There has been a flood of columns, editorials, and opinions about Elon Musk’s growing wealth. Rather than reviewing them, I’ll offer my own view.
I don’t care that Elon Musk is rich. I don’t care that he makes a great deal of money. I do care about how he has made that money.
I agree that Mr. Musk is a genius but I think his genius takes a form that is not widely recognized. He is neither an engineering genius nor a political genius. His real talent is an extraordinary ability to see where government policy, public institutions, and society are headed and to position himself ahead of those trends.
To paraphrase Bill Clinton, Mr. Musk repeatedly figured out which way the parade was going and got out in front of it.
It is a pattern. He did it first with PayPal, then with Tesla, and then with SpaceX. The common factor is not government contracts, subsidies, or tax policy. Those are merely different mechanisms. The common factor is that Mr. Musk recognized emerging government priorities before most of his competitors and built businesses that would benefit from them.
His companies might well have succeeded without government action. They almost certainly would not have succeeded as quickly.
That distinction matters. Human lifespans are finite. Capital compounds. If PayPal had grown at a tenth of the rate it did, Mr. Musk would not have become a billionaire until much later. If Tesla and SpaceX had developed more slowly, he would have accumulated wealth, influence, and opportunities at a very different pace. The acceleration mattered.
Those who respond to Mr. Musk’s wealth by demanding higher taxes are missing the point. To the best of my knowledge, no millionaire in American history has ceased to be a millionaire because of higher taxes. The same is true of billionaires. I see no reason to believe the world’s first trillionaire, should one emerge, will be any different.
The lesson is not that Elon Musk should be poorer. The lesson is that government should think carefully about the incentives it creates. If immense fortunes can be built by correctly anticipating the direction of public policy, then we should expect more people to devote their talents to that pursuit.
Mr. Musk did not create the parade. He saw where it was going and got there first. He has now done that three times.
I will agree quite a bit, but it wasn’t just anticipating policy. He was also exceptionally good at acquiring grants and subsidies and hiring former govt officials to grease everything. Looking at the bigger picture, I am not sure how effective it is for so much of a nation’s wealth to be tied up in the hands of one person. We now have to an unprecedented degree a large percentage of our economy under control by POTUS also. Truly centralized govt and wealth doesnt seem like a good combo in the long term.
Steve
also, being born rich helps
simply a modified underpants gnomes business plan
Phase 1. born rich
Phase 2. ???
Phase 3. Profit!!
I think an important point is that fortunes of this size can take on a life of their. Even after the founder dies (not anytime soon, Musk is young), the people managing the fortune will strive to keep it going, and it might be used for all sorts of things the founder never envisioned. The Ford Foundation et al. is a good example.
I would recommend reading the Elon Musk biography by Walter Isaacson. It gives a lot of insight into his personality, history, and businesses. He is autistic, bipolar and was treated like crap as a kid in South Africa. He lacks a healthy sense of fear which is why he was able to risk every penny he made from PayPal on Tesla and SpaceX. The other thing is that he spends almost none of his money on consumption.
Government policy, taxation and economic freedom matter a lot. If he had stayed in South Africa, he would not have created PayPal, Tesla, SpaceX, the Boring Company, or bought Twitter. If he had stayed in Canada (where he first migrated to), I doubt he would have created these things as well.
Frankly, I doubt it. Specifically, I doubt that he has ever been diagnosed by a physician as being on the autism spectrum. I know he said he had Asberger’s Syndrome on SNL—IMO that was self-justification more than revelation.
I doubt it about Bill Gates, too, although there’s been plenty of speculation. Some people on the autism spectrum are shmucks but not all shmucks are people on the autism spectrum.
Regardless, my point stands. His is not a model that people should try to emulate. However, I disagree with Steve that it was either salesmanship or some form of bribery that made him rich. I think he became rich by figuring out where the ball was going and getting there first.
So I wasn’t going to comment, but…
“Knowing where the ball was going”
I fail to see the problem. The very basis of investment is seeing value before everyone else does. And then having the balls to put your money and time behind it. Few have that ability.
We invest in people like this. There may be a founder whose investment may just be intellectual capital, or that plus some bucks. But the capital markets are all about discovering these people/opportunities and providing the capital to realize on the next opportunity. If one doesn’t understand this I simply don’t know what to tell them. Take a wage job and a pension.
I agree with comments here about not letting tax or government subsidies drive investment. That’s obvious. If you think that public policy should not guide people I would agree to the extent that you just came squarely into my worldview: minimalist government. That minimizes the damages. Given the inevitable outcomes of intrusive government, no matter how well intentioned, you need to burn your Democrat, or at least Progressive, voting card.
We need Musks. We don’t need Solyndras.
I don’t see it as a problem but some people rather clearly do. They need to recognize that they created the problem they now want to solve.
Musk didn’t create PayPal nor Tesla, he just invested.
scout
We forget, or willingly ignore, stuff like Musk getting a $500 million low interest loan from the government, much like Solyndra did, that enabled it to get its S model to market. If it’s principle that matters, then you should oppose both loans. Or the $500 million grants to Space-x early in its existence when it was developing the Falcon. What is clear is that Musk was especially good at getting government aid at the early stages of his companies when capital acquisition is so important.
On the SpaceX front note that a former senior Space X exec is now a senior advisor in the government on space issues and Trump has hired former top NASA officials. This is so reminiscent of the military industrial complex.
Steve