Musk X Milei

Plus Polymarket's prediction, man's fatal conceit and the beauty of spontaneous order...

(A murmuration of starlings… in the shape of a giant bird. Image by Daniel Biber)

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

~ Friedrich Hayek, The Fatal Conceit (1988)

Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina...

In Tuesday’s Note, we had a bit of fun at the expense of those who, predictably, got the election “wrong.” The greasy polls, beltway pundits, celebritools, hackademics and, of course, the Pavlovian press corpse. (Not a typo.)

Today, if only in the interest of fairness, we take a look at who got it right. But first, some breaking news from down on the Pampas. 

Yes, dear reader, it’s that time of month again... when we check in on the latest inflation data here in Argentina, just to see how the chainsaw experiment is fairing so far. See for yourself...

(Source: Instituto Nacional de Estadística y Censos – National Institute of Statistics)

Musk X Milei

From an ear-bleed high of 25.5% per month when he took office, Javier Milei has managed to rein in the nation’s skyrocketing inflation in less than a year. October’s 2.7% print is the lowest monthly change registered since the man with the motosierra took office. 

Moreover, that figure would have been lower, but for the fact that the largest price increases came from removing phony state subsidies for household utilities – electricity, gas, water, etc. – that has only resulted in severe price distortions and consequent underinvestment in critical infrastructure. (Communication, Transport and Food & Beverages came in way below the average, at 2.1%, 1.2% and 1.2% respectively.)

The hopeful trend is driven by a simple “zero tolerance” to deficit spending. That is, along with cutting tens of thousands of government contracts and generally being a mortal threat to bureaucracy, President Milei flatly refuses to spend one centavo more than the government collects in taxes, resulting in consecutive budget surpluses. 

As it happens, Milei is meeting with co-director of Trump’s Department Of Government Efficiency (DOGE), Elon Musk, as we type. Happily, the richest man in the world seems to have understood the assignment. From his X:

“The excess government spending is what causes inflation. ALL government spending is taxation. This is a very important concept to appreciate. It is either direct taxation, like income tax, or indirect via inflation, due to increasing the money supply.”

We’ll see what comes of the experiment up at the other End of the World in due course. In the meantime, let us return to our thread from earlier in the week...

Amidst a surging tempest of wrong raining down on last week’s presidential election, one predictor stood out for its countertrend measure of right. Was it some Deep State cabal of omniscient intelligence operatives... an Ivy League think tank staffed with modelers, quants and other bulging cerebrums... a rogue A.I. algorithm, crawling the Interwebs in order to peer into the dark hearts of man?

Nope. Nuh-uh. And... not quite yet. 

Rather, it was boring old Natural Intelligence (N.I.) that won the day, in the form of spontaneously ordered free market price discovery. 

Spontaneous Order

Unlike the conceits of the top down managerial class, glutted with overfed bureaucrats, petty price czars and professional interveners, it is the sum of freely-associating individuals, known as the free market, which affords the clearest glimpse into a reality that remains beyond the scope of collectivist parasites. 

That millions of individuals might better know their own hearts and minds than a horde of their supposed moral betters is, of course, not a novel idea. Here is Friedrich A. Hayek, explaining the concept as it pertains to the spontaneous organization of complex economies through the division of labor. From his essay in the New Individualist Review, titled Kinds of Order in Society:

“That division of labor on which our economic system rests is the best example of such a daily renewed order. In the order created by the market, the participants are constantly induced to respond to events of which they do not directly know, in a way which secures a continuous flow of production, a coordination of the quantities of the different things so that the even flow is not interrupted and everything is produced at least as cheaply as anybody can still provide the last quantities for which others are prepared to pay the costs. 

“That it is an order which consists of the adaptation to the multitudinous circumstances which no single person can know completely is one reason why its existence is not perceived by simple inspection. It is embodied in such relations as those between prices and costs of commodities and the corresponding distribution of resources; and we can confirm that such an order in fact exists only after we have reconstructed its principles in our minds.”

In the context of last week’s election, it was not only what the “experts” missed, but rather what the market perceived that is relevant here. 

Betting sites Polymarket and Kalshi consistently favored Trump for the win, sometimes by as much as 2-1, a veritable blowout in betting markets. Moreover, it was the “continuous flow” of decentralized information that kept the markets on track, able to respond in real time to infinitesimal fluctuations in relevant data and to price the outcome accordingly. 

Here’s what the betting markets looked like as the market ingested the McTrump Burger publicity stunt on October 21.

(Screenshot from your editor’s phone…)

Demand vs. Command

The fact that decentralized free markets are better able to synthesize relevant information more accurately than pollsters, pundits and presstitutes should come as no surprise to readers of these humble Notes. Unlike the aforementioned propagandists (on both sides), free markets also screen for political bias by recognizing a simple, universal fact: If there’s one thing private individuals hate more than seeing their political opponents elected to public office, it’s losing money. 

Here’s Polymarket CEO, Shane Coplan, explaining some basic economic concepts to the stupefied bobbleheads on CNBC, after the votes were counted: 

“I think the thing that people get wrong about Polymarket, the thing I wish people would understand better—and maybe now that they’re more open-minded to it—is that if someone takes a really big position on Trump, for example, there’s someone on the other side, a counterparty. It's all peer-to-peer.

“There’s a big position being taken on Harris. And because of that, when you see the odds on Polymarket, it’s not a function of how much money was put on either side. It’s a function of the market price at that moment. It’s the tightest spread for this market in the world. And I think when you think about it like that, a trade someone made two weeks ago doesn’t have [any] bearing on what the market price is right now. So, all I can say is I understand that it’s a novel concept, and people were skeptical when it came around, but hopefully, people will be more embracing of market-based information.”

Hmm... to think there might be some value in listening to markets (people) instead of telling them what to think... registering and meeting demands instead of drafting and bleating commands... information of the many, instead of misinformation by the few. And yet, man appears doggedly committed to what Hayek called his “fatal conceit.”

Here’s the great Austrian School economist again, from his lecture to the Nobel committee upon receiving their eponymous prize, in 1974. His discourse was titled, aptly, The Pretence of Knowledge:

“The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men’s fatal striving to control society – a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.”

Black Hole Guns

How, the gentle reader might be wondering, might that black hole of centralized coercion and violence known as The State respond to this peaceful and voluntary alternative to its humble claim on pure omniscience? 

Why, with the only tools in its box, of course! 

As we go to press with today’s Note, we learn that the weaponized goonsquad known as the Federal Bureau of Investigation (FBI) arrived on Mr. Coplan’s doorstep yesterday morning to harass and intimidate the young CEO and to confiscate his private property. From The New York Post:

FBI agents raided the Manhattan apartment of Polymarket CEO Shayne Coplan early Wednesday — just a week after the election betting platform accurately predicted Donald Trump’s stunning victory, The Post has learned.

The 26-year-old entrepreneur was roused from bed in his Soho pad at 6 a.m. by US law enforcement personnel who demanded he turn over his phone and other electronic devices, a source close to the matter told The Post.

Coplan was not provided with a reason for the raid, but the source suspects it was political retribution since Polymarket predicted an easy Trump triumph over Vice President Kamala Harris — as opposed to traditional polls.

Power, as Chairman Mao famously stated, comes out of the barrel of a gun. But a bazooka is no match for a swarm of bees. In the end, free and voluntary markets are superior in every way to the intimidation and violence of the State. 

And that’s why we pen these Notes to you, dear reader… in defense of free markets, free minds and free people. (If you’re not already a member, please join, share or comment, below.)

¡Viva la libertad!

Stay tuned for more Notes From the End of the World...

Cheers,

Joel Bowman

P.S. A special shoutout to our dear Notes Members; we’re ever grateful for your generous and ongoing support. As mentioned in this space previously, Notes is an entirely independent, reader-supported publication (as in, we accept no advertising and bow to no boss, bend no knee).

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