How Trump theft hurts you: thoughts to chew on over Thanksgiving dinner
from Dean Baker
Donald Trump has basically come right out said that he intends to use the presidency to further enrich himself and his family. After refusing to follow long-established precedent and put his assets in a blind trust, he proclaimed, “the president can’t have a conflict of interest.”
Of course the president absolutely can have a conflict of interest as speakers of the English language use the expression. If a president owns a large business empire, as does Mr. Trump, there are all sorts of situations where his personal business interests could be in conflict with the country’s interests.
For example, he may want favorable treatment from a form government for one of his hotels. This may lead him to make concessions to the government in other areas which he would not otherwise do. The same applies to domestic tax policy where he may decide to push tax changes that will help his business interests. There are literally an infinite number of situations where the president can and does have a conflict of interest when he owns a business empire like Mr. Trump.
It is also worth noting that it does not seem as though corruption will be exlcusively a family affair with Mr. Trump. David Dayen has an interesting piece in the Intercept about how Trump may hand billions to his friend and campaign contributor, John Paulson, by reprivatizing Fannie Mae and Freddie Mac. Of course this is just the tip of the iceberg. Trump seems intent on raising political corruption to a new level in his administration. As he is prone to say, it will be yuuge!
Some folks hear about this stuff and think it is just rich people’s games that don’t affect them. After all, who cares if Trump’s hotels are able to pull away business from Hilton or Marriott because he is in the White House? Well, the incredible wealth of Trump and his cronies actually does affect the average worker, although we have to take a small detour to get the full picture.
Every six weeks the Federal Reserve Board’s Open Market Committee meets to decide on interest rate policy. It will raise interest rates if it believes there is too much demand in the economy and there is a serious risk of higher inflation. This assessment is highly subjective and there are sharp differences among economists as to when the risk of inflation is high enough to warrant rate hikes, as I have pointed out numerous times. Nonetheless, it is unambiguously the case that the greater demand we see in the economy, the greater the risk of inflation.
Suppose that when Trump’s family or cronies further enlarge their fortune through their insider deals they decide to go on a lavish spending spree. They build themselves some new castle or some other extravagant expenditure. This sort of spending further increases demand in the economy. This makes it more likely that the Fed will raise interest rates, thereby choking off employment growth. The point is to weaken the bargaining power of workers so that they are less well-positioned to get wage gains.
In short, the story is that the corruption of a Trump administration means that the lavish consumption of Trump and his cronies will come at the expense of wage growth for ordinary workers. (You can get the fuller story in my new book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer [it’s free].) Anyhow, the basic point is a straightforward one. The corruption of a Trump administration should not just be a source of amusement and entertainment for the rest of us, it comes out of our pockets. You’re welcome to laugh if you like, but you will pay a price for this joke.