The first trillionaire
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Elon Musk's almost inconceivable fortune has expanded the Overton window of wealth.
Why it matters: Big, round numbers have a remarkable way of focusing minds and setting narratives.
- The first trillionaire — much less a trillionaire known for erratic personal behavior, online trolling and support for global right-wing politics — will likely reignite discussion of the diverging fortunes of wage earners and those with market-based wealth, as well as their growing political power.
Driving the news: Shares of Musk's space-launch-satellite services-AI-and-social-media conglomerate SpaceX ended their first day of trading up 19.2%, to $160.95.
- At that price, Musk's publicly reported stake of roughly 6.4 billion shares of stock would be worth $1.03 trillion.
- Toss that on top of the market value of Musk's $340.141 billion worth of Tesla at Friday's close, and you find yourself at $1.37 trillion.
Context: This is an extreme case of a long-term trend in which those with market-based assets have seen their financial position supercharged, compared with wage-earning workers.
- The dynamic has been amplified by the surge in technology shares over the last few years.
Case in point: The gap has swelled between the wealth of the average California household and that of the richest 0.0002% of California households, as spotlighted in a recent paper from the University of California Berkeley economist Gabriel Zucman and his colleagues.
- The paper comes out in favor of California's proposed billionaires' tax, noting "the proposed one-off California billionaire tax of 5%, payable over five years, is both small relative to California billionaires' wealth gains and large relative to the taxes they currently pay ... we find that an annual wealth tax on California billionaires could raise substantial additional revenue even after accounting for income tax losses due to mobility."
Yes, but: Musk decamped with his business empire to Texas a couple years back, which will deprive California tax officials of some benefits as of today's IPO. (In the past, IPO booms have created tax windfalls for the state.)
Flashback: Still, if history is any lesson, Musk's gobsmacking net worth could become a potent talking point for advocates of higher taxes on the rich, especially as the U.S. debt load seems increasingly burdensome and the finances of popular programs like Social Security worsen.
- In February, Bloomberg's Ben Steverman had a great yarn on how Standard Oil tycoon John D. Rockefeller's emergence as the world's first billionaire came amid a massive political backlash against concentrated wealth that ultimately gave birth to the income tax in 1913 and the estate tax a few years later.
