- cross-posted to:
- aboringdystopia@lemmy.world
- cross-posted to:
- aboringdystopia@lemmy.world
Elon Musk is on pace to become the world’s first trillionaire by 2027, according to a new report from a group that tracks wealth.
Informa Connect Academy’s finding about the boss of electric carmaker Tesla, private rocket company SpaceX and social media platform X (formerly Twitter) stems from the fact that Musk’s wealth has been growing at an average annual rate of 110%. He was also the world’s richest person, with $251bn, according to the Bloomberg Billionaires Index, as the academy’s 2024 Trillion Dollar Club report began circulating Friday.
The academy’s analysis suggested business conglomerate founder Gautam Adani of India would become the second to achieve trillionaire status. That would reportedly happen in 2028 if his annual growth rate remains at 123%.
That’s the assumption everyone makes but it’s a false premise. If he tried to sell all his shares it would cause the stock price to collapse, his wealth would plummet, and his companies would be in jeopardy. Far from being able to give all of them $1.6M, they would all likely lose their jobs.
That’s also the issue with taxing them. If someone owns a billion dollar company (based on the price of their shares of stock) we call them a billionaire but they might not have very much money in cash (say a few million). Suppose we want to tax them 10% of their wealth: that’s $100 million! They don’t have enough cash to pay for that, so they have to sell shares, which causes the share price to go down, which negatively affects the company and the workers.
I think the issue is with how we view ownership of a business vs other things, like a yacht. The yacht can be sold to pay taxes and it won’t affect other people. The company cannot. In a lot of ways, the company isn’t just a possession of the owner, it’s a responsibility. These days I feel like we don’t talk enough about responsibility.
Why? If the fundamentals are there, there should be a hard floor on stock prices. It would take a while for the market to absorb that much Twitter and SpaceX, but I see no reason it’s impossible. Actually, I bet Twitter’s (off-book) cap would go up if Musk was leaving.
If you’re trying to defend capitalism (whatever that means to you), keep in mind that you’re basically suggesting stocks have no actual, intrinsic value here.
Billionaires don’t actually do this, though, because liquid cash doesn’t earn.
The S&P 500 is “worth” 45 trillion dollars.
The M2 money supply is less than half of that. There does not exist as money dollars to spend as the nominal value of all the stock.
The stock value is extrapolated from the shares that do move, but those extrapolations fall apart in the “cash it all out” scenario.
That being said, it just means we have to be careful about how we proceed. For example, better tax capture of loans and estates, which is a big dodge for people with high stock wealth.
Cashing out the entire S&P 500 is very different from cashing out one billionaire. Most of the people who buy stocks already own stuff on the S&P 500, so it’s unclear who that trade would be with, exactly. Same exact thing for real estate: if you sold the entire continental US (again, whatever that means) it would probably exceed 45 trillion, but I’m still pretty comfortable saying if you own 100 billion worth of Manhattan real estate, you actually have 100 billion dollars, and could reasonably pay a 90 billion dollar bill given enough time.
Careful is good when it comes to policy, I definitely agree with that.
There are infinite possible ways to implement wealth tax. If you want to avoid your scenario, tax corporations on their profits, reducing the dividend payout to shareholders. For example.
These people have ALL THE MONEY and it needs to be stopped, like yesterday. Find a way.