Elon Musk vs. China | Starlink, Tesla, SpaceX and the New Cold War | Markets Are Dumb 14

Today’s video hints at something I’ve been thinking about a lot lately. We all know China’s great internet firewall as a source of great repression. But China’s maintenance of a separate national internet has also left it weirdly independent of the US tech giants that rule the internet everywhere else.

China has worked hard to co-opt the newest of the Tech behemoths, Elon Musk, the founder of Tesla and SpaceX. General Motors and other foreign car companies battled for decades to build up their competitive position in China. Musk was building a massive factory in China under favorable terms before he sold his millionth (100,000th?) car. China was wise to try to get this guy on their side, but as today’s video explains, it’s unlikely to work out well for them in the long term…

I’d like to make more videos in this vein, thinking through the outside power of tech companies and what it means for geopolitics, but that depends on how this video does. If you like it, share it around…

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Video Transcript after the jump…

Hey there. Elon Musk may look like a clown on social media, but there is a good deal of method to his madness. Tesla is an emphatically liberal friendly company, that would be nowhere without Obama’s subsidies and is aimed squarely at what has so far been the very Democratic concern of climate change. The past three years should have been very scary ones for Tesla.

But thanks to his absurd Twitter presence Elon Musk has both made himself an inescapable celebrity, and positioned himself personally as somewhat MAGA friendly. The President loves both those things, and Musk’s government subsidy dependent companies haven’t just survived the Trump era, they have thrived.

This is nothing compared to Musk’s next act. Tesla is going to do great under whatever version of the Green New Deal passes under the next Democratic president. SpaceX’s provision of a fully American space launch capability will make Musk indispensable to future presidents of either party. But today I want to talk about a sort of nuclear option that Musk is giving to the US government that is far more terrifying to China than any US nuclear missile.

I am talking about Starlink of course. If you have heard about this program, it’s probably in the context of astronomers being angry about it. Depending on how you measure it, there are between 2 and 3,000 satellites in space today. Starlink is currently planning to launch 12,000, and could eventually put up as many as 42,000. Astronomers are reasonably concerned about what this will do to their view of the night sky.

That’s a real issue that needs to be resolved, but there is plenty of coverage of it. What isn’t being covered enough is what these satellites can do. Officially they will bring internet to underserved populations all over the world. Unofficially it’s potentially the end of government censorship of the internet. Everywhere.

“We know how much the internet has changed America, and we are already an open society. Imagine how much it can change China. Now there’s no question China has been trying to crack down on the internet. Good Luck


That’s sort of like trying to nail Jello to the wall.”

Despite Clinton-era expectations, China really has nailed the Jello to the wall and made the internet work for them. Through a mix of technology and sheer manpower, China has constructed a great firewall that allows them to censor all on-line activity in the country. At the same time they’ve used this walled garden to build the only serious non-American mass market technology companies. Elon Musk’s Starlink project threatens both China’s ability to censor, and its independent tech industry.

To be sure there are all kinds of legal and technical barriers to bathing China with US government supported, open internet. All of those barriers will be kept in place as the network is being built, and it will take a very conscious choice by SpaceX to start offering services in China. But Starlink is perhaps even more dangerous to China as a threat than it would be in execution.

Musk has already stated that Starlink would not be broadcast to China, in part because they have the capacity to shoot his satellites down. This comment, made 4 years ago, may have been somewhat tongue in cheek, but it was probably reassuring to China. It shouldn’t be. The 540 Starlink Satellites launched so far may already represent as many as a fifth of the total satellites up there. China has demonstrated it can shoot down a single satellite, but can it shoot down thousands? They certainly can’t do it without destroying the whole world’s communication systems. Blowing up a single satellite risks an ever expanding field of space junk. Blowing up thousands would block everybody’s access to space.

China knows that it will never be able to shoot these satellites down, so it has entered into a sort of mutually assured destruction pact with Elon Musk. A lot of Tesla’s absurdly high valuation comes from the company’s mysteriously good relationship with China, and its surprisingly friction free entry into that market. If Elon Musk’s Starlink wants to screw China’s governing model, then China can screw Elon Musk’s Tesla. In the short term this is a good strategy for China. Long term I’m not so sure.

Tesla is not just a car company. It’s also big on solar panels, grid technology and consumer and utility scale battery storage. As the coming decades turn more science fiction into reality, SpaceX and Tesla will be well positioned to lead in industries that haven’t even been thought up yet. These developments will draw these companies ever closer to the US government. As this process continues, Tesla’s ability to sell cars in China will become a less and less important factor for Musk’s inter-weaved empires. This guy is becoming troublingly powerful, but he’s not going to stop being a US citizen.

Starlink’s revolutionary potential should become a large political factor in countries like Egypt and Iran by the end of the decade if not sooner. But not with China. It’s much more likely that Musk’s technology will be reserved as a threat, first by Musk to keep selling Teslas, and later by the US government to aid in all manner of negotiations. The US Defence industry wants to sell us more useless nukes and aircraft carriers, but it’s stuff like this that represents the US’s real advantage in the New Cold War.