsidy. Or make the subsidy contingent upon continued research and development.
Which works if there's just one company involved. The problem is that we're looking at an industry, and the industry has private investors as well as the subsidies. What you're doing is creating a "free money" situation. What's to stop me from taking an existing non-marketable product, putting a glossy sheen on it, and claiming that if only I can solve some technical problems <insert cleverly worded tech doc here>, it could produce <ridiculous energy for cost estimate> and solve our energy problems? What's the likelihood that some group of political appointees in Washington are going to detect my BS in a field of similarly looking projects (some of which may actually be on to something)? Remember, if even experts in the fields could perfectly predict which research projects will bear fruit, no one would ever fail to produce a marketable product (which we all know is false). There's no way the bean counters can know. They're going to give me money as long as I've got a slick presentation and perhaps the right political contacts.
Then, subsidy in hand, I soak some private investors as well (or soak them more than I already do), live high on the hog as CEO of my soon-to-fail company, and when things go wrong, we'll all just chalk it up to a necessary cost for doing the right thing for the environment. Even in the absence of government subsidies, and with every investor making decisions based on hoped for returns, there are companies that do this all the time. It happens. By putting the government, which has no profit motive, into the position of subsidizing such things, you're just asking for even more raider style capitalism.
And the worst problem is that even when those companies fail, someone else will start another company and do the same thing. What this means is that it's even harder to tell the good ideas from the bad. You will flood the market with people attempting to take advantage of the free government money and who have no intention of building a product at the end. Which makes it that much less likely that legitimate ideas with real potential for generating exactly the kinds of advancements we need will be the ones which receive the subsidies and garner attention. The presence of government subsidies might even affect how private investors spend their money.
I know you complained of tl;dr, but when you just dismiss what I'm saying out of hand when it's presented in simple/short form, I don't know what else to do. This is a very real problem, with very real consequences. We really do hurt the rate of real advancements in these fields by attempting to subsidize the results. Even your solution doesn't work, because the companies doing this don't care if the subsidies run out. They're in it to make a few hundred million dollars over a few years on the government's dime and then move on to other things. And there's a pretty much endless list of people who will do this as long as the government is foolish enough to just hand out free money.
Easy way to waste a ton of taxpayers dollars, yes.