Every week brings new evidence to support the contention that humanity is moving rapidly towards a future where a handful of people control the vast majority of the world’s wealth.
Last week, for example, Elon Musk made nearly $60 billion on paper. In five days.
The bonanza was catalyzed by a $4 billion order from Hertz which, a scant four months out of bankruptcy, is buying 100,000 Teslas.
Read more: Elon Musk And Our Future In Irrelevance
This is how hyper-capitalism, with help from the “perpetual motion machine” dynamics described in 2017 by Howard Marks, perpetuates absurd outcomes.
The financial media didn’t make the connection. For example, the title of a Bloomberg article dated October 25 promised to explain the situation: “How a $4.2 Billion Deal Generated $119 Billion in Market Value.”
The linked article offered no such explanation, though. The “how” wasn’t addressed. Only the “whats.”
Augusta Saraiva, the journalist, marveled at the amplification process. “It’s not every day that a simple $4.2 billion order creates a $119 billion jump in value for the buyer and seller combined — some 28 times the size of the sale itself,” Saraiva wrote. “But that’s what happened Monday.”
Yes, it did. Happen last Monday. A day when $36 billion “happened” for Musk. On paper, he made another $5 billion on Wednesday, $10 billion on Thursday and $9 billion on Friday (figure below).
I’d say “let that sink in,” but that would be silly, wouldn’t it? $60 billion in a week isn’t something that we can process.
For Musk, the price tag on a solution to problems like world hunger is pocket change. After David Beasley, director of the UN’s World Food Programme, challenged billionaires to “step up,” Musk called his bluff.
“Congratulations to @elonmusk for passing up @JeffBezos as the world’s richest person – worth a whopping $221 billion!”, Beasley tweeted last month, in an ill-fated attempt to shame Musk. “Elon, to celebrate I’m offering you a once in a lifetime opportunity: Help us save 42 million people from starvation for just $6.6 billion! Offer expires SOON.. and lives do too.”
“If WFP can describe on this Twitter thread exactly how $6 billion will solve world hunger, I will sell Tesla stock right now and do it,” Musk said over the weekend. He demanded open and transparent accounting so the public could determine “precisely how the money is spent.”
That’s the flipside of the “receipt” problem I described last week, and it speaks to what I believe to be one of the most important issues facing humanity in the 21st century.
In “The Billionaires Would Like A Receipt, Please,” I chided the likes of Larry Fink and Leon Cooperman for demanding an account of how their tax dollars are spent. Specifically, I wrote that,
It’s not incumbent on lawmakers to provide Fink with a ledger proving every dime he paid in taxes was allocated in a way that he would describe as money “well spent.” Just like nobody elected Cooperman to oversee the distribution of Americans’ tax dollars.
Whether Fink and Cooperman would, in fact, be better at appropriating funds than Congress is irrelevant. It’s eminently possible that they would be considering the incompetence on display in Washington. But the wealthy have plenty of avenues down which to drive on the way to buying influence on Capitol Hill without essentially refusing to pay extra taxes unless someone can send them an itemized receipt for services rendered.
Fink, Cooperman and other “minor” billionaires of comparatively little consequence, consume public goods just like the rest of us and, frankly, it’s not entirely clear the value they add to society is commensurate with their fortunes. They probably get more from society than society gets from them.
In the linked article, I was careful to acknowledge philanthropic endeavors. “People with that much money invariably engage in philanthropy of some sort, and in many cases that entails personally funding initiatives that produce and provide for public goods,” I wrote, adding that,
It’s certainly not as if they don’t understand the premise. Indeed, there’s a very real sense in which you and I will never do as much good for the world as a billionaire because we simply can’t afford to, for example, spend $5 million building parks and playgrounds or donate $50 million to an initiative aimed at establishing enhanced education programs for at-risk youth.
But let’s face it: Building parks, providing funding for the arts so you can have your name emblazoned on a concert hall or, say, donating copious amounts to your favorite top-tier college, are just things you do when you’re ultra-rich.
That’s not to say philanthropy shouldn’t be applauded even when the motivation is vanity. It should. After all, a billionaire who builds a library just so he can put his name on it still built a library. He could have bought another yacht.
Is this discussion different when it involves Musk, Bezos and Mark Zuckerberg than it is when it involves mortals like Fink, Cooperman and even Ray Dalio (who’s richer, but whose motives I believe to be mostly pure as far as billionaires go)?
I’d argue the answer is yes. I won’t bother trying to research and list any “regular” philanthropy associated with Musk, Bezos and Zuckerberg. I’m aware of The Giving Pledge, of course, and of the various ways in which Bezos “gives back.”
More importantly, though, you could argue that as astronomical as their fortunes are (and I’ve repeatedly suggested that no human brain, Musk’s included, is currently capable of understanding what it means to be personally worth a trillion dollars) Musk, Bezos, Zuckerberg and the Google braintrust deserve their fortunes in a way that folks like Jamie Dimon and Warren Buffett don’t.
Note that “deserve” doesn’t necessarily have to mean you think Zuckerberg’s (for example) monstrosity is a net benefit to society. It just means that “good” or “bad,” the world’s demigods are changing the course of human history. It may not make much sense to ask if they “deserve” their exploding personal fortunes. It’s more apt to ask whether those fortunes are commensurate with the sheer scope of their ambitions and projects.
Consider this. For better or worse, human development over the next several decades will depend in no small part on what Musk accomplishes with his portfolio of figurative and literal moonshots and what Zuckerberg, Bezos and Google do with the data they control. By contrast, history simply won’t remember the Coopermans, Buffetts and Stan Druckenmillers of the world.
Why would a modified human living in the year 2150 — her blood teeming with nanobots that seek and destroy threats, her brain implanted with a cognitive enhancement chip that optimizes decisions based on personalized recommendations from Google — care what some financier said or did two centuries ago? She won’t. At all. But she’ll know the name “Musk” because her son has plans to retire on Mars. And she’ll know the name “Zuckerberg” because when it’s raining outside, she goes for a run on a perfect day in the metaverse. And she’ll know Google — only not nearly as well as Google knows her.
For these demigods, we need to redefine philanthropy. Philanthropy as an act has virtually no meaning for someone like Zuckerberg or Bezos. “Oh, my friend’s brother is an alderman in Mayberry and the town needs a new community center? Sure. Build it.” “Jane whatshername from the such-and-such foundation wants $15 million to combat that rare disease I forgot the name of around the same time I forgot her name? Fine. And don’t even ask next time. Just write the check. I’m getting ready to launch myself into suborbital space.” And so on.
Note that Musk’s wealth is now accelerating so quickly that even world hunger is akin to funding a new community center in Mayberry. All he wants is an accounting (an itemized receipt) and he’ll sell some Tesla shares and save 42 million people from starvation.
Is it fair for Musk to make the same accounting demand when it comes to eradicating world hunger that folks like Fink make when presuming to set out the conditions for acquiescing to a surtax on their wealth?
Yes. Probably. In the same way it would be fair for Fink to ask for a receipt if he decided to — I don’t know — build a library somewhere. It’s a mistake to conflate philanthropy with “fair share” taxation arguments.
Coming quickly back to the more important point, philanthropy as it’s currently conceived is an almost nonsensical concept for someone whose net worth can balloon by $36 billion in a matter of hours. If that’s what happens when Tesla gets a $4 billion order, how much does Musk make (on paper) if the company gets a $20 billion order? Or if SpaceX goes public and the company starts getting contracts worth hundreds of billions? Forget some clunky headset, how much does Zuckerberg make when Meta announces a brain implant that can take people into a Matrix-style metaverse? And so on and so forth.
Philanthropic acts still have meaning for the merely rich. If Dimon donates $100 million to some project, that’s a big deal. He’s “only” worth $2 billion. For Musk, Zuckerberg and Bezos, such a donation isn’t just “small potatoes.” It’s barely even real. Depending on market conditions, they can make (or lose) $100 million in minutes. There’s no library they can’t build. No symphony hall they can’t refurbish. No climate initiative they can’t launch. No idea for saving the coral reefs they can’t bankroll. Let’s say $10 trillion could at least jumpstart the Green New Deal. Musk, Bezos, Bill Gates, Larry Page, Sergey Brin and Zuckerberg could theoretically fund 10% of it today. In short, there’s no philanthropic act they can’t fund. Musk calling the UN’s bluff on world hunger is perhaps the most poignant example to date.
Philanthropy thus needs to be redefined for these demigods. Their “pledge” should be about intent. Will they or won’t they commit to a set of philosophical dictates conceived to ensure the unbridled power they’re sure to accumulate will only be used to advance the interests of humanity as a whole?
If they’re willing to commit to a utilitarian set of principles, who writes the principles? And what recourse do we have if the pact is broken?
Currently, we allow Google, Facebook and Amazon to run our lives. Mostly, it’s still a “consent of the governed” arrangement. But the line gets more blurry by the day.
For example, when you search for something on Google, you don’t really know if you’re getting the best possible results. But then again, who are you to define “best”? Google has been monitoring your emails, your search activity, your online purchases and quite possibly your driving patterns, every day for a decade. And unlike yours, its memory is perfect. It shows you the best results for you, and you’re in no position to question it.
Is that “consent of the governed”? Arguably, yes. Google knows you better than you know you, so it knows that if only you knew yourself better, you’d realize it’s showing you the best possible search results.
We can take this much, much further.
Imagine Google determines an ex-girlfriend with whom you’re not on speaking terms happens to be booking a hotel in Charlotte on the same day you are. And let’s say, based on Google’s assessment of the playlist she’s been listening to non-stop for two weeks, Google determines she’s angry and likely to be confrontational towards anyone she believes may have contributed to her current bout of depression, including and especially you. Based on another instantaneous calculation, Google determines that even if the algorithm prevents the two of you from booking the same hotel in order to avert a calamity, your respective itineraries suggest there’s a 32% chance the two of you will accidentally run into one another while visiting the city, which could potentially cause the both of you undue psychological harm. Google also knows, based on an analysis of your emails, that her trip is obligatory (mandated by work), while yours isn’t (you’re going to see a sports contest).
Based on principles agreed and set forth by humanity for how Google is compelled to act in its capacity as benevolent overlord, does it then deliberately discourage you from traveling to Charlotte by showing you, for example, the latest crime statistics or emphasizing the chances of severe thunderstorms either in the city itself or along your travel route? Or does it knowingly let you (and someone else) walk into a potentially distressing situation?
Do note: It’s possible Google is already doing things like that. Or even doing the opposite in an effort to test its capacity to predict suboptimal outcomes so that it can spare other people the same stress you’re about to endure in Charlotte.
Xi Jinping’s crackdown on Chinese tech might be viewed as an attempt to prevent this kind of world from ever materializing. Or, more accurately, to ensure that when it does materialize, it’s the Party which gets to make decisions based on the data, not private companies and the people who control them.
What’s abundantly clear is that outside of the Politburo, most people aren’t thinking seriously about the issues that matter.
It’s not about “convincing” Musk or Bezos or Zuckerberg to throw a few billion at the starving or pay a surtax on their fortunes in order to help pay for social initiatives. Developed economies can fund all of that stuff on their own. (Musk’s comments about federal spending and the national debt pretty clearly indicate he doesn’t understand how government finance actually works in advanced economies with sufficient monetary sovereignty, but that’s a separate discussion.)
Rather, it’s about securing a commitment from the people in whose hands the future of the species rests that they’ll wield their power responsibly even if we don’t yet know what “responsibly” might mean in this context.
Maybe Google had it right all along: “Don’t be evil.”