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Comment by memish | Hacker News Reader

That's an arbitrary cut off and it's not just about whether they will work less hard or not. It's about effective capital allocation. If they earned their wealth through smart capital allocation, why would you want to remove capital from proven allocators and forcibly move it to the least effective allocators?

TLDR. Elon makes vastly better use of capital than the government does. He turned $180M into SpaceX and Tesla. They turn $180M into some bombs and maybe an unfinished train station if we're lucky.

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Lots of hidden assumptions here:

1. The objective of public policy is to maximize the efficiency of capital allocation.

2. Who is efficient at capital allocation is independent of public policy.

3. Efficiency of capital allocation is measured by stock market capitalization.

1) would assume that building a Lamborghini Veneno Roadster is a better allocation of capital than building 10 homes. Or treating 100,000 cases of malaria.

2) would assume that someone who benefits from government subsidies is intrinsically better at capital allocation than someone who doesn't.

3) would assume that tulips sellers were really, really, good capital allocators for a while, and then suddenly were terrible capital allocators. Or that the number of cars produced isn't really a relevant metric for an auto company.

Very good points. Externalities and other market failures are also better addressed by governments than capital markets, as is well understood and was conceded even by Milton Friedman.

> they earned their wealth through smart capital allocation, why would you want to remove capital from proven allocators and forcibly move it to the least effective allocators?

1. You'd certainly want to remove it before they pass it on to their children -> 60% of all wealth in the US is inherited, mostly by the very wealthy.

2. Those most likely to scoop up redistributed capital are the efficient capital allocators at current time, which is better than calcified structure of efficient capital allocator from 1970 who has just put their money into index funds and passed their wealth on to their children.

3. Diminishing marginal utility of the dollar means strong first-order utility gains from redistribution of wealth which would need very large second-order impact on capital allocation effectiveness (and impact on behavior) to harm net utility.

buying twitter at $54/share is an effective use of capital?

This^ + how much capital did Elon Musk actually allocate to Tesla and SpaceX? It was much closer to $100m than $1 billion or $100 billion.

At the time, yes. Today one could get it for a lot cheaper.

SpaceX was funded by government contracts awarded to SpaceX. 'Ol Musky doesn't wave a magic wand for discerning capital deployment. He just gets lucky.

Luck doesn't itself explain being able to repeat that level of complex achievement. You need >99 percentile in energy, intelligence and curiosity to pull that off.

He was certainly lucky that the Obama administration was around to lend him money to finish the Model S and not declare bankruptcy, sure.

Right, because this single person takes all of the credit for SpaceX. Musk didn't found SpaceX. He just invested money. Big difference. He's also, despite what you're implying here, not a rocket scientist. Nor should he take sole the credit for thousands of scientists' and engineers' work. Do you attribute all of your company's achievements to your CEO or principal shareholders? Are you not concerned with being drawn up into a cult of personality?

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