Elon Musk, Vivek Ramaswamy and the future of American capitalism

By: Ricardo Israel - 16/12/2024

Whether you call it a capitalist economy or a market economy, we are essentially talking about the same thing here. It seems ambitious, an effort to unleash the full potential of capitalism or the American market, tied down by a multitude of regulations, sometimes essential, but other times totally unnecessary. Democracy is a system that needs constant review, since there are many dangers, which manifest themselves as controversies with supporters and detractors, and for that reason, it is full of mirages and traps, as well as false Messiahs.

In the case of the Trump administration that begins on January 20, there are two of these struggles that will probably define its legacy and its place in history, along with the way it resolves issues of global interest such as the Middle East and Ukraine, and for Latin America (LA), dictatorships such as those in Cuba and Venezuela. Also, whether the US advances or retreats in its competition with China to remain a superpower in this 21st century. The two struggles are against the so-called Deep State and the second is against the so-called Bureaucratic State or Administrative State. They correspond to different species that, however, have in common the contempt for the rules of democracy, so that the equivalents of the Deep State are rather found in the Soviet nomenklaturas, having nothing in common with the assignment to Musk and Ramaswamy, as much as sometimes some commentators confuse themselves and confuse others.

The task for this duo, therefore, has a single recipient, the so-called Bureaucratic State or Administrative State, which, although they have a lot of similarity, are not exactly the same. Historically, the administrative State was born together with the modern State, aspiring to be supported by both professional and political bureaucracies, however, its fundamental objective was never efficiency, but the idea of service to the public or the people.

Both have fundamentally a European origin, Germanic in the case of the administrative system and French in the case of the bureaucratic system. In both cases, over time, the original idea underwent a deviation and the idea of serving the people became in some or many cases serving the people, using them for one's own benefit, ending up themselves and their families, if not always enriching themselves, at least using their position in the public apparatus for personal benefit, causing great damage to the democratic ideal itself.

On the positive side, the idea of the administrative State has a better name, since, together with the service provided by its codification in Administrative Law, it reduced arbitrariness by generating a legal framework for relations between the administration and citizens, guaranteeing order, while at the same time providing greater equality of opportunity.

Ultimately, every State is an administration, so the first thing that revolutions, including Islamic ones, do is to institutionalize themselves, that is, to provide themselves with a bureaucratic order, with the permanent risk of transforming the means into ends.

Therefore, I believe that the appropriate name for the mission entrusted to Musk and Ramaswamy is a profound re-adaptation of the Bureaucratic State, since I believe that it identifies better than other names what they must modify, and what will determine their success or failure.

However, one problem they face is that there are exaggerated expectations that cannot be met, so if they are not able to define exactly the limits and boundaries of their task, they will surely fail in the attempt. For now, it is only an idea, and in the absence of further specification, in the absence of a plan, program or schedule, for now it is fundamentally the reduction of government spending, when it is unnecessary, exaggerated or only serves pressure groups, whether business, union, or other types, such as environmental groups, especially in relation to oil and gas.

An example of interest groups becoming pressure groups that redirect public investment are some environmental NGOs, where the original activists become entrepreneurs themselves.

A second problem is that it is not clear what they should cover and where they should not penetrate, since the private world has different rules, and many well-intentioned plans fail when they are transferred to other cultures, as the US knows with those military interventions that fail to leave democratic and/or market societies behind when they withdraw.

In another sense, it also happens with people who come from politics and the public world, who, when they move to the economic or financial sphere of the State, become frustrated again and again, since they act without knowledge of these rules, and with a lot of voluntarism, both in consolidated democracies and with populist proposals. It also happens with those cases of those who have been successful in the private sector, but when trying to apply this logic to the public world, they fail equally, since there are rules and balances that make it impossible to impose solutions that have been successful in the company.

An example of something that is not equivalent to what the aforementioned duo has just been entrusted with is contained in the famous speech in 1961 in which John Kennedy set the nascent NASA the mission of reaching the moon in that decade, which was satisfactorily accomplished on June 20, 1969. However, there was something there that the Musk-Ramaswamy duo lacks, in the sense of a limited and understandable objective for everyone.

However, the limitations of that goal are visible to everyone, since after reaching the moon, and beating the USSR in that competition, interest practically disappeared, so much so that the US presence in space almost completely disappeared, and it needed Russia itself to reach the Space Station, and today it depends on the rockets and ships of Elon Musk's companies, so much so that today the main project is his person and not NASA, in the form of a future colonization of Mars.

Even more important is the fact that there is something of the America of the last century that simply does not exist today, since there was a sense of national unity that mobilized each and every one of the country's resources behind that purpose. And not only because of the disappearance of the cold war, since the America of today is polarized, so the transition of this duo will be accompanied by many obstacles, and it is possible that more than one person will not feel comfortable and prefer to return to what they know, mainly their own companies.

Kennedy's 1961 plan is exactly what it is not now, and so these announcements have been accompanied by voluntarism. For now, in the absence of a plan, what exists are general purposes, one of which is the aforementioned reduction of government spending that is sometimes out of control and which is expressed in the deficit that has been unresolved for so many years, to which was added the recent spending that, via inflation, greatly contributed to the defeat of the Democrats.

Moreover, they do not even seem to have the same motivations, since, unlike Musk, Ramaswamy has a clear personal goal, which is that, if successful, he could be a presidential candidate with real chances in 2028. He did well in the primary, made himself known and today, he is undoubtedly one of the great Republican promises, in addition to being the first descendant of Indians (in the country) with the potential to reach the White House. As an entrepreneur, he founded the pharmaceutical and biotechnology company Roivant Sciences that made him a millionaire at an early age.

Musk's case is different, and he plays his place in the consideration of many people, for the simple fact of being the richest man on earth. Personally, I have nothing against those who have so much money, since I do not like to get into anyone's pocket, and, on the contrary, I notice its positive aspects, since those who have money to spare have the possibility of using it for the benefit of others, although with the majority this does not happen. In Musk's case, one notices his purpose of colonizing Mars as a new stage for humanity, as well as his investment in so many innovative companies, not only electromobility, (about which I have some doubts) but advances that would allow those who cannot walk, as well as the proven usefulness of the existence of satellite internet.

Personally, I don’t like activist billionaires, and sometimes I think that the competition between Musk and Bezos over who can go higher in space and on tourist trips for those who can afford them is a current equivalent of the “who has the biggest” of the males. In the same sense, sometimes I think that the monopolists of the past were even transparent, including the robber barons of the 19th century, since they only defended interests and I have never liked those activist billionaires who censor those who do not think the same and who, in addition to defending interests, try to impose their particular visions or obsessions on the rest, including replacing meat with the consumption of insects. At times, my distance has been so great that I understand the fear that the oligarchs of Russia or Ukraine provoke in other countries, since they provoked it in me when companies censored none other than the president of the United States, setting a precedent similar to that of the Chinese leaders, since, if they did it - not to Trump, but to the president of the United States - they could do it to anyone.

However, today I sympathize with Musk for several reasons. The first is also for others, since I started to be interested in him when he bought Twitter at a loss, with the aim of defending freedom of expression, in my opinion one of the most important rights, today, with many enemies, and in danger. His arguments gave me the impression of being a different billionaire and I still think so, which was reinforced by the harsh campaign against him by those who previously idolized him, simply because they did not agree with his current opinions and choices.

I don't know if Musk will improve the opinion of his critics, since he undoubtedly cares more about being liked than respected, nor am I sure that he will help Ramaswamy to inhabit the White House, I am sure that he will generate a massive demonstration effect for imitative attempts throughout the world, as I am also convinced that for now the DOGE, Department of Government Efficiency is just a project that will have the power that is transferred to it by the president, but that it does not exist as a true federal Department, since that would require a law, an executive order not being enough for its survival, and without an act of Congress, the requirements demanded by the Romans are not met, adding the auctoritas and the potestas, that is, along with the legal title, there must be the legitimate power that can impose compliance on the entire population.

It will ultimately be not only an economic issue, but a deeply political one, since what will exist is a confrontation of power, ultimately, of those who have it and do not want to lose it and those who believe that power should be returned to both the people and the states, taking it away from the federal bureaucracy in Washington. This will be so, because the president's order will seek that the executive action and decisions of the DOGE be based on a new interpretation of existing legislation, rather than on new laws, which will always take time. In any case, since the US is both a State of Law and a Democratic Republic, many of these decisions, by affecting vested interests, even privileges, will be questioned in court, and this will also take time, years in the case of the Supreme Court, the only instance with the capacity to resolve the issue of the DOGE's powers with mandatory obedience for all.

For the people involved in the decisions, any delay can be frustrating, especially for those who are used to making decisions as owners, having had Musk's experience of massive staff reductions, as happened at Twitter, without affecting the company's productivity. Nothing similar will be possible in the current public sector, unless the unions facilitate it with illegal strikes, as happened with the air traffic controllers fired by Reagan. The first challenge will surely be the difficulty of getting federal employees to return to work in person, as Musk did at Tesla.

Of course, the President can set targets, but the experience of the Post Offices across the developed world provides ample evidence, over a long period of time, of how difficult it is to introduce rules for greater efficiency and competitiveness without a strong backlash.

Now, if he succeeds in dismantling bureaucratic power that is not based on law and is a de facto imposition, if he succeeds in cutting some regulatory excess, if he succeeds in reducing wasteful spending, if he can restructure at least some federal agencies, the success achieved will have imitators not only in U.S. governorships and municipalities, but throughout the world, granting its authors and President Trump a victory that will put them on a higher level than they currently hold in the opinion of even universities and business schools.

Perhaps it was originally just an impromptu announcement, built up as the personal relationship between Trump and Musk and between Trump and Ramaswamy grew stronger, which ran in parallel until the two approaches converged into one, the current duo, which makes a lot of sense as such, and just as Ramaswamy has the presidential goal in mind, Musk hardly has a similar one, since he simply cannot access the presidency because he was born outside the US, so he is not going to have the same dedication as the one born in Cincinnati, Ohio.

If there is something remarkable and striking in this effort, it is the role played by Javier Milei, the Argentine president, who has become a kind of example to follow, which has rarely happened in the recent history of the US, where it is usual for the US to act as an example for most countries, both to imitate and to discard, but it is extremely rare to find situations where it is the US that follows what has been done in other places, and less so in Latin America, but nevertheless, that is what has happened.

Reducing unnecessary spending and eliminating regulations that create problems instead of solving them appears to be the possibility of unleashing the full competitive force of American capitalism to take advantage of the potential of its capital market. In addition, it will inevitably be dragged into the cultural war that the United States has been and is experiencing. Certainly, some decisions that are made will be affected by this factor, also for historical reasons, since the growth of the federal government and regulations is a relatively recent element, which only began to take root with President Franklin Delano Roosevelt's New Deal, part of the strategy to overcome the great crisis of 1929-30.

The United States is a representative democracy, but in this second decade of the 21st century, in the task entrusted to Musk and Ramaswamy, there is a question: Which is the ideal? Respect for the civil service career or respect by civil servants for what was voted and decided at the polls in November?

The duo in charge and the magnitude of a task that has not yet been defined in detail, beyond the campaign statements, generates instant admiration for some, and for others, for the same reasons, especially for the two in charge, instant rejection. In both cases, more emotion than reason, another evidence that, in my opinion, shows the Latin Americanization of US politics.

Hence the possibility that it can be a great success or a resounding failure. Hence my proposal to reduce the decibels and limit ourselves to concrete objectives that can show measurable and objective results. My recommendation is that, if progress can be made on three points, debt reduction, spending efficiency, and the merger, reform or elimination of some programs or departments, much will have been achieved and/or progress made. Besides, is there water in the pool for anything else?

The size of the Pentagon is just one example of the magnitude of the challenge of reducing government spending. How do you do that when at the same time there is a strong argument that military spending must be increased, given that the US is not currently in a position to simultaneously face scenarios such as the invasion of Ukraine or Israel's wars in Gaza and Lebanon, without at the same time a strong investment? Investment in money and people, which is also a repeated electoral promise of Trump, that the US will at least recover the deterrence that it has been losing in recent years. And that is without even mentioning Taiwan and China's effort at all levels to displace the US as the great power of the current century.

In the mandate that begins on January 20, Trump has already overcome the “outsider” stage of his previous administration. Now, nationally and internationally, not only the fulfillment of promises is expected, but fundamentally solutions. The decisions taken and the international presence he has achieved before taking office as President for the 47th, compared to the 45th, show a greater consolidation and a superior handling of the government apparatus.

In ancient times, the Greeks spoke of leaderships such as Trump's presidency in terms of the need for a Great Helmsman, capable of steering the ship of State and bringing it to a safe harbor, both in calm seas and in stormy weather. Will Trump be able to do it? Since talking about the State is impossible without linking it to politics and power, that is, to conflict and authority.

Hopefully, both Musk and Ramaswamy understand that this is more politics than economics, above all, that being politics there are two phases, the agonistic (from the Greek agon or fight) and the architectural (from the Greek arkitekton or construction), and, consequently, politics must be seen as a process, as a struggle followed by adjustments that in turn determine new realities.

In other words, Trump's previous administration, the 45th, was an agonistic phase of politics, but now his collaborators are expected to collaborate in an architectural phase, that of the 47th presidency, that of legacy.

@israelzipper

Master and PhD in Political Science (University of Essex, England), Bachelor of Laws (University of Barcelona), Lawyer (University of Chile), former presidential candidate (Chile, 2013)

«The opinions published herein are the sole responsibility of its author».