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Comment by lend000 | Hacker News Reader

If this isn't an efficient allocation of resources by a free market system then I don't know what is. Not that the current system doesn't have plenty of problems and challenges to solve, but here is the single most productive and futuristic capital allocator in modern times. Imagine seizing his assets and distributing it to the people via a wealth tax. That would be great for a few months of welfare and terrible for the future.

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Because a car company that manufactured 500k cars is worth _more_ than the entire car industry combined... which manufactured 70 million cars? This is irrational exuberance.

I agree the valuation is too high. But we should note that most of those 70 million cars are soon to be obsolete, and their resale value is going to crash very hard. Anyone buying a car these days should think twice about their purchase.

I think you are highly optimistic about this timescale.

This perspecitive is highly US centric. For instance, a lot less people buy new cars in europe, not to mention the developing world.

Not sure if you're talking about the timescale of obsolescence or the timescale of the value crashing. One could make the argument that ICE cars becoming obsolete is an event that has already happened, so let's set that aside.

You're right that my view of this is US-centric, my bad for that.

Value crashing is interesting. Cars have a fairly long lifespan so the transition to ownership of EVs is slow, I would agree with that if that's what you're saying. But the transition to crashing value does not have to be as slow. If the perceived value of an option is 2% better than another option, that does not equate to a 2% price difference. It equates to a much bigger price difference.

Of course a lot of EVs are still crappy and the perceived value of ICE cars is still high due to rampant ignorance about charging options (in the US and Europe) or simple lack of charging options (in the developing world). But that can change very quickly as EVs and the infrastructure get better, and then even though the ownership transition is slow, people will be stuck owning ICE cars when they would prefer to own something 2% better, or 10% better, or 90% better.

Since profit tends to zero, the entire car industry converges on paying its own bills and nothing else. Any new company that shows signs of growth potential is way more significant to investors - although, I admit, this might be a little overboard.

When you find out that Tesla has their finger not only in car manufacturing, you realize that they should never be evaluated as a car manufacturer alone. They compete in Solar power (solar roof), in battery storage (commercial and private), autonomous driving (Waymo is valued at more than 100 billion, why shouldn't Teslas autopilot division alone too), energy autobidder, own battery tech and so much more. Maybe they are a bit high right now, but just simply comparing Tesla to VW or whatever doesn't cut it.

You can argue that he's the best person we could choose right now to have the title of richest person in the world.

But there are far too many needlessly impoverished people in this country to convince me that there's something "efficient" about this.

Do you think that he wouldn't have done what he has done if there was a wealth tax in the US? Do you think he can put money to better use for all of society than a good government? (And we can discuss if the US government is a good government in that sense, but that's beside the point I'm making).

I'm pretty sure the answer to these questions is No (he would have still done it) and No (a good government can put money to better use for all of society).

Or do you think the single mom with 3 kids working 2 jobs and still can't pay rent and health care cares about electric cars and rockets?

Edit: I still think what he's doing is important and impressive, and it's ok that he is one of the richest people on Earth. However, that doesn't mean the US needs to have a better tax system for the rich and better social pillars.

> Do you think that he wouldn't have done what he has done if there was a wealth tax in the US?

Maybe he would've left the country and tried to build something elsewhere. If he didn't, you also can't proclaim to know that he would've pursued his projects with such vigor in the presence of a wealth tax. The wealth tax idea has been tried before and has failed, so whoever is promoting it at least has to explain why this time is different. https://www.businessinsider.com.au/what-happened-when-the-we...

> Or do you think the single mom ... cares about electric cars and rockets?

Climate change (EVs) isn't only going to impact the rich. Also, reusable rocket tech is massive value add to our society including to regular people; satellites - which working class people rely on, plus diversifying life in order to reduce existential risk which is something everyone should care about.

I'd argue we have a good but very inefficient (by-design) government. The US government is optimized to prevent tyranny, definitely not for efficiency. Departments operate on a 'use it or lose it' budgetary basis, there's very little mechanism to use funds efficiently.

Considering that all of his wealth is tied up in TSLA and SpaceX, allowing him control (and resulting in their success based on taking risks), and considering that he reinvests most of his excess capital back into his companies, your answer is not based in reality, despite your appeal to emotion.

It's comical, but also tragic, that you also think the government can put his money to better use. The F-35 program alone is $173 billion over budget.

Imagine taking SpaceX away from Elon, putting the funds into to the government stuff buying system... and ending up with Boeing getting it all.

Put it all into a California high speed rail. That'll do it, economic justice has been achieved.

Perhaps for the consultants and lawyers that suck up all the funds while the rail is never built.

California simply does not have the political, legal, and governmental infrastructure succeed at megaprojects.

Most major cities in the state can't even overcome the legal and policy hurdles for housing development or light rail, and High speed rail is a magnitude more difficult.

In the darkest days of the model 3 production, do you think there’s much of a difference between him and the single mom with 3 kids and 2 jobs?

Sure, I can accept that the work a single mom is doing is much nobler, much more humane and much more deserving of our collective conscious assistance.

But there’s something to be said of our hypocrisy if we (via govt) tax Elon’s wealth _today_ when those same people are unlikely to have to assisted Tesla during _production hell_ (there was talk of Apple doing some Tesla acquisitions; but can’t remember if the US govt was in talks to help Tesla out there)

Elon’s wealth didn’t come out of nowhere. Many many people consciously invested. The US govt _already_ has access to every single one of those people’s wealth via existing taxes. Despite that, we have a society with non-zero single moms who can’t pay rent & healthcare.

There’s something wrong in our society here, sure. A wealth tax doesn’t seem to address that problem though. Heck, if the US govt could’ve put taxpayer money to ease off on Model 3 production hell then yes taxing Elon’s gains today would be fair. Otherwise, it’s just unfair, inefficient.

> In the darkest days of the model 3 production, do you think there’s much of a difference between him and the single mom with 3 kids and 2 jobs?

Is this a joke?

When someone buys a share of Tesla for $800, that money doesn't disappear. It's received by another person. Very little work is done from this exchange, so it doesn't make any difference for the single mom or government.

Do you think that he wouldn't have done what he has done if there was a wealth tax in the US?

I think the answer to this is a resounding Yes, he would not have done it. Tesla and Musk is the perfect example of why a wealth tax on capital is insane.

Tesla market cap is 750 Billion, but the profit is 500 million, and the stock owners that haven't sold have realized $0 profit.

A 1% wealth tax on Musk's 200b ($1b) would be 4 times higher that the profit of the entire company.

Under the current system, the moment he cashes out any stock, he will have to pay taxes on his actual profit. The reason we income instead of wealth, is that wealth can go up and down without the owner seeing any benefit.

> The reason we income instead of wealth, is that wealth can go up and down without the owner seeing any benefit.

I don't think a wealth tax is the right solution, a person that holds wealth definitely does derive a benefit from that wealth -> in the form of control (of a company), collateral (borrowing money at sub-inflation rates), and influence.

Check out Islam's Zakat, which has been proven to work. It's not a wealth tax per se as proposed by some foolish and unrealistic policies, but cash sitting in the bank is taxed at 2.5% (if it is above a certain threshold), and its proceedings go to the needy and poor, among others.

Yeah, Totally I agree that wealth comes with benefits, even if it cant be spent. I am curious how the collateral works without with owner of wealth ever having to realize income. I suppose the way it could work is moving from loan to loan, using the newer ones to pay off the older ones. I wonder if there is some way to fix the tax codes to address this.

> Do you think he can put money to better use for all of society than a good government?

Yes, I do.

How is that wealth tax even supposed to work?

The only successful model that is remotely close that has been historically proven is Islam's Zakat, a form of charity tax if you will. It doesn't force you to sell shares of your company, unlike some proposals I saw by dems.

I did not see a single politician refer to Zakat in any of their proposals. Note that they'd have to get rid of income tax as well to make things just.

"efficient allocation of resources" doesn't mean "the guy who owns popular companies gets unimaginable wealth". Obviously what constitutes efficient is subjective, but I can't see how this kind of allocation is good for the world.

> Imagine seizing his assets and distributing it to the people via a wealth tax

How would a wealth tax seize his assets?

A wealth tax wouldn't seize assets, but given that Musk's "wealth" is almost entirely his shares in Tesla, SpaceX, etc., how would he pay a 5% tax on his total wealth without liquidating a bunch of Tesla shares? His physical assets are unlikely to be worth $10bn.

Governments and public entities can own shares in corporations, so a tax could be paid in kind.

That's definitely better for the share price, but what does the government do with those shares? Again it's paper wealth apart from maybe some small amount of dividends generated.

And having the US Government "seizing the means of production" - and that's how it would be spun - is a great way to turn people against it!

A wealth tax is most likely unconstitutional anyway, the same way income tax was before the Sixteenth Amendment.

I'm not really arguing whether it's a good or bad idea. It's just that, as far as I know, it's the norm in our society and others so it's odd if someone wants to debate it as a hypothetical that people might turn against.

Look at Fannie Mae and Freddie Mac for an example of taking more than a sliver. https://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae...

I'm not sure of the difference between a "wealth tax" and a "property tax". Are you saying the sort of property tax homeowners pay in a lot of places would be unconstitutional at a Federal level? Or are you saying it's unconstitutional at any level?

A property tax is a wealth tax yes, and as you say it would be unconstitutional at the federal level, but they're enacted at the state or municipal level which is legal. At least that's the obvious position and the fact that the federal income tax required an Amendment supports that.

https://nymag.com/intelligencer/2019/02/constitutional-conce...

The federal takeover of a government-created corporation in a financial crisis to prevent it collapsing isn't really a good comparison to an ongoing process of "taking" large chunks of successful companies because their owners are required to pay taxes. And there is criticism of that control now, even if people accepted those actions were required at the time:

https://www.nytimes.com/2016/11/15/business/dealbook/fannie-...

A lot of people want to get the government out of Fannie Mae and Freddie Mac, and I'm no expert, but I think they are obviously wrong. You have a systemically important entity that has to have a government guarantee, then it has to answer to the government as at least a 51% shareholder and have restrictions on distributing profits. It seems obvious and simple and correct to me, not some sort of temporary aberration.

Nothing against Musk, but the specific notion that this proportion of value to wealth is "efficient" seems stupendously backwards. Though I agree that welfare is also not efficient, but only if the goal is solving the problem of suffering and poverty. However, welfare has a second, shorter term function: Necessity.

I feel like the job of "paying people do things then taking the profit and credit" isnt the best allocation of resources

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