The State of The State
Plus, the illusion of choice, the scam of phony money and the libertarian experiment down at the End of the World...
“The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.”
~ Ludwig von Mises from the book Economic Policy: Thoughts for Today and Tomorrow, a work based on six lectures delivered by Mises at the University of Buenos Aires in 1958
Joel Bowman with today’s Note From the End of the World: Luang Prabang, Laos...
In today’s Note, we check in on what we’ve been calling “The Greatest Political Experiment of Our Time.” But first...
At 9 p.m. (EST) this evening, tens of millions of citizens in the most powerful nation in history will tune in to watch two of their fellow mammals debate the future of their beloved country.
One alleged Republican. One so-called Democrat. And a conspicuous (some might even say “undemocratic”) lack of Independent candidates.
Between them, the aged bipeds have walked the planet for nigh on 160 years. Both have their conceits and vanities, their shortcomings and petty grievances. Both threaten to “lock up” their political opponents. Both enjoy spending other people’s money (Trump added $8.4 trillion to the national debt during his first term... Biden stacked on another $4.3 trillion in Obama’s third...) And both indulge, to varying degrees, what we might call an “open relationship” with the truth.
But as far as we know, each man puts his trousers on one leg at a time. Neither one walked on water.. neither shot the moon on a winged horse... neither removed a chocolate stain from a white linen cushion.
For all their faults and foibles, they are human, in other words... all too human. But then, aren’t we all?
Reliably Unreliable
A man can be relied upon to err. It is his nature, after all. An incomplete project until the day he dies, he strives to work harder, to drive past the bar, to read more books and to avoid lingering eye contact with his neighbor’s wife. Some days he celebrates his successes; others, he sleeps on the couch.
But if every honest man carries a mote in his own eye, his elected representatives haul stave churches in theirs. Who among us has set a country to war? Or spent trillions of dollars of unborn generations’ wealth? (The US national debt is projected to hit $50 trillion by 2034.) Or “erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance,” as Jefferson complained in his superb break-up letter with King George III.
Indeed, the most violent bully is but a barefoot Jain compared to a standing army... the most ruthless debt collector a mere patsy next to the IRS... the most pathological liar, scoundrel and cheat a bonafide angel beside any politician when his gills get to flapping.
The difference between reliable private folly and inevitable public catastrophe is the size of the office. Given man’s propensity – nay, fate – to err, it stands to reason that giving him the power of the state... with all the guns, all the courts and the ability to write (and rewrite, when it’s convenient) all the rules... is a recipe for disaster.
And so it has been throughout history...
The idea, therefore, is not to worship the State as some kind of civic religion, to blindly hope that an angel among men will ascend to its highest order and deliver us from evil forever and ever, amen.
Rather, we hope to witness the unchecked power of the State abrogated, annulled, brought to heal, domesticated by the impulses of free men and women, who aspire only to suffer the consequences of their own idiotic decisions in peace and quiet, without the State multiplying their earthly misery.
Individual responsibility, in other words, not collective guilt. Voluntarism, not violence. Cooperation, not coercion.
And yet, as little as a year ago, it would have taken a madman or a mental defective to pen such a passage. (We know... we’ve been writing it, in one form or another, for the past 20 years!)
Anarchy Now!
Hence our fascination with the goings on down at the opposite End of the World, in our adopted country of Argentina, where sensible citizens last year voted (in a landslide victory) for a man who openly declares himself an “enemy of the state.”
For avoidance of doubt – and, one imagines, to troll mirthless collectivists – Javier Milei even campaigned with a chainsaw, with which he promised to slash the State down to size.
As far as we know, no population in modern history has voluntarily demonstrated, in free and fair elections, a desire to so drastically hack back the size and scope of their putrefied bureaucratic Leviathan. After all, such an audacious project flies in the face of the conventional, largely unexamined theory, that the State exerts a legitimate monopoly of force over people who could not possibly get along without it.
Naturally, Big Government apologists in the mainstream monomedia were agasp at the very idea of treating citizens like consensual adults. And so, sure as dawn follows dark, they treated Sr. Milei, an unknown quantity to their insular worldview, the only way they knew how... by hurling unimaginative epithets in his direction.
He’s a “far-right” extremist, they yelped in hyperventilating unison... a “fascist”... a “dictator”... a “threat to democracy.” (For the love of liberty, somebody please buy these fustilarian hirelings a Funk & Wagnall!)
But how is the whole liberty project working out, you may be wondering, now that Sr. Milei has been on the job for just about six months? So glad you asked...
Though you might not read it in the popular papers, El Presidente has not caused the moon to fall to earth or sent the country directly down to Dante’s Ninth Circle of Hell. Much to the mainstream media’s undisguised chagrin, rather the opposite has happened.
On the economic front, Milei has managed to lasso Argentina’s bolted inflation, which at the time he assumed office had overtaken Venezuela’s as the world’s highest rate. Although still “horrendous” (Milei’s own description) on an annual basis, the rate of inflation has come down every single month since Milei took office. And now the annual rate, a much bulkier ship than the monthly reading, has begun to turn, too.
The two charts above come from Argentina’s National Institute of Statistics (INDEC). The first shows the monthly rate of inflation slowing from 25.6% per month in December (Milei was inaugurated mid-month) to “just” 4.2% for the month of May. The second chart shows how the longer-dated, annual rate has also begun to turn down.
Net Zero Inflation
On a weekly basis, too, inflation is cooling even in the most critical, volatile sectors. Independent consulting firm Econometrica tracks prices across 8,000 supermarket items online to compile its research. The firm announced last week that it had measured zero percent inflation in “food and beverages” during the third week of June, the first time in 30 years it has registered such a reading.
That an entire generation of Argentines has seen nothing but increasing prices at the grocery store... week in, week out... for three decades...appears lost on conspicuously compassionate progressives, who profess to care about the very disadvantaged people they hope never to have to encounter on the street.
That’s millions of poor and working class people, who watched their savings waste away as a matter of course, part of the natural order, and who were indoctrinated to believe that it was “greedy capitalists” who were forcing up prices, when it was a State-sponsored fraud all along.
Of course, inflation is not an “act of God,” as Mises points out in the quote above. Nor need it be policy, except in the case of corrupt governments.
As readers of these pages well know, wealth cannot simply be printed in the form of phony fiat notes. If that were the case, Argentina would stand above all nations as the richest on earth. Rather, wealth must be forged in the crucible of the free market, where honest toil meets real world demand. As Sr. Milei himself reminds us:
“If printing money would end poverty, printing diplomas would end stupidity.”
And how has Milei been able to achieve this superhuman feat? Was it by increasing the role of the State in the nation’s economy? By “managing” the intricate details of private, commercial arrangements? Perhaps by some kind of omniscient centrally planned edict?
Hardly. As he told a room full of libertarian whackos and hopeless anarchists (your editor among them) at a conference in Buenos Aires earlier this year:
“If the state does not spend more than it collects and does not issue (excess money), there is no inflation. This is not magic.”
And lo! What do we find here...
Alongside slowing inflation, we are compelled to notice that Argentina just posted its fifth consecutive monthly primary fiscal surplus in May. The 2.33 trillion pesos ($2.57 billion) surplus is the largest yet under Sr. Milei’s administration.
Combined with a monthly financial fiscal surplus of 1.18 trillion pesos ($1.25 billion), the results underscores Milei’s pledge to achieve a “zero deficit” by the end of the year. This, by the way, is no small feat... not for a country that has run annual deficits for 113 of the past 123 years.
And who knows... if Argentina can quash inflation... and run budget surpluses... and oust the entrenched political caste... maybe, just maybe, people in other countries might begin to believe it’s possible in their once-proud nations, too.
Stay tuned for more Notes From the End of the World...
Cheers,
Joel Bowman
P.S. Might unpopular ideas – free markets, civil liberties, common sense – be enjoying a resurgence… even in the woke West?
Might thoughtful individuals be ready to ditch the ‘statist quo’ in favor of a more peaceful, voluntary existence?
Might citizens be ready to shrug off the illusion of choice proffered by their would-be political leaders and their puerile porters in the mainstream press?
Such a reality might be closer than you think. Already, millions of people in hundreds of countries have tuned out of state propaganda, meant only to divide, conquer and impoverish people.
How do we know?
Well, we don’t… but we have reason to be cautiously optimistic. Even these humble Notes now reach dear readers in all 50 states across the US… and in 130 countries around the world. Not bad, given that we only just kicked off this year.
Of course, the ideas of freedom, liberty and independence are not going to spread themselves. And that’s where our dear members come in. Thanks to their support, we are able to remain fully independent… which means no advertisements, no bosses and no bias.
Just free markets, free minds and free people… all the time.
If you’d like to support our work and join the growing community of folks interested in these lately resurgent ideas, please consider becoming a Notes member today. Cheers!
Beautiful article Joel, Thank you. The inflation data coming our of Argentina is impressive but I'm a data nut and a student of economics. We'll see how it does in the future. Can the government gain confidence in this and can it start to make sensible movement forward and can Von Mises and Hayek influence, in a positive way, for Argentinians? This could influence behavior the world over.
To a Hayek believer and mathematician / statistical engineer it all makes sense to me. It is simply logic of numbers. More money chasing the same goods means money would have less purchasing value, all else being the same. So when a static economic system drastically increases the money supply the value of that new money will buy less. Of course economic systems aren't static but when the money supply grows drastically or more than society grows it's economic activity, measured in GDP, then the money chasing those goods and services has less value. I should also add the growth in money supply has grown at a drastically greater rate than the overall economy has grown after covid.
Best ever, Joel. I laughed out loud four times AND learned a valuable new word. 'Fustilarian'. 'Fustilugs'. Best of all, I'm left with a swell of optimism and a renewed appreciation for the simplicity of economics. Thank you.