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The skeletal structure of a destroyed home stands, January 16, 2025, after the Palisades Fire burned along the California Pacific Coast Highway.
The Wall Street Journal runs a special section every Friday titled “Mansion,” featuring the homes of the fabulously wealthy. The title is a perfect, in-your-face signifier: This is a section for the unapologetic filthy rich and the lesser beings who envy them. Happy reading.
Last Friday’s Mansion section had a feature on rich people who had lost ultra-luxury homes in the Los Angeles fires. It opened with the case of Austin Russell. In 2021, he bought a home in the Upper Riviera area of Pacific Palisades for $83 million. Among other amenities, according to the Journal, it included a 20-seat theater, a temperature-controlled wine lounge, a retractable roof for stargazing in the master bedroom (sorry, the primary suite), and “a ballistic safe room where the owner could retreat in a crisis.”
The mansion burned to the ground. The Journal does not reveal whether the ballistic safe room survived.
Maybe this account made you envious. It made me wonder what kind of narcissistic asshole wants or needs such a house. The piece read like a commercial for a steeply progressive wealth tax.
I had never heard of Austin Russell, or his company, Luminar Technologies. He turns out to have quite a story. Russell, age 29, is the world’s youngest billionaire.
He founded Luminar when he was in high school. Luminar specializes in lidar and machine perception technologies, mainly used in autonomous cars. Luminar went public in December 2020, making Russell a billionaire at the age of 25.
And here’s where things get complicated. Unlike the robber baron billionaires of the Gilded Age, most of whom made their fortunes by extracting monopoly profits from industries such as oil and railroads, at least some of today’s billionaires add real value.
Given the structure of Silicon Valley capitalism, where a genuine innovator is able to cash in by selling out to a larger tech company or doing an initial public offering, innovators can become billionaires overnight. So does that weaken the moral or economic case for taxing away some of their fortunes or tightening regulation of tech?
I think not. While some tech entrepreneurs arguably earn their billions as innovators, others multiply their fortunes by increasing concentration and stifling innovation. Google, Apple, and Facebook (Meta) are exhibits A, B, and C. Biden’s stepped-up antitrust enforcement enhanced the opportunities for other innovators and consumers.
Even in the case of “earned” billions, it’s lousy for society when millions of people can’t afford housing at all, while others have the means to build frivolous palaces, a tendency of the rich and powerful that winds back from Austin Russell through William Randolph Hearst back to Louis XIV at Versailles. Veblen called it conspicuous consumption: If you’ve got it, flaunt it.
During World War II, however, entrepreneurs as military contractors made fortunes creating innovative technologies, which in turn helped America win the war. A grateful nation taxed defense billionaires at marginal income tax rates as high as 94 percent. That did not deter entrepreneurship at all, but it helped finance spreading the wealth around via programs such as the GI Bill. It was an exceptional time.
The ultimate case of a mega-billionaire who seems to have “earned” much of his fortune is Elon Musk. According to the excellent 2023 biography by Walter Isaacson, Musk was a social misfit who soon realized that he was the smartest guy in any room. Isaacson, whose book is remarkably balanced, writes that Musk “was not hardwired to have empathy. Or, to put it in less technical terms, he could be an asshole.” That from a friendly biographer.
Asshole or not, Musk proved brilliant at both the entrepreneurial and the technical aspects of innovations. His trademark was disruptive audacity. One of his first major successes was an electronic payments system that he had designed. He called it X.com. It would meet all financial needs—banking, digital purchases, checking, credit cards, investments and loans.
It happened that Peter Thiel and co-founder Max Levchin had invented something similar but less grandiose, called PayPal. Each venture had about 200,000 customers. In 2000, rather than compete with each other, they two merged, under the name PayPal. At one point, Musk seriously proposed arm-wrestling Levchin for control.
Musk’s better-known successes, Tesla and SpaceX, were not just lucky accidents, though much of the real engineering work for Tesla was done before Musk arrived on the scene. And some of his windfall riches are the result of the kind of market timing and manipulation available to the very rich, as in his surprise purchase of Twitter, rebranded as X.
In the current jockeying over TikTok, Musk’s efforts to use his political influence to get China to trade a reprieve for TikTok for access in China for Musk’s X are perfectly in character. He epitomizes a marriage of technical genius with bottomless corruption.
Musk is such a brilliant outlier that he remains an object of fascination, even to his critics and even to the likes of Donald Trump. But granting Musk his genuine contributions, that doesn’t mean it’s healthy for a democracy for any private citizen, let alone a sociopathic one, to have this much wealth and power.
Where does this man live? Until 2020, Musk owned seven houses, worth over $100 million. Six were in the Los Angeles region. The largest mansion was a 16,251-square-foot home with six bedrooms and 11 bathrooms. The palatial estate was built in 1990 and modeled on a French château, featuring a two-story library, wine cellar, tennis court, pool, and home theater. The home sold for a $29 million, according to Zillow.
But then, Musk, who is subject to mood swings, decided to play against type, sell these worldly goods and move to a modest rented ranch house in Texas. He has denied reports that he is secretly building a new $35 million compound in Austin, to house all eleven of his children.
Which brings me back to The Wall Street Journal’s Mansion section. For now, the Journal’s editors have gambled correctly that more readers will react to such palaces, and the concentrated wealth that they reflect, with awe and envy than with the disgust appropriate to a democracy. Until that changes, our democracy will be at risk, and not just from Elon Musk and Donald Trump.