Sunday, December 4, 2016
So how bad will the effects of Trump-era corruption be?
Remember all the news reports suggesting, without evidence, that the Clinton Foundation’s fund-raising created conflicts of interest? Well, now the man who benefited from all that innuendo is on his way to the White House. And he’s already giving us an object lesson in what real conflicts of interest look like, as authoritarian governments around the world shower favours on his business empire.
Of course, Donald Trump could be rejecting these favors and separating himself and his family from his hotels and so on. But he isn’t. In fact, he’s openly using his position to drum up business. And his early appointments suggest that he won’t be the only player using political power to build personal wealth. Self-dealing will be the norm throughout this administration. America has just entered an era of unprecedented corruption at the top.
The question you need to ask is why this matters. Hint: It’s not the money, it’s the incentives.
True, we could be talking about a lot of money — think billions, not millions, to Mr. Trump alone (which is why his promise not to take his salary is a sick joke). But America is a very rich country, whose government spends more than $4 trillion a year, so even large-scale looting amounts to rounding error. What’s important is not the money that sticks to the fingers of the inner circle, but what they do to get that money, and the bad policy that results.
Normally, policy reflects some combination of practicality — what works? — and ideology — what fits my preconceptions? And our usual complaint is that ideology all too often overrules the evidence.
But now we’re going to see a third factor powerfully at work: What policies can officials, very much including the man at the top, personally monetize? And the effect will be disastrous.
Let’s start relatively small, with the choice of Betsy DeVos as education secretary. Ms. DeVos has some obvious affinities with Mr. Trump: Her husband is an heir to the fortune created by Amway, a company that has been accused of being a fraudulent scheme and, in 2011, paid $150 million to settle a class-action suit. But what’s really striking is her signature issue, school vouchers, in which parents are given money rather than having their children receive a public education.
At this point there’s a lot of evidence on how well school vouchers actually work, and it’s basically damning. For example, Louisiana’s extensive voucher plan unambiguously reduced student achievement. But voucher advocates won’t take no for an answer. Part of this is ideology, but it’s also true that vouchers might eventually find their way to for-profit educational institutions. And the track record of for-profit education is truly terrible; the Obama administration has been cracking down on the scams that infest the industry. But things will be different now: For-profit education stocks soared after the election. Two, three, many Trump Universities!
Moving on, I’ve already written about the Trump infrastructure plan, which for no obvious reason involves widespread privatization of public assets. No obvious reason, that is, except the huge opportunities for cronyism and profiteering that would be opened up.
But what’s truly scary is the potential impact of corruption on foreign policy. Again, foreign governments are already trying to buy influence by adding to Mr. Trump’s personal wealth, and he is welcoming their efforts.
In case you’re wondering, yes, this is illegal, in fact unconstitutional, a clear violation of the emoluments clause. But who’s going to enforce the Constitution? Republicans in Congress? Don’t be silly.
Destruction of democratic norms aside, however, think about the tilt this de facto bribery will give to U.S. policy. What kind of regime can buy influence by enriching the president and his friends? The answer is, only a government that doesn’t adhere to the rule of law.
Think about it: Could Britain or Canada curry favor with the incoming administration by waiving regulations to promote Trump golf courses or directing business to Trump hotels? No — those nations have free presses, independent courts, and rules designed to prevent exactly that kind of improper behavior. On the other hand, someplace like Vladimir Putin’s Russia can easily funnel vast sums to the man at the top in return for, say, the withdrawal of security guarantees for the Baltic States.
One would like to hope that national security officials are explaining to Mr. Trump just how destructive it would be to let business considerations drive foreign policy. But reports say that Mr. Trump has barely met with those officials, refusing to get the briefings that are normal for a president-elect.
So how bad will the effects of Trump-era corruption be? The best guess is, worse than you can possibly imagine.
By Paul Krugman