On June 12, Elon Musk became the world’s first publicly known trillionaire, after his company SpaceX made its first public offerings. The value of the company and, subsequently, his shares, skyrocketed, making his publicly known wealth exceed $1 trillion. It is impossible to grasp the scale of his wealth truly.
One would need to make $3.3 million every year since the dawn of humanity, 300,000 years ago, to reach that amount. It is mathematically unfeasible for anyone to make that much money in one lifetime. This begs the question: how did Elon Musk do so?
The common response given to those critical of billionaires is that the overwhelming majority of this wealth is tied to stocks or other frozen assets, which do not necessarily translate to a 10-digit account balance. This defense is also presented in response to the claim that billionaires pay the lowest tax rate in most capitalist countries. This trivialization of net worth as a simple number is a common tactic to deflect criticism. Yet the practical uses of this wealth often outweigh these dismissals.
Firstly, although stocks and their valuations are not taxed, people often use them as collateral to take out loans, which are then repaid slowly to avoid tax regulations. This enables the use of untaxed wealth to obtain more liquid, yet still untaxed, funds to support the elaborate lifestyle often associated with billionaires.
Another thing that often flies under the radar is the amount of soft power projected through accumulated wealth. Anything from flights to accessories is often ‘gifted’ by potential associates or businesses seeking to gain the favor of said billionaires and then leverage their soft power for personal gain.
Then there are the more shady practices that fund the lavish lifestyles. The most obvious yet hardest to crack down on is the use of shell companies and tax havens. By funneling wealth through countries that charge minimal or no taxes, billionaires can keep a large portion of their money. Furthermore, by possessing the ability to bribe or lobby any potential opposition or outspend them, they can fend off any attacks that may threaten their hoarding.
The existence of these loopholes and defences are not a feature of capitalism. An economic system that prides itself on the value of labor and creativity, such that anyone with the right ideas can build something of value, cannot at the same time enable a hyper-controlled system that works only when it is exploited.
Companies like Amazon or SpaceX are not the wealthiest because of their in-house innovation. They maintain their stronghold through the sheer scale of their capital, able to buy out any innovation that might benefit them or present insurmountable challenges to any that do not bend to their will. Such a mentality permeates the minds of company owners and shareholders, who then practice the same exploitative measures.
These practices are not the hallmark of an egalitarian economic system. Instead, they reflect the oligarchal practices of the medieval or revolutionary eras. To understand what the issue with any system is, be it economical, sociological, or political, the easiest consideration to make is always who might be benefiting the most from it in relation to the ones who are suffering the most because of it.
The accumulation of such wealth is precisely a failure of an economic system that was unable to self-regulate, and in its dreams of creating a self-regulating system, failed to build the necessary infrastructure through authorities such as governments to regulate unfair practices that snowball into protecting its already established beneficiary class.
