The $1 trillion question

Elon wants it, he may even get it but how will it all pan out?

Elon Musk, the Tesla boss, has scaled new heights with a pay package worth just below $1 trillion.

I cannot even begin to think what an individual could do with this kind of money but in reality this stellar package is little more than moonshine. In fact this is not a pay package but a grant of shares over a ten year period if Tesla, under his leadership, meets certain targets.

The likelihood however is that Tesla’s share price will fall rather rise in the next decade and that some of the targets, such as delivering 20 million Tesla vehicles and one million robots, will not be achievable. Tesla shares have always been highly volatile and as the company matures, the fantastic targets set by Mr Musk are becoming less and less realistic.

Yet Mr Musk, whose ego vies with that of the Orange Blob in the White House, is not going to be unduly exercised by prissy little details. He will simply revel in his status as the ‘richest man in the world’ or ‘the highest paid man in the world’. Being bigger and better than his superrich counterparts is what gets him up in the morning.

Mr Musk is hardly alone among the superrich who are forever looking over their shoulders comparing their wealth and status with other rich folk.

As F. Scott Fitzgerald famously observed about the very rich: ‘They are different from you and me…They think, deep in their hearts, that they are better than we are …even when they enter deep into our world or sink below us, they still think that they are better than we are.’

There is some controversy about this quote, which formed part of a conversation with Ernest Hemmingway, but it is consistent with a number of other things that the great author had to say about the wealthy.

His point being that wealth in terms of possessions was less important to rich than the status and prestige it bestowed.

Mind you ostentation is also part of the package as Jeff Bezos of Amazon regularly shows either by staging an absurdly expensive wedding in Venice (we can only hope that his next betrothal manages to top this one) or sending some of his besties into space, basically because he has the means to do so.

Not all seriously rich folk are this vulgar or indeed this egotistical. A strange by-product of having been a financial journalist is that you tend to meet quite a lot of rich people. Most of them, in my experience, are simply not very nice. However you sometimes come across plutocrats who are good company, usually because they feel no need to prove anything and have reached a stage in life where they are busy giving money away or they have become indifferent to their wealth.

What is very clear is the trend for the rich to get richer and for the income gap to balloon.

In America the top 1% of households hold some 30% of the nation’s wealth, while the bottom 50% own just 2.5%. It is much the same in Britain where the top 10% of households hold some 57% of national wealth, whereas the bottom 50% have to share a mere 5% among themselves.

Much of this wealth gap is aided and abetted by government policy ensuring that the ultra-rich pay a lower proportion of their income in tax, are first in line for state handouts and, precisely because they are rich and dish out impressive political donations, are able to ensure that policy decisions match their needs. When governments have the temerity to suggest something like getting the rich to pay more tax, these avid patriots threaten to up sticks and take their wealth elsewhere.

Besides putting the heavy arm on governments, the rich get richer by operating within a tight circle of the already rich who form networks to deal with each other in ways that exclude outsiders. In Britain social class used to be the key factor but such has been the arrogance and hubris of much of the ruling class that they have lost much of their prominence to grubby newcomers. America claims to have less of a rigid class system but a trip to the Hamptons in the summer and a stroll around Wall Steet’s watering holes suggests otherwise.

Yet aspiration is more thoroughly drilled into the American psyche which gives hope to those of lesser means. One of the many things I liked about living in Hong Kong was that it barely has a ruling class defined by birth, instead anyone could join as long as they had the cash; it meant there was always hope.

Mr Musk, an outsider, is a good example of the realisation of the American Dream, it’s a pity that he is so blatantly vile and attached to causes that are dangerously close to those of that funny little Austrian with the toothbrush moustache.

There comes a time however when all this wealth and obnoxious behaviour provokes a backlash. Look no further than the recent election of a socialist mayor in New York and even in Britain and France outspoken anti-capitalist parties are gaining a great deal of traction. Mr Musk meanwhile is using his dollars to back extreme right-wingers in all sorts of places, his ego does not permit him to realise that this is precisely the sort of thing which will end up producing unintended consequences .