Crazy but true: A California-based electric car company that wants to make inflatable cars, using pressure membrane technology developed by the aerospace industry, is indignant because the government won’t give it money to do so.
This is what our Bailout Nation is coming to: XP Vehicles, whose website won’t say who is running the company because “it is too easy for our competitors to poach them,” is calling upon supporters to write to Congress because the U.S. Department of Energy rejected its application form for an Advanced Technology Vehicles Manufacturing Loan.
The company says:
The DOE reviewers, mostly from “Detroit”, have turned down XP’s loan application in favor of “Detroit” players. Are we a national where innovation and great ideas win support or where great influence buyers win the support? If you want an XP Vehicle, call Congress now and ask for action!
Now it’s true that Ford ($5.9 billion), Nissan ($1.6 billion) and Tesla ($465 million) were awarded loans under the $25-billion federal program in June. They’ll use the money to build or rebuild plants in Michigan, Tennessee and California, the interest rate is a very low 5% and they’ve got 25 years to pay the money back. If you don’t think politics comes into play when that kind of money is doled out, you’ve not spent much time in Washington.
A car you'll likely never see
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Yesterday I blogged about economist Steve Fazzari and his arguments on behalf of the Obama administration’s $8 billion in loans to automakers Ford, Nissan and Tesla to make electric and fuel-efficient cars. Today, an opposing view comes from Russ Roberts, a libertarian economist who is a professor at George Mason University, a research fellow at Stanford University’s Hoover Institution, the host of the excellent podcast EconTalk and a blogger at www.cafehayek.com.
Steve, Russ and I spent time together recently at a retreat for journalists and economists organized by the Murray Weidenbaum Center on the Economy, Government and Public Policy at Washington University in St. Louis. What struck me was how smart, thoughtful economists can see the world so differently. If you’d like to delve further into these issues, you can listen to my podcasts with Steve and Russ at The Energy Collective, or listen to an in-depth conversation about Keynesian economics between Russ and Steve here at EconTalk. A correction to my podcast: Although I say that the administration is giving loan guarantees to the automakers, the government in fact is making low-interest loans directly to Ford, Nissan and Tesla—a concept that Russ finds troubling, and not just because Tesla builds $100,000 sports cars for millionaires.
Tesla roadster
The economy’s a mess, Russ Roberts says, in part because the government promoted cheap credit and fueled a housing bubble. The Fed kept interest rates too low for too long, while government-sponsored enterprises Fannie Mae and Freddie Mac poured money into risky mortgages. So, he goes on, “it’s kind of ironic that, as we try to cope with that mess, we continue with the same fundamental idea–let’s try to artificially alter the rate at which people can borrow so they can do more of what appear to be good things.”
“In the past, it was home ownership,” he says. “Now it’s manufacturing and green technology.”
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I’m trying something different this week on the blog, in part because I’m on vacation. Recently, I had the great pleasure of attending a retreat for journalists organized by the Murray Weidenbaum Center on the Economy, Government and Public Policy at Washington University in St. Louis. The event was held on Cape Cod, at the lovely Wianno Club in Osterville, Mass., and while time was set aside for golf, tennis or sightseeing, we engaged in a lot of learning, discussion and debate with economists and political scientists from the Weidenbaum Center and elsewhere.
I spent time there with a bunch of smart, interesting and lively people, including two economists, Steven Fazzari, who teaches at Wash U., and Russ Roberts, who teaches at George Mason and hosts one of my favorite podcasts, EconTalk. Steve is a Keynesian and Russ is a libertarian, so I thought it would he interesting to talk to them about the Obama administration’s aggressive efforts to promote clean energy and create green jobs. We discussed the U.S. Department of Energy’s recent decision to make $8 billion in loans to Ford, Nissan and Tesla “for the development of innovative, advanced vehicle technologies that will create thousands of green jobs while helping reduce the nation’s dangerous dependence on foreign oil.”
Today’s blogpost explains why Steve Fazzari thinks this is a good idea. Tomorrow, we’ll hear from Russ, is pretty sure that it isn’t.
Cape Cod sky photographed by Russ Roberts
Ask Steve Fazzari what he thinks about the government loan program for electric and fuel-efficient cars, and he says:
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