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Do you really think the economy is zero sum?

For example, who was Elon Musk's wealth transferred from?

What do you think about all that money being invested into AI? Is that "extreme short term profit maximization"?

cowmix 60 days ago

I don’t know who his wealth was transferred from, exactly. But I do know what he’s using it for now: as a gravitational force to unilaterally screw with public institutions and systems the rest of us depend on.

Even if you agree with some of DOGE projects’s goals, the way it operated was wildly thoughtless about consequences beyond Musk’s personal wishes, and almost completely unaccountable.

I’m honestly sick that my personal Model Y purchase helped add to that power.

And I say that as someone who was a huge Musk fan for years, despite the warning signs — the Thai “pedo” comments, and his very public turn during COVID.

Musk's money came from creating a business that was worth a lot of money. I.e. he created his wealth.

It was not transferred to him.

The same goes for Bezos, Jobs, Gates, etc.

jfengel 60 days ago

He ended up with all of the profits, but he didn't put in all of the work. A lot of people worked very hard for that wealth, either for salary or a minuscule fraction of the profits.

He gets to keep the lion's share of the profits because he was the one who took the risk with his capital. And bully for him; well done that man. But we treat him as if he had all of the ideas and wrote all of the code, and that's simply not true. It's a myth that the wealth owners tell us.

All of these products would exist with the CEOs who get the credit. If it weren't them it would have been someone else. Their expertise as CEOs is not to get the product done, but to get it done a week earlier than the other guy. And even that much is more luck than skill.

There's no way to say "Musk took this money from someone else". But that's different from "He has a million times as much wealth because he is a million times more valuable."

> He ended up with all of the profits

Obviously not. The investors got their share, and employees got their stock options.

> But we treat him as if he had all of the ideas and wrote all of the code, and that's simply not true.

What were the names of the crew of Captain Cook's ship? Who was under the command of General Sherman? Who won the battle of Yorktown? Who created Standard Oil? We give credit to the head of something, not to the people under his command.

> If it weren't them it would have been someone else.

Nobody knows that.

> And even that much is more luck than skill.

If I hit a home run once, I would attribute it to luck. If I hit a home run 3 times, then I have skillz.

Gates maneuvered 3 dramatic changes in Microsoft, where other companies failed at the transition. Jobs made 3 fortunes. Musk has made several diverse fortunes.

At some point, you're going to have to give these people credit.

Musk has created a million times more wealth than others. If his life story was a novel, I would have put it down as absurd.

kmijyiyxfbklao 60 days ago

You can always trick investors. For example all the overpromising Musk has done over the years. Also when you are that famous you can sell lower quality goods for a higher price that people will buy because they are associated to you.

https://www.seattletimes.com/seattle-news/politics/does-noth...

All true. That's why there are laws against fraud.

What do you think of the tricks that California pulled to have billions vanish with not a mile of track laid? Or all those hospices with no beds? Or this fun one:

Unfortunately, as a taxpayer, I am on the hook for those tricks. With a business, I can do some due diligence and then decide if I want to get in or not.

I suspect you and I are being fleeced far more by government waste and fraud than by businesses.

lossyalgo 60 days ago

> I suspect you and I are being fleeced far more by government waste and fraud than by businesses.

And do you think that firing half of the employees at various gov't agencies has and/or will decrease the waste and fraud?

bdangubic 60 days ago

> I suspect you and I are being fleeced far more by government waste and fraud than by businesses.

lovely how US politicians have been able to successful lie their way into making gullible people like you believe this - quite remarkable… I am always in awe what they can accomplish

breezybottom 60 days ago

That's what Elon Musk said, and yet DOGE has lead to zero fraud lawsuits

breezybottom 60 days ago

Buying an ownership stake in an established business and forcing them to give you a "co-founder" title isn't "creating a business".

Tesla was quickly going bankrupt when Musk decided to buy into it. It was not an "established business". It had no plan, no car, no design, no sales. When you sell a controlling share to another person, the other person then controls the business.

sghiassy 60 days ago

I won’t deny he created his own fortune from PayPal.

But if you come from “so much money we couldn't even close our safe” as his father put (quote from Wikipedia

Then you do have a leg up

Arainach 60 days ago

> I won’t deny he created his own fortune from PayPal.

I'd deny even that. He made enough dumb decisions that he was forced out and got rich primarily because of other peoples' good ideas/decisions.

And where are those other geniuses today?

cowmix 60 days ago

The “created vs transferred” thing is more nuanced than that.

At some point, accumulated wealth becomes power, and that power can be used to pull energy, attention, labor, and public resources out of the system for one person’s agenda.

And in Tesla’s case, the stock value creation story is insanely unorthodox, to be charitable. A lot of that valuation was supercharged by years of market-moving hype done personally by Elon: 10+ years of FSD timelines that never happened, the more recent “buy a Tesla, it’s an appreciating asset!” super-lie, the mission gradually being abandoned, GOP craps on EVs and it’s crickets from Elon, etc.

Now we have the ultimate example of wealth gravity distortion: Musk helped put Trump back in power, and the relationship looks openly transactional. But Elon is not just benefiting from Trump’s transactional nature. He is also benefiting from an administration where white collar crime and regulatory accountability seem to have basically stopped being real things.

So with all that, the kind of shady behavior Elon pulled that might normally trigger government scrutiny or enforcement is now being smothered by political influence.

Even today, Tesla appears to be the highest P/E outlier in the S&P 500 among profitable companies. So the market is not just valuing the current business. It is valuing the story, the hype, and increasingly Musk’s ability to buy influence to stay outta trouble.

And to be clear, I’m not trying to pretend nothing real was built. SpaceX is impressive. Tesla really did help kickstart the EV market. But that does not make up for the harm, distortion, and unaccountable power being exercised now.

So yes, maybe the wealth was “created” in an accounting sense. But the concern is what happens when that created value becomes an unaccountable force acting on everything else.

If TSLA is in a bubble, at some point it will implode. And then the wealth that was created is destroyed - it won't be transferred out of the company, either.

> Musk helped put Trump back in power, and the relationship looks openly transactional.

Both parties accept help from wealthy people, and yes, they do expect something in return. I don't see that Musk got anything out of it, though. Musk received 0 benefit from DOGE.

> But that does not make up for the harm, distortion, and unaccountable power being exercised now.

What power do you think Musk is exercising now?

> He is also benefiting from an administration where white collar crime and regulatory accountability seem to have basically stopped being real things.

I gave you examples of no accountability in government things. I don't see any decrease in accountability.

> Even today, Tesla appears to be the highest P/E outlier in the S&P 500 among profitable companies. So the market is not just valuing the current business. It is valuing the story, the hype,

Sure. And I bought TSLA years ago. I didn't believe his FSD hype. But he delivered on it anyway. If TSLA stock implodes, it's only going to hurt the shareholders, not you.

> and increasingly Musk’s ability to buy influence to stay outta trouble.

What influence is he buying?

Arainach 59 days ago

> Musk received 0 benefit from DOGE.

Besides eviscerating all the regulatory agencies enforcing rules against his companies and huge amounts of private data from all sorts of agencies?

pigeons 60 days ago

That business is currently worth a lot of money, but why? Its not making a lot of money.

Businesses are valued on their ability to make money in the future.

c22 60 days ago

Wealth is not created, it's stripped from the natural commons and it is, despite being massive, obviously finite. What you're referring to is "value creation"--the transformation of this natural wealth into a form that some other humans find valuable at a point in time. This value creation is rewarded via capitalism by the accumulation of monetary instruments which very much represent an appropriation of this wealth. If this system wasn't zero sum then we wouldn't have inflation?

Where was all this wealth 200 years ago?

Inflation is caused by printing money not backed by goods and services. Inflation is another form of taxation.

c22 60 days ago

The vast majority of it was stored underground as petrochemicals. A fact made immediately apparent by looking at like any chart. Is this a serious conversation?

Unmotivator2677 60 days ago

I don't know but I will speak:

Cantillon Effect

How much does your bread cost and how much did it cost in the 90s? Where do you think all that value gone? Has bread some what become much better quality or something? Are they lacing it with gold?

They are stealing from your pocket, in many ways than one.

Another point to consider is that musk wealth is on paper only, real value if he wanted to cash out would turn much smaller, it's all hypothetical.

American bread was worse in previous decades. Now I have many more options, and I buy organic bread.

> They are stealing from your pocket, in many ways than one.

You need a more compelling argument than that. Agriculture is not a particularly lucrative industry.

> Another point to consider is that musk wealth is on paper only, real value if he wanted to cash out would turn much smaller, it's all hypothetical.

Back to "what is value?" There is no such thing as intrinsic value. Value is what people are willing to pay for something. That's it. If people are willing to pay more, then the value is higher. If the are only willing to pay less, then the value is lower. And certainly the value of x is different for different people, and varies moment by moment.

The value of a TSLA share of stock is no different from the value of that piece of paper you have that says "One Dollar" on it.

rkuodys 60 days ago

What is the point on Musk you are making? The monetary success does not neccesserily correlate to the common good they have created. In case of Musk there is a lot of governement subsidies, lots of market manipulation and false claim s. So not all activieties that bring profit to the richest are good to the rest. And stats on inequality just highlights that trend

> subsidies.

The government gave Musk a trillion dollars?

> So not all activieties that bring profit to the richest are good to the rest

I didn't say they were all good. I said he created his wealth, it was not transferred to him.

> And stats on inequality just highlights that trend

All those stats highlight is some people create more wealth than others.

AngryData 60 days ago

On the short term every economy is effectively zero sum. Even if you invented something magical that is worth trillions, the economy can't pull trillions of dollars out of nowhere in any short period of time without devaluing everything else.

Sigh. A brief explanation of how money is created. If I create something of value, you can go to a bank and borrow money based on that value. Where did that borrowed money come from? The bank created it out of thin air! Yes, that's right. Created value can be transformed into money. The books balance. And this is unlimited.

What happens when you pay back the money? Yes, it is symmetric, the money is destroyed! (wild, isn't it!)

So why does the bank do this? They make money on the interest from the loan.

This is how "free banking" works, and it applies to your scenario. Creating value does not devalue the rest of the economy. The supply of money is not fixed, it rises and falls relative to the value in the economy.

I know this is a difficult thing to describe briefly, there are college degrees on this topic.

YZF 60 days ago

These two positions are not mutually exclusive:

- Over-optimizing for short term profit can hurt innovation and value creation.

- The economy is not a zero sum game and new value is created out of thin air.

afpx 59 days ago

Partly this is because total global debt is 3x global GDP.

Yizahi 59 days ago

It transferred from the S&P-493, obviously :) .

ryandrake 60 days ago

When it comes to what actually matters, people's standards of living, what matters most is percentages, which are zero sum. In a simplified economy where 10 people have $100 each, everyone is worth 10% of the economy, have about equal buying power, equal standards of living, equal political power, and so on.

If one of those people suddenly "creates wealth" and now has $100,000, then the average value of the dollar goes down and the cost of everything goes up. Person X can trivially afford the increase, but the other nine now have lower buying power, lower standards of living, and the $100,000 now can exert coercive control over those with less.

We are all slightly worse off every time there is a new billionaire.

> We are all slightly worse off every time there is a new billionaire.

I responded to the zero sum theory in another reply.

I'll just say that every country that decided to get rid of its wealthy people wound up poorer, a lot poorer.

For a specific example, Massachusetts has a luxury yacht industry. The government decided that they wanted to tax the wealthy, and slapped a hefty tax on yachts. The billionaires simply took their yacht buying elsewhere, and the yacht industry collapsed, costing thousands of highly paid jobs. The government rescinded the tax.

ryandrake 59 days ago

> I responded to the zero sum theory in another reply.

You have ~40 responses in this thread in defense of billionaires, not sure which one exactly you're talking about.

WalterBright 58 days ago

See my posts saying that wealthy people create wealth, they do not transfer it. The transfer theory is the zero sum theory.

SquibblesRedux 60 days ago

Musk got a huge leg up through the government, whether it be tax credits, incentives, side-stepping regulations, etc.

Bezos ran at a loss for so long it drove out actual and potential competitors.

Most (or all?) of the recent titans seem like each has his own company town. (See https://en.wikipedia.org/wiki/Company_town )

While their activities certainly fall in the realm of capitalism, and are just blips at longer time scales, it certainly feels like capitalism has been a bit under the weather for the past couple decades.

Regarding the money invested in AI, it all gives me "irrational exuberance" vibes.

> Musk got a huge leg up through the government, whether it be tax credits, incentives, side-stepping regulations, etc.

Nope. (Any government incentives were available to all the other car companies.)

> Bezos ran at a loss for so long it drove out actual and potential competitors.

Where do you think he got the money to sustain those losses? Investors! Including me. That is not a "transfer" of wealth, as in exchange the investors received an ownership share of the company.

> Regarding the money invested in AI, it all gives me "irrational exuberance" vibes.

It still is the opposite of short term thinking.

SquibblesRedux 60 days ago

I was not making an argument that the economy is zero-sum, or that Musk or Bezos did not build wealth. I merely pointed out methods they used to build their empires. For example, Musk did take advantage of government incentives, sidestepped regulations, etc.

Again, I never claimed there was any sort of zero-sum transfer of wealth. I'm simply pointing out there are varied ways to build up wealth; people have various opinions about those ways. It's right to call out misconceptions or outright falsehoods, but it's also good to understand what leads people to form or accept those misconceptions in the first place.

WalterBright 58 days ago

Government incentives were available to all the car companies. There were no government incentives for SpaceX or Twitter or Starlink.

As for "sidestepped regulations", you'll need to be more specific. He did have some court battles with regulators, and won them.