Tesla’s Investment in Bitcoin Is an Insult to Its Employees
Companies don’t know what to do with their cash — far from rewarding employees, they seek high-return, high-risk investment.
There are two ways to look at Tesla’s $1.5B investment in Bitcoin. The first adopts an optimistic, futuristic stance and sees it as the most noteworthy crypto news to date, ushering in an era of legitimacy and mainstream adoption. The second understands it from a human standpoint and sees it as an insult to thousands of employees (millions in the years ahead).
Tesla and its founder, Elon Musk, are known for their exuberant antics and their “outside-the-box” thinking. The electric vehicle company consistently sits at the top of “most desirable workplace” rankings; the brand stands for innovation, ecology, and modernism. Yet, when you talk to their employees, the story sounds a bit different.
Everything feels like the future but us.
Articles detailing Tesla’s factories' working conditions paint a picture of gruelling labour, intense pressure, and physical harm. People passing out on production lines, regular ambulance trips, and, since 2020, Covid outbreaks are the norm more than the exception. One employee quoted in the Guardian article linked above says that at Tesla, “everything feels like the future but us.”
Tesla has also been accused of wage theft: the car manufacturer failed to compensate its employees for their overtime; it also did not provide them with the mandatory breaks. In 2021, Tesla also declined to match its employees’ 401(k) contributions for the third year in a row.
Not paying overtime and failing to match 401(k) contributions, you’d think Tesla is cash-strapped. Think again! According to their latest financials, Tesla hoards nearly $20B in cash and equivalents, up from $6B a year ago. From now on, it will hold 10% of this cash in a high-risk, volatile asset. Money that did not go to employees who were entitled to it legally and morally went to a gamble instead.
When social structures are threatened and economic inequalities are at their highest, this investment raises a fundamental question. The media who reported on it haven’t asked it. Why are companies still aiming to maximise profits when they don’t even know what to do with their cash? Why don’t they improve the lives of thousands of employees with this cash?
Before you stop to respond by telling me I don’t understand how capitalism works, I’d like to make it clear: I am questioning the very foundation of capitalism, namely the quest for profits above all. It is not an oversight or a misunderstanding of economic principles; it is a deliberate critique of these very principles.
Profits are nothing but the difference between the sale of goods and the total cost of producing them. This surplus-value comes at the expense of either:
- End-buyers, who pay an unjustified premium on the value of the product;
- Suppliers, whose prices are negotiated down;
- Employees, whose labour is not compensated to the full extent of its value.
In a genuinely competitive market, profits should tend towards zero as companies compete on price to capture a larger market share. The record-high profits made by tech companies over the last years should tell you all you need to know about the reality of economic competition and anti-trust laws surrounding the most profitable industries.
According to theory, companies are always looking to grow their profits to generate positive cash flow that will allow them to:
- Re-invest in the companies growth;
- Decrease the risk of bankruptcy; and
- Reward their shareholders through dividends and share buybacks.
Whatever the economic circumstances, you can count on companies to abide by the third rule. Rewarding shareholders at all times, and at any cost is the credo of the modern corporation. Who cares about unpaid overtime, there’s a buyback to finance!
Companies hoarding cash like Smaug under his mountain tell us something interesting, though: they don’t know what to do with it. Retaining it as reserves increases the value of the company, which is good for shareholders. Investing it in tradable assets or other companies, through acquisitions, comes at particular risk, mainly to the CEO and the Board of Directors.
They could, of course, decide to increase their employees’ salaries. Tesla turned in nearly $2.5B of net income in 2020. It currently has around 50,000 employees. Paying them the overtime they are due and matching their 401(k)s would barely hurt the company’s bottom line, yet they decided not to.
Tesla, like all other major companies who steal their employees' wages, ask for evermore loyalty, and create a “hustle culture” where work and personal lives are interchangeable, has the choice and the resources to improve the lives of thousands of families. It wilfully decides not to.
Walmart or Amazon, the largest retailers globally, consistently fail to pay their employees a livable wage or provide them with the benefits they are owed, yet they make billions in profits. Once again, it is not a necessity; it is a deliberate decision.
In light of these arguments, Tesla's investment is nothing but an insult to its thousands of employees who face harsh work conditions and low financial rewards. It tells them, and the world that their labour is a worse investment than Bitcoin. It informs them that Musk sees more return in a high-volatility asset than in improving his employees' lives.
Other companies will undoubtedly follow suit. Apple sits on nearly $200B in cash, Microsoft and Google $130B each. These humongous reserves are the product of decades of surplus-value not being reinvested in the market, not being returned to the employees. They are proof that money never trickles down unless the trickling is forced by taxation or regulation.
The most optimistic might say it is an opportunity for people worldwide to invest in Bitcoin and make a fantastic return, but this is naive. The realist would say that higher salaries, more employee benefits, and lower profits are what the world truly needs.