Musk in the Marketplace

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Five months ago, there came a buzz in libertarian circles about whether Elon Musk was a libertarian, or even a sort-of libertarian. The buzz followed a story in the New York Times, “The Elusive Politics of Elon Musk,” by Jeremy W. Peters, and a column in the Financial Times, “Beware Elon Musk’s Warped Libertarianism,” by Edward Luce. The NYT story was descriptive and fair-minded. It said Musk’s politics have been “described as libertarian” but are really eclectic. The FT piece was an opinion column with a lefty edge. Luce argued that Musk’s libertarianism was bogus, and really just a cloak for his self-interest. “Billionaire libertarians . . . have the money to do whatever they want,” Luce wrote. Their libertarianism, he wrote, “rarely stretches beyond their personal freedoms, especially the liberty not to be taxed.”

In response, Canadian libertarian Pierre Lemieux wrote, “On what basis does Mr. Luce claim that Elon Musk is a libertarian? I have never seen anything written by Mr. Musk that would show his support for this political philosophy.”

By referring to the lack of Musk’s political writing, Lemieux is responding as an academic. Lemieux deals in the world of ideas. To someone in that world, Musk’s political pronouncements are a mess. The man has not bothered to place them in an ideological hierarchy, to order them, to write a book about them. The reporter from the NYT is not so different from Lemieux. He’s working for a different kind of enterprise, he has a different audience and probably a different political philosophy. But he’s still in a workplace where university-educated people deal in words and ideas. Musk is dealing with ideas that concern physical things. I think he should be judged by a different standard.

Elon Musk, the new biography by Walter Isaacson, does that. Isaacson describes Musk growing up in South Africa in a broken home under an overbearing father. Young Musk was a nerdy guy who would rather play videogames than go to parties. He read science fiction, including Robert Heinlein’s The Moon Is a Harsh Mistress and Isaac Asimov’s robot books. He imbibed Asimov’s three laws of robotics, as well as a fourth, called by Asimov the “Zeroth Law,” which said, “A robot may not harm humanity, or, by inaction, allow humanity to come to harm.” As an adult, two of Musk’s passions are making sure artificial intelligence is safe for humans and opening up human travel to Mars.

Lemieux deals in the world of ideas. To someone in that world, Musk’s political pronouncements are a mess.


Early on, Musk could see that South Africa was not the place to do that. He emigrated to Canada to attend university, then to the United States, where he studied at the University of Pennsylvania. He was recognized there for his brilliant mind. “At Penn,” Isaacson writes, “Musk received some internship offers from Wall Street, all lucrative, but finance did not interest him. He felt that bankers and lawyers did not contribute much to society.”

Musk’s interest was in hands-on things. He converted a 20-year-old BMW from a four-speed to a five-speed so it could go fast. Driving across the United States to his first post in Silicon Valley, he made a detour to the new airport at Denver, because he wanted to look at the baggage-handling system.

Soon he got involved with starting companies. The first one, Zip2, was a kind of computerized Yellow Pages. Right off, he had a distinctive work style. He was a fanatical worker. After the code writers went home, he would review their code and rewrite it. If they complained, his attitude was that they should have stayed at work until they got it right.

“Like Steve Jobs,” Isaacson writes — and Isaacson is a biographer of Apple Computer’s co-founder — Musk “genuinely did not care if he offended or intimidated the people he worked with, as long as he drove them to accomplish feats they thought were impossible.”

Musk said of himself that he had “a maniacal sense of urgency.” “It made his engineers engage in first-principles thinking,” Isaacson writes. And it gave the competitive edge to Musk’s two biggest enterprises, SpaceX and Tesla.

Musk is dealing with ideas that concern physical things. He should be judged by a different standard.


Isaacson’s book tells the story of SpaceX, founded in 2002. In 2008 it launched its first rocket designed to reach orbit, the two-stage Falcon 1, from a private launch pad on Kwajalein Island in the mid-Pacific. The rocket blew up. The second rocket blew up, and the third one blew up. The fourth one — the last one SpaceX had the money for — was a success. It “had made history,” Isaacson writes, “as the first privately built rocket to launch from the ground and reach orbit.”

Soon after, Space X was awarded a $1.6 billion contract to make 12 round trips to the Space Station. The company built a bigger rocket, the Falcon 9, which became NASA’s workhorse. SpaceX’s rockets were no longer launched from a remote atoll in the Pacific but from Cape Canaveral, Florida, and from a private rocket base in southern Texas. In 2015, SpaceX developed a reusable rocket that could launch a payload into orbit and return to earth. Finally the company developed the Starship rocket, which was taller than NASA’s famous Saturn V rocket, which sent astronauts to the Moon.

At the same time, Musk was building up Tesla, his electric-vehicle company. Only a handful of people have tried to start an American car company within the past 90 years. I can think of Henry Kaiser in 1945, Preston Tucker in 1948, and John DeLorean in the late 1970s. All those companies died. Tesla lives. Where I live (admittedly a Tesla stronghold) you can hardly walk down an arterial street for five minutes without seeing a Tesla.

And look at the stock. In 2010, Tesla had the first initial public offering of an America car company since Ford’s in 1956 — and Ford was half a century old at the time. The NASDAQ calculates that $10,000 of Tesla stock at the offering would be worth $2.4 million today.

The rocket blew up. The second rocket blew up, and the third one blew up. The fourth one — the last one SpaceX had the money for — was a success.


I can hear a libertarian say, “SpaceX and Tesla were supported by the government. It’s crony capitalism.” I used to think that, but not so much anymore.

The story of both these companies is one of imagination and fanatical drive — private imagination and drive. SpaceX had to push its way into a market held by big, old companies that were living on cost-plus government contracts. Musk did that, Isaacson writes, by “installing a culture based on questioning every rule and assuming that every requirement was dumb until proven otherwise.” When the company needed cranes, he was told that they cost $2 million each, mainly because of Air Force safety regulations. Musk challenged the regulations as obsolete and unnecessary, got the cost down to $300,000. “The latches used by NASA in the Space Station cost $1,500 each,” Isaacson writes. “A SpaceX engineer was able to modify a latch used in a bathroom stall and create a locking mechanism that cost $30.”

At Tesla, Musk walked the assembly lines, questioning every procedure. One scene in the book is from Tesla’s battery plant in Nevada. The production line was being slowed by a robot that was gluing fiberglass strips to the battery packs. The robot’s suction-cup hands kept dropping the strips. It also applied too much glue. At first, Musk thought the problem was that a human should have been doing the work — and, at that plant, he did rip out a bunch of the robots and replace them with humans. Then he asked, “What are these strips for?”

The person from the engineering department said the strips were needed to eliminate the vibration noise between the battery and the floor pan, and had been required by the noise-reduction team. The person from the noise-reduction team denied this; he said the engineering department had required them. “It was like being in a Dilbert cartoon,” Musk told Isaacson. Musk did a few tests and ordered the fiberglass strips taken off the assembly line.

That’s not a story of engineering genius but of attention to detail. Yet with both good engineering and relentless attention to detail, Musk has been able to reduce the price of a plug-in electric from well over $100,000 to as low as $40,240 for a Model 3. And he did this at the first Tesla plant at Fremont — in California.

In the context of today’s automotive industry, Tesla is an industrial triumph. It has taken some subsidies, but it hasn’t wasted them.


In 2010, Tesla did get a $465 million loan from the Department of Energy under the Advanced Technology Vehicles Manufacturing program. It’s small compared to the billions lent to General Motors, Ford, Chrysler, and Nissan.

Another start-up company, Fisker Automotive, founded in 2007, made plug-in hybrids. Fisker got a $529-million loan from the federal government at about the same time that Tesla did. Fisker also got about $1 billion in private investment. In 2011, Fisker went wheels-up. Bankrupt. Tesla paid its $465-million loan back after three years, with only $12 million interest. Crony capitalism?

Under the current law, people who buy electric vehicles can claim a federal tax credit of $7,500. That’s an indirect subsidy of Tesla and all the other companies making electric cars. And according to the reports I’ve seen during the United Auto Workers strike, the other companies are losing money on electrics, and Tesla is in the black. Part of that is Musk’s lean-and-hungry management. Part of it is that most of the other companies are unionized and Tesla isn’t.

Call up a bar chart of the number of Tesla cars produced over the past six and a half years. The total is more than four million, and growing. Three-quarters of a century ago, Kaiser produced 760,000 cars and bit the dust. DeLorean produced 9,000, Fisker 2,450; and Tucker — the subject of an admiring film by Francis Ford Coppola — just 51. (Coppola had to borrow just about all of them for his movie, which is worth seeing.)

It’s unfair to dismiss Tesla as a government boondoggle. In the context of today’s automotive industry, Tesla is an industrial triumph. It has taken some subsidies, but it hasn’t wasted them.

How important is it, then, to decide whether Musk qualifies as a libertarian?

I was a reporter and columnist in the business section of a newspaper during most of the 1980s and 1990s. I had libertarian ideas, but I was writing about actual people in the marketplace. Academics on the left argue that the actual way business is done disproves our theory, and I don’t think it does. But sometimes it challenges our theory.

To make labor more productive, a free market was helpful but not sufficient. Change required somebody, often a new player, to enter the market and wreck the business model of the existing players.


I’m reminded of the joke, “How many libertarians does it take to change a light bulb?” The answer — “None; the market will take care of it.” This captures a reality about us. We’re interested in the theory. And the theory is important. But results require more than the right theory.

That’s a point made in The Power of Productivity, by William W. Lewis of the McKinsey Global Institute, a book I read almost 20 years ago. Lewis had been involved with studies of how banks, builders and other businesses operated in countries such as India, Russia, Brazil, and the United States. The difference in living standards of those countries, Lewis wrote, was powerfully related to the difference in the productivity of labor at the enterprise level. To make labor more productive, a free market was helpful but not sufficient. Change required somebody, often a new player, sometimes a foreign player, to enter the market and wreck the business model of the existing players. Lewis’ observation is that when people are free to do what they want, and they’re doing OK, they’ll keep screwing in the same old light bulb in the same old way. Competition requires competitors.

A theoretician might say, “Obviously. I know that,” and no doubt he does. But if you don’t care about it, the point gets lost. And when someone comes along who’s a master of the activity you don’t care about, and you judge him by the things you do care about, you’re not being fair to him.

Some of the time Musk sounds libertarian. He took over Twitter because he’s for speech unfiltered by the guardians of wokeness. At Tesla, he defied the mandatory mask order during the covid time, when he also objected to “forcibly imprisoning people in their homes.” “In general,” he has said, “I believe government should rarely impose its will upon the people, and, when doing so, should aspire to maximize their cumulative happiness.” Musk has spoken against direct government subsidies to business, though he benefits from the subsidy paid to Tesla’s customers. Most notably, Musk has been against the war in Eastern Europe, and has suggested that Ukraine cede the Crimea and perhaps the Donbas to Russia if Russia will pull back and make peace.

The theory is important. But results require more than the right theory.


Then again, over the years Musk contributed money, though not a lot, to the campaigns for Barack Obama and Hillary Clinton. Lately he has contributed a little money to Republicans, though he considers Donald Trump a “bullshitter.” What he would really like, he said in an interview, is for a president to be a normal person rather than a spearhead of either the Right or the Left. Musk quoted the line that he would rather be governed by people chosen from the telephone directory than the faculty of Harvard — but he couldn’t remember who said it. (It was William F. Buckley.)

Hearing all this, I like the guy. I judge him by business standards — and judged that way, Elon Musk comes off well. He is our generation’s Henry Ford — a man who had an eclectic bag of political opinions, some of which, in hindsight, were admirable — he was against war — and some of which were appallingly bad. Yet we don’t mainly remember Ford as the publisher of the Dearborn Independent or for saying, “History is bunk,” but as the man who made automobile ownership available to the ordinary people. Musk is not anywhere near as goofy in his ideas as Ford was, nor as academically limited, and he has done great things.

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Review of “Elon Musk,” by Walter Isaacson. Simon & Schuster, 2023, 670 pages.

One Comment

  1. Marla

    “Has done great things” describes many a hard-core leftist entrepreneur. With respect to the ideology he expresses and defends, Musk is a much more mixed case, which makes him better. But many of the bad things he says and does are really bad. Isaacson quotes him as saying that there are “two sides” to the Chinese government’s genocide of the Uyghurs. Like Apple, Tesla and Musk are concerned to protect Tesla’s Chinese market, which means appeasing the murderous dictators of China.

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