Full Transcript for Why Governments Can’t Unplug From Elon Musk

the green industrial policy that's designed to electrify the auto sectors to make America less dependent on fossil fuel and less required to enter in quagmires like the Iraq war. So he is actually, as you're saying, managed to offer an expansion of state capacity in certain ways. We talk about this as sovereignty as a service, which in very concrete ways allows governments and clients to do things that they couldn't do before, right? It's very important even as critics to point out that he, through SpaceX, has reduced the cost of putting mass into orbit by over 90% across 20 years of business. So that seems on its face like a kind of positive thing, you could say, a successful public-private partnership, good industrial policy. But it comes with this catch, of course, which is that he holds veto power ultimately over that feature of state capacity you've just gained through your contract with him. And this is made extremely clear, of course, through the discretionary and arbitrary and unexplained and actually disavowed decisions to turn off internet connectivity in the battlefield for the Ukrainian armed forces on at least one occasion in Kherson and probably in Crimea as well. So this is the promise of sovereignty through technology that cashes out as deep dependency on private, ultimately unaccountable individuals. And Musk is in some ways only the most extreme and exaggerated version of that phenomenon across the digital capitalist space. 00:08:03 Speaker 1: The Ukraine case, It was very striking. And you remind us, the Polish foreign minister has suggested after one of these incidents that they might be forced to look for other suppliers if Starlink was an unreliable provider. And Musk just said, be quiet, small man, which I think embodies obviously the way he approaches things. Peter Thiel famously thinks you should just build monopoly businesses. You don't want to actually have competition. You want to be in the only one in your space. He is quite suspicious of government and wants to replace government. And And Elon has had this different approach of colonizing the state. But the monopoly control is a big piece of it. 00:08:44 Speaker 2: Teal is a funny case because, of course, among his best-known ventures is Palantir, which was founded shortly after SpaceX. And benefits from, I would say, many of the same political economic developments rides this contracting wave of the war on terror here. and successfully implants itself deeply in the American state, just as deeply as SpaceX. So while Thiel, as you point out, has fashioned himself as a libertarian ideologue of sorts, his actual business practices do bear some resemblance to this muskist state symbiosis dynamic that we're describing. But I think that does point to a deeper dissimilarity between the two men, which is that Thiel has always been interested in presenting himself as an intellectual of sorts, as someone who has intellectual and ideological motivations for his actions, whether

or not those entirely justify or align with the outcomes. Whereas Musk, and this is something that I think made writing about him a bit challenging, but also quite interesting, one finds Musk's ideology if you like, in the everyday operations of his businesses, particularly before he turns to the far right. He's generally disinclined to make the kind of grand pronouncements that a Peter Thiel might. But if you want to learn what is the operating system of Muskism, You actually have to look at how does he practice capitalism every day. 00:10:36 Speaker 1: One of the other themes that you're sort of pulling out from his version of capitalism is that he was kind of ahead of his time before deglobalization. He was into a sort of fortress economy approach to building things, a very vertically integrated production at the time where actually most other big businesses around the world were actually building their very globally integrated supply chains. That is something that comes through and in the end is a great advantage for him, I guess. 00:11:03 Speaker 3: Absolutely. And that's, I mean, following what Ben said, our analog really here is Fordism, right? And Fordism is not a system that people understood purely by reading the life and work of Henry Ford, but it's something they understood by seeing how he organized manufacturing and then the world outside the factory. But this feature of Musk that is often related to Ford, namely vertical integration, this desire to bring as much as possible of the production under the roof of one firm, has often been remarked on as a unique feature of Musk. He was doing it before it was cool, so to speak, right, already in the 2000s at the high point of kind of supply chain capitalism and high globalization. He was already trying to make as many of the components himself, reduce dependency on contractors and so on. That's always been remarked on, but very rarely or if ever explained. Where did the inspiration for this come from? And I think this is one of the interventions of our book, actually, is to draw on his South African upbringing, not only or merely to explain his later turn to ethno-nationalist and exclusionary racism, but to explain some of his political economic inclinations. So late apartheid South Africa, where, of course, he was raised and left in his late teens, was in a third way in contradistinction to U.S.-led globalization already at the time and Soviet-style search for self-sufficiency in a block model. South Africa was creating what we call fortress futurism. They were using IBM mainframes to practice apartheid. They developed their own nuclear bomb. They built out their own auto industry through licenses from the major companies. And Musk seemed to have brought this mentality with him. He sells and has been successful in marketing to both households and nations, the idea that you can harden the walls of your own security in a time of increasing threats, whether those are climate-related, social-related, political-related, immigration-related. So this seemed to have sort of prepared him in advance for what we now think of as a more recent trend towards reshoring, re-territorialization, and deglobalization. He was already on that train. And when COVID hit in 2020, he was especially well-suited to pivot to a more domestically anchored production model because he was already doing it. And furthermore, he'd already sold that model abroad. So the Gigafactory in Shanghai had opened in 2019. It would open a few years later in Brandenburg. So he's interestingly globally franchising a model that is at least partially premised on deglobalization. And that's one feature of Musk that I think is often overlooked. 00:13:55 Speaker 1: What you've just talked about for an individual business or for his business, as you suggest, he's also kind of selling it to individuals implicitly that they can be, there's almost like a kind of prepper feel to it. As you say, he sells the fantasy that states and individuals in an increasingly unstable world can fortify their self-reliance by plugging into his infrastructures. But of course, the paradox is that They become reliant on him in the process. 00:14:25 Speaker 2: No, I think that's absolutely right, that this sovereignty through technology can be scaled either up or down. It can be scaled up to the level of the nation state so he can sell satellite service or launch service to militaries and intelligence agencies around the world who are attempting to protect their countries in a world that feels increasingly unstable. but that he can make that same promise at the individual level. We quote from a presentation he gave where he described a integrated Tesla dome where the various technologies that are provided by Musk could help you achieve total self-sufficiency in a storm. So for instance, you would have solar panels on your roof, You would have a Tesla battery in your basement. You would have a Starlink receiver up top. So you're able to continue to get electricity. You're continued to get Internet service. And you have a Cybertruck in the garage. And when we try to explain this concept of the prepper side of Muskism, we often use the Cybertruck as a perfect visual illustration of that, because it really is. the car that is designed for the end of the world. I mean, not practically speaking, as various researchers have discovered. 00:15:54 Speaker 1: Certainly not designed with aesthetics in mind. 00:15:56 Speaker 2: No, and I think its actual resilience is somewhat debated. But in terms of the cyberpunk look, what it's telegraphing is the notion of a world that is breaking down, a world of social and political and infrastructural and even ecological change chaos, that you'll be fine driving through the hordes of protesters or the flood zone in your cyber truck. And that, I think, it also helps explain how he has pivoted politically. Because if you think about Musk purely as the Obama era, bright green

future guy, as we call it, then it can be a bit bewildering to now see his current political and ideological incarnation The Cybertruck, I think, helps provide that missing link of the future getting darker and the response being more about adaptation and hardening rather than trying to actually solve the deeper problems. 00:16:58 Speaker 3: One of the things we also wanted to push back at in the book is the idea that at some point in the relatively recent past, quote unquote, Musk went crazy. In fact, we think that if you follow certain guiding principles, he's actually been quite consistent. And the shift from the sort of cherry red roadster to the Cybertruck may look like a kind of U-turn, but if you think about even awareness of climate change and its consequences and how that's sharpened and radicalized from 2008 when he rolls out the Roadster to the 2020s when he rolls out the Cybertruck, well, the way we understand the future under conditions of climate change has also darkened, right? There's no longer this vision of the possibility of an energy transition in which middle-class consumer lifestyle would remain relatively untouched. There's no prospect of that now, right? Radical weather events are a matter of fact. Extreme transformations of landscapes and territories, whether through forest fires or flooding, are now a matter of seasonal occurrence. So you actually are still the green musk. It's just that the world has changed around you. 00:18:05 Speaker 1: Yeah, and I think people in that conversation for many years didn't want to sound like it was too late or too... paint only a negative vision. They wanted to suggest that you could still do things because they didn't want to instill a sort of apathy. But I think given the direction that things have gone, they've sort of given up on that. 00:18:23 Speaker 3: Yeah, there's a fatalism now, even in the ecological community. 00:18:37 Speaker 1: With the prepper point and the sort of self-reliance, I had a sort of ludicrous example when I interviewed him. down the line in a kind of remote interview for a big conference actually in London and just as we were about to start and his was obviously one of the highlights of the program was to talk to him there had been these big storms in Texas where he was he was in his house near quite near the factory the SpaceX factory and there'd been these big power outages so we lost all contact And then he came back on about 15 minutes later, and it transpired that his WhatsApp video interview was being powered by one of the batteries of his Tesla car. And after about 15 minutes, he switched to the other battery of the other car. But this is obviously what, you know, everyone should be trying to do. But you made the point that on the other side of these kind of monopoly sort of, you know, very dependent relationships that... Pentagon and other parts of government have got into that, you know, their service was being provided, that they were actually, he was doing something more cheaply and better than any other government contractor had been able to do. Where that failed was in the case of Doge. I mean, how do you, when you think about the themes in your book, what new light does that cast? on the DOGE experience? 00:19:51 Speaker 2: Yeah, I think DOGE really represents an inflection point in the arc that we're tracing. Because if you think about state symbiosis, as you suggested, symbiosis in ecology is a relationship of mutual benefit between two organisms, right? Whereas in the Doge experience, it seems to tip over into something perhaps closer to parasitism, where Musk actually directly enters the state, doesn't just provision the state with services of sovereignty, but begins to exercise a degree of sovereignty himself, personally, which is quite unprecedented in his history, and does so not very clearly to his own financial benefit. 00:20:37 Speaker 3: The chapter we have about Doge is called State X. And our working assumption is that he thinks reformatting and restructuring the government will be very similar to the way he restructured and reformatted his own businesses. He thought, like Twitter, it would not only be easy, but it might also be fun. He gamified the practice of Doge quite literally by naming it after a meme coin. But it was also continuous with things that came before, like the other Obama examples we've already cited. Doge was created inside the shell of the U.S. Digital Services Office, which was created under Obama, in the effort to upgrade, modernize, and bring online the government's databases. So there is a continuity there that we think is under-remarked on, that in his case was radicalized to such a point that gutting the parts of the government that were seen as inefficient did create a kind of blank slate into which could be plugged data. next generation of government provisioners as a kind of radical way of displacing the old primes and contractors and database providers that used to do that job. So grok for government, right, which is now something and is not only getting big contracts at high levels of security clearance for the United States defense wing. But it's something that probably wouldn't have happened without Doge. So looking at it in terms of dollars and cents and saying he didn't save the money he said he was going to, we think is the wrong lens. If you look at it as a kind of internal reformatting, then it may not have succeeded to the extent he hoped, but it has certainly made the government now much more dependent on his generation of service providers. 00:22:21 Speaker 1: Interesting. We've obviously talked in different ways on this show and in general when you think about the way the global economy has gone. We have these companies that have now often seen much more powerful, much bigger than governments. And sometimes in the case of the sort of symbiosis that we're talking, there's a sort of mutual dependency there to some degree. But

obviously, the government can't exercise the kind of regulation over SpaceX that it would exercise in relation to a more distanced business. We're talking in the week where Donald Trump has emphatically emphasize the idea of self-regulation for the AI companies, which may end up, at least by their own account, their own AI models may end up being more powerful than any tool that has ever been created by a technology company. Reading your book, does that help understand that process that we're seeing with AI? Does it provide any clues for how governments could handle that relationship with the tech companies? 00:23:21 Speaker 3: Well, I think part of the lack of accountability you just described is by design, right? I mean, the way the military brought down costs for these services was often by not doing procurement along models of a spec contract, which they had direct oversight over, but just saying, listen, here's what we want. You do it however you need to do it. We don't need to know how you do it, and we don't need to have any kind of IP rights or kind of further purchase on the things that you're selling to us. You can sell it to the market and to us and elsewhere. And that's been the 21st century digital capitalist service model. The fact that it's become so oriented to government has been clarified by Alexander Karp's recent co-authored book, The Technological Republic, which came out when Ben and I were writing this book and which we found very clarifying because it's basically delivering a muskist manifesto. It's saying, Silicon Valley needs to come home to the state, re-recognize its role in public purpose, and digital capitalism is actually not about making people's lives more pleasant or expanding out possibilities of direct democracy or connecting you with friends and people in the world the way it had been sold in the Web 2.0 era, but it's actually about securing national sovereignty against external and internal threats. And that transformation of the rhetoric of what Silicon Valley is and what it does has not coincidentally accompanied the shift from the Web 2.0 platform era to the Gen AI LLM era, which requires, as we describe it, a much different relationship to the government, right? It's not capital light in which the users create all the information and the product. It's capital intensive and And it requires access to federal lands, cheap access to energy, water, credit markets. So since November 2022 and the rollout of ChatGPT, a shift has happened, which Musk has very much accompanied, which requires a deeper and more mutually coordinated relationship between big tech and the United States government. And that will not change from one administration to the next. unless the political economy of the United States somehow diversifies away from what's now a kind of one-way bat on the drive towards AGI through scaling. So we think that, you know, the United States is in a tough spot that isn't isolatable to individuals. It's not a Trump-Musk thing. It's not even an Altman-Amade White House or Wong thing. It is a structural relationship between Silicon Valley and the United States economy. that needs to be addressed at a deeper level, and that right now no one is really charting a way out of. Right now there's a kind of cry of pain, you could say, in the data center revolt, but there isn't something like a real roadmap to how there could be a different version of American capitalism. What's interesting, I'll just add one thing and then Ben can jump in on AI, is if you look globally, how have other parts of the world confronted this same conundrum? The EU and the UK is interesting because they're partially due to the wake-up call of Musk, doing their best now to accelerate drives towards something like digital sovereignty, to use what's now the big watchword, which means replace Musk's companies, replace Zuckerberg's companies with clones that are homegrown. That takes political will, deep capital markets, and engineering know-how. Perhaps only one of those three has actually been achieved so far. But if you look further afield, if you look at China, for example, They provide the best example of how you deal with this conundrum. They welcomed in parts of Musk's technology. They gave him a red carpet to Shanghai. But they added an asterisk that CATL needed to be making the batteries for the Tesla cars. And that's now allowed them to use it as a springboard towards global dominance of lithium-ion battery production and actual global dominance of EV production technology. Brazil and India are other countries that have shown more backbone, you could say, South Africa too, vis-a-vis this problem of muskist dependency. So that spectrum of responses, policy responses, will probably also apply in the AI era as well. 00:27:52 Speaker 1: You say, somewhere in your book, I think you say you're not sort of assuming necessarily that muskism will succeed. But if you're a policymaker who kind of doesn't see the mass of voters as non-player characters, where do you start? Or what's the mentality that you talk about in Muskism is pretty widespread now and is a challenge to governments that are trying to approach things in a more traditional way, or at least think about people? 00:28:20 Speaker 3: Well, this comparison to Fordism was really helpful for us to help answer the question that you're posing, because for all of its demerits, the Fordist model did have a kind of social contract built into it, right? There was a version of consent, both implied and realized through things like collective bargaining agreements, mass consumption, upward generational economic mobility. Our motivation writing this book was to ask whether or not, in fact, there was the equivalent for Musk and his confreres in the digital capitalist leadership class. How did they think they would secure consent in a time of extraordinary disruption. How do you anchor society when people's lives are being upended in that way? And what has been so surprising for us to see is how thin their response is, right? Musk has a very, you could say cybernetic, and we call it a kind of cyborg conservative response, which is to take for granted that people are so plugged into their network technologies that you can effectively reprogram their brains, or in his terminology, inject a mind virus that will beat the mind virus of your opponents and thereby jump them into your kind of apocalyptic hysteria about racialized immigration fears. And thus, they will cling to you and the contract will be secured through their fear, really, of what he's protecting you against. Alternatively, the trickle-down effect of the profits made in his business's through things like the integration of the SpaceX stock into people's index funds, is also seen as a way to secure people's sense of obligation, really, to Musk as the engine of economic growth. And this goes for the tech class as such. But this, we think, is an inadequate way of securing legitimacy and consent. And in fact, the last few months of the data center revolts, as they've been described, the level of popular objection to the effects of AI and tech on their lives reaches a level of cross-party consensus that one would think normally is unreachable in American life, right? There's actually nothing that 75% of Americans agree on, except for now that AI will make their lives worse, that data centers are things to be rejected in their immediate neighborhoods. So that is an enormous political challenge. from the point of view of the tech class. And the question me and Ben keep asking ourselves is, is that actually a flaw or will that be a dismissible bug? Will the next generation of politicians be able to articulate a version of the future that puts them in harness, that decreases their centrality to American economic life? Or will these data center uprisings be symbolically registered at the campaign trail, but then dismissed as soon as the politicians come back into power. 00:31:29 Speaker 1: That is a tantalizing question to leave in people's minds. And maybe we'll get you back in a couple of years, see if anybody has answered the call in the US or anywhere else. But Ben Tarnoff and Quinn Slobodian, thank you so much. Thanks for listening to Trumponomics from Bloomberg. It was hosted by me, Stephanie Flanders, and I was joined by the authors Ben Tarnoff and Quinn Slobodian. Trumponomics was produced by Sam Asadi and Moses Andam with editorial guidance from Megan O'Neill from Bloomberg Economics. Sound design was by Blake Maples and Kelly Gary. Amy Keene is the executive producer of Talk Podcast and Cheryl Brumley is the head of podcasts at Bloomberg. And to help others find us, please rate and review us highly wherever you listen.