Maybe Elon is Right
Elon is a strange name. Google tells me it is the 950th most common boy’s name at this point with some 234 baby boys (and 5 baby girls) getting christened with that name last year. It is both a Biblical Hebrew name meaning Oak Tree and an African name meaning Spirit (technically, the individual that God loves). It’s not just God, we all gotta love Elon. If you absolutely have to grow to become the richest and most obnoxious person in the world, you might as well do it with a unique and spiritual name like Elon. The best part about it for me is that I can just say Elon in my title and everyone knows who I am talking about. That doesn’t work with Bob or Mike, but everyone who reads Elon immediately has an image and perhaps some specific feelings that the name evokes.
As I wrote this title, which I do in a stream of consciousness manner, I realized that while there is no mistaking Elon, there is plenty to consider about what exactly he might be right about. Is he right about the ubiquity of the EV in modern highway life? Is he right about space travel and the colonization of Mars? Maybe he’s right about tunneling as the ultimate solution for land-based transport. We know the SEC doesn’t think he was so right about his prospects for taking Tesla private at $400 per share (though it did help propel it to $1,200 per share, hence the SEC concern). We also know that the Twitter board of directors does not think Elon understands right from wrong and they intend to try to get the courts to force themselves upon him for $44 billion of his $262 billion horde of wealth.
But for all the things one can think about that Elon has projected his will onto the universe about, the one that I want to discuss today is his counter-intuitive and highly counter-cultural view that he should not own property. How very Howard Hughes of him, right? Where is Teri Garr when you need her hitchhiking on a lonely stretch of the Mojave Desert (a vague reference to Teri’s contestation of Howard’s last will and testament)? I suspect that Elon’s squabbles with the state of California, the United States of America Internal Revenue Service, and the world at large as he chose to move his act to Austin, Texas had the most to do with his shunning of the materiality of real estate possession. But he put that out there just as American, and especially California residential real estate was doing yet another one of its blow the roof off programs. I recall passing a billboard near my home six months ago that declared, “Why aren’t you thinking of selling your home now?” That’s a pretty bold statement in a country dedicated to the proposition that all men are created equal in their ability to own a piece of the American Dream and mortgage it to the hilt while they are doing it.
This morning I read that Elon has given advice to people worried about inflation. If you’re the richest guy in the world, people take stock of what you say about economic issues, whether you have a clue what you’re talking about or not. His advice was that they should try to own as much physical assets as they can since those will maintain value in an inflationary environment better than financial assets. This from the man who can’t talk enough about the future of cryptocurrency. But its good to know that Elon was paying attention to at least one day in his Economics 101 course at either Queens University or Wharton (he attended both). He would have most certainly learned that physical assets do better in times of inflation than financial assets do. When I used to travel to Latin America during the runaway hyper-inflationary days of the 80s, every cab driver in Buenos Aires knew exactly what that meant and probably could have explained it better than Elon could. Elon was going to go to Stanford University for his Ph.D. in material science (yes, they say he was actually accepted and then deferred) where he could have taken even more economics courses on the side, but instead, he decided to get on with the business of business and started his first internet bottle rocket and made his first $22 million. I bet if he had taken all his tuition money from Queens and Wharton and invested it in 1990 in Silicon Valley real estate, he might have made more than that by 1997 when he sold his company. Who among us cannot woulda-coulda-shoulda his way through economic life, right?
Well, this morning I am feeling like maybe Elon is right after all. Why do I say that? Is it because I just barely made any money net of renovation costs on my son’s Staten Island home this year? No, that worked out OK. Is it because I wish I had bought five houses here in San Diego ten years ago and could sell them now for 10X? No, too risky to have been my style. What makes me say that maybe Elon is right is that one of the basic tenets of American home ownership is the ability to collectively protect yourself against the perils of the world with property insurance. That rugged individualism that makes us want to own our own home gets squidgy when we think of it burning down or being washed away in a flood. Who can afford that all by themselves? We can’t, so we became the home of the brave, the land of the free and the place where home owners’ insurance is the secret to a happy life. But that has now changed.
Don’t get me wrong, the mortgage lenders still insist on it and every housewife tells their husband he had better not buy one beer until the monthly mortgage, property tax and insurance bill has been paid. But those damn insurance executives, the ones who probably vote Republican and thereby deny climate change, have realized that underwriting homeowners against the perils of flood risk in coastal and flood plane areas and against wildfires in dry drought-plagued western climes is a mug’s game that they don’t want any part of.
Yesterday, my insurance company notified me that they would no longer underwrite my homeowners’ policy due to wildfire risk. this follows my being thrown out by Chubb Insurance after 30 years with them a year ago for the same reason. And here’s the thing, the new national homeowner’s peril website rates my home address as a Level-2 (Minor) risk of wildfire peril over the next 30 years. What? So why am I so undesirable? Did I mention that these are monolithic and stoic insurance companies that answer to no one since insurance is regulated by state? I have a proposal for Governor Newsom, tell insurers that they don’t get to write ANY insurance in California unless they underwrite homeowners’ risks. Price them to market and actuarial risk (using the Goddam peril ratings, please), but make the shit available so we don’t have to do an annual “fire drill” of rewriting insurance policies.
But then again, maybe it all comes back to Elon being right. Maybe none of us should pretend to own anything and then we wouldn’t need insurance and the law of large numbers to protect us.