By Alejandro A. Tagliavini *

                       As I have explained in previous notes, succinctly, today there are three economic theories. Keysianism, which we know for being a great setter of bubbles, print and print money bills believing that this is how they move the economy and what they achieve is an artificial balloon that when explodes destroys more than what eventually achieved. Then, the neoclassical economic theory -the preferred one of market operators who distrust exaggerated issuance- whose characteristic consists in believing in the equilibrium -of the supply and demand curve- of the market, which implies that perfect knowledge has been reached and, therefore, that it is static and rigid: the company is only a productive function, a means to transform inputs into products.

                  And, finally, the theory of the natural market («free» from artificial State interference), initiated by the Spanish scholastics of the School of Salamanca of the 15th and 16th centuries, and taken up, to some extent, by the Austrian School of Economy that knows that there is no equilibrium -because there is no perfect, static knowledge- but a specific environment in permanent movement, which tends towards equilibrium at the rate at which market players find new knowledge that is always perfectible and pose new horizons that move the point of balance.

                And, therefore, the market is unpredictable and impossible to plan in advance, and a company is precisely a creative function, in search of perfect knowledge that is never reached, and therefore, unpredictable and spontaneous.

                By the way, it is worth a clarification before starting to praise Elon Musk. In a natural market, the supply and demand curve govern for everything, I insist, for the entire cosmos. Also, for personal wealth. That is, contrary to what many believe, exaggerated fortunes compared to the rest of society are not typical of a market where the supply and demand curve governs, for the simple reason that, when others observe that a person is earning a lot of money, they copy him and compete.

              Exaggerated fortunes, on the other hand, are typical of systems intervened by the State – as with the Keynesians and neo-classics – that prevent others from copying these billionaires. A typical case are the laws of «copyright» – as if ideas had an owner – that create true monopolies such as Amazon, Microsoft, Facebook, etc. enriching its monopolists in an artificially exaggerated way.

              Thus, it could be said that, while socialism equals downwards by impoverishing everyone with the coercive impositions of bureaucrats, the natural market, on the contrary, equals upwards as there are no barriers to the expansion and creativity of each person.

              And Musk does not escape this definition. If there were no «copyright» laws, it would have much more competition. But, in this world where for the moment and for a long time, I suspect, there will be a strong State intervention, Elon stands out for fighting it while his ultra-millionaire peers stand out for taking advantage of the State.

               The owner of Tesla, among many other achievements, defied the quarantine imposed by the State and won, he is «privatizing» space activity – and its infinite potential – making it much more efficient. And, almost unwittingly, he is the richest man on the planet with a net worth of more than USD 311,000 M, since his flagship company has a market capitalization that far exceeds the world’s largest automakers combined, even when not even close to producing so many cars.

               Tesla is now worth about 16 the value of Ford, but only has 33% of sales. A few days ago, on the back of better-than-expected third-quarter results, MS Research raised its price target for the electric car maker’s stock to $ 1,200 and fell short, though later by a tweet from Musk, there was a correction. And the stock rises almost 900% since the crisis of February 2020 when I personally already recommended its purchase:

                 Of course, for the neo classics, Tesla is overvalued since the «fundamentals» -income, sales, profitability or whatever else that determines the current discounted value of its future cash flows- are not as good, and for months, they wrongly predict their collapse since they do not understand that the market is unpredictable, that it does not move at the whim of the operators or State planners but at its own pace. And, above all, it is not moved by costs, that is, the public never decides how much they want to pay for a product based on how much it costs the manufacturer, they decide to buy if they consider that the price is convenient for them.

                    Thus, the market does not buy the shares based on the fundamentals of the companies but when it senses that this stock has the potential to go up, for different reasons. Many like to talk about «expectations», but it is more like «hope» because expectations refer to the anticipation that these fundamentals will be exceeded in the future, while hope refers to clear, progressive ideas, with breakthroughs and strong leadership they can achieve unthinkable achievements today, and Elon Musk is one of those leaders.

                 By the way, another notable case is that of Bitcoin, whose «fundamentals» also scare the neoclassicals. What are the similarities between Tesla and Bitcoin, are the «fundamentals» improving, are they great hedges against inflation, are there «gamma traps» or is it pure speculation?

                   But Elon, in addition to openly confronting statism, also faces corruption and demagoguery without inferiority complexes. I have no doubt that he was sincere when he offered to sell Tesla shares «right now» if the UN proves that USD 6,000 million solves world hunger.

                    Thus, he challenged the director of the World Food Program (WFP) who asked that billionaires like the South African businessman «step forward now, for the only time.» Few agencies are more corrupt than the United Nations and Elon Musk knows it and thus shared a note from the British newspaper Express about the case of nine-year-old children allegedly forced to give oral sex to UN officials to get food and asked: “What happened here?».

                  If WFP, using transparent and open accounting, «can describe in this Twitter thread exactly how $ 6 bn will solve world hunger, I will sell Tesla shares right now and do it,» Musk wrote on Twitter. «But it should be open-source accounting, so the public can see exactly how the money is being spent,» he added.

                  The WFP bureaucrat responded by saying that he could assure that they had the systems in place for transparency and open-source accounting. I have my serious doubts, but even if it were true, what he does not say is that the larger the WFP budget, the more bureaucrats like him benefit since they are left with a good part in salaries, travel expenses, representation expenses and other niceties.

                    Then the bureaucrat backed off and said that «USD 6,000 M will not solve world hunger but will prevent … a perfect storm due to covid / conflict / climate crisis.» Yes, of course, what he did not clarify is that, strictly speaking, the covid is not the culprit of the crisis but, precisely, the restrictions -quarantines, protocols, etc.- applied by his fellow government bureaucrats almost everywhere in the world.

                  And finally, Elon has criticized attempts to tax billionaires. Another demagogic measure that, of course, to the rich is those who least harm – that is why Bill Gates has no qualms about promoting it – since they have a thousand resources – to increase prices, lower salaries, reinvest in less onerous countries, etc. – to derive taxes down. In other words, when politicians fill their mouths with the demagoguery of «let the rich pay,» it is to disguise that they are going to charge the poor.

* Senior Advisor at The Cedar Portfolio  and Member of the Advisory Council of the Center on Global Prosperity, de Oakland, California