So who will pay for it? The customers won’t directly pay more. In Germany lobbying towards subsidies is underway. I assume either that will be successful or we just have to wait until UTMS investments paid off...
And even if it gets subsidies (which is the case here), I would expect it to spend the public’s money well instead of building kilometres upon kilometres of wiring to connect those three farm houses in the Black Forest.
If the government pays subsidies they will combine it with strengthening economically weaker areas. No one needs more high quality jobs in the overcrowded and overly expensive Munich area.
The infrastructure those companies have built already exists, and the subsidies are mostly going to pay debt. If the subsidies stopped, the companies would go bankrupt. Their assets would be sold to another company, likely at a price less than the debt. The new company could therefore have a lower debt burden, and wouldn't necessarily need the subsidies to provide the same level of service. The subsidies are stopping the market from efficiently allocating capital.
Subsidies such as this are a net-loss for the average citizen of Germany and whatever country would have otherwise been host to this factory. It may well be in the interest of the German citizen, and it happening means that this is indeed the believed by people who studied the specifics.
A better example for wasteful subsidies may be the competition for their new HQ Amazon ran between US cities, only to place it where they wanted to go in the first place. There, as well as in the Intel case, a deal prohibiting competition by subsidy would be in everyone's interest.
To be fair, they already get significant subsidies and various preferential tax arrangements to compensate for this, at least in the US and many other western countries.
Thanks for the detailed response. I'm surprised by how much of the cost is being deferred by subsidies, but maybe that will pay back in terms of spurring innovation.
Is that without subsidies? Because subsidies are just make believe money to push people in some direction, the money for the infrastructure still has to come from somewhere.
I agree with you, but there are entire industries thriving propped up on subsidies.
I am curious if this will really work long them, but I'm actually somewhat optimistic that there will be enough momentum to keep the industry around until its successor arrives.
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