{"id":1162,"date":"2026-07-26T06:06:31","date_gmt":"2026-07-26T06:06:31","guid":{"rendered":"https:\/\/nationallogisticspost.com\/?p=1162"},"modified":"2026-07-26T06:06:31","modified_gmt":"2026-07-26T06:06:31","slug":"the-trillion-dollar-illusion","status":"publish","type":"post","link":"https:\/\/nationallogisticspost.com\/?p=1162","title":{"rendered":"The Trillion-Dollar Illusion"},"content":{"rendered":"
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E<\/span>lon Musk has created \u2014 and lost \u2014 more paper wealth than anyone in history, with most of that loss occurring in just four weeks. His net worth dropped by an amount nearly equal to the combined fortunes of Jeff Bezos and Mark Zuckerberg. Though Musk remains the world\u2019s richest person, these wild paper swings expose fundamental truths about risk, entrepreneurship, and how we measure value.<\/p>\n

Read more A Tale of Two Bridges: The China Bridge Disaster Waiting to Happen?<\/a><\/p>\n

The SpaceX IPO shattered records as the largest of all time, raising $75 billion in cash with an initial valuation of $1.77 trillion, eclipsing Saudi Aramco\u2019s $29.4 billion and triple Hynix\u2019s $26.5 billion. At its June 26th peak of $225 per share, Musk\u2019s 42 percent stake pushed his net worth past $1.4 trillion, briefly making him the world\u2019s first paper trillionaire.<\/p>\n

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We just shouldn\u2019t tax people based on their paper wealth \u2014 because it could be gone next week.<\/p>\n<\/blockquote>\n<\/div>\n

But Elon does not have tens of billions of dollars sitting in bank accounts. His wealth comes entirely from his ownership of companies. In fact, Musk was not wealthier after the IPO than he was before it. Nor is he poorer now than he was when his SpaceX shares were \u201cworth\u201d more than a trillion dollars. What has changed is how the public values <\/em>what he owned: 5 billion shares of SpaceX (roughly 42 percent of the company).<\/p>\n

Although investors often calculate someone\u2019s net worth or a company\u2019s market value by multiplying the number of shares by the price of those shares, in the case of big companies and big stockholders, such calculations can be misleading. The real value of companies shouldn\u2019t swing by tens of billions overnight \u2014 yet paper calculations make it look like they do.<\/p>\n

In the case of SpaceX, the limited availability of its shares make its market cap calculations highly speculative and misleading. With only 4 percent to 5 percent of SpaceX shares publicly trading, market cap calculations fluctuate wildly. Imagine an artisan who makes 1,000 glass ornaments and sells 40 for $100 each. The $4,000 cash in hand is real. Claiming her remaining 960 ornaments are \u201cworth\u201d $96,000 is fantasy. Flooding the market with the rest would crash the price immediately.<\/p>\n

Valuing SpaceX and Musk\u2019s five billion shares at the current share price runs into the same problem. Doubling the number of shares being traded would push the valuation down noticeably. What would quintupling the available shares do? Investors recognize this and so have been reassessing what the price of a share of SpaceX ought to be.<\/p>\n

Since the SpaceX IPO, Elon\u2019s paper net worth has plummeted. At its peak price of $225\/share, Elon\u2019s stake in SpaceX was worth $1.125 trillion. As of July 23rd, the share price was roughly $116\/share, which means Elon\u2019s shares are now worth roughly $580 billion. Meanwhile, a rough earnings report for TSLA sent its shares down nearly 57 points, erasing another $25 billion to $35 billion of his net worth.<\/p>\n

Read more Was Britain Really the Most Evil Empire in History?<\/a><\/p>\n

While still incredibly wealthy, his wealth on paper literally declined by more than half a trillion <\/em>dollars in less than two months. For comparison, the next wealthiest individuals in the world are Larry Page (~$290 billion) and Sergey Brin (~$267.5 billion). So Elon has already \u201clost\u201d nearly as much as the next two wealthiest people in history have made combined. But is SpaceX really half as valuable today as it was a month ago? No, investors have simply reassessed<\/em> its value.<\/p>\n

This volatility exposes why a wealth tax would be disastrous. It taxes money that doesn\u2019t exist and may never materialize. Every $1 move in SpaceX share price shifts Musk\u2019s paper net worth by $5 billion. A 5 percent wealth tax levied at peak valuation would have hit Musk with a $55 billion tax bill. Today, that same 5 percent tax equals $27 billion \u2014 leaving him on the hook for $28 billion in taxes on wealth that vanished into thin air.<\/p>\n

Paying that kind of tax is not easy, even for someone like Elon. He would have to sell huge numbers of shares to cover the liability \u2014 and he would then have to pay additional income taxes on those sales. Meanwhile, ordinary investors holding shares in those companies would watch the price of their shares plummet. Even some folks who want billionaires to pay more taxes shy away from wealth taxes.<\/p>\n

Besides the patent injustices that would emerge, a wealth tax will also dramatically distort, or really destroy, the engine of entrepreneurship that has created companies of tremendous size and value that employ millions of people and generate hundreds of billions of tax revenue every year. Wealth taxes would force Elon and other billionaires to give up large parts of their ownership of companies they own and run.<\/p>\n

Entrepreneurs become billionaires when they develop companies and products that people choose to spend their money on. You and I made Zuckerberg and Bezos billionaires by using Facebook and Instagram, or by buying stuff from Amazon. As participants in, and beneficiaries of, the market, we should want to see a healthy marketplace where we can succeed \u2014 whether making thousands or billions of dollars \u2014 because that kind of society not only fosters more innovation and wealth, it fires the imagination and it kindles hope.<\/p>\n

Unfortunately, politicians regularly use the politics of envy and aggrievement to gain more power. While it can be cathartic to accuse the ultrawealthy of greed, excess, or any other vice, trying to punish them or expropriate their wealth through tax policy or regulation is not only unjust, it reduces everyone\u2019s wellbeing. Entrepreneurs are not necessarily moral exemplars or super-human. They are something more humble and more valuable: prosperity creators.<\/p>\n

In commercial societies with clear property rights, competition, and free exchange, dollars measure value. Whether that is the hot dog stand, the car dealership, the cereal company, or SpaceX. We just shouldn\u2019t tax people based on their paper wealth \u2014 because it could be gone next week. And such taxes will discourage the very innovation that improves our lives.<\/p>\n

Read more The Hopeful Protestant Future<\/a><\/p>\n

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Real and Imagined Benefits of Trump Accounts<\/strong><\/p>\n

Baby Bonds, Billionaires, and Making Capitalism Cute Again<\/strong><\/p>\n

Why Do We Let the Feds Control Air Travel?<\/strong><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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