Tesla’s board has proposed a fat pay package that could make Elon Musk, currently worth $400 billion (give or take), the world’s first trillionaire—and then some—as long as “he meets a series of very ambitious corporate goals,” reports The New York Times. In other words, if Tesla really succeeds, Musk gets even wealthier.
Question: I wonder what Zohan Mamdani will make of this news?
Actually, I suspect I do know. Recall last June when Mamdani, the Democratic nominee for New York City mayor, told NBC News that “we shouldn’t have billionaires.” It’s a hot-take that may have resonated on social media and in a city where there are plenty of superrich and also plenty of poor—and also plenty of young people who are more billionaire-skeptical than previous generations. But, sorry, the idea of abolishing extreme wealth fundamentally misunderstands how prosperity is created in a free-market economy. If ever implemented, such a policy would strangle the very entrepreneurial dynamism that distinguishes the United States from Europe.
Let’s start with a few updated facts. America counted 1,135 billionaires worth $5.7 trillion in 2024, up from 927 in 2020, according to wealth-intelligence firm Altrata, as newly reported in The Wall Street Journal. While tech titans Musk, Jeff Bezos, and Mark Zuckerberg dominate the rankings—nearly $1 trillion among the three—most billionaires are neither household names nor Silicon Valley moguls. About 300 fortunes come from banking and finance, 110 from tech, and 75 from real estate. (Lots of new AI CEOs coming soon?) The piece notes that roofing entrepreneur Diane Hendricks and the heirs to Russell Stover Chocolates illustrate the breadth.
A global comparison underscores America’s uniqueness. The UBS Billionaire Ambitions Report 2024 shows US billionaire wealth represents over 40 percent of the global total. Crucially, about 70 percent of US billionaires are self-made, compared with fewer than half in most of Western Europe, where fortunes are anchored in luxury brands and inheritance.
Critics like Mamdani fundamentally misread the mechanism that generates such fortunes. As the UBS analysis shows, billionaires often emerge from savvy entrepreneurs building products that radically improve lives. Amazon redefined consumer convenience. Apple turned the smartphone into perhaps the greatest consumer product ever sold. SpaceX slashed the cost of space access. These fortunes weren’t rapaciously extracted from the 99 percent but earned by taking high-risk bets and creating massive long-term value. Nobel economist William Nordhaus has calculated that innovators typically capture only about two percent of the total social value they create, with the remaining 98 percent flowing to consumers through lower prices and better, more diverse products.
Inequality is real, of course, but in free societies it often reflects diverse talents, preferences, and risk appetites. Wealth accumulated in competitive markets is not evidence of exploitation but of dynamic capitalism at work. Wealth caps or confiscatory taxation could snuff out tomorrow’s breakthroughs. Example: Elon Musk nearly lost both Tesla and SpaceX in 2008, while Steve Jobs used his post-Apple fortune to bankroll Pixar, a studio that revolutionized animation. In a world of punitive taxation, neither bet might have been made.
It’s also wrong to claim billionaire wealth lies idle. Some is reinvested in businesses—a good thing — while much fuels philanthropy. The Altrata/WSJ data show American billionaires have donated or pledged about $185 billion since 2015, with nearly half directed toward education and medical research. Yes, giving is uneven—a quarter of billionaires have donated less than $1 million over the past decade—but the broad pattern underscores that private capital isn’t just hoarded, Scrooge McDuck style. It’s often allocated by individuals with deep knowledge of industries and causes, channeling resources into universities, laboratories, and civic organizations. That pluralism of funding, messy as it may be, produces experimentation and diversity of approaches that centralized state spending rarely achieves.
Mamdani should study hard the Old World, where excessive billionaire-aversion has helped produce a worrying stagnation. The continent watches as American firms dominate every frontier technology while its brightest entrepreneurs flee to Silicon Valley. The proper response to inequality isn’t constraining success but expanding opportunity. If Musk becomes a trillionaire by electrifying transport and making humanoid robots ubiquitous, good for him and us.
The post Why Elon Musk, Trillionaire, Would Be a Good Thing appeared first on American Enterprise Institute – AEI.
