Home > Uncategorized > How Trump theft hurts you: thoughts to chew on over Thanksgiving dinner

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.

  1. November 24, 2016 at 12:03 pm

    Dean, I am still not clear when/where Trump “said that he intends to use the presidency to further enrich himself and his family”. You never really attended to this quite specific accusation, or did you mean it metaphorically?:)

    But even if he did not say that it still probably is the case: that is what the US presidency is, and that is why one has to invest millions if not billions to get it, and still be lucky. Hillary and Bill were/are notoriously greedy, and one can expect Trump to enrich himself too. But perhaps his motivation is different, perhaps he has a fetish for America, some idealistic fantasy and a path to ultimate self aggrandisement as America’s ‘saviour’. This is still not clear to me and only time will show, although the ‘saviour’ argument is consistent with Trump’s official refusal to accept his presidential salary (some $400k p.a.). If he were just after the money he would just collect his salary like every other president and nobody would bat an eyelid.

    Regarding the interests rates and corruption argument, you can rest assured that it is all priced into the current rates already. The system knows itself.

    • patrick newman
      November 24, 2016 at 1:07 pm

      Apologist – those who lick the ass of coporate moguls can enjoy the trickle down.

  2. patrick newman
    November 24, 2016 at 1:09 pm

    If the Donald does not face an impeachment action in the next four years I shall emigrate to Mars!

  3. F. Kautz
    November 24, 2016 at 1:47 pm

    Trump “theft”? Does anyone seriously think any particular Trump-related business transaction (past, present, future) actually moves the economy or Federal Reserve policy? I think Michael has it exactly right in his last paragraph. Where was the outrage over the Clinton Foundation “pay-to-play” facilitated by a sitting Secretary of State? The implications of that type of behavior are much more momentous for the economy and the country than these speculative outcomes. This is not to dismiss the concerns around possible conflicts of interest, which have been present for every presidency since George Washington. Some perspective here (particularly with regard to influence peddling at the highest levels of government as well as the functioning of markets) would be appreciated.

    • patrick newman
      November 24, 2016 at 5:22 pm

      You have almost dimissed concerns about conflict of interests.

  4. Dave Raithel
    November 24, 2016 at 1:59 pm

    “[T]he president can’t have a conflict of interest.”….And so when the President does something, it is not illegal?

  5. November 24, 2016 at 5:45 pm

    “… Trump may hand billions to his friend and campaign contributor, John Paulson , by reprivatizing Fannie Mae and Freddie Mac. ” OK, so you would have a president-not do something in the best interest of democracy such as not to nationalize, because he would be accused of “conflict of interest”. Would he be guilty of the same conflict if he ‘privitized’ by paying a fair price for the outstanding value of Fannie & Freddie ? BTW, how loud an uproar would you make it Trump were to completely divest all interest in the “Trump Group” with a 500million share IPO @ $20/share,
    while not allowing his family to ‘buy in’.? Trump giving half to his family and purchasing Treasuries w/ other half.

  6. November 25, 2016 at 4:10 am

    The Presidency is a dirty job. Impossible to do it without getting some mud on you. Arguably the most corrupt Presidential administration in US history was that of US Grant. Grant was an honorable and honest man. So how could his administration be so corrupt? My answer, Grant was honorable and honest. Many of those who made up his administration were not. So corruption is a matter of intent. Grant did not intend to act corruptly. Many of his cabinet members did. Is it Trump’s intent to act in a corrupt manner? Based on Trump’s personal and business history I think the answer is yes.

    • robert locke
      November 25, 2016 at 11:50 am

      It is not clear to what standard Trump can be held to; he is unprincipled, which might be worse than being corrupt.

      • November 26, 2016 at 11:42 am

        We can examine Trump’s history to get some ideas about his “operating” parameters. That history seems to show Trump as a narcissistic opportunist focused on money and the good life. He seems to accept few restrictions on his behavior, apart from avoiding jail time. At the same time Trump seems to be a classic rich kid, private schools class bigot, with a distinct like for and need to ridicule those he sees as inferior to himself. Except for the last part Trump is George W. Bush on steroids.

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