Is Entrepreneurialism Bad?
After announcements earlier this month that Elon Musk had become the world’s first trillionaire, there was an outpouring of attacks from people who thought that was horrible. Senator Elizabeth Warren (D-Massachusetts), for example, stated, “We’re living in a time when more and more people are just hanging on by their fingernails to survive in this economy, and Elon Musk has more money and more wealth than anyone [else] in human history.” For this attack to make sense, it would have to be true that what Elon Musk added to his wealth was taken from others.
Is that true? For some of his wealth, yes. After all, Musk’s Tesla was a huge gainer from the federal government’s requirement that car companies that did not produce electric vehicles pay car companies that did produce such vehicles. It’s possible that I missed it, but I don’t recall Warren criticizing that federal intervention that had one obvious beneficiary: Tesla shareholder Elon Musk. But most of Musk’s fortune comes from producing services that make it easier for people not to hang on by their fingernails. Moreover, a study by a Yale University economist who was co-winner of the Nobel Prize in economics is relevant here. This study strongly suggests that the gain to those who have consumed or will consume the products and services that Musk’s firms produce are, or will be, a huge multiple of the value that Musk has captured for himself.
These are the opening two paragraphs of my latest Hoover article, “Is Entrepreneurialism Bad?” Defining Ideas, June 25, 2026.
In the piece I get into why AOC is wrong in thinking that to be a billionaire you have to have cheated someone; a numerical example showing why William Nordhaus’s claim that the vast majority of the benefits from innovation go to consumers is quite reasonable; and some of the ways Elon Musk makes people’s lives better and even saves lives.
I laughed the first few times Donald Trump referred to Elizabeth Warren as Pocahontas. Then the joke got stale. When I think of her and her attitudes, Warren reminds me of Oscar the Grouch. I almost said that in the article but decided it was too far afield and that a better on-target way was to say what I said in the last paragraph.
Read the whole thing.
This discussion reminds me of something I have thought about but never seen written about anywhere. The socialist criticism of capitalism dates from the early days of the Industrial Revolution, when technological change and business innovation was just beginning to raise living standards for the non-wealthy. Socialism was part of the Romantic response to the Industrial and Market revolutions, but its intellectual premise (that capitalist wealth came from exploitation of workers) was much truer of the pre-market agricultural society that preceded those revolutions. Much wealth in the pre-modern world was exploitative, arising from social arrangements under which the nobility used its monopoly on the effective use of force to extract a large percentage of the surplus production of the peasant class, whether free but dependent, semi-free or unfree. What was a legitimate critique of wealth in the “feudal” era became illegitimate once wealth was being created in ways that benefitted, rather than exploited, the working class (both as consumers and eventually as workers). John D. Rockefeller, for instance, became the richest man in history by ruthlessly driving down the price of lighting and then transportation fuel, with the result that twentieth century workers had inexpensive artificial light and means of mobility that were completely unavailable to 18th Century Kings. But the so-called “progressive” critics were so intellectually tied to an analysis based on the now superseded feudal economy that they totally missed the change.
I'm so glad you wrote this. What great insights! Especially the gains to consumers, compared to producers, which you mentioned get a lousy 2.2% of the haul. As you said: " The remaining 97.8 percent of the gains from innovation go to consumers. Thanks for sharing the German's exhuberance about America too. I belong to a Spanish Club at the University Club of Chicago. When some of the group started bad-mouthing America (in a slight way), a German lady, who has been incredibly innovative in nuclear power along with her husband, said: "You people have no idea. It's very difficult to innovate in Germany." And she went on further though I don't remember the details now. It was very emotional for her, but I think the lefty crowd may not have gotten the message.