As Donald Trump was sworn in as the 47th president of the United States on Monday, only his family stood between him and the tech moguls, among them the three richest men in the world – Tesla’s Elon Musk, Amazon’s Jeff Bezos and Meta’s Mark Zuckerberg. Not since Dwight Eisenhower’s post-war military-industrial complex has there been “such unity of purpose between political and economic power”, says Jeremy Warner in The Telegraph. As Joe Biden warned in his farewell address, “An oligarchy is taking shape in America of extreme wealth, power and influence that literally threatens our entire democracy, our basic rights and freedoms”.
In a show of intent, on the day of his inauguration, Trump revoked a 2023 executive order from Biden that sought to reduce the risks of AI. The day after, he announced Stargate, a $500 billion private sector investment in AI infrastructure, says Natalie Sherman on the BBC. The explosion of AI has created a massive demand for data centres, along with water and power. Stargate, which will create an estimated 100,000 jobs over the next four years, is a joint venture by OpenAI, Oracle, Japan’s SoftBank and MGX, a tech investment arm of the UAE government.
Trump is not unshackling Big Tech and dangling the promise of “lucrative government contracts” to feed the Bezos/Musk “assault on outer space” in return for nothing, says Warner. For him, the new tech oligarchy is “the means by which he pursues his own place in history as the saviour of the Western world, pushing back on an ascendant China and cementing America’s position as the world’s unrivalled superpower”. Maintaining and enhancing the US lead in AI, robotics, space, weaponry and bioscience is “central” to his “expansionary ambitions”.
Sign up to Money Morning
Don’t miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don’t miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
There are “jarring echoes” between the Russian oligarchs who “made out like bandits” in the post-Soviet 1990s and what is happening today, says John Thornhill in the Financial Times. Musk – who may yet end up as owner of TikTok’s US business – has already enjoyed a “stunning return” on the $250 million he spent helping to re-elect Donald Trump. Tesla’s stock market value surged by more than $300 billion following Trump’s victory. And Musk, Zuckerberg and Bezos already have huge influence via X, Facebook and The Washington Post.
But the “technoligarchs” are far less influential than feared, says The Economist. Firstly, Amazon, Meta and Tesla may account for 10% of the value of all listed US stocks, but their economic contribution is just 1.8% of GDP. To put that in perspective, in 2004 a couple of dozen oligarchs were responsible for around two-thirds of Russian output, while in Hungary “chums” of strongman PM Viktor Orban oversee an estimated 20%-30% of the economy.
Secondly, public opinion also matters, and sections of the Maga base “already loathe” the tech billionaires. Thirdly, unlike John D. Rockerfeller, who “wielded near-total control over a critical economic input”, they cannot hold the US economy to ransom.
Finally, their interests are often competing (eg, space, social media, advertising). In short, America’s economy is simply too huge, “unwieldy and dynamic to petrify into an actual oligarchy”.
Nevertheless, the risks of more personal, transactional relationships between business and government are real, say Filipe Campante and Raymond Fisman in The New York Times. “Political connections, more than economic efficiency” may now have a “bigger hand in policymaking”. The damage will be amplified as businesses increasingly divert effort and resources into cultivating such connections. When power is consolidated in such a way, “accountability becomes much harder, and the quality of governance will suffer”.
This article was first published in MoneyWeek’s magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Leave a Reply