[Analysis and Opinion.]
Elon Musk has demanded that Tesla pay him a bonus of $50 billion. Here’s a link to a story about it:
We’ve previously expressed our view that one of the biggest dangers facing the United States is the risk of oligopoly. See https://reasonandbalance.com/worlds-biggest-problems-ai-and-more/. It would have been more correct to say that the danger is in the creation of a plutocracy.
According to Investopedia:
“Plutocracy is a government controlled exclusively by the wealthy, either directly or indirectly. A plutocracy effectively allows only the wealthy to rule. This can then result in policies exclusively designed to assist the wealthy. Such a dynamic is reflected in the word itself; the Greek words “ploutos” and “kratos” translate to wealthy and power, respectively.”
By contrast, Investopedia also states:
“An oligopoly is a type of market structure in which a small number of firms control the market. Where oligopolies exists, producers can indirectly or directly restrict output or prices to achieve higher returns. A key characteristic of an oligopoly is that no one firm can keep the others from having significant influence over the market. An oligopoly differs from a monopoly, in which one firm dominates a market.”
Regardless of the foregoing technical distinction, we often use the terms interchangeably simply because, as will be demonstrated below, extreme wealth can and often does create both oligopolies and plutocracies.
There are several big reasons why an oligopoly and/or plutocracy is undesirable and even antithetical to the existence of a true democracy. The ability of the plutocrats controlling a plutocracy to fund and thereby control political parties and even the major participants in our system of justice being a major one. In short, plutocrats are often able to live above the law and/or to control government and government officials through their financial wealth alone. If all else fails, if someone has enough wealth they can, and do, often payoff a public official to get favorable treatment or to avoid legal trouble.
The risk of plutocracy is in large part caused by the increasing wage and wealth disparities that have arisen between rich folks and the rest of the population. Moreover, the gap between the upper 5 or 10 percent of the population has gotten significantly wider over the last 30 years or so. Professor and former Secretary of Labor Robert Reich, has put together an excellent video on this crucial issue. He says: “ The top 1% [of the population] holds 15x more wealth than the bottom 50% combined. If you’ve never watched a video of mine, please watch this one.”
See https://youtu.be/wOI8RuhW7q0?si=BBsA71ZQCMHzEvrQ
If you would like to see a chart of this ever widening income gap please check out the following graph at VettaFi Advisor Perspectives:
[There is also a hand-drawn 2017 generalization of the graphs depicted in the above links (which are more current) at the bottom of this article. And its fair to say that the situation hasn’t changed much in terms of the widening of the income gap.]
My novel, Rao’s Solution, although a fictional novel, also addresses this vital issue and suggest an first important step in solving the problem: https://reasonandbalance.com/raos-solution/ see also https://www.youtube.com/watch?v=fL7J2ry1Lmw. [The proposed first step is not that we convert to a communist system, or even a socialistic one. The first step is quite simple, requires no real change in the way our economy operates and would require no huge government bureaucracy.]
Putting aside for the moment of whether former President Trump is guilty of anything and/or whether one should vote for him or not, his recent legal troubles point to one of the many huge dangers of an oligopoly or plutocracy. Current estimates are that his legal bills are now close to $100 million if not more. If true, that means that one man can totally tie up significant, if not overwhelming portions of our legal system. For example, $100 million is almost exactly twice what the Commonwealth of Virginia spends each year to pay all court-appointed attorneys to represent all indigent criminal defendants in Virginia.
With figures like that how can anyone ever argue that everyone has the same rights regardless of income? If Trump were a normal person, and not a billionaire, he would have eventually been given court appointed counsel, and in Virginia that lawyer would have in all likelihood been restricted to a fee to around $500 per charge. (See for example, Virginia Code Section 19.2-163 dealing with compensating attorneys representing indigent defendants ). Therefore, if for example, there were 200 counts containing criminal charges against him the legal fee would be about $100,000 (as opposed to $100 million) and his lawyers would be far less able to research and prepare for trial, meaning less able to adequately defend him, and they almost certainly would not have wanted endless delays, because criminal lawyers representing indigent defendants don’t get paid until the very end of the case, no matter how long it lasts. Thus, Trump’sd cases, if he were an indigent defendant, would have all undoubtedly been resolved by now.
As such, in Trump’s case it could be argued that all his wealth has done so far is tie up the courts without actual resolution of many issues that are of critical importance to not only the next election but to our Constitutional system of government. If one takes the position that the ability to delay is good, especially when it causes endless delay, then they implicitly admit that there’s something wrong with their case and/or that they are in the wrong. The same can be said for the ability to clog up the court system. Moreover, even if one is not bothered by these factors, then at the very least everyone should be bothered by the fact that poor folks don’t get the same quality of legal representation before the courts as the rich do.
The point is that super-rich people can manipulate the justice system and the rule of law. Moreover, they often get better and more favorable treatment than that received by the average citizen or by poor folks. And this is true, regardless of how fair the judges may otherwise be.
And then there is the case of Supreme Court Justice, Clarence Thomas. According to upi.com:
“Thomas, alone, has accepted 193 gifts valued at over $4 million. The report also noted the George H.W. Bush appointee received an additional 126 “likely but not confirmed gifts.”
Thomas has been on the Supreme Court since October of 1991, or 32.5 years. This means he has received approximately six gifts per year with each gift averaging $20,725. This means that in terms of gifts alone he is making over $124,000 per year. In short, he is making over $62 per hour in gifts alone. This, of course, is more than four times the $15 per hour hourly rate, which is the minimum wage in most places throughout the country.
The question then has to be asked: Does this sound normal for a government official? Should it be normal? Does not this raise at least some question of some attempts being make by one or more people to unduly influence Justice Thomas’ decisions?
The foregoing is noteworthy because of the size of the gifts and the identity of those who can afford to give gifts of such size. In short, those gifts are almost certainly not being given by poor folks. Instead, it is almost certain that the donors of those gifts are rich folks. And predictably enough, Justice Thomas’ decisions tend to be favorable to more conservative causes which are more likely to be the causes supported by wealthy folks. All of which is relevant to the point that the United States is in danger of becoming an oligopoly, if it hasn’t become one already. The election of billionaire Donald Trump to the Presidency in 2016 only buttresses this argument.
Having said the foregoing, also consider Elon Musk’s demand that Tesla pay him a bonus of $50 billion. We’ll ignore for a moment the fact that the electric vehicle industry is looking much shakier these days than it did a few short months ago, and that Tesla has a huge backlog of unsold vehicles—thus calling into question the merit of awarding any kind of bonus during these particular times. But let’s assume that Tesla is doing well and selling its vehicles at a healthy clip.
According to Worldometer awarding Trump $50 billion would give him, as a one time bonus, an amount that is greater than the total yearly gross domestic product (GDP) of 90 other nations. [Gross domestic product is the dollar value of all goods and services produced by a country in any given year.] Only 86 other countries have a GDP greater than $50 billion.
But here’s the scary part. According to Wikipedia, if Musk took all of that $50 billion and bought weapons and paid for his own personal army, he would have spent more money on “defense” than all but 10 nations. He would be more militarily powerful than 167 other nations. Talk about power! That is an incredible amount of power and it should be a concern to everyone on the planet. And he’s already one of the richest, if not the richest, man in the World, which means that $50 billion would just be icing on whatever other “defense” assets he already has. He is already an independent security consideration. The conflict in Ukraine has already clearly demonstrated that Musk and his other company, Starlink, are/were major influencing factors on how nations conduct war itself. And all of this doesn’t even take into account his other company SpaceX. Even if it is conceded, that Musk has heretofore acted responsibly in reacting to the situation in Ukraine and elsewhere, one has to seriously ask: Does he not already represent a security risk?
Beyond the foregoing, however, is the probable unfairness of the situation. How much of this bonus is going to go to the other Tesla employees? Presumably none. If that’s the case, however, then everyone, but especially Tesla employees, should be protesting very loudly.
The point is that regardless of how talented or important anyone is, no one is irreplaceable and all results of any organization are based on what the entire organizational team did. Tesla has over 145,000 employees at last count. Even if $1 billion of that $50 billion (2%) were split with the rest of Tesla’s workforce, each employee would get approximately $6,900. If Tesla awarded Musk $25 billion and then gave the other $25 billion to all other employees, each would get a whopping $172,000. That would pay for a lot of college for a lot of kids and a lot of food and doctor bills.
Our understanding is that Musk has threatened to leave Tesla if he is not awarded the $50 billion bonus. Regardless of whether that’s true, the mere request for the $50 billion shows that there is no end to what the super-rich will demand and/or what they consider themselves to be entitled to. This has been demonstrated over and over again throughout history. Now, however, the demands of the super-rich have gotten to the point where they border on the dangerously absurd.
Some will argue that in a free market folks should be able to get what ever they can get. The problem is that eventually the accumulation of too much wealth in one person’s or one group’s collective pocket can and does give that person or group too much political power. When that happens the rule of law and democracy itself become imperiled. This is one reason why we have anti-trust laws. Antitrust laws are absolutely necessary to keep the price of goods and services down. This is because competition forces sellers to not only keep prices down but it also forces them to produce goods of better quality if they want folks to buy their products. Without these antitrust laws, monopolies and oligopolies would prevail and the public would pay much higher prices for the goods and services that they buy. Moreover, the monopolists and oligopolist-plutocrats would reap excessive profits thus allowing them to acquire the excessive political power we’ve just mentioned.
The bottom line is that the government must step in and find ways to stop and hopefully shrink the widening income and wealth gap between the rich and everyone else. It is submitted that this is possible, without resort to communism or the creation of vast governmental bureaucracies. Rao’s Solution provides one possible way to start this process,
June 11, 2024 revised 6/12/24
David Dixon Lentz
END NOTES:
All links to all videos are to offsite URLs. Some factual background was provided by articles on the various artists, the linked tunes and other topics discussed herein by the associated articles in Wikipedia and/or by Chat GPT.
However, no part of this blog article was actually written by artificially intelligent software.
Please note that the names and descriptions of all characters are fictional and any similarity with any actual person is unintended and coincidental.
© Copyright 2024*, David Dixon Lentz All Rights Reserved
*Copyright claim herein applies only to the content contained in this article/blog post that originated with the David Dixon Lentz and not to any quoted or referenced material originating from another source and the like. It does not apply to any music, lyrics, videos or other content contained in or on any linked site, including any of the words, lyrics and/or the performance of any music or videos contained on the sites linked.
For more on this subject: see also the discussion of wage disparity in “Compete or Cooperate: Jobs, Wealth Disparity and the WTO” by David Lentz (it begins at the 15:57 mark) published 04-08-20. Here’s the link:
https://youtu.be/77XdXpO0cl0?si=Ems8PmweXirgAmgj
All questions, comments and/or objections to anything contained herein should be directed to the ownership of www.reasonandbalance.com on the “contact” or “contact us” page.
