Twitter and Musk

Liftoff of the 4th Falcon 1 which did not crash and burn (click on image for credit.)

A non sequitur in a recent comment[1] caught my attention: “And then there’s Elon Musk, who has earned much more than all deeshaa readers combined, whose respect for his “hard-earned” money is demonstrated by buying … Twitter!”

Elon Musk earned much more than the all the readers of deeshaa combined!? That surely wins the understatement of the year award hands down. Try “Musk earned more than all the readers of all blogs ever combined.” That’d be closer to the truth.

Let’s reflect on the fact of Musk buying Twitter. It’s his money. He earned it. He gets to do whatever he wants to do with his money. Smoke ’em if you got ’em, is the principle.

Musk is a superbly successful entrepreneur. An entrepreneur’s primary function is to realize that there are unrecognized opportunities for creating wealth, to take specific actions that are inherently risky, and if on the rare occasion that he succeeds, to capture a small part of the newly created wealth.

Entrepreneurs willingly shoulder the burden of uncertainty. They take the risks, they get the rewards. Every entrepreneur gambles in a world of uncertainty, and when he sometimes wins as a result of his foresight, immense hard work, and his willingness to assume the risk of ruin, many people who lack the ability to create wealth are driven by envy to resent his success.

Let’s never forget that all the wealth that exists in the world is unnatural. Wealth has to be created by human action. Every bit of wealth we enjoy is created by entrepreneurs. Some are supremely successful, creating trillions of dollars of wealth like Jobs, Bezos, and Musk of the modern era, but the vast majority of entrepreneurs are unsung heroes who lived unremarked lives over the last few thousand years.

We, who are not entrepreneurs, are mere cogs in the great big machine built by entrepreneurs that manufactures wealth. Cogs are not unimportant but they are not irreplaceable; entrepreneurs are uniquely useful.  We are the beneficiaries and the entrepreneurs are our benefactors.

But wait! Wouldn’t it have been better if Musk had spent his $46.5 billion to alleviate hunger instead of frivolously buying Twitter for his own amusement? Nope. That’s USDA Grade A Prime bullshit.

Twitter is a very useful platform. How useful is it? Useful enough that Musk valued it at $46.5 billion. Certainly, investors do makes mistakes but successful investors like Musk are not stupid. If his acquisition proves to be a bad mistake, it would put a dent in his wealth but will probably not ruin him.

However, Musk has faced ruin several times. His SpaceX was close to dying. Wiki reports that

… the first three launches of the [Falcon 1] rocket, between 2006 and 2008, all resulted in failures, which almost ended the company. Financing for Tesla Motors had failed as well, and consequently Tesla, SolarCity, and Musk personally were all nearly bankrupt at the same time. Musk was reportedly “waking from nightmares, screaming and in physical pain” because of the stress.

He’s bet the farm and, luckily not just for him but also for us, won.

Feeding the hungry is a very noble enterprise. But that’s not the entrepreneur’s responsibility. It’s a responsibility shared by each one of us. It’s what we as members of society have to do: take care of the less fortunate. How? By stopping the government from robbing us. What does the government primarily do with the loot? Kill by the hundreds of thousands.

It is estimated that the US government spent between $3 and $4 trillion killing innocents abroad in its “War on terror” so far since 2001. Let’s take the average figure: $3,500 billion. The $46 billion doesn’t look like much in comparison, does it? Insisting that Musk save the world using the wealth that he earned, and allowing the government to waste two orders of magnitude greater wealth that was stolen from people with threat of violence (never forget that ultimately taxes are extracted at the point of a gun) is stupid beyond belief.

Entrepreneurs create wealth; governments destroy wealth.

Ultimately, it’s about division of labor and specialization. Entrepreneurs specialize in creating wealth; governments should specialize in the protection of life, liberty and property; we should devote a part of our time and money to the extent we can in helping others as part of our social responsibility.

Entrepreneurs sow the seed corn, we reap most of the harvest. Denying them seed corn will surely mean starvation for us.

I can imagine that some neighbors of a couple of bicycle mechanics in Ohio were unhappy. Perhaps they wished that instead of spending time and money on the patently idiotic idea of trying to build a flying contraption, the brothers should have run a soup kitchen to help the hungry in their small town.

But what about all those vanity trips into space that billionaires spend on? I was coming to that.

NOTES:

[1] Although I allow comments from anonymous handles on this blog (there aren’t that many comments in the first place), I am seriously tempted to delete pointless comments from oh-so-clever handles.

Author: Atanu Dey

Economist.

2 thoughts on “Twitter and Musk”

  1. The vanity trips to space – let me beat you to the post by simply saying that every new technology is expensive to begin with and starts off as a toy or novelty for the wealthy. Over time, the investment they make is what spurs innovation, leading to cheaper and safer alternatives that can be scaled up for manufacturing and lowering the price for all. Space travel is today thus exactly where air travel was a century ago, or automobiles were before Ford’s invention of the assembly line.

    Like

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