Transcription
Okay, welcome back to Gary's Economics. Today, we're going to talk about Elon Musk. For those who don't know, Elon Musk is the world's richest man. He owns Twitter and Tesla. He's recently entered politics aggressively, supporting Donald Trump. Donald Trump won the election, and it looks like he'll give Elon Musk an official role in the US government. Musk has started intervening aggressively in politics in many countries, including the UK and across Europe, generally supporting anti-immigrant, far-right parties. We'll discuss what we can learn from Musk's move into politics.
I think the first thing we can learn is that when the super-rich get really, really rich, it *does* affect you. On this channel, we talk a lot about taxing the rich more to protect living standards. We often hear pushback: it's the politics of envy; you shouldn't tax the rich; it doesn't matter if rich people get rich; we should focus on getting rich ourselves. This is a good example of why the rich being super rich *does* affect you. The rich getting richer and richer and richer, and ordinary people owning fewer and fewer assets, affects you because the rich compete for the same resources you need. There's only a certain amount of housing, education, universities, doctors, dentists, and physical space in cities. As the rich get aggressively richer, they consume more, leaving less for you. You see this in rising housing costs in cities—the rich consume more and can pay more, pushing prices up. But it's not just housing; it's university education, access to doctors, dentists, and space in cities. In London, we see pubs closing and being replaced by housing, while luxury hotels, restaurants, and theaters in the city center boom. The rich are outcompeting you for space, resulting in higher prices for everything you buy.
With Elon Musk, we see the rich competing for control of your politics, politicians, and media. This has always been the case, even for economists. I studied economics at the London School of Economics, a top university. I got good grades and had a choice when I graduated: work for the government, helping the economy for people earning £40,000-£60,000 a year, or manage the money of the rich, earning £1-£2 million a year. It's the same for dentists, doctors, and politicians. I'm reminded of David Cameron. The UK Prime Minister's salary is about £150,000 a year. After leaving office, David Cameron went to work for Greensill, a finance company, and made about £10 million in his first year. Ask yourself: is David Cameron an excellent trader or financial analyst? If politicians are paid £100,000-£150,000 a year by the people and can also earn £10 million a year working for the rich, who do you think they really work for?
Rishi Sunak is another interesting example. His father-in-law is one of the world's richest people, a billionaire. The money Sunak earns as Prime Minister is irrelevant to him; his family's wealth from his father-in-law is his major financial interest. When Sunak decides on tax policy, do you think he speaks to his father-in-law? When David Cameron made decisions, did he speak to Greensill, who would pay him £10 million? Doctors, dentists, universities, economists, and politicians face this competition. Politicians can earn money working for you or the rich. When the rich are super, super, super rich, and the average taxpayer is increasingly poor, it's harder to compete with them. This is why we see high levels of corruption in poor countries—local people can't afford to pay their politicians much, while wealthy people in other countries can pay enormous amounts to control the country's resources. This has been happening in poor countries for a long time—in sub-Saharan Africa, Latin America, and Asia. The West has been relatively protected because we had wealthy taxpayers and not super-wealthy foreign billionaires influencing our politics. As inequality increases, ordinary families become poorer, the super-rich richer, and we face the same situation as Latin Americans and Africans—we can't compete with the super-rich for control of our politicians. This is why inequality matters. If you allow the super-rich to get richer and the middle class to lose assets, they will outcompete you for everything you need, including your politicians and media.
Consider the media. Journalists need to be paid. They can sell journalism to the people or sell their services to the rich. If you pay me, I'll sell stories promoting your ideas. In America, you see extremely biased media; their job is to sell a story, not tell the truth, because they're paid by very rich people. This is the effect of inequality. The Musk situation makes it clear how inequality affects you: if you allow the rich to get really, really rich and powerful, they outbid you for control of your politicians, your media, and access to your resources. You get politicians who don't care about you, media that lies to you, and inability to access resources like food and housing. Tesla's stock price doubled when Donald Trump won the election because traders think Trump will use taxpayer money to give to Tesla and Elon Musk. That's what inequality does—it gives the rich direct access to your tax dollars. That's why you need to care about inequality and the distribution of wealth and power.
My second point: Elon Musk's support of far-right, anti-immigration parties worldwide. Why? It's obvious, and rarely discussed in the media. On this channel, I've talked a lot about the worsening economy, falling living standards, and the difficulty of achieving financial security, good housing, and good jobs. Inequality keeps rising, making things worse. When I first started saying this in 2011, it wasn't a popular opinion. People thought the economy would recover. Now, in early 2025, it's becoming obvious that the economy is in a structural downturn, and things will get worse. This creates political tension: people don't want their families to get poorer each generation and demand change. Old-school politicians cling to hope, but it's becoming obvious that people will demand change. We're already seeing discussions about how to change things. In the next 10 years, we'll probably see significant changes in politics, what politicians offer, and what people demand, because the status quo isn't working for most people.
If you're Elon Musk, the world's richest person, you'll see a changing world and people demanding change—less inequality, higher taxes on the rich, lower taxes on ordinary workers. There's an obvious reaction: avoid higher taxes. You need a different story. The main alternative story is that immigrants are the problem, not the super-rich. A sensible billionaire would realize it's economically destabilizing to keep growing inequality, but most billionaires don't think that way; they just want to keep getting richer. They'll financially support the idea that immigrants are the problem. I'm not super pro-immigration, but it's massively in the rich's interest to tell you that the problem is immigrants because if you don't think that, you might realize the super-rich are the problem. This is Elon Musk's situation. It's not just Musk; other super-rich people will support this idea because hatred of foreigners and immigrants is the main thing standing between them and high levels of taxation. They'll fund these ideas, and more money will flood in if inequality keeps increasing. This will destabilize an economy already providing unbelievable luxury to the rich. I don't think this is right. There's a story that the French cut off the heads of the rich and the English didn't because the English super-rich gave back to ordinary people, increasing their living standards. A sensible billionaire would accept that stopping inequality increases stability and protects their situation. But most super-rich want to keep their taxes down.
This puts people like Musk, who fund anti-immigrant political parties and ideas, in an interesting situation. It's in their interest for people to hate foreigners and migrants and think migration is the key problem. But it's also in their interest to keep migration high because it's easier to get people to hate migrants when there are loads of migrants. Trump is simultaneously funding anti-migrant parties and arguing for high levels of immigration in the US. This reminds me of what the Conservatives did when in power. They fought hard to kick out illegal migrants arriving in small boats, but after Brexit, they had complete power over legal immigration and massively increased non-EU migration. They portrayed themselves as the party of low migration while massively increasing non-EU migration. This shows the billionaires' tactical play: tell you to hate migrants and make sure there's tons of immigration.
The final thing we learn from Elon Musk is how important it is for billionaires that you hate each other. I try to make it clear that the reason you're getting poorer is because inequality is rapidly increasing. If you don't stop it, you'll keep getting poorer. You can only protect yourselves by working together as a mass of non-super-rich people, using political power. This only works if you don't hate each other. People in the comments say this won't work, that people will never work together. They ask for trading tips to protect themselves from rising inequality. Rising top 1% inequality means more and more of you lose every year. The only way to change that is to stop inequality from rising. People like Elon Musk want you to live in a Squid Game where you all think only one of you will win. You need to change the game; you can't play a game where 95-97% of you lose every year and hope to be in the 1%. You need to change the rules and work together.
In conclusion, Elon Musk is a great example of why inequality is a danger for you and your family. These guys will take what you need: your politicians, economists, media, housing, and food. You need to fight inequality, and the only way to do that is to work together. That's why these billionaires want you to hate each other. If you hate each other, they win; if you work together, you can win. Support the channel, tax the rich, cut taxes for ordinary working people. Send this to your friends and your mom. Thanks for your help, good luck.