Wealth Concentration
Some People Have All the Luck
...and an outrageously large share of the wealth the rest of us have created
How many people do you know who work really hard? Or have a strikingly good sense of what’s becoming popular? Or have a talent for getting things done?
You probably know people — maybe even bunches of people — in all these categories. Our world is teeming with hardworking, perceptive, and talented people.
Now let’s switch gears: How many people you know have become fabulously rich? Probably none. Precious few people ever become fabulously rich. The prime reason? Becoming fabulously rich takes more than hard work, perception, and talent. Getting rich takes oodles of luck.
The richest among us have always, of course, tended to downplay the impact of sheer serendipity. They would rather we credit the wealth of our wealthiest to their superior work ethic and wisdom. Grand fortunes, they insist, do not in any significant way depend on the good fortune of being in the right place at the right time. The rich have earned their wealth. They deserve every bit of it.
Most all of our richest have internalized this rationale for their riches. But some among them have gone an ominous step further. The rationale for their grand personal fortune has mutated into something fundamentally more sinister. “I fully earned my fortune” has become “I can do no wrong.”
The current king of this I-can-do-no-wrong crowd? That surely has to be Elon Musk, currently the third-richest human on the face of our Earth.
We first encountered Musk as a classic I-fully-earned-my-fortune claimant — and he certainly seemed to fully fit that bill. He had started out, after all, as a struggling 21-year-old web software developer with a product that newspapers could use to develop online city guides. Four years later, in 1995, the Compaq computer company would buy out Musk’s handiwork for a sweet $341 million.
That success would quickly beget one new triumph after another: Tesla, SpaceX, SolarCity. By 2015, Forbes was rating Musk’s net worth at $12 billion. By 2022, his wealth was topping $200 billion.
This edition of Musk, in Wall Street’s eyes, could do no wrong. As late as this past December Wall Streeters were valuing Tesla at nearly $868 billion, a market cap than was running a stunning 18 times greater than the value of General Motors.
But now Wall Street is singing a different tune. Musk no longer strikes our business world — and those journalists who report upon it — as an unadulterated generational genius.
“Elon Musk’s underlings at Tesla Inc.,” as a Bloomberg appraisal earlier this week bluntly noted, “are accustomed to chaos.”
Musk has of late been pushing Tesla to bet the house on self-driving cars and “robotaxis” at the expense of delivering a $25,000 electric car. Meanwhile, sales numbers in the existing Tesla auto line are slumping. In 2024’s first quarter, the company has announced, Tesla produced 433,371 vehicles but only delivered, even after deep price cuts, 386,810 to customers.
Shareholders have noticed. Slowing sales and recalls of Tesla’s Autopilot “driver-assist system” have them spooked. Tesla has turned out to be one of 2024’s “worst performers in the S&P 500.”
Other stakeholders in the Musk corporate empire share the shareholder unease — and have even been showing some anger.
“The families of Tesla drivers who have been killed in crashes involving Autopilot have sued the company for wrongful death,” notes Andrew Hawkins, the transportation editor at the Verge. “And Musk’s tenure as head of X, formerly Twitter, has alienated many of Tesla’s progressive-leaning customers, who have watched in horror as he promotes right-wing conspiracy theories on the platform.”
Amid all this stakeholder angst, what has Musk and his exceedingly Musk-friendly Tesla board of directors most upset? A court decision in Delaware, the state where Tesla originally incorporated. The judge in that case, Kathaleen McCormick, this past January invalidated Musk’s six-year-old Tesla pay deal. She found that deal — a package 33 times more generous than any other CEO pay arrangement in U.S. corporate history — “deeply flawed.”
Musk and the Tesla board have, since that ruling, moved to re-incorporate Tesla in Texas. And they plan this June to bring before Tesla’s annual meeting a measure that would put back in place the same sweetheart Musk pay deal that Delaware’s McCormick so nobly struck down.
Where do Tesla workers stand amid all this Tesla corporate chaos? In jeopardy. Earlier this month, the company announced plans to eliminate “more than” 10 percent of the Tesla workforce. That would mean at least 14,000 lost jobs. The eventual layoff total, observers expect, may well top 20,000.
Why 20,000? Musk seems to believe, the Wall Street Journal reports, that Tesla should cut its payroll by 20 percent because the company’s vehicle deliveries “dropped by that amount” from 2023’s fourth quarter to 2024’s first.
Musk, naturally enough, feels he holds no responsibility for Tesla’s sinking sales. Tesla workers, he believes, simply have to bear the burden. Too bad. Just their hard luck.
Sam Pizzigati, an Institute for Policy Studies associate fellow, co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970.