Conflict of Interest and Moral Codes

I was under the impression that we all agreed that government officials should do everything to eliminate both the reality and the appearance of acting for financial gain before, during, and after serving as a public figure.

Trump_teethApparently, that was naïve of me, as President-elect Trump has signalled his plan to turn over his business to his children, with details to follow in January 2017.

Wall Street Journal columnist Holman Jenkins wrote recently that any President is “always conflicted,” and therefore maybe President Elect Trump should be cut some slack with respect to his and his family’s business interests.

As Trump declines to fully separate himself from the family business, “Why not widen our tolerance a bit?” asks Jenkins. “Why not allow that Americans have the right to pick a business owner as President? Let’s see how their choice plays out.”

No, let’s not. People who make public policy should not have a private financial stake in the outcome, or even the appearance of a stake in the outcome. Shifting the Trump businesses to his children does not solve this problem. Even if the Trump family members aren’t seeking to profit from government ties, both critics and favor-seekers will assume that’s the case. That assumption itself undermines basic good government.

I understand Trump supporters view his business success as a kind of protection against financial corruption. After all, he and his children don’t need the money. Personally, I like the idea of a wealthy businessperson in office who therefore should be “immune” to financial temptation.

But that’s not even the point. People will still assume that policy isn’t made with the public’s interest foremost in mind. His critics will assume everyone’s on the take. Allies and favor-seekers will attempt to gain an advantage however they can. Is that great hotel site with water views in Costa Rica worth $50 million? Maybe selling to the Trump children for just $40 million gets an important meeting set up. Revisiting Dodd-Frank banking regulation soon? I’m happy to review those financing terms for you, Mr. Trump, Jr.

What real estate seller anywhere in the world wouldn’t want to cut them a good deal? What bank wouldn’t offer preferential terms?

Mafia
Mafia

The widespread idea that people get rich off of public service is an insidious termite nest, eating at and hollowing out the foundations of a republic. Successful generals in the late Roman republic generated extraordinary, corrupting wealth through their public offices. Latin American governments and Putin’s Russia offer past and current examples of the corrupt practices and cynicism it engenders about government. This is not a “Let’s see how their choice plays out” situation. We already know how it plays out.

Different moral codes

Jane Jacobs in Systems of Survival: A Dialogue on the Moral Foundations of Commerce and Politics argued that a completely different set of moral codes defines how people in government should act versus how people in private enterprise should act. The two moral codes are each valid, and each work independently and properly in parallel, when contained within their own system. The blending of the two moral systems, however, leads to criminal outcomes and a breakdown of trust in society.

I read this about 20 years ago and haven’t seen a better explanation since.

The partial list of the proper moral codes of government workers – and here you could picture the police and military, plus political campaigners and government office holders – include the following precepts: Shun Trading, Be Obedient and Disciplined, Adhere to Tradition, Respect Hierarchy, Be Loyal, Take Vengeance, Dispense Largess, Be Exclusive, Show Fortitude, and Treasure Honor. Those moral codes make me picture an impressive old county courthouse, commanding a bit of awe. In a government and public service context, these moral precepts work best.

 

A partial list of the proper moral actions of business people – and here you could picture a trading firm, a technology startup, or a busy coffee shop – include the following codes: Shun Force, Collaborate Easily with Strangers, Compete, Use Initiative and Enterprise, Be Open to Inventiveness and Novelty, Be Efficient, Be Thrifty, Dissent for the Sake of the Task. I’m picturing an open floorplan marketing company with comic-book colored walls, glass conference rooms, and the smell of caffeine. In a business context, these moral values work best.

The point is not which code of conduct is morally superior, but rather that each code is consistent and appropriate to the job at hand.

Jane_jacobs
Jane Jacobs, activist and brilliant writer

The problem, Jacobs explained, is when you mix the two moral codes. The mixing leads to monstrosities. The Mafia, for example, is a for-profit business enterprise which employs moral codes from the government side, like loyalty, largesse, honor, and vengeance. Government office holders, on the other side, slip into corruption when they adopt values like of profit-seeking, inventiveness, and enterprise. Private armies and mercenaries are a special kind of mixed moral-code monstrosity, as is anytime we see politicians engaging in clear pay-to-play practices. What is moral and good in one context is not moral and good in the other.

Democrats too

By no means does one party have a cleaner history than the other on this. According to biographer Robert Caro, Lyndon Johnson built an ill-gotten fortune through pressuring businesses in Texas to advertise with radio stations nominally “owned” by Lady Bird Johnson, while Johnson served in Congress and the Senate. Technically (technically!) they weren’t his, but come on, “entrepreneurial activity” in this context is obviously wrong. Al Gore reportedly left the Vice Presidency in 2000 with a $1.7 million net worth, which then grew to an estimated $200 million net worth by 2012 through media, technology, and solar investments. I have a hard time believing his business partners solely valued him for his business acumen, rather than his government experience. The $240 million in income reportedly earned by the Clintons in their post White House careers also disgust me. They mixed the separate moral codes of business and government in a monstrous way, and they unfortunately set the stage for Trump to blow off calls to fully separate himself from his family’s businesses.

The point should not be “forget it, because both sides do this.” The point is, we should not be ok with the mixing of profit and public service, nor even the appearance of it. People will assume it’s happening with Trump’s family. We can’t do what Jenkins suggests, and normalize it, accept it, and “see how their choice plays out.”

Accepting this kind of moral monstrosity moves the republic much close to the Russian and Latin American model, and that’s not a good thing.

 

Please see related posts:

Curt Schilling and Rhode Island – The Moral Monstrosity of “Economic Development Politicies”

Book Review: Systems of Survival: A Dialogue on the Moral Foundations of Commerce and Politics, by Jane Jacobs

Book Review: The Death and Life of Great American Cities, by Jane Jacobs

Book Review: Cities And The Wealth of Nations by Jane Jacobs

Trump – Why I Can’t Sleep At Night

 

Post read (172) times.

Trump Part III – The Use of Security Crises

angry_trumpI can’t predict the future, but we know every US President is tested by security crises – whether domestic or foreign. President Trump’s four years will be no different.

[While I’m not predicting the future, in previous posts on Trump I am having nightmares of a potential future, and reviewing the past rise of authoritarians.]

We don’t know if the biggest threat will come from domestic disturbances or jihadists at home. We don’t know whether the crisis will be abroad, like a foreign military threat. We do know there will be heightened moments during and after a security crisis when we as civilians are especially frightened for our safety.

Those are the times when society turns eagerly to the institutions with a monopoly on the legitimate use of force – institutions like the police, the FBI, spy agencies, the National Guard, and the Army.

It’s precisely at that time that we are most vulnerable to leaders’ worst instincts. It’s then that we willingly vote in – with few Congressional dissenters – the Patriot Act, to give up our protections from domestic surveillance. When we are under direct attack we (many of us) seem willing to condone the creation of Japanese internment camps.

It’s then that we applaud extrajudicial interrogation techniques – like waterboarding – that authoritarians seek.

japanese_internmentThe Turkish premier Erdogan is right now using the crisis opportunity of the failed coup in Turkey to jail or fire independent voices from the universities, the press, the military, the judiciary, and the civil service.

Former Congressman, Obama White House Chief of Staff, and now mayor of Chicago Rahm Emanuel famously counseled, “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” [1]

In the authoritarian’s hands, what use can he make of that inevitable security crisis? What opportunity will he take to do the things he could not do before?

When the next lone-wolf jihadist shoots up a movie theater, will that be the pretext that Trump needs to register all Muslims for a government database as Trump says he wants to do? When the next dead-ender pledges allegiance to ISIS on Facebook just before shooting up a mall, does that mean Homeland Security shuts down all immigration from majority Muslim countries as Trump says he wants to do? When Russian irregulars in civilian clothes in Estonia, Latvia, or Lithuania ask for Russian military intervention to protect their rights, and Putin responds with another opportunistic strike, how does NATO, and our country, respond?

homeland_securityTrump does not have to enact a false flag attack – As Putin’s FSB seems to have done – in order to take advantage of a security crisis to enact his plans. We will have incidents around which he and his national security team can build a case for breaking with constitutional norms.

Trump has told us over and over how he yearns to bully perceived enemies. He has demonstrated a vengeful character throughout his campaign.

We know that vengeful instinct because we’ve even felt it ourselves, when we feel attacked. What will we give up, that we can’t get back again, when we’re most fearful?

In January Trump will control the awesome power of the US national security apparatus. He will wield more power to threaten, detain, injure, and kill people than anyone else on the planet. This is part of why I can’t sleep.

 

Please see related posts:

Trump Part I – Fever Dreams

Trump Part II – Review of Recent Elected Authoritarians

Trump Part IV – The Use of Economic Crises

Trump Part V – The Constitutional Crisis

Trump Part VI – Principled Republican Leadership

 

And related posts:

Candidates Clinton and Trump: Economic Policies

Candidate Trump on US Sovereign Debt

 

[1] Winston Churchill also gets credit for this one. Because Churchill said every clever thing that’s ever been said, like, ever.

Post read (303) times.

Trump Part II – Rise of Authoritarians

Trump_handsThis is part 2 of probably 6 posts on Trump, of which the first one is here. These are not predictions of the future per se, but just a recording of what I worry might happen, and why I can’t sleep at night.

A slow unfolding

It takes a long time, sometimes years, for the authoritarian to tip the system in his favor, to undermine enough counterbalancing institutions that he can no longer be opposed.

A leader willing to do whatever it takes to keep and increase power can – over time – chip away at resistance. After a few years, there might be very little left standing in his way.

Chavez

I remember well the day after the election of Chavez in Venezuela in 1998, as I worked on Goldman’s Latin American bond desk. We hardly knew Chavez’ name and background, but our economist who covered the Andean countries warned us that this would certainly be a catastrophic regime for Venezuela. He was right, although it took some time to play out that way.

chavez_angryFirst Chavez had to replace governors and mayors with loyalists. He needed to delegitimize the opposition parties and the opposition newspapers. He needed to overturn the system.

Like many authoritarians, Chavez initially sought the legitimacy of constitutionality. He called a constitutional convention in 1999, and had it 95 percent packed with Chevez loyalists. These conventioneers in turn set about abolishing the existing legislature and courts.

A new single house of Congress replaced the old Congress, and handed legislative authority over to Chavez. The Presidential terms was extended to six years, with the chance for reelection, which of course Chavez got.

The Supreme Tribunal of Justice – established at the constitutional convention of 1999 – has recently been rated the most corrupt court in the world by Transparency International.

As fragile as Venezuela’s political system had been at the time of Chavez’ election, it started with important political checks in the form of two parties that had alternated power for decades, a free press, and strong banks. Dismantling them took time, consistent pressure, and some populist violence. Fomenting a constant state of semi-war against Colombia, plus the perceived threat of the United States, helped consolidate Chavez’ power.

Putin

Putin’s rise from semi-obscure Yeltsin-appointee to seeming lifetime Tsar of Russia was not pre-ordained. Many steps along the way helped him eliminate rivals and seize complete power over the Russian state.

putin_angryPutin has only slowly dismantled an independent domestic press through intimidation, “tax investigations,” violence, and the murder of journalists. He coopted business oligarchs with whom he could do a deal, and jailed or exiled those who would not cooperate. Regional Governors are hand-picked by the President in Russia.

All along, Putin has been careful to cloak his actions in constitutional forms. The legislative Duma is dominated by Putin’s party – along with some acquiescent minority parties like Communists – with the veneer of regular elections to signal legitimacy.

Putin rise is a sort of blended electoral victory and seizure of power in the face of corruption and chaos. He became acting president following the resignation of the ailing Boris Yeltsin, and then won election in 2000 by a 53% to 30% margin. Putin, like Chavez before him, has insisted on holding regular elections and even respecting the letter of the law regarding Presidential term limits, even while few believe he ever took his hands off the levers of power during Dmitri Medvedev’s Presidential inter-regnum, 2008 to 2012.

Putin’s accession and consolidation of power was greatly aided in September 1999, however, by a series of apartment building bombs blamed on Chechen rebels but believed by many to be the result of a ‘false flag’ operation by Russian security forces, known as the FSB.

Putin’s rise may be the most relevant example to watch with Trump. Dangerous authoritarians may arrive via the ballot and constitutional legitimacy, only to set to work to undermine that same constitutional structure. I think that’s what I’m most worried about with Trump.

The first few months

Gaius_Marius
Gaius Marius: The Beginning of the End for Rome

History does not afford us counterfactuals with which to test the following claim, but it seems the first few months and the first two years in particular are when brave patriots have to stand up and take risks in the face of encroaching authoritarianism.

If the authoritarian finds little resistance to eroding institutional checks on his power, the regime can move much more quickly. I am worried about where the checks and balances on Trump’s power will come from in his first few months in office.

Gaius_MariusI’m desperately reading Plutarch’s Fall of The Roman Republic right now, looking for signs of the end of our republic. Plutarch describes Senators bowing before the Roman strongman Gaius Marius[1], who demanded a humiliating oath. One of Marius earliest mentors Metallus remains an honorable Senator to the end, saying:

“It is certainly sordid to do the wrong thing, and anyone can do the right thing when there is no danger attached; what distinguishes the good man from others is that when danger is involved he still does right.”

Where is the principled institutional opposition to Trump? Are there enough good men and women?

I assume the Democratic opposition – such as it is in 2016 and 2017 – will try its best. I expect newspapers and legitimate news organizations will continue to claim that the rise of Trump is “Not Normal” in terms of the threat to constitutional government in the United States.

Hitler_New_York_Times
NYTimes on Hitler, in 1922: He probably doesn’t literally mean that Anti-Semitism, does he?

What will the courts do? Will a Republican Congress stand up to him? How will governors and mayors respond? Will good people in the FBI, the military, the police, and the NSA do what’s right, rather than what he may ask them to do? All of these people and institutions will be tested.

 

Please see related posts on Trump:

Trump Part I – Fever Dreams

Trump Part III – The Uses of A Security Crisis

Trump Part IV – The Uses of an Economic Crisis

Trump Part V – The Constitutional Crisis

Trump VI – Principled Republican Leadership

Also, previously:

Trump as Candidate – Sovereign Debt Genius

Clinton and Trump as Candidates – Economic Policies Compared

 

[1] Marius was born 57 years before Caesar and ruled Rome approximately 50 years before him. His authoritarian descent into murderous rule – followed by similar strongmen like Sulla – is one of the precipitating events leading to the fall of the Roman Republic and the conversion of the Republic to an Empire under the Caesars.

Post read (397) times.

Trump Part I – Fever Dreams

trump_angryI haven’t slept well since the Presidential election.

The Trump presidency – an unlikely nightmare until the night of November 8th – suddenly became reality.

Taking Trump Seriously

A week before the election, Trump’s biggest Silicon Valley supporter (PayPal founder, early Facebook investor, and Gawker Destroyer) Peter Thiel offered us all some insight.[1]

“…[T]he media is always taking Trump literally. It never takes him seriously but it always takes him literally. I think a lot of the voters who vote for Trump take Trump seriously but not literally.”

He was right about the media – and probably many Clinton supporters – that Trump as a candidate often seemed fundamentally un-serious. We are now beyond the realm of what voters thought, and into the new world of Trump as President. We have to take him both seriously, and literally.

And that’s what keeps me up at night. His literal words are a nightmare.

Fever-dream of the future

What follows here are not predictions – as people who predict the future generally don’t know what they’re talking about (or they have something to sell.) I have nothing to sell. So these are not predictions, but rather fever-dreams of a possible future.

I need to write this down because I want – if any of the worst comes true – to be able to record that we knew this was possible, even from the beginning.

If Trump turns out to be the authoritarian that I fear he is, I at least want the (sad, pitiful) solace of being able to say “we saw the signs from the very start. We knew what could happen.” I think it’s safe to say his supporters and voters do not fear an authoritarian Trump regime in the same way I do. I hope for all our sakes, I am wrong and they are right.

It’s also safe to say many of Trump’s opponents do not fear Trump in quite the same way I do. By that I mean as a middle-class straight white male I don’t have precisely the same personal fears of Trump’s Presidency as do others. Although I’d like to think I’m “woke” enough to heed Neimoller’s warning about what will happen when they finally do come for me.[2]

My own fears about Trump tend to focus on an institutional crisis – his clear threats to constitutional democracy.

I find myself looking back at the rise of earlier demagogues and authoritarians, looking for lessons and signposts.

The authoritarian’s rise

The rise of demagogues and authoritarians does not pertain specifically to a story of the Left or Right. We need to study and understand the Hitler narrative, but also Hugo Chavez, and Vladimir Putin. These stories can teach us the patterns, and we need to study and watch these patterns closely.

First, dictatorship often comes through the ballot box. It did for Hitler, who led a minority Nazi party invited into power and legitimacy by arch-conservative plutocrats who decided it was better to have him inside the tent[3], where they could better control and benefit from his worst impulses.[4]

It did for Chavez, who legitimately won the Presidency of Venezuela in 1998 via an election.

A few people since the election have linked to a passage from philosopher Richard Riorty’s 1998 Achieving Our Country with a vision of a strongman coming to power in the United States. I’m afraid it’s too scarily accurate. It captures what’s happened, so far.

From Riorty’s book:

“…Members of labor unions and unorganized unskilled workers, will sooner or later realize that their government is not even trying to prevent wages from sinking, to prevent jobs from being exported…that suburban white collar workers are not going to let themselves be taxed to provide social benefits for anyone else. At that point, something will crack. The nonsuburban electorate will decide that the system has failed and start looking around for a strongman to vote for – someone willing to assure them that, once he is elected, the smug bureaucrats, tricky lawyers, overpaid bond salesmen, and post-modernist professors will no longer be calling the shots.

A scenario like that of Sinclair Lewis’ novel It Can’t Happen Here may then be played out. For once such a strongman takes office, nobody can predict what will happen. In 1932, most of the predictions made about what would happen if Hindenburg named Hitler chancellor were wildly over-optimistic.

One thing that is very likely to happen is that the gains made in the past forty years by black and brown Americans, and by homosexuals, will be wiped out. Jocular contempt for women will come back into fashion. The words “nigger” and “kike” will once again be heard in the workplace. All the sadism which the academic Left has tried to make unacceptable to its students will come flooding back. All the resentment which badly-educated Americans feel about having their manners dictated to them by college graduates will find an outlet. But such a renewal of sadism will not alter the effects of selfishness. For after my imagined strongman takes charge, he will quickly make his peace with the international super-rich, just as Hitler made his with the German industrialists.

… He will be a disaster for the country and the world. People will wonder why there was so little resistance to his evitable rise. Where, they will ask, was the American Left? Why was it only rightists like Buchanan who spoke to the workers about the consequences of globalization? Why could not the Left channel the mounting rage of the newly dispossessed?”

 

All I can say is: Riorty, in 1998, was accurate!

 

Please see further Trump posts:

 

Trump Part II – The Rise of Elected Authoritarians

Trump Part III – The Use of a Security Crises

Trump Part IV –  The Use of an Economic Crisis

Trump Part IV – The Constitutional Crisis

Trump Part VI – Principled Republican Leadership

And related Posts:

Trump as Candidate – Sovereign Debt Genius

Candidates Trump and Clinton – Economic Policy

 

[1] It appears that Thiel probably lifted and amplified the phrase from a headline and article by Selena Zito in the Atlantic that appeared in September 2016.

[2] The German Protestant pastor Martin Niemoller’s warning of course reminds us that although I will not be picked up first, I and everyone else has a duty to speak out about authoritarian round-ups:

“First they came for the Socialists, and I did not speak out – Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out – Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out – Because I was not a Jew.

Then they came for me – and there was no one left to speak for me.”

 

[3] Pissing outward, etc etc

[4] Trump was not particularly embraced by his country’s plutocrats before the election. Technology and finance titans from Soros to Silicon Valley executives on the (presumed) left opposed his campaign, while many of the plutocrats on the right (including the politically-active Koch brothers) similarly declined to support him prior to the election. Famously, no CEOs of Fortune 100 companies backed Trump publicly, while 11 CEOs backed Clinton. Some of that lack of CEO support may be explained by the fact that Clinton was ahead in the polls, and therefore a safer bet, all the way until election day. But still, Trump certainly wasn’t “handed the throne” by a group of high-profile business elites.

Post read (1205) times.