The Capitalisn't of Elon Musk's Twitter

Episode Summary

Is the world better off now that Elon Musk owns Twitter? The $44 billion acquisition is the largest leveraged buyout of a technology company in history, and also the first time in well over a decade that the ownership of a global social media platform has changed hands. It also begs the evergreen question that this podcast explores: Is the saga an example of Capital-Is or Isn't? Bethany and Luigi debate and discuss the many different aspects of the deal: how Musk might be forced to run Twitter as a traditional business even if he initially claimed otherwise, his content moderation experiments to prevent it from becoming a "free-for-all hellscape", the effects of mass layoffs, and much more.

Episode Notes

[Show Notes: During the episode, Luigi mentions the paper of a Stigler Center Fellow. Here is a ProMarket piece describing this research in further detail:]

Episode Transcription

Luigi: Hello, Capitalisn’t listeners. This episode was recorded Friday, November 4. This is an ongoing story, and some details may have changed slightly since we recorded this episode. However, the overarching narratives and discussion are still incredibly relevant, so we hope you enjoy the conversation.

Bethany: As regular listeners know, here on Capitalisn’t, Luigi and I discuss what’s working in capitalism and what isn’t. We usually have a guest who is thinking about an aspect of this question or reframing something in an interesting way. But this week we’re doing something a little different, and of course we are. We’re talking about Elon Musk’s acquisition of Twitter.

Speaker 3: After revolutionizing the space race and electric cars, the world’s richest man is now promising a Twitter makeover.

Bethany: And so, how could any of the standard rules apply?

Speaker 4: Elon Musk carried a kitchen sink into Twitter HQ this week, tweeting, “Let that sink in,” then fired senior execs once closing the $44 billion deal.

Bethany: The key question we set out to answer is this: does Musk’s acquisition of Twitter make the world a better place?

I’m Bethany McLean.

Phil Donahue: Did you ever have a moment of doubt about capitalism and whether greed’s a good idea?

Luigi: And I’m Luigi Zingales.

Bernie Sanders: We have socialism for the very rich, rugged individualism for the poor.

Bethany: And this is Capitalisn’t, a podcast about what is working in capitalism.

Milton Friedman: First of all, tell me, is there some society you know that doesn’t run on greed?

Luigi: And, most importantly, what isn’t.

Warren Buffett: We ought to do better by the people that get left behind. I don’t think we should kill the capitalist system in the process.

Bethany: Luigi, as we’ve been talking about doing this episode on Elon Musk and Twitter, you asked what I think is a basic but really interesting question, which is, is the world a better place now that Elon Musk owns Twitter?

Everybody agrees that Twitter has never been a great user experience. If you actually could tackle that problem and really make Twitter more compelling for all sorts of users, not just sophisticated media types, but everybody, you could have a compelling product.

Is that what Elon Musk wants to do with Twitter? Does he want to turn it to into a free-for-all, where anything can be said, and anything goes? Does he know what he wants to do with Twitter?

I’m not sure that even he knows. He’s been a little bit all over the place when he has been asked to talk about it. Last spring, when the deal was first being floated, he said prominently at a New York Times conference, “This isn’t about the business. This is just about making a better product.” Well, right now, with the amount of debt he’s putting on it, it has to be about the business.

And so, I’m also not sure that he has the freedom to do what he wants to do with Twitter. In other words, I think maybe your question is the right one, but I’m not sure there’s an answer to it. I think it’s a very complicated question that is bound up with a lot of other things, including his need to make Twitter profitable.

Luigi: I will actually start from there, because I think I learned it from you when we first discussed this potential takeover several months ago, that given the structure of the deal, he has no alternative but to turn Twitter into a very profitable business. It has a billion dollars in payments every year, so if you don’t become profitable, you are running out of money even if you’re the richest man on earth.

I will start by assuming—whatever his narrative, Elon Musk is a fantastic storyteller—but I am the old-fashioned type. I follow the money. Don’t follow the story, follow the money. The money is, he needs to maximize profits. And then, the question is, given that he has to maximize profits, how is it going to change Twitter?

What I would like is to think about the various areas of Twitter, the ones that are more politically charged, and see how a purely profit-maximizing entity would behave in that situation.

One of the fundamental issues is about content moderation. Even if you are a purely profit-maximizing entity, you care about content moderation for two main reasons. Number one is, you want the user experience to be pleasant. Why? Because you charge your customers by subjecting them to advertising. The happier we are being on Twitter, the more ads he can sell. That’s great. He wants to make sure that your user experience is good.

Second, he wants the advertisers to be happy to advertise on the platform. If people see it as a toxic idea to advertise on the platform, they’re not going to do it, and he has no revenues, except maybe the charges. We’re going to discuss that in a second, but that’s not enough to make this profitable. I think that he will actually be much more moderate than people make him out to be, because he needs to subject himself to these two constraints.

Bethany: Well, the question is if Elon Musk is capable of being moderate, even when he needs to subject himself to certain constraints. I couldn’t agree with you more, and in fact, you’ve had a number of prominent advertisers saying that they’re suspending their advertising on Twitter while they wait to see what he’s going to do.

Speaker 9: With Twitter’s ad revenue down, Musk disclosed that the company is losing $4 million a day.

Bethany: And if that’s not clear-cut evidence of the truth of what you’re saying, then I don’t know what is. He has to keep advertisers happy, and so he can’t turn Twitter into the free-for-all hellscape—I think that’s what he called it at one point, saying he didn’t want it to be that. But he can’t let it be that, because he’ll lose all his advertisers, and advertising makes up 90 percent of Twitter’s revenue.

Speaker 10: Advertising giant IPG has recommended to its clients, which include American Express, Coca-Cola, Johnson & Johnson, and others, to temporarily pause advertising on Twitter.

Bethany: The question is, I don’t know if Musk is capable of moderating himself. Part of his genius and his appeal is that he doesn’t moderate himself. And so, you would think anybody with a shred of caution would not have retweeted the tweet about Nancy Pelosi’s husband, the attack on Nancy Pelosi’s husband, that has gotten him into so much trouble.

Speaker 11: Elon Musk is being slammed for reposting an article suggesting Nancy Pelosi’s husband had some sort of relationship with the man accused of trying to kill him with a hammer.

Bethany: I mean, can you think of any person capable of moderating themselves in the process of buying Twitter who would have retweeted that tweet? That, to me, just speaks volumes about Musk’s character.

And then, he posted a rant about activist groups pressuring the company’s advertisers, blaming the activist groups for Twitter’s massive drop in revenue. And again, maybe he’s right, this is what’s causing some of it, but if you’re trying to cater to those very people, you don’t do this.

Something I’ve always actually admired and liked about Musk is his willingness to just give the finger to conventional ways of being in the world, but I’m not sure that that personality type fits with the very careful personality that’s needed to walk this fine line between allowing free speech and keeping advertisers happy.

Luigi: But this is also something he can easily delegate to good programming. He, first of all, announced that the algorithm to moderate would be made transparent and public. I expect him to actually let people choose their level of moderation. Now, there are some companies, one company is called Bodyguard AI, that lets you choose your level of moderation on Twitter. I think that this is probably what he’s going to offer, so that all the customers are going to be happy, because they can choose their own level.

Bethany: That sounds ideal. Have you heard any feedback from either activist groups or advertisers as to whether that works? In other words, do you pass muster? If you can advertise on a platform and you can advertise in the place that is only PG-rated, where everybody says happy things and life is always good, do you care that you’re also giving advertising money to a company that is allowing all sorts of ugly stuff to proliferate in another part of its offering, or is it good enough for you as an advertiser that your name is only appearing next to content that you like?

It certainly works from a user perspective. I agree with you. But does it work from a business perspective? I don’t know.

I think if I were an activist group, I would continue to pressure the company for allowing that sort of speech to proliferate on any part of the platform, even if it were up to users, because that’s never been the point about allowing users to opt out of it. It’s been the point about allowing it at all. Does that make sense?

Luigi: Yes and no. I want to protect my children when they go on Twitter, or I want to protect myself from being harassed or offended. I think that’s pretty important. I don’t know whether you ever were on the receiving end of a Twitter hate campaign toward you.

Bethany: Mostly over Elon Musk himself. Yes, I have been.

Luigi: I was, and it’s very unpleasant. You open your Twitter feed, and you see a huge amount. And today, the only way to do that is by literally blocking people, which means blocking everything they say, which is not necessarily what you want, and can only be done ex post, after you’re insulted.

On the other hand, if you have a personalized filter, you can do it ex ante . . . I love to hear what you say, Bethany, but the occasional time when you go bananas and you insult me, I don’t want to hear you. That’s hypothetical, of course. I think that this seems to really resolve the user experience in a major way.

The point is that all the social platforms are making money out of toxicity. There’s actually a fellow of the Stigler Center that did an interesting paper documenting that if you filter out toxicity, the engagement goes down. But that’s not a problem of moderation. That’s a problem of business models altogether. That’s true of Facebook, it’s true of YouTube.

I don’t really understand the differences between Facebook, YouTube, and Twitter, why the activists are targeting . . . First, they were only attacking Mark Zuckerberg. Now, they’re targeting Musk even more than Zuckerberg. In fact, if I were Mark Zuckerberg, I would pay Musk, because he took away the role of the bad sheep. They are silent on YouTube, even if YouTube is the most dangerous one, because people look at videos much more than they look at anything else. If I were an activist and I were fair, I would be homogeneously against advertising in all this stuff.

If I am Elon Musk, and I actually publish the algorithm that determines whether I promote you or don’t promote you, and whether you’re filtered or not filtered, I become, all of a sudden, much better instantaneously than Facebook and YouTube by an order of magnitude, at least. The activists, if they’re honest, should say, “Please advertise on the Musk, because it’s bad, but in the category, it is the least bad of all.”

Bethany: Yeah, but I think we can already see from what’s happening that there isn’t any intellectual honesty at work in this, because advertisers would be gone from most social-media platforms if they really gave a damn about toxicity. I mean, there’s been enough in the public domain about the effect of Instagram on young girls, for instance, that if you are a consumer-products company, there is no way in hell you should be advertising on Instagram.

People only care when they have to care, and so, I think it depends on what advertisers are being told to care about. I don’t expect intellectual honesty from them. I’m not deliberately singling out activists or advertisers in this, but I do think our world generally works on the principle that it is OK to be the second-least bad. If you’re the worst or perceived as the worst, or somebody decides you’re the worst, you’ve got a problem. If you can hide behind that person, you’re probably going to do OK.

Musk is right. He hasn’t actually done anything yet on Twitter. I mean, you could argue that retweeting that tweet about Pelosi’s husband was doing something, but he hasn’t made any decisions. He hasn’t let Trump back on the platform. There hasn’t been anything yet, and yet advertisers are pulling out preemptively. And so, that, to me, is a sign that he’s become the devil to get.

By the way, I’m not sure advertisers are wrong to be boycotting Musk and saying, “Let’s wait and see what he’s going to do.” That seems, to me, like in some ways the epitome of capitalism, and they’re right to do it, which is to say, we’re not sure what this guy is going to do, we’re not sure we’re going to want to advertise on this platform, and so, we’re going to say, wait and see. I’m just pointing out the hypocrisy of it in some ways and the lack of intellectual consistency around what advertisers will and won’t do.

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Luigi: I actually think that his idea of charging $8 for the blue check . . .

Speaker 12: Elon Musk making big changes at Twitter, saying the service will begin charging for the blue checkmarks indicating that users are verified.

Luigi: Is a fantastic idea because—

Bethany: It’s terrible. We totally disagree on this. OK, finish. Why do you think it’s a great idea?

Luigi: First of all, it is a democratization of Twitter. Now, the blue check is like a nobility, it is a blue blood. It’s only reserved for a few, and the others cannot have it. Now, we are saying, no, I want to charge everybody.

Number one, I eliminate the bots, because it’s going to go from an elite status to a necessary status. If you are not blue, I don’t even . . . Maybe I can filter you out if you’re not blue. And so, why? Because that’s a very cheap way to filter out bots. All of a sudden, everybody’s going to pay, and $8 a month, 450 million people, is a lot of money every year.

Of course, not everybody would pay, but even if, like, 10 percent were paying regularly, that would be enough to pay for at least his interest expenses. I think that would be a way to democratize Twitter and to make it less reliant on the toxicity.

You need to find a source of value. This is a very good and legitimate one.

Bethany: But here’s a question about the blue checks and the bots. Why couldn’t a bot, a well-funded state enterprise—Russia or Chinese or somebody who’s out to get the United States—buy a blue check? And why doesn’t that make the problem worse, rather than better? In other words, foreign governments have invested a ton of money in this kind of targeting in the US. Why is having to spend $8 in order to get blue checks after their bots, why is that going to deter them? Why doesn’t it make the problem worse?

Luigi: Of course, this depends on Twitter still checking the identity of those who make the $8 purchase. As we know, Musk has declared that he’s going to, in some way, remove the accounts that are impersonating other people.

Bethany: But couldn’t that be the real identity of somebody in Russia or China? I guess it gets rid of the . . . It doesn’t end the manipulation.

Luigi: I’m not saying it ends all manipulation, but it’s part of freedom. If I want to interact under a pseudonym, I have the right to do it. But on the other hand, I have the right to filter out the pseudonyms. That’s an easy way to do it. If you want to be secretive, you don’t pay, but I don’t pay attention to you, and you can decide to de-index or eliminate everybody. I think that’s a fantastic opportunity that he is offering to people.

Bethany: I think it’s a lovely idea in theory, and I agree with that. What I’m not sure is what that does, whether it cannibalizes Twitter’s underlying business model. And what I mean by that, is that I think most of the interaction on Twitter comes not from human to human, but rather from people following celebrities and responding to those people’s tweets or tweeting at celebrities.

If most of the blue-check users on Twitter start to see Twitter as an uncool place to be because of Musk’s actions, that power disappears overnight. Blue checks are very quick to follow the crowd and say, oh, wait, Twitter is someplace that it’s dangerous for my reputation to post on Twitter. So-and-so left. I’m leaving, too. It’s not going to take much to start an exodus. If you lose those big names and big voices on your platform, and you make Twitter into a democratic institution, which is regular person to regular person talking, do you have a business left?

I think you can ask that question also about the level of toxicity on the site, because per your colleague’s paper, the toxicity creates engagement. If you get rid of the toxicity, do you still have the same level of engagement? And if you get rid of the toxicity plus the celebrities, what do you really have left? Do you get people to pay for their blue checks for a couple of years, only to find that your business slowly dwindles?

I know, for sure, I wouldn’t pay for my blue check. I wouldn’t. I liked having a blue check, because other people in the media had a blue check, so therefore, I got my blue check to show that I was a real person. I’m not going to pay for it. I question the level of the cannibalization that takes place by doing that. In a really ideal world, Twitter should be a place for real people to talk to real people and have real conversations. I’m just not sure that’s ever been the business.

Luigi: That’s exactly the point, Bethany. You are nobility, and you get upset that you have to pay for your title that you received from God directly. On the other end, I am a peasant who loves to be able to be recognized as true Luigi, rather than the fake Luigi, and I’m very happy to pay $8 a month for this recognition and for the ability to filter out the fake ones. I think that would be something that would be delightful.

I think that Twitter adds a lot of value, for example, in research. I get a lot of news about new research coming out. I see valuable interaction pointing out the papers that I didn’t know about, especially in other areas. One of the things that is most deficient in academia these days is that it is, well, little siloes. We don’t communicate very much. We don’t talk to each other. And the moment you put a paper on Twitter, people come from sociology, political science, from all the places, saying, look, you have not seen this aspect, you don’t understand this aspect.

I think it’s a useful way to communicate. I’m happy to pay even more, if that comes without some of the anger and some of the craziness of Twitter.

Bethany: I agree with you, and perhaps I am being too cynical, because that’s for sure how I use Twitter, and I’ve gotten immense benefit out of it, from just the sheer delight of finding, who was it, someone who did the 20 best uses of classical music in popular film. The fact that you can find this kind of content for free, that is just fantastic.

I just don’t know what percentage of users are drawn to Twitter for that. And so, I’m going to give this one to you, and let’s just give the world credit and say that most of Twitter’s users are in it for that reason. But I fear some large portion of them are either in it for the toxicity or in it for the celebrities.

Luigi: No, I think you are right. A big chunk is there for the celebrities. I don’t disagree with that, but I think that Musk has a plan, which is to rebate some of the revenues to the celebrities themselves, that’s the reason why they stay. He has a very, if you want, capitalistic approach rather than a feudal approach of nobility. And that’s the reason why, I’m sorry to say, all the journalists are pissed off with him, because he does not recognize the nobility of journalists—

Bethany: Well, for sure he doesn’t.

Luigi: You’re all the same.

Bethany: He hates journalists. Oh, my goodness gracious, does he ever. Maybe with some validity. I think the hot take, the culture of the hot take in media, has been incredibly damaging on all sorts of levels. I’m not sure it would be all that terrible. Either Musk makes Twitter a better place, or it goes away, and it crashes and burns. Is that necessarily such a terrible thing?

For me, honestly, the biggest issue with this transaction is that I actually would have felt a lot better about it if Musk had more breathing room.

Speaker 13: Twitter is reportedly laying off about half of its 7,500 employees today, just a week after Elon Musk officially took control.

Bethany: Maybe Elon Musk would be laying off this massive number of Twitter employees if he didn’t have this desperate pressure to make Twitter more profitable, but maybe he wouldn’t. Some of the stuff we’re talking about, like content moderation and product development, these require people. These can’t be done by an algorithm. They can’t be done by Musk himself. They require teams of engineers. And so, to me, the layoffs are perhaps a sign that Musk isn’t going to be able to invest in innovation and product development in making the Twitter user experience better.

I don’t know that, even if he does have a plan, that he could execute it when he is under mammoth pressure to cut costs and grow profits very quickly—not, like, grow profits over a 10-year plan, like, grow profits now. That’s very different than a Jeff Bezos acquiring the Washington Post or Laurene Powell Jobs acquiring The Atlantic. They didn’t do it with the immediate need for profits to grow now. It makes this deal different. That very real need makes this deal very different.

Luigi: I completely agree that the deal is different, but that’s precisely the reason why I like this aspect, and I disliked Bezos buying the Washington Post. There was a famous Italian capitalist, Agnelli, who used to own Fiat, and he also owned a newspaper. He was proud that he never made a dime with his newspaper. Why? Because he was using it as a political instrument.

I think that, actually, what reassures me about Elon Musk is that he has to make it work. It’s not like it’s a toy that he uses to influence the political system. He has to make it work, otherwise he goes bankrupt. That’s real capitalism.

Bethany: Yeah, the problem is, I’m not sure the laws of real capitalism or that kind of real capitalism is what we want, societally speaking. I would argue that neither Bezos nor Laurene Powell Jobs has used either the Washington Post or The Atlantic as a political tool. I think they’ve actually been quite hands-off. Part of the reason is that it is so extremely transparent. In other words, if the Washington Post were suddenly to start writing pieces exalting Jeff Bezos as the greatest creature that ever lived, it would be pretty transparent what was happening.

I think there’s a long term . . . I guess I’m enough of a believer in capitalism to believe in the long-term, make-it-work argument. But the short-term pressure to make money in order to pay the debt, I think might lead to some pretty dangerous decisions. The very financially pressured situation that he’s walking into has the potential not only to be really bad for him, because he might lose some equity if the deal goes south, but because I don’t know how the banks’ efforts to sell that $13 billion in debt are going and if they’re stuck keeping that debt on their books.

It seems to me there’s a lot of risk in that debt. They committed to it back at a time when interest rates weren’t going crazy the way they are now. They committed to it at a very different time in the world, and now they’re stuck with it.

I worry. It’s their problem, but if the banks end up taking big losses on that, we all know now that it’s all of our problem, too. I think that’s a big risk to this transaction, too, that people aren’t talking about, because it’s easy to say, the banks get stuck with this. Look at the losses they’re going to have to take. Except that’s going to screw the economy even further if that happens.

I also worry about the intertwined and somewhat secretive . . . and I don’t mean this in a way that is implicating Musk in anything, but it’s just by nature of his businesses. It wouldn’t be as transparent if Musk were doing things. It wouldn’t be like the Washington Post writing a story about how great Amazon is. For example, Musk could do some little tweak within Twitter that would make some user on Twitter who is a Chinese national have a more favorable presence or get retweeted more often, and none of us would ever be able to see it. That little tweak could mean a lot of money for Musk’s Tesla operations in China, and you wouldn’t know that that was happening. All of that, all of these mixed incentives and the lack of transparency around that, worries me.

Luigi: You put a lot of meat on the fire. Let me postpone China for a second, because you’re absolutely right on China. I’m with you there. Let me first say, and this is for another episode, I completely disagree with you on Bezos, the Washington Post, and The Atlantic, because you know, as a journalist, that it is not only important what you write. It’s also important what you don’t write. They are very strategic. I know they’re under watchful eyes, but I think they’re playing a very important role in shaping the narrative in one particular direction, and that’s the reason why they are there. But this is for another episode, OK?

Bethany: Can we pause on that for a second? Because, let me say, that’s fair.

Luigi: Yeah.

Bethany: I actually have never done a systematic study of either publication to see what they write and what they don’t write, and that could be interesting. Let’s move on and agree to discuss it later. I was going for the surface angle, which might not be the right way to think about it.

Luigi: On the transparency issue, I think it’s true that Elon Musk has acquired enormous power, which, by the way, is also the power that Google has, that Amazon has, and that Facebook has. I don’t think that his power is worse. In fact, it is less bad than the others, so I don’t know why he’s the villain. If we want to go after all of them together, I am the first one to sign up.

Now, I think that him owning Tesla is a huge problem, because as you correctly pointed out, Tesla depends dramatically for its valuation—I would say, for its overvaluation—on the Chinese market. And so, I can easily see Musk tweaking Twitter to not piss off the Chinese. The best way to deal with that is, again, transparency in the algorithm. That would be the solution.

The other problem, which is even bigger, in my view, is how is he going to use data? What Twitter has not done so far, at least as far as we know, is use the data they have in a massive way. A friend was telling me that, unlike Facebook and Google, that really promise repeatedly that they don’t look at your individual behavior with your name, unless they are asked by the US government, Twitter has never promised that.

It’s not out of the question that I see what tweets Warren Buffett clicks on. Based on that, I know what he is going to invest in, and I am going to trade on that. I can see a gigantic hedge fund starting on the back door of Twitter using the best data possible and making bazillions with that. That, I think, is a real issue.

Bethany: Yeah. I guess I’m a little bit less willing to give Musk credit for all his transparency talk. Isn’t one of the first things you learn from CIA agents about how people try to mislead, is when they make a really big deal about something, be really careful? The more of a big deal Musk makes about his commitment to transparency and how his algorithm is going to be transparent, the more I think, hmm.

Luigi: He’s a character. He likes to spin a story about himself. Now, we know that, thank God, he cannot run for president. That’s at least a reassurance. But what do you think his ultimate goal is, and how might this ultimate goal impact the way he runs Twitter?

Bethany: Well, I don’t know. It’s not clear to me that he wanted to buy Twitter. In other words, when he floated the idea and proposed the deal, it seems that he thought he could get out of it. Then he tried every strategy possible in order to get out of it, only to, I think, at some point have his lawyers tell him, “You’re facing a really nasty lawsuit.” And, at some point, he probably just decided that it was more painless . . . that he had to go through with the deal.

It’s not even clear to me that he really, really wanted to own Twitter. And in some ways, it makes Musk more likable, because part of his genius is that he isn’t committed to a worldview, that it’s really hard to put him in a box. You don’t actually know who he is, or what he’s going to do, or how he’s going to behave. He’s unpredictable, and I’m not sure he knows what he wants to do with this thing.

He certainly has been completely unclear in anything he said publicly, going back to last spring, when he said he didn’t care about the economics at all and he wasn’t running this as a business, to now, when it’s clear that he really, really cares about the economics and he is definitely running it as a business.

I don’t think you can look at anything he’s said publicly or anything he’s done and do anything other than make wild, crazy guesses on what his ultimate goal is.

Luigi: I don’t know. I think that he clearly has this view of himself as this heroic tech entrepreneur that is going to save the world. He thinks that the political system is broken, and it’s not that important to be in the political system. You exert your power through your voice and through your money. And, so far, he has been quite successful in doing both. I think he wants to continue to aggrandize himself and go down in history as one of the great titans in US history.

Bethany: Yeah, I think that’s true. And I think, for that reason, he will certainly do whatever he can to not let the Twitter deal fail.

There was an argument years ago, when I wrote this piece on Solar City, which ended up being bought by Tesla in this very controversial acquisition, that part of the reason that Musk couldn’t let Solar City fail was that it would dampen the Musk legend. In other words, if a company that Musk ran failed and went bankrupt, then all of a sudden people would look at Musk and say, “Maybe you’re not the hero after all,” and that would increase the cost of capital at his other companies.

I think that’s true, and I think if Twitter goes down in flames, it’s going to seriously destroy his reputation in a way that has not only reputational costs, but very real dollar costs, in the sense that destroying the Musk legend will make capital raising much harder and more expensive for his other ventures as well.

I think there are two things to keep in mind about the heroic guy. One is that he’s never been completely honest or upfront about the extent of government dollars he’s relied upon in building his company, from the many government dollars and incentives that Tesla has gotten, to those that SpaceX has gotten. That doesn’t quite fit with the visionary businessman who doesn’t trust or rely upon the government. There’s a little bit of hypocrisy in that.

The other is that—we’ve talked a lot about this—there are a lot of people who have grown up in a world where stocks only go to the moon, and companies can always raise money, and capital only gets cheaper and cheaper. Elon Musk is one of those people. He hasn’t lived through the really tough times—very few businesspeople today have—of rising interest rates and companies collapsing, and capital not being free, and lenders caring about whether you’re meeting your projections or not.

I mean, arguably, if Tesla had been born in a different time, it never would have succeeded. And so, I don’t know that Musk knows how to run a business under what look to be the new parameters, the new rules of running a business.

I might be wrong. I mean, every time people have predicted that the world is changing and we’re going back to a time where capital has a cost, the Federal Reserve steps in again, and that turns out to be wrong. I think we’re headed into a very different world, and I don’t know that Musk knows how to run a company under those parameters.

Luigi: I think you are a bit unfair to Musk, because first of all, you’re right that he’s not upfront about the huge amount of government subsidies he’s received, but to be honest, I’ve never seen an entrepreneur be honest about that.

Bethany: Right, that’s fair.

Luigi: If you find me one, I will change my mind, but I rest pretty reassured that I win that bet easily.

And second, it is true that, of course, he lives in this world, blah, blah, blah, but in 2008, he was on the verge of bankruptcy with Tesla, and he put in every dime he had to save it. I think that the guy actually has more experience and more business acumen that we give him credit for.

Now, I think he likes to have the persona of the crazy guy that smokes pot. This is the persona. I think that the person underlying is a shrewd businessman.

Bethany: I don’t know the answer to that. I’m going to let you say that, and I’m just going to say that I don’t know. I really don’t know. I don’t know how much is persona and how much is person.

Luigi: Given this, is the world a better place now that Musk owns Twitter?

Bethany: I actually think it probably is. I’m really worried about what Musk does to Twitter, given the pressures to make money. I think some of those actions may help to lay bare some of the underlying problems at all social-media companies. Maybe all the animosity will be directed toward Twitter if Musk does things and everybody else will just skate free.

But maybe it will focus people on the problems with toxicity at all social-media companies, and we’re certainly going to get some answers about Musk, who he is, what he thinks. I mean, he is arguably one of the most important businessmen of our generation, and the Twitter deal is going to reveal a lot about him. I think that’s going to be really interesting.

That’s not really a better place, though. That’s making the world a more interesting place, but I don’t know if it’s making the world a better place. And for all the worries about what Musk might do to make Twitter into a free-for-all, I think . . . As we’ve pointed out, I don’t think those worries are overblown, but I think those worries are overblown in the context of all social-media companies, and no one really having figured out content moderation. I’m not sure that Musk is going to be uniquely bad, in this respect.

Luigi: I think the world is a better place, in my view, because, number one, as you said, he’s going to try different routes, which are desperately needed. I will add that he adds some diversity in the ecosystem. All the social media were basically very much homogenous, in terms of views of the world, et cetera, and also homogenous in their coziness with the government.

One aspect we did not discuss, but I’m sure you read that it came out the Department of Homeland Security is in cahoots with Facebook, et cetera, in moderating together what should be moderated, so that the government through the back door is censoring what appears on social media, which is the last thing we want to do in the world.

I think having a bigger-than-life personality that tries a different strategy, it might fail, but from a societal point of view here, we’re not looking at the perspective of Twitter itself, but as a society, I think having a diverse strategy provides more resiliency and more opportunity to learn.

Bethany: I think that’s probably true. Putting aside the very thorny question of hate speech, some of the things that establishment social media decided were objectionable and would get one kicked off the platform or at least heavily censored, it’s turned out that, let’s call it, for lack of a better way of phrasing it, progressive moderation isn’t always right either, in the sense that it totally squelched any discussion about the origin of Covid. Whether right or wrong, it totally squelched that discussion for a long time. I don’t know if you got kicked off the platform for saying it might have come from a lab, but you certainly got canceled in some areas.

Then, the refusal of the mainstream media to touch anything about Hunter Biden’s laptop. The National Review, of all places, of course, pointed this out in an article, but it’s not as if progressive moderation is a clear winner, in terms of truth, as looked at after the fact.

I like the idea of more diversity on opinions. I’ve never liked the idea of saying things aren’t reportable because they interfere with a political agenda. I think that’s a very dangerous direction to go in. I like the idea of diversity of viewpoint in that way.

Luigi: But you’re not willing to pay $8 a month for that.

Bethany: I think I’ll just let my blue check go away. I’ll be very happily . . . I’m anonymous Bethany anyway. I still can’t figure out how this happened, but I got on Twitter very late, because I just was a refusenik about all aspects of social media, so I finally got on Twitter really late. Every version of Bethany McLean was gone, and I still can’t figure out how that happened, because there are not that many Bethany McLeans in the world, but they were all gone. If I have to go from being @bethanymac12 or whatever I am with a blue check after me to just @bethanymac12 with no blue check, I’m fine.