Donald Trump just told Reuters that he would consider naming Elon Musk to an advisory or cabinet role if he is reelected in November.
Although a man like Elon Musk shouldn’t work on legislation that directly affects his finances, it happens more often than you might think. Look no further than the story of how the Federal Reserve was created: Essentially, the Rockefellers and Morgans got together and drafted a bill — a bill that directly affected them. (See the full story at the beginning of our video on Everything Wrong with the Fed).
In Elon’s case, he holds a $245 billion fortune that is largely tied up in shares of Tesla, SpaceX, and X (formerly Twitter), along with his holdings in the fields of biotech, artificial intelligence, satellite communications, and infrastructure projects. So, if Musk did become an actual cabinet member, it would become Exhibit A — the epitome! — of what’s known as Capture Theory,
Capture Theory holds that the people most interested in the regulation of an industry are the companies in that very industry. After all, it’s their businesses at stake! So they will spend more time and money than any person or group of people to influence any potential regulation, and secure favorable outcomes.
Learn more about Capture Theory (see the 5:22 mark):
Now, typically, people entering public office attempt to fix this problem by divesting their stocks and other holdings or by putting them in a blind trust. (Of course, that doesn’t entirely solve the problem, nor does it even begin to address the issue that friendships and family relationships still inevitably exist among public officials and the people they used to work with.) For Musk, though, the problem is even more complicated: As the CEO and single largest shareholder of Tesla, can’t just sell his stake without causing the price to collapse.
It’s possible that Trump is only trying to curry favor with Musk fans, and that he has no intention of following through on this plan. But again, even the possibility of it makes plain how government inevitably puts the wealthy and the privileged at an advantage over the rest of us. It’s simply not possible for politicians to avoid playing favorites. Politicians are human, after all.
Public Choice Theory explains why. It’s the close cousin of Capture Theory, and you can learn more about it here:
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