Elon Considering X Holding Company for Tesla, SpaceX, Boring Company and Neuralink

19 thoughts on “Elon Considering X Holding Company for Tesla, SpaceX, Boring Company and Neuralink”

1. Keep SpaceX private. As much as I would love to invest in an IPO of SpaceX, it doesn't suit its goals. Shareholders would be a burden for a company that is trying to colonize Mars. The one time losses could cripple it in terms of risky investments, which is how they operate. The company literally plans to burn their entire profit on a venture (colonizing Mars) that has little possibility of return for 20-30 years at best, likely a 50 year investment. With shareholders and their fickle attitude, good luck with that.

2. From the outset, I asked you to "interpolate" from Ted as an example of suboptimal capital allocation… an extremum… a reductio ad absurdum of a tax that doesn't even try to approximate the kind of use fee that would obtain under anarcho capitalism.

   Do you not believe anarcho capitalism would have built in to it incentives for optimal capital allocation?

3. But why stop there? Your argument is – correct me if I am wrong – that assets should be taxed because the owner may not be the most efficient capital owner. If the land owner was forced to pay taxes on the value of the land every year, he/she would either have to become an efficient capitalist of hand over the land to someoen else.

   So what about money in the bank? Shares? The doll house that you made for your daughter? Your car? Your clothes?

   Everything that a person owns could be taken away on the principle that someone else may use that value "more efficiently". This would probably not encourage savings, which by itself is very beneficial for an efficient economy…

   For me, this is plain immoral, regardless of the "efficiency" of the system. I believe that what you make is yours, since you own yourself and thus the fruits of your labours.

   Of course, you could just tax income of all sorts – as is done now – and have the beneficial effect of civiliazation and the benefit of property rights….

4. Wow, you are assuming a lot about Ted!

   First of, if Ted only rents the entire USA to his nephew for one USD per month, Ted is missing out on a massive income. Presumably, the land would be worth hundreds of trillions of dollars, and the rent could be in that size bracket as well. Now why would Ted do this?

   In reality, this does not happen, i.e. the combination of owning all land – so that economic activity can be excluded – and not being "greedy" enough to sell parts of the land.

   What exists in reality are small land owners that do not want to sell their mineral rights in order to protect land that has sentimental value to them. Which is OK in my book.

   What also exists, are small to large businesses that operate in small margin domains in mature industries. Say, a bicycle shop (small business) or a cleaning company that employs a few hundred cleaning ladies.

5. If the sometimes suggested notion that Starlink profits are intended to fund development for Mars colonization, spinning out Starlink makes very little, if any, sense. How would stockholders of Starlink view diverting their profits to a non-Starlink project? Very poorly, I imagine.

6. Nothing in the scenario presented requires Ted to rent out his property in anything remotely approaching an optimal manner for the economy. He can rent the entire land area of the US out for $1/month to his nephew and exclude the rest of the population from his nephew's leased land.

   Ted's annual income tax on flipping burgers for his day job will pay for may be 1 microsecond of flying an F16.

   The increase in the value of his property resulting from the general growth in the economy placing greater demand on his land's value results in capital gains that he can realize by selling off pieces of his land. This increase in value is not his doing, but that of the others who create economic growth (somehow, without using any land since Ted's nephew excludes them). At the time of sale this can be taxed as capital gains but the longer he delays sale of the land (so his nephew can keep "using" it, preventing more productive uses), the lower the effective rate he pays for the services required to uphold his title to it — thereby inhibiting allocation of the land to productive use.

7. OK, but Ted does not make a profit, right? This means that all the money coming in is also going out in the form of salaries and fees. He is probably employing millions of workers ('all the land in the USA'). These workers presumably pay tax on their income so the government has plenty of cash to finance all the necessary activitities (protection of property, police, roads, military a.s.o.). This civilization benefits all citizens, not just Ted.

   So, as a result of Ted's ownership, millions have work, food on their table and the government has money. Ted has single handedly financed the good of civilization of millions of people, while only getting the "use" of one citizen. Meanwhile, Ted actually get's no monitary reward for this! He is not making any profit and can not even feed himself by his ownership. Ted, in fact, has to get a "day job" just get food on the table. And on this meager income Ted does pay taxes.

   If you ask me, Ted is a pretty nice guy and has nothing to be ashamed of.

8. Just like humanity only having Earth, or rather only Earth having humans…which is part of the reason for SpaceX in the first place.

9. Yes, I've thought it all the way through to a monetary system backed by the total property rights in the economy:

   https://jimbowery.blogspot.com/2020/01/property-money.html

   Consider this extremum as a reductio ad absurdum of your line of critique and then interpolate from there:

   A guy, we'll call him "Ted", owns all the land in the US and rents it out to others. Ted doesn't pay tax on it. Ted "just barely breaks even". Young men are sent to fight in wars, evict squatters, etc. to defend Ted's rental stream. Tens of thousands of them end up debilitated to the point no woman will want them, if not totally disabled.

   All this costs money to society.

   But Ted argues that to tax him on his property rights is "socialism".

   Where does that money come from?

10. Have you thought this through in its entirety? You have to pay tax based on the liquid value of the company you own. OK, suppose you own a company that just barely brakes even. No profit. Still, the company has a value, perhaps in the machinery, perhaps in the opportunity to include it in a bigger company and make it profitable or perhaps in the customer base. With your scheme, the owner would have to sell of parts of his company just to keep owning an ever smaller part of it.

    Does this makes sense to you?

    And how about capital? Would you tax money in the bank, stocks, cars and all assets even when they are not being sold for a profit? So if you have shares, you have to sell parts of them off just to keep the rest?

11. If Musk was serious about humanity's future in space, he'd take seriously what I proposed in 1992 after our coalition got NASA barred from competing with the private sector for launch services in 1991:

    Replace all taxes on economic activity with a single tax on the liquid value of net assets at the rate of interest on the national debt AND replace all transfer programs, including the welfare state, with a citizens dividend.

    Imagine the world's richest man making such a proposal.

    Also, imagine how Bezos would fare under such a tax system compared to how Musk would fare under such a tax system.

    Musk has a slam dunk for humanity if he does this — and for himself as well at least in comparison to his rival for the title of "world's richest man".

    The problem Musk would face, of course, is there would soon be hundreds of "Elon Musks".

12. That's what I'm thinking. One big holding company run by one bad CEO post Musk and its all over.

13. Single point of failure.

14. Well, I wanted to buy into SpaceX, but it's privately held.

    Much as I dislike not being able to do so, I understand why it is.

    Elon has undoubtedly read Heinlein's The Man Who Sold the Moon, where the space-obsessed entrepreneur that enables commercial space travel, and then builds entire cities and industries on the Moon, is never allowed to go into space at all, as he has sold so much of his company that the board is able to prevent him from going (anything bad happening to him would be detrimental to shareholder interests, after all).

    Elon Musk doesn't want any shareholders telling him he can't do something, especially as some of the things he wants to do (e.g. cities on Mars) might lower quarterly returns.

15. The likely ways this happen are like google becoming Alphabet. A swap from Tesla to X and still publicly traded. Spacex, Boring and neuralink shares would get bought out at substantial premiums. I think Spacex and the other two have faster growth potentials at this point. Current Tesla shareholders would gain even faster growth but Spacex and other shareholders would lose some future potential faster share growth gains. They still will see say a 10x but not a 100x or 1000x. Boring is 80+% Elon and Spacex is 54% Elon. I have some Spacex shares. For that part of things I would probably see less returns than if Spacex stayed private and then spun out STARLINK as an IPO. But I would be happy as a Tesla shareholder. I have more Tesla. As a futurist, Spacex and boring and neuralink develop faster with more funding. And Elon gets to launch a bigger and better future because the more time efficient things for him lets him launch the supersonic electric passenger jet etc…

16. One more thing. If this holding company-X would push out a lot of small stock owners (it may or it may not), then Tesla would loose a lot of fans. It's not only about admiring the products, but also the chance to be a part of the development through ownership. Chase away the little guys, and the number of cheerleaders would go down a lot. And then Tesla may need to start advertizing and thus loose one of the advantages that it has.

17. Any suggestion that forces me to loose my Tesla shares, I dissaprove of. Remember, you "only" need 90% of the votes to force a sale of somebody elses shares. What if Elon would have managed to force a sale of all "little guys" one of the numerous times he tried to make Tesla private?

    And now this. If this happened, would you be forced to trade in your Tesla shares for a number of shares in the X-holding company? Or would you just be forced to sell, period? Would this X-holding company be publicly traded, or would you need to be a "qualified investor" to hold those share? What if you like Tesla shares, but not SpaceX-shares in which case you would think that getting X-holding shares would be a "trade down"? I would personally be thrilled to own SpaceX stocks and Boring company stocks, but this may not be the sentiment of all Tesla shareholders.

    This is the aspect of Elon Musk that I like the least. He does not seem to have much consideration for small stock owners. So you stuck with Tesla shares through thick and thin and you don't want to trade your stock for a short term 30% win when you believe that there is a 10x in the stocks in a few years? Tough luck, I don't care.

18. Ex: Uber Self-Driving -> Aurora

19. This isn't a good idea. You want to separate each separate enterprise as much as possible. This is asset management 101. Setting it up all under one structure leaves the potential for massive liability issues. In fact, I think he should separate the companies he has even more. If he wants to pursue higher risk projects like cybertruck or Tesla semi, set that up under a separate company so that it reduces risk to Tesla itself.

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