Between the 1800s and early 1900s, a bunch of powerful financiers dominated America through their political networking or guanxi, making a ton of money in the process through what we might today call questionable practices. They were dubbed “Robber Barons” — a term first used in the 1870s to describe businessmen who used exploitative practices to amass huge wealth.
It’s back to the future in America. On Jan 20, billionaire property developer Donald Trump will triumphantly return to the White House to start his second term in office after a four-year hiatus. The man most responsible for his putting him back in the White House: Elon Musk, the world’s richest man who is CEO of electric vehicle (EV) maker Tesla Inc, rocket giant SpaceX, social media firm X (formerly Twitter) and artificial intelligence start-up xAI, which is raising US$6 billion ($8.05 billion) at a US$50 billion valuation.
Musk invested just over US$120 million or so to get Trump elected. Since Nov 5 election day, Musk’s total net worth is up over US$50 billion and now stands at US$331 billion. You can do the math. It is about 416 times, a truly spectacular return on investment in just over four months. In January, when the US election primaries season began, Musk’s net worth was merely US$251 billion. The Tesla CEO has added over US$80 billion to his total wealth in less than 11 months. Last week, SpaceX initiated a share sale that valued the firm at US$255 billion. SpaceX, which is still privately held, was valued at around US$180 billion a year ago.
These days, Musk spends most of his time inside Mar-a-Lago, Trump’s Palm Beach resort, where he has been busy helping select the new Trump administration. He is also co-head of the new Department of Government Efficiency (DOGE) and has vowed to cut at least US$2 trillion from government spending. It isn’t cabinet appointments or picking top officials; Musk is almost like a Deputy President. When foreign leaders call Trump to congratulate him, Musk joins the call. When Trump flies to New York to watch a wrestling match on a Saturday night, Musk is on the plane munching Big Mac and french fries with the President-elect. The duo are working, eating and playing together while Musk remotely runs a bunch of companies, including Tesla, whose market capitalisation topped US$1.2 trillion this past week. And Musk isn’t the only billionaire in close proximity to Donald Trump and his family; he is just the most visible one.
Wealth, power and connection
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There are clearly interesting parallels between Musk and the Robber Barons of the 1870s, who flaunted their wealth, connections and immense power. John D Rockefeller created Standard Oil, which has since morphed into what is now called ExxonMobil. Back in the day, Rockefeller controlled nearly 90% of all American oil. There was also John Pierpont Morgan, the founder of JPMorgan & Co, a banking behemoth. Morgan bought railroads, helped Thomas Edison create General Electric Co, and helped in the creation of a number of large American manufacturing icons, including US Steel. Here’s how powerful he was: Before the US Federal Reserve was created in 1913, Morgan and his bank helped bail out troubled banks and provided liquidity to keep the New York Stock Exchange functioning during times of stress.
There was also Andrew Carnegie, the steel magnate, and Cornelius Vanderbilt, the original robber baron who started as the world’s top shipping tycoon and then branched out into railroads and an array of manufacturing businesses. They may have been close to key political players, their control of key sectors of the economy may have made them incredibly influential, and they may have used that influence to amass a ton of money through deals that would be considered fairly shady.
Yet, they were incredibly smart, entrepreneurial businessmen who took extraordinary risks to get to the top of the corporate ladder in America 150 years ago.
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While the world is focused on the tariffs that the new Trump administration will impose on goods from China and elsewhere, which might spark global trade wars, the reality is that the influence of Musk and a new set of 21st-century Robber Barons will trump the anti-China official like Robert Lighthizer, the architect of Trump’s protectionist proposals. The appointment of billionaire Howard Lutnick, CEO of financial services firm Cantor Fitzgerald, as the Commerce Secretary, with broad powers over the US Trade Representative office and trade policy last week, is very telling. Musk and Lutnick, whom the Tesla CEO was backing as powerful Treasury Secretary, will be at the apex of key decision-making on issues like trade as well as onshoring or bringing back manufacturing to the US.
Musk sells Tesla cars in China, which are made at its huge gigafactory in Shanghai, and is also building a massive battery plant there. He is also seeking to expand SpaceX’s Starlink business in China. A huge 60% tariff on Chinese goods or a prolonged trade war is certainly not in his interest, even if tariff hawks within Trump orbit like Lighthizer want the President-elect to pressure China with their old playbook.
The Bitcoin President
It was also a crypto election. Crypto went from something so toxic that nobody wanted to touch it in the aftermath of the collapse of FTX Exchange two years ago and the arrest of its founder, Sam Bankman Fried, to Bitcoin, soaring to US$94,000 this past week. Democratic Senator Sherrod Brown, who heads the Senate’s banking committee and had been a big crypto sceptic, was defeated by a neophyte backed by the crypto lobby, which reportedly spent US$50 million to attack Brown.
The US government now has nearly US$30 billion in Bitcoin that it seized from criminals. Trump and Musk have talked about setting up a strategic Bitcoin reserve. By hook or by crook, Bitcoin is now a legitimate asset. It has, over time, established credibility as a store of value. Under Trump, there will be a more favourable regulatory framework. There have been all sorts of numbers up to US$100 billion thrown around for just how big the US strategic reserve of Bitcoin could be. While the strategic reserve is being talked about as a starting point, that doesn’t mean the US government will buy US$70 billion worth of Bitcoins the day Trump takes over, but that is a goal the Trump administration will strive for. When the US sets up its Bitcoin reserve, I bet China, Japan, India, the UK and Europe will all race to set up their own Bitcoin reserve as well. Sovereign wealth funds would want to put a bit of money into Bitcoin as well. It will be small at 1% or 2%, but, eventually, that all adds up.
Trump and his family are now “all in” with crypto. And, of course, Musk has long been a big promoter of crypto and digital assets. The way I see it, once crypto crosses the US$100,000 mark, huge institutional money will flow into digital assets. The biggest banks like JP Morgan, Bank of America and Goldman Sachs, have been tiptoeing around crypto for years, are fully embracing, and they will be talking to their corporate customers and high-net-worth clients that crypto, like gold, is an asset class they need to have some exposure to. So when big clients with zero exposure to crypto have 1% or 2% exposure to crypto, the market will get new tailwinds. Personally, I am still deeply sceptical about crypto, but I am also a realist and I can no longer ignore the writing on the wall.
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If you thought the incoming Trump administration might relax some of the Biden administration’s tough anti-trust approach, look no further than the appointment of Brendan Carr as head of the Federal Communications Commission (FCC) and the controversial appointment of extreme right-wing former Florida Congressman Matt Gaetz as Attorney General. Gaetz has openly called for the breakup of Big Tech companies like social media giant Meta Platform and search giant Google’s owner Alphabet Inc. Gaetz, like Vice-President-elect JD Vance, has been supportive of the current Federal Trade Commission chief Lina Khan, who was a Biden appointee. Trump has not yet said whether he would reappoint Khan or appoint someone else as FTC chief. Gaetz appointment might be blocked by the Senate but Trump is likely to appoint someone of similar ilk to the post.
The Department of Justice (DOJ) is currently trying to force the search giant to sell its Google Chrome browser as a remedy in the aftermath of a long-drawn antitrust case. In August, a judge ruled that Google holds a monopoly in the search market. Chrome provides Google with data, which it then uses for targeting ads. The DOJ said in a filing on Nov 20 that forcing the company to get rid of Chrome would create a more equal playing field for search competitors. Google was first sued by Trump in 2019.
Another big loser is likely to be Meta Platforms, which owns Instagram, Facebook and WhatsApp. Carr has criticised tech giants like Google and Meta, which limit conservative voices through content moderation, including by watering down protection for tech firms provided by Section 230 of the Communications Decency Act. He has argued that the FCC has the power to interpret Section 230, which states that “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider”. That shields companies like Meta and Google from being sued by anyone who feels wronged by something someone else has posted — whether their complaint is legitimate or not.
Among the big winners is, not surprisingly, Tesla, which is developing its own full self-driving cars in competition to Alphabet’s Waymo, which I wrote about two weeks ago. The incoming Trump administration, pushed by Musk, wants a federal framework for self-driving cars to be one of the Transportation Department’s top priorities. Tesla expects to launch its own Robotaxis late next year as Waymo and General Motors’ Cruise unit expand their operations to more cities across America.
The problem is that transportation is mostly a state and local issue, and state regulations currently dominate self-driving cars. The federal government’s efforts to oversee self-driving technology have made little headway in recent years. However, if Musk can push Trump to enact a strong federal framework, the rollout of self-driving cars across America will become easier, unlike Tesla and Waymo’s efforts to convince 50 US states and hundreds of cities to back a common framework.
Trump has promised to end all of the Biden administration’s EV incentives. While Tesla will lose out as the old EV incentives are revoked, its huge wins in the self-driving space will more than offset those losses.
Another winner of Trump 2.0 might be iPhone maker Apple. If Trump enacts tariffs on all Chinese imports, iPhones would cost a lot more in America, hurting its total sales. In 2018, Apple CEO Tim Cook convinced Trump that tariffs on the phones most Americans use would be counterproductive. Cook visited the White House several times, including a private dinner with Trump. Eventually, Apple won a reprieve, and iPhones were never subject to any tariffs. Some analysts believe Trump could even drop the Biden administration’s antitrust lawsuit against Apple, which was filed earlier this year.
When reading the tea leaves of how Trump 2.0 will be different from his first term in office, focus on the Robber Barons and their agenda rather than Trump’s election manifesto.
Assif Shameen is a technology and business writer based in North America
