Saturday, December 3, 2016

Trump Should Scare the Hell Out of Generic Republicans: "Systematic Corruption"

Not quite sure what I think of this, but I saw an interesting article by Matthew Yglesias on what he saw as the greatest danger from Donald Trump (assuming he doesn't start a disastrous war).  Yglesias' argument is not just that Trump is corrupt to an unprecedented degree, but that he brings an unprecedented kind of corruption to the White House.  This is not the distinction I have made, that Trump's corruption is uniquely narrow, or that he is our first President who does not seem to distinguish between the public interest and his private interest.  Rather, Yglesias relies an an article predating any Trump candidacy, that draws a distinction between what it calls "venal corruption" and "systemic" or "systematic" corruption.

I should probably start here with a definition of "corruption."  Most people tend to see corruption rather narrowly, as bribery or some other sort of illicit financial gain.  But treating corruption solely as financial is too narrow.  I would define "corruption" to mean "subversion or cooption to an improper purpose."  Most people these days think of corruption specifically as meaning powerful private actors coopting government for their own purposes instead of the public good.  Yglesias and John Wallis, the author of the pamphlet, refer to this as "venal corruption."  So far as I understand it, systemic/systematic corruption is the opposite kind -- government subverting private actors to an improper purpose.  Yglesias explains:
We are used to corruption in which the rich buy political favor. What we need to learn to fear is corruption in which political favor becomes the primary driver of economic success. . . .  To be a successful businessman in a systemically corrupt regime and to be a close supporter of the regime are one and the same thing. 
Those who support the regime will receive favorable treatment from regulators, and those who oppose it will not. Because businesses do business with each other, the network becomes self-reinforcing. Regime-friendly banks receive a light regulatory touch while their rivals are crushed. In exchange, they offer friendly lending terms to regime-friendly businesses while choking capital to rivals.
As specific examples, Yglesias suggests the use of anti-trust legislation to break up media conglomerates that criticize Trump, or a National Labor Relations Board (NLRB) whose position on unions and labor disputes depends on the political leanings of the parties.  

Yglesias has discussed this sort of thing before.  His comments on the auto bailouts under Obama are revealing:
Opposition to the bailout was driven, in part, by the recognition that nationalization of an industrial enterprise is an open invitation to mismanagement and bad public policy. You could easily imagine a scenario in which the Obama administration made its partisan political objectives a key management priority at Government Motors. Alternatively, you could easily imagine a scenario in which Obama administration trade policy became dominated by the narrow interests of Government Motors rather than the broad interests of the American public. There's a good reason why sensible people don't normally recommend that the government own manufacturing companies. . . . . I think it's very understandable that Obama's political foes were not prepared at the time to simply assume that the administration was handle a post-nationalization auto industry in a responsible way. But the fact of the matter is that they did handle it in a responsible way and the skeptics were largely mistaken.
That sound very much like what he is describing as the danger from Trump, except that presumably in the case of Trump he would also own stock in GM and insist that it name its top model car after him.

But here is the thing about that type of corruption.  It is something I would expect the Republican donor class to care about.  It is the sort of government abuse I would expect them to fear the most because in this case they would be the targets.  In fact, I think it fair to say that at least one reason libertarian-esque people are so strongly opposed to economic regulation is the fear that it will be used in exactly this sort of way.   It is probably  not too much of a stretch to suspect that a lot of members of the Republican donor class would prefer a Democrat imposing what they would see as excessive and heavy-handed regulation, but doing so in an objective manner that a Trump Administration applying its regulatory powers based on political support and personal enrichment.

In short, this is something I would expect to meet with immense resistance, from extremely powerful actors in the Republican Party, including many who supported Trump in hopes that he would be their puppet.  They will let Trump get away with a great deal -- immigration, foreign trade, crazies in the Cabinet, conflicts of interest, racist appeals, sexual assault, erratic rantings, loopy foreign policy, and, for all I know, maybe even shooting someone in the middle of Fifth Avenue -- but there are two things I do not think the Republican donor class will let Trump get away with.  One is being a Russian agent (as opposed to a mere useful idiot).  If any solid evidence were to emerge of a quid pro quo in which Trump actively sought out the support of the Russian government in the election in exchange for a pro-Russian foreign policy, then I have no doubt that he would be impeached for it.  (And just for the record, I do not believe that any such evidence exists).  The other is any attempt to use the powers of the federal government to infringe on the freedom of the Republican donor class.

Already in the case of the Carrier Air Conditioning deal, we are starting to see push-back. James Pethokoukis of the American Enterprise Institute warns, "[T]his is all terrible for a nation's economic vitality if businesses make decisions to please politicians rather than customers and shareholders. . . . Imagine business after business, year after year, making decisions based partly on pleasing the Trump White House."  Reason Magazine (a libertarian publication) warns against, "a system in which corporations succeed and fail not based on their value in the marketplace, but based on their facility at making friends in the government, and friendly deals with the political class."  Even Sarah Palin,  the very embodiment of the Republican base politician who scorns its elite, has warned that the deal smacks of "crony capitalism."

Granted, we don't know whether this is a mere speed bump or the beginning of a big fight, but my own guess is that we should be looking for a big split here.

1 comment:

  1. Count me as extremely skeptical that Trump's crony capitalism will produce principled opposition from the bulk of the Republican donor class. There may be a few hardcore libertarians who will complain, but most of them are supporting the Republicans because they think it will benefit them personally. As long as their loyalty to the Republican party is rewarded by things being tilted in their favor, I don't expect to hear many complaints. It's only if and when Trump starts rewarding his personal cronies or new friends at the expense of long-time Republican donors that you'll hear real complaints.