According to USA Today, Jeff Bezos could become the world’s first trillionaire, and many people aren’t happy about it.
Count me among them. Unlike Elizabeth Warren and her ilk, who fear that Bezos will consume the money by buying more expensive ice cream cones than he deserves, or hoard it in the form of coins in giant Scrooge McDuck Money Bins, I worry that Bezos is just too prosaic a thinker to be running that much money.
Capitalism is all about locating individuals who are especially skilled at figuring out what people are going to want in the future, and letting them choose how to allocate the society’s investment capital. If they guess right, they get even more money to invest next time. If they guess wrong, Capitalism takes their money away. It turns out that this system for allocating capital cannot be beaten in terms of producing prosperity and a high standard of living for people. Various forms of statists have tried to allocate investment capital using boards of experts and analysts of various kinds, but their societies never came close to performing as well as a Capitalist economy. Even as doctrinaire a bunch of Marxists as the Chinese Communist Party finally gave up and said, “If anybody around here can figure out how to become a filthy rich oligarch, please do so.” As a result, “Communist” China now has 285 billionaires managing almost a trillion dollars of investment capital. And their economy is a lot better off for it.
The Bernies and the Elizabeths — why didn’t her parents name her Karen? — and in fact most Democrats erroneously believe money to be a form of matter. They believe that if Jeff Bezos has some money, then you don’t have it. They also believe that he consumes it, i.e. makes it go away somehow when he “spends” it, thus further depriving you of it. They also speak of such people hoarding money, which makes no sense at all to anyone who actually has any money. The problem here is that everything that Democrats know about money is wrong.
Money is a form of energy, and it is only useful when it is in motion. And it moves so fast that it can appear to be in several places at once. Let’s have Jeff Bezos buy a yacht. Democrats think that’s bad, because now all that money went for a yacht instead of day care for poor people. Except that’s not what happens. To get the yacht, Bezos has to give the money to somebody else, in this case the yacht company. They give most of it to the yacht builder, who keeps some and passes the rest to the craftsmen who build the boats, and then they go out and buy groceries, and the cashiers pay their rent and the farmers buy seeds and the seed guys buy an iPad, and… it’s all the same money. Round and round it goes. Some of it’ll probably wind up back in Bezos’ pocket when one of these people orders something from Amazon.
No matter how many yachts or ice cream cones or mansions a Jeff Bezos buys, there’s only so much of this stuff anyone can use. The only thing to do with the rest of it is invest it… which is what actual billionaires do with virtually all their money. As a percentage, very little goes into envy-producing toys, even though on an absolute basis a mansion can look pretty good. From 30,000 feet, billionaires are basically a capital-allocation system, and the best one humans have ever found for producing a high standard of living.
But, just as with NFL quarterbacks or musicians, there are Tom Bradys and there are Ryan Leafs. You can’t laugh at Ryan Leaf, he became an NFL quarterback and you didn’t. But… you’d rather have Tom Brady.
Which is why, if we’re going to have a trillionaire, a capital allocator with the most money to allocate, I’d rather have Elon Musk.
Not that Jeff Bezos is a piker, but how many really good — world changing — ideas has Jeff Bezos had? One, really: “this Internet thing is going to blow up bookstores.” It’s blown up a lot of stores, and Bezos was quick to figure that out and build on it. And he has plastered a few bags on the side of Amazon — Prime video, Amazon music — but those are just elbowing his way onto stages that were already there. Still, that’s better than Bill Gates, who really had no good idea of his own, just ambition and ruthless aggression. But hey, that counts. He’s an entrepreneur and a billionaire too.
By contrast, Elon Musk is the closest thing we have going now to Steve Jobs or Akio Morita. Both of those men were fountains of things that up-ended whole industries and affected almost everyone’s daily existence. Most people would be lucky to have one such idea in their entire life. Two is amazing, and three is almost unheard of. Jobs had at least four, and Morita another four. So far from Musk we’ve seen electronic payments (X.com and PayPal), rockets that work, the first serious electric car company, and soon… rockets that make money. He just tossed Hyperloop out there… gave the idea away, basically. Why California would try to build high speed rail any other way is a mystery. Toss in Musk’s Boring Company and you have subways that rival airplanes for speed. And for fun, flamethrowers. Has Bezos ever manufactured flamethrowers? Has Gates?
It’s the rockets that make me want Musk to be the first trillionaire. In the absence of NASA, rockets had become a kind of hobby for billionaires. Sir Richard Branson is making rockets, and so is Jeff Bezos. Branson and Bezos both seem to think that the highest valued use for rockets is tourism. Branson is building a sight-seeing space plane on which he hopes to sell seats. It’s not clear what Bezos is doing. But if you’ve looked up at the night sky lately, it’s very clear what Musk is doing: he’s getting ready to up-end the worldwide telecommunications industry by becoming the low-cost producer of Things In Orbit. And he is putting a lot of things in orbit. Starlink is a big deal. Starlink is potentially a much larger business than Tesla (which I don’t think is sustainable as an auto company), perhaps on the scale of one of the energy giants like Exxon-Mobil. And along the way it might have a profound impact on the ability of totalitarian governments to control what their citizens can find out.
On Tuesday, Brandon Morse referred to Musk as Elon Galt. That was in reference to Musk standing up for basic human freedom in California. But there’s another sense in which Musk is Galt… and in which Bezos and Branson are merely Reardens and Wyatts. Of three entrepreneurs who could build rockets, and did build rockets, only Musk seems to understand that it’s a business, not a toy.
I don’t think there’s any doubt that right now, Elon Musk is the best capital allocator we have. He has had more ideas, and more good ideas, than anyone else around. If anyone gets a trillion dollars to invest, I hope it’s him.