The Rumble in the Swamp
We're gonna get it on 'cuz we don't get along.
The Thursday Question 2:44: If not DOGE...
Ian Brodie at The Thursday Question disagrees politely and articulately with my optimism on deregulation in the wake of the Musk-Trump brouhaha.
Regulation is an invisible tax on growth. It is invisible in the sense that regulators do not ever anticipate any pejorative economic impact from their intervention. These just accumulate and pile up and clog up the world.
If the world’s richest man and most successful self-made entrepreneur can’t fix it, can anyone?
‘Still, the political scientist and the former political staffer in me both worry. Say there’s enough deregulation to bring investors off the sidelines and power the US economy ahead. Can that beat 3% growth in the long term? How much growth is needed to keep ahead of social security and Medicare and Medicaid and the apparently endless appetite for green and other new deals and industrial subsidy and trillion dollar side payments to the base of both parties? 4%? 5%? Every year for the next 40 years? If the spend side of the crisis were a fixed sum rising at a predictable rate, the math on deep deregulation works. And if everyone understood they couldn’t regulate new industries into submission and the American economy down to 2% growth, maybe the US could keep its creditors at bay. But the American political appetite for spending isn’t fixed, and neither is the appetite for growth-destroying regulation.’
The Entire Predictable Tragedy of DOGE
This. One hundred percent this.
Musk failed politically because he was an arrogant so-and-so who thought that he could make promises he knew he was unlikely to keep.
He’s a villain in the sense that his defeat has set the movement back.
He’s a hero in that he has drawn tremendous fire away from the silent service making real change happen behind the scenes. I hope.
‘Yes, indeed. But it’s critical to understand that DOGE and Musk have been undone not by the sometimes good work that they undertook and the prudent cuts they identified. They haven’t been undone by their mistakes and missteps, of which there were more than a few. They haven’t even been undone by the resistance they encountered within the broader Trump administration, in the courts, and in civil society.
‘They have been undone by their sky-high promises, and their hubris.’
Jim VandeHei: ‘Bureaucracy Is Undefeated’ by DOGE But Elon Musk Will Profit in the End
Conspiracy theory #1 via Axios: Musk sucked all the data out and now he will be able to monetize this theft.
(Additional) Conspiracy theory #2: Musk and Trump are contriving this fight to conceal their deal to steal. Because nobody would ever buy, say, space services from SpaceX or bandwidth from Startlink, otherwise.
Jeesh.
‘I mean, the bureaucracy is undefeated, for sure, and it defeated Musk in this task. That said, you got to understand Elon in that he takes the long view. And certainly in the short term, he didn’t accomplish what he wanted to but remember what his companies do and remember his relationship with the president and remember how much data they’re able to suck up when they went into all these different agencies to better understand how the federal government works.
‘And now watch, does he start to sell rockets, satellites, autonomous technology, all of the products that his 5 or 6 companies are producing? Does the government end up being a massive purchaser of it because of the expertise that he has, the inside knowledge that he now possesses, and the relationship with Trump that I think will endure.’
There’s the crux of it.
How many voters actually care about deregulation?
‘Many Republicans are very excited about DOGE. But its governance structure is undefined and untested. It does not have a natural home or an enduring constituency. It cannot engage in much favor-trading. Its ability to keep Trump’s attention and loyalty may prove limited. And it’s not clear that deregulation is a priority for many voters.’
What Elon Musk Learned (and Donald Trump Didn’t) About Governing
Musk can still believe that bureaucracy is an existential threat and want to leave the government if the opportunity cost to his companies outweighs the expected value of success.
If it’s impossible to move the mountain, then maybe you should give up and go back to farming mushrooms, dude.
‘As part of his self-pity tour, Musk spoke to The Washington Post and retreated to crank mode. “The federal bureaucracy situation is much worse than I realized. I thought there were problems, but it sure is an uphill battle trying to improve things in D.C., to say the least.” This isn’t wise hindsight. It’s wild revisionist history. Remember, Musk wrote seven months ago that the “entrenched” federal bureaucracy didn’t pose a few problems but was “an existential threat to our republic.” If that were true, that we face an “existential threat,” he wouldn’t return to launching rockets; he would do everything he could to save the country from fiscal destruction. Musk can’t admit that he oversold “waste, fraud, and abuse” and his ability to curtail it. ‘
Musk bids goodbye to Washington — for now
These guys always tell you what they really think.
People just choose not to believe them.
‘Musk on Friday said he still believed DOGE would ultimately find $1 trillion in savings.
‘“This is not the end of DOGE, but really the beginning,” Musk said.’
Musk Is a Genius, but He Isn’t a Political One
Elon Musk wasn’t the first genius to misapprehend the street fight that is DC politics. He won’t be the last.
We wrote earlier about Musk’s political missteps.
Here are things that the markets have trained him he could get away with that didn’t fly in politics.
Making big promises that are impossible to keep and then failing to come even close.
Saying highly bombastic things all the time, with no apparent filter.
Thinking that the political plumbing inside DC institutions is simpler than the tubes and nozzles in a SpaceX engine.
Thinking that political capital was just like financial capital. i.e., there’s always money in the markets if he just asks.
‘The qualities that made Mr. Musk a transformative force—his single-minded pursuit, his dismissal of conventional wisdom, his willingness to disrupt—become vulnerabilities when transplanted into political discourse. His blunt criticism, devoid of nuance, has provoked an equally blunt response from Mr. Trump, who has used the levers of governmental authority to punish dissent. It’s a harsh lesson that political influence demands finesse as much as forcefulness.’