What’s a Trillion, More or Less?

Elon Musk

Last week’s declaration that Elon Musk has become history’s first trillionaire has me thinking about what a dollar means in today’s economy. Not in the ordinary moralistic sense of it being wrong that he has a trillion dollars, while nearly one in five American children is food insecure. No, rather, I question what Elon actually has. Because it sure isn’t money in the sense that most citizens have money.

Start with how Musk became rich. He didn’t create or sell anything valuable. His IPO on SpaceX common shares enjoyed a price jump, causing the fraction of shares in Musk’s hands to increase. In other words, his “net worth” includes the promised future value of transactions he hasn’t yet made. You or I can claim future transactions as personal value only under specific circumstances, controlled by regulations and personal integrity.

This personal integrity component matters. Musk’s notorious buyout of Twitter caused massive financial losses that reduced stock values by half. Then he stopped the bleeding by selling Twitter’s successor company, X.com, to xAI, his tech startup. He moved his holdings from one pocket to another, giving himself a markup along the way. He later repeated the trick, selling xAI to SpaceX, mere months before selling SpaceX to Wall Street.

Each of these transactions created money without creating value. Neither Twitter nor xAI saw their corporate functioning improved by the transaction; in fact, neither has ever turned a profit. Neither has SpaceX. Smarter critics than me have analyzed the SpaceX IPO and determined that it involves nothing but high-minded promises and Elon’s personal financial network. Tesla’s mediocre cars have no resale value, and the Boring Company’s tunnels barely exist.

Please remember, when we discuss Musk’s “net worth,” we mean its dollar value, not actual dollars he has. Musk’s fortune mainly consists of his stock portfolio, which mostly comprises his own companies. He pumps their floating value by making his companies seem desirable, but he also controls the supply, keeping them scarce. He cannot ever sell his stock holdings, because that would flood the market and crash their value.

Musk isn’t a trillionaire because of products he makes, services he provides, or material he sells. He’s a trillionaire because of resources he owns. This is the definition of capitalism. Sometimes, when we reformists deride “capitalism,” conservatives accuse us of opposing free markets. Not so: markets exist in economic models other than capitalism. Rather, capitalism is the system that controls who owns which resources, and how they’re priced.

Home Depot is a market. So is the informal collocation of off-the-books day laborers in the Home Depot’s parking lot. Home Depot’s market is regulated by legislation, Federal Reserve policy, and labor law. The day laborer market is regulated by trust and honor. But only the Home Depot is capitalist, since it also owns its concrete slab building, its supply contracts, and the parking lot where the day laborers meet.

But Musk has reached a plane where Home Depot can’t reach. Home Depot has value only if it creates value for other people. It must sell product at sufficient mark-up to generate profit, but not so much that it discourages commerce. It must both read the present market, and anticipate future trends. And it must make moral compromises, such as letting undocumented day laborers use its grounds.

Let’s put it another way. A friend of mine, a registered Libertarian and outspoken Musk supporter, owns the local craft brewery. He owns his building, his tanks, his trucks, and his distribution contracts. But to remain solvent and pay his workers, he must produce beer. He can’t sell futures on his proposed ability to produce epoch-making innovative beer, eventually, then punt down the road. He must sell beer now.

This doesn’t apply to Musk. Of the six corporations Musk controls—Tesla, X Corp, xAI, SpaceX, NeuraLink, and the Boring Company—only Tesla currently sells products on the open market. And those, as reported by neutral reviewers, are good-enough cars whose resale value is undercut by limited battery life. Musk mostly sells the promise of future dividends, a promise he’s never consummated, and keeps moving into the future.

It’s apparently paradoxical. He’s charmless in media interviews, disdains workers and women, espouses small-f fascist politics, and sells mostly empty promises. Yet the retail value of those promises has made Musk a trillionaire. Which means that, ultimately, the foundation of that trillion is Musk himself. At least Cornelius Vanderbilt, for all his dick-swinging vulgarity, built actual railroads. What even is Elon’s trillion?