Elites Aren't Much Savvier Than MAGA
They're both easy marks for Donald Trump.
The right-leaning tax economist Alan Cole, whom you’ll frequently see quoted in news articles about the federal budget, recently won over $128,000 gambling. Not against poker players, or the house in Vegas, or in any game of chance. Instead, Cole put his entire liquid savings on the line—almost $350,000—betting that Elon Musk was full of shit, and that Musk’s legions of fans were suckers.
This is surely not how Cole would put it, at least publicly, but it’s the truth. Last year, Musk promised to chainsaw trillions of dollars in waste, fraud, and abuse from the federal budget, easy peasy, as the temporary head of a temporary White House initiative called DOGE. Sums that large would accomplish something pretty much unthinkable: reducing government outlays in nominal terms, year over year, such that the Treasury would spend less money in calendar year 2025 than it did in calendar year 2024.
Because he is not a complete moron, Cole understood this was not going to happen. That even if Musk were committed in an above-board way to reducing federal spending—and even if he were to find more in savings than experts believe we lose to waste, fraud, and abuse each year—it couldn’t counteract the tidal forces of an aging population, or the federal government’s fairly steady, year-by-year obligations to the defense and welfare of the country.
So he took the other side of the bet: that outlays would go up. That DOGE would fail on the terms Musk set. And he won.
I don’t gamble in prediction markets, so it would have never occurred to me to search for or try to create this market, and place the same bet. But Cole’s success is enough to make any half-way competent wonk want to develop that reflex: Look for opportunities to fleece suckers. Identify false promises from Donald Trump and his loyalists, then bet against their marks.
What’s impressive about Cole’s haul is the creativity of the method. It takes nothing away from his skills as a tax economist to note that his underlying insight was banal—something any competent, mid-career budget reporter could have told you, with complete certainty.
The revealing thing isn’t that Cole got this right, but how many suckers made the opposite bet without bothering to learn anything about the ways and means of the U.S. government.
Trump administration officials will apparently make all kinds of bets in the prediction markets, including when they have inside information, which is tantamount to stealing. But I’d be shocked if anyone with real experience in Republican politics was on the other side of Cole’s bet, because they, too, all knew Musk was full of shit. They might have lied about it publicly (effectively helping Cole find more suckers) but they wouldn’t have put their money where their mouths were, because that would’ve been a sucker’s bet. If anything, I’d wager a small sum that at least one White House official also made money “gambling” against DOGE.
This is life in the age of MAGA. Even when there’s a 100 percent chance Trump and the people in his orbit will fail to achieve something they’ve promised, plenty of true believers will bet real money on success1.
It’s sad. But it’s also somewhat unsurprising. MAGA is a cult, and there’s a sucker born every minute. I am personally more interested in the positions people take when there’s at least a theoretical possibility Trump will succeed. And not just MAGA Republicans, but people of influence and power who aren’t Trump cultists.
For instance, from the vantage point of January 20, 2025, what was the elite view on how likely Trump was to:
Reduce inflation;
Reduce nominal prices;
Maintain public approval for his handling of “immigration”?
Did they have a bead on this stuff?
There was literally no way for Musk to reduce federal outlays, except perhaps in scenarios so catastrophic that Cole and all of us would’ve had much bigger things to worry about than lost savings. But it was at least conceivable that Trump would stamp his name on to the Biden economy, make tweaks around the edges of policy to bring inflation down from three to two percent, step up deportations marginally, and win the long con. No real accomplishments to speak of, but retire a popular president nonetheless.
This would not have required assuming away the laws of physics. But betting on it would have required total ignorance of his character—the kind of thing you might do if you’d been comatose through his first term, or experienced significant brain damage.
AND YET!
This seems to have been the modal view of the American political, financial, and media establishments: When Trump took over, “smart” money was on him being something like ‘a good president who writes mean tweets,’ or, less charitably, a dictator-like figure who’d bend the country to his will, but do so in a way the public supported. When he started making unhinged decisions, the smart money shifted to “TACO.” Trump Always Chickens Out. He might abuse tariff authority extortionately and arbitrarily, but never so excessively as to cause lasting global economic disruption. At the first sign of that kind of turbulence, he’d reverse course, and avert crisis.
Now, with his war in Iran—which is a bit like DOGE for regime change, and which can not practically be TACO’d—these bets are coming due, and the people who made them are at pains to explain themselves. Thus, the specter of people like Savita Subramanian, with job titles like “Head of U.S. Equity Strategy and U.S. Quantitative Strategy for Bank of America” uttering these words: “We thought the administration was going to be focused on affordability and quelling inflation, and that seems to be the opposite of what’s actually happening.”
Oh did you? Perhaps you should be fired, then. You certainly shouldn’t be head of strategy of any kind for any financial or fiduciary institution.
I’ve never so much as visited the Kalshi or Polymarket websites, so I don’t know if there’s any practical or legal way for normal gamblers or investors to make quick bucks betting against this kind of terrible analysis from executives at leading Wall Street firms. It seems more like the remit of institutional investors with decent political intelligence.
But it is a real phenomenon, and it persists. A week into Trump’s misbegotten war on Iran, oil futures soared, starting Sunday night, as traders finally got spooked about the prospect of a severe and lengthy energy crisis. After U.S. markets closed Monday, they plummeted again, because Trump phoned up a reporter to claim “the war is very complete.” It is not complete. Moreover, the question of whether the energy supply chain comes back online isn’t entirely up to Trump. Israel and Iran each have a say in that question, and we just murdered the new ayatollah’s entire family.
What is happening here? How are people who do this for a living no better than the Trump and Musk fanboys Alan Cole just took to the cleaners?
In the private sector, some of it is surely attributable to greed. Economic elites weren’t wrong that Trump would cut their taxes, and deregulate their industries. Even if they knew he’d solicit bribes and extort reluctant executives, they’d more than make up for the inconvenience in corporate tax cuts. They are now invested, emotionally as well as financially, in the idea that he isn’t an idiot or a madman.
But I think everyone in politics and finance and media who anticipated a fictional, level-headed version of Donald Trump succumbed to years of spin and misinformation and algorithmic propaganda on Twitter.
If you’d asked them on January 7, 2021 or January 20, 2021 what a second, discontinuous Trump term would mean for the country and global economy, they would have been much more clear eyed. They would have cited his COVID failures and the insurrection to warn of severe economic risk and political instability. But in the intervening four years, Trump and his sycophants worked extremely hard to rewrite the history of his first term, while the Biden administration undertook a complementary effort to make people stop thinking about Trump altogether. A couple years in, Musk took over Twitter. By 2024, elite conventional wisdom had inverted: Other countries had bad COVID outcomes, too. And January 6? Yeah, that was unfortunate, but the transfer of power was never really in danger—things just got out of hand. And Trump? His economy was pretty good until COVID!
None of that is true on its own terms. And to the extent that some of it seems true, it’s only because Trump inherited a healthy economy, and faced meaningful constraints, in his first term. Nobody could have predicted every way Trump has bollocksed up his second term, but the fact that he was likely to bollocks it, and the means by which he was likely to bollocks it, were almost as obvious as DOGE’s fraudulence.
Matt Yglesias wrote this mea culpa on Monday, tongue at least half in cheek.
I don’t think I can sustain the argument that Democrats’ most prudent move after losing in 2024 was “change nothing, wait for Trump to fuck up spectacularly.” But I absolutely could have told you that Trump would fuck up spectacularly. And, perhaps more to the point, I don’t think Democrats have changed nothing. I think they, too, convinced themselves that Trump had gained command of his powers, and they needed to be supine. They fell for the revisionist history almost as hard as Subramanian did.
Everyone seems to be coming out of it now, slowly, and much too late.
But I, and any of my readers, and probably even the median BlueSky user could have told these elites Trump is incapable of running the country competently, or of governing and politicking in a manner that will be widely admired over time. Because we didn’t forget what we saw from 2017-2021. Where do we go to get our apologies? Our cable news contributor contracts? Our newspaper columns? Our million-dollar bonuses? Or do we all just have to learn to stop worrying and take what we’re owed from suckers on Kalshi?
Trump’s bad faith is so insidious that it somehow manages to create a beneficent use case for these betting markets: If enough Trump supporters lose enough money, and enough stories get written about their bad bets, the scales might fall from their eyes, and the Trump cult might dissolve or revolt.
I’m retired. When the DOGE campaign was tearing through D.C., I requested calls with our banker and our investment manager to talk about the potentially devastating effects of Trump’s harebrained “governance,” including the unauthorized access to our private information, and the tariffs he was imposing. Of course, trust managers are supposed to be calm and reassuring. They’re dealing with people’s life savings, after all, so I wasn’t surprised to hear the party line. What did surprise me was the condescension. Clearly the old broad (me) was simply hysterical, while their calmer, more rational heads would prevail. I wonder how that’s going for them.
In law school, my peers and I observed that the most thoughtful students – in the Socratic dialogues and outside of class - could be found in the second GPA quintile (yes, we tended to be in that quintile, why do you ask?). On exams, those in the top quintile were adept, could recite the applicable black-letter law in clear terms, and in grades were properly rewarded. Others of us tended to get distracted by things such as rationales underlying legal doctrines, the arrangements of societal power they might reflect, and the critiques to which they might be subject. Those in the top quintile were swept into federal clerkships and prestigious corporate law firms. The rest of us did fine.
The point being, in the service of power (a broad field of endeavor that includes (most) lawyers, financial advisors, journalists, political pundits and much more), one is rewarded for thinking with agility, but penalized for thinking critically. The explanations for what seems superficially to be an inexplicable ingenuousness of the sophisticates are many and complex, but I’d offer that this self-selection element is important.