Elon Musk became the world's first trillionaire after SpaceX's IPO, but a former US Labor Secretary argues this milestone reveals a broken capitalist system based on hype, self-dealing, political connections, and rigged markets, potentially at the expense of ordinary investors.
Elon Musk has officially become the world's first trillionaire following the SpaceX IPO on Nasdaq. Shares priced at $135 each propelled SpaceX to a $1.77 trillion valuation, boosting Musk's net worth past the $1 trillion mark. However, the article argues this event signals a departure from traditional economic principles, suggesting modern capitalism is now driven by hype, political connections, and arbitrary control rather than supply and demand. The author highlights 'hype' as a key factor, noting SpaceX stock was priced at approximately 100 times its projected 2025 revenue despite consistent negative profitability and missed goals. Much of SpaceX's 'value' is attributed to a self-negotiated deal between SpaceX and Musk's AI startup, xAI, described as a 'magic trick.' The IPO is characterized as a 'show of faith in Musk' and compared to a 'show of faith in Musk's ill-fated Doge' and Trump's government takeover, driven by one man's ego and thirst for power, lacking accountability or checks and balances. 'Connections' are also scrutinized, with FCC Chair Brendan Carr cited as a 'Musk booster' who approved regulatory requests for SpaceX and Starlink, enabling Musk to control two-thirds of active satellites and dominate global internet access. Carr also investigated a rival company, EchoStar, after a complaint from Musk's company, and threatened media outlets over unfavorable Trump coverage. Furthermore, the article points to Musk's 'total control' over SpaceX, where his shares hold 10 times the voting power of public shares, rendering the board of directors powerless. The author expresses concern that ordinary investors, particularly those with savings in major stock indices, will be forced to invest in SpaceX due to 'rigged' market rules. SpaceX allegedly lobbied for rule changes, such as Nasdaq 100's new 'fast entry' rule, which will automatically include the company in major indices. This will tie a significant portion of Americans' retirement savings and pensions to SpaceX's market value, while simultaneously providing an artificial short-term boost to its value. The 'real kicker' is that SpaceX insiders will have the ability to sell their shares sooner than typically allowed in an IPO. This allows them to profit from the initial surge caused by forced index investments before a potential downturn, effectively becoming a 'huge redistribution from most of us to Elon and his buddies.' The author, Robert Reich, concludes that this situation represents 'rot at the core of American capitalism in this Second Gilded Age.'
