Cope and Elon’s wealth (why cant we just admit being a billionaire is great)

Elon is officially a trillionaire, as I predicted in April 2021 in the post “Convergence to the global hegemon.” Here is what I wrote:

We’re seeing the convergence to the global hegemon , as an increasingly large percentage of economic activity and wealth creation is concentrated through a shrinking number (relative to the size of the global population and global GDP) of firms, countries, and individuals. Something like 8 individuals control half of the world’s wealth. This trend will continue , converging to near 100%. By this decade, Bezos and Elon Musk will become trillionaires, growing their wealth at a rate that far exceeds inflation in spite of low GDP growth (why this is true is explained in the final paragraph). Same also for the disparity between US and China dollar-adjusted and real economic growth and asset appreciation relative to the rest of the world.

Everything about that post aged perfectly. Albeit, Elon was already worth hundreds of billions with Tesla stock, so a trillion was not that inconceivable. Being invested in Tesla stock, I assumed his future trillionaire status would come from Tesla stock and not Space-X. So I was wrong there.

More like, make that a trillionaire times 1.20 given that Space-X stock gained ANOTHER 20% on top of its already inflated IPO price of $135. It’s just nuts how wealthy he is. You cannot even wrap your mind around it. Federal budgets and GDPs are measured in trillions, and here a single person has a trillion–not a country, government or other entity. This is enough to pay for 1/5-1/6 of Covid aid/stimulus. Or the 2008 ‘TARP’ bailout, and still have hundreds of billions left.

There is so much cope when it comes to Elon Musk trillionaire discourse, on either side of the aisle. There is the usual, predictable left-wing discourse about how he “doesn’t deserve his wealth”, “Space-X is a bubble,” or that his “wealth was not self-made,” etc. And there is right-wing cope, which is of a different kind. It’s more like downplaying how rich he actually is or creating these trickle-down economics narratives, or how having billions isn’t even that great or what it’s cracked up to be.

For example, about “Space-X being a bubble”. Wow, what an original insight. I am sure no one else has thought of that and it isn’t already priced into the market:

Everyone knows Space-X is overvalued by “conventional valuation metrics,” but so was Tesla, Uber, or Amazon stock for most of their existence, too. It’s a meaningless statistic that is of no actionable or predictive value. Sure, maybe it’s a bubble and will collapse–or maybe not. Who knows.

It’s worth keeping in mind:

1. No trillion-dollar company has ever fallen from grace or otherwise lost a large percentage of its valuation. Once a certain threshold of size is crossed, say a trillion dollars, it becomes much more stable, much like an institution and less like a company. Although perhaps it’s too soon to tell, and a repeat of a 2008 crisis would change that. There is so much inertia working in Space-X’s favor, such as auto-buys from inclusion on S&P 500, pensions, etc. Space-X is so big and important everyone owns a piece of it indirectly in some way.

2. “Smart money” knows more than you. In other words, you’re not smarter than the market. Last week news dropped of Space-X having landed two contracts worth a combined $2.2 billion/month from Google and Anthropic. VCs and others “in the know” were probably aware of Space-X’s massive datacenter outlay, before being reported by the media. Space-X isn’t merely a rocket/satellite company, but is effectively also an AI/datacenter company, having stealthy secured 110,000 Nvidia GPUs. So this makes the $2+ trillion valuation in hindsight not so irrational when viewed through the lens of being an “AI play”.

3. Betting against Elon has a long track record of large losses by some of the most famous hedge fund managers who thought they knew more.

Now on to the right-wing cope.

As someone in the comments remarks, “same private plane, same yacht, private island, etc.” It’s not just frivolous spending, but having an extra, say, million, goes a long way for things like private schools, a reliable car, college, better medical care, etc. Medical expenses are the leading cause of bankruptcies.

Similar to my post a few weeks ago about how being thin is good and how people invent copes about Nick Fuentes being “too thin” when they themselves want to lose weight, why can’t we jsut admit Elon has a shit tone of money and that, no, it’s not going to trickle down much. It’s like many of us slave away trying to earn more money or want to earn more money, and then when it comes to Elon having a trillion we’re suddenly “above money”. If having a billion dollars is not that great, why do billionaires go through all these hoops to pay as little of it as possible?

The trickle-down arguments that Elon’s wealth makes us all wealthier are especially cope. For example:

Given that these billionaires try to minimize their tax footprint whenever possible–as is rational and their right–it’s much more likely retail space-X investors and employees are going be paying a larger percentage of their newfound wealth in taxes. It’s not like any of these early VCs and investors are lining up to pay taxes on their Space-X gains. They will use every avenue possible to pay as little as possible. Why don’t they spend more to accelerate the trickle-down effect if it’s so great? If trickle-down makes everyone wealthier, then the rational utilitarian thing to do is to not have any money.

Let’s assume that investors somehow voluntarily choose pay the same tax rate as employees, so 20-30%, and do not avail themselves of any tax avoidance strategies, and all of it goes to California: how much per capita we’re looking at after what is is squandered on bureaucracy, teachers unions, wasted on illegals, etc. Suddenly, wasteful governments becomes very judicious at spending money when it’s in trickle-down form–but it cannot be both. Governments cannot be wasteful by default, but then make an exception for billionaire wealth–it all goes into the same pot. When you run the math, given a population of 40 million, very little goes to regular people in any tangible form (as actual spending cash) even under the most optimistic scenarios. It’s like “wow, better state parks”–for the 3 days out of the year you go to a state park. It’s not going to make your healthcare, groceries, or other expenses more affordable.

Another cope, above, is that Elon is not actually that rich because can only access a tiny fraction of his trillion, so it’s as if he doesn’t have it at all. The people who make these arguments typically don’t understand how capital markets work. This argument is debunked in my 2021 post “Paper Wealth is Real Wealth.” Being a 2-trillion dollar company, by default, Space-X stock is extremely liquid, so he can easily sell a considerable amount of stock without it affecting the price. This is because the transaction is conducted over the counter rather than on the open market. Instead of selling shares on an exchange, the investment bank acquires the shares on a secondary market and either hedges the exposure with options or resells them to another buyer, earning a profit in the process. Elon gets his cash, and the market avoids the disruption of a large public sale. This is essentially how a buyout works: ownership is transferred in exchange for cash, but the shares themselves never hit the open market. It’s all done digitally through a legal change of title of ownership.

“Cope” is the mask or front people put up to hide their true beliefs or feelings. It’s okay to wish to have more money and say so openly. The honest response would be something like, “Congratulations to Elon on his wealth. It also reminds me that I wish I had more money, and rather than invoking some trickle-down argument that some illusory wealth eventually awaits–or hoping it’s a bubble–I need to go out and find ways to earn more myself.”