Divergence From the Interests of Capital

Trump will ultimately make rich people poorer. Why?

This is how it ends. (Image via eBay)

One of the most interesting things about the current Trump administration is the fact that we have a Republican president who is boldly leading the nation down a path that is contrary to the standard interests of capital. I do not say this in a complimentary sense. This is interesting in the same way that the methods and predilections of a prolific serial killer are interesting. The actions are so far outside the norm that is is fascinating to try to understand why they are happening; and, by understanding them, we might be able to think more clearly about where this is all going, before everyone is dead.

Generally speaking, throughout the history of modern America, the government has worked on behalf of business. Foreign policy has been conducted in service of business interests, and domestic policy has been conducted with an eye towards generating maximum prosperity. The Democratic Party tends to lean a little more towards shared prosperity and regulation, and the Republican Party tends to lean more towards raw unfettered capitalism, but both have operated in service of the basic mandate of “protect and increase America’s wealth.” To say that money controls politics is a little simplistic—history shows that social movements and labor power and other countervailing forces have their impact—but if you are looking to reduce politics to a single variable, money is the one that will produce the most accurate predictions. Most of the policy disagreements of the past century, in the big picture, amount to how and whether to share the wealth more widely, and how and whether to make access to wealth more widely available. The parties have disagreed, somewhat, over who should be rich, and the government has certainly made misjudgments about how best to make Americans rich, but there has never been real, sustained opposition to the overall project of making America itself richer. Indeed, keeping this as our government’s highest value, and being willing to back it up with more guns than anyone else, has made us the richest nation in the history of the world. We have the dead bodies to prove it.

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This basic reality has also produced an easily intelligible political spectrum for all of us to locate ourselves on. The left wants to leaven this drive for wealth with the demands of justice—to create a system that will produce the wealth ethically and distribute the wealth fairly and use the wealth to provide for the welfare of all—and the right wants to unshackle the gears of capitalism and allow the wealth to be maximized even if it is created evilly and distributed unfairly. The left’s victories, in America, have been modest. We have created a social safety net and a system of workers’ rights that are, by the standards of wealthy Western nations, pretty poor. We have brought about much greater legal equality than there used to be, though unimpressive levels of genuine equality. The left has had more success during Democratic administrations that Republican ones, but in neither case has the left managed to fundamentally curb the government’s determination to prize economic growth as the nation’s highest goal.

Trump is doing something different: He is making decisions that will clearly harm the American economy, in both the short and long term. He is breaking things that are useful to business interests. Casting this as “right wing populism” is, I think, foolish—the media’s habit of describing Trumpism as “populism” reflects mostly a paltry vocabulary. Calling a man whose primary motives are narcissism and revenge and self-enrichment a “populist” does not really illuminate what’s going on here.

But something is going on here. Consider just a few of the ways that Trump is, either implicitly or explicitly, acting against the interests of capital:

• Destroying Government Services

  Yes, rich and greedy right wingers want to slash government services that they don’t need anyhow so that they can pay less taxes. What Trump is doing (and allowing Elon Musk to do), however, has veered far into the territory of breaking the load-bearing walls that facilitate America’s position as the world’s richest nation. Gutting libraries and cultural institutions and education will, in the long term, impoverish the work force and create a poorer nation. Firing the employees of the national parks will hurt tourism. Maniacally casting out immigrants harms businesses who need those people to fill certain jobs. And then there are specific things like fucking with the agencies that produce economic statistics, throwing the reliability of US government statistics into question. That is bad for business! They need those! Even traditional Republicans who would be happy to slash welfare and Medicaid and penalize Woke Colleges do not want the Treasury Department’s payment systems to malfunction, or to see the federal government snatching payments out of city bank accounts as a result of obscure political witch hunts.

  The Trump administration’s actions here have hurt American prosperity in ways that liberals would point out—by failing to invest in public services, you produce a worse educated and less healthy population, which is a drag on economic growth—but also in ways that conservatives would point out, like “stupidly breaking the parts of the government that allow our financial markets to function smoothly with no apparent plan.” This is not “populism” any more than a bite from an alligator is a kiss. This is just nihilism.

• Destroying Rule of Law

  The rule of law is a necessary ingredient for long term growth of businesses. Love “free” markets? Then you love the rule of law: it offers predictability of rules, and predictable enforcement of those rules. It is the thing that allows businesses to make long term investments and sign contracts and trust that those things will be governed by a transparent set of rules that all sides of the transaction understand. To the extent that business interests are always trying to carve out exceptions in the rule of law for their own benefit, they are playing with fire. Riddle the system with enough holes and, like a house chewed up by termites, it becomes brittle enough to collapse.

  The Trump administration is not just weakening the rule of law—it is replacing it with gangsterism, which is to say, the opposite of the rule of law. Trump is corrupt. So corrupt, in fact, that it is kind of alarming to me that we are not talking about his corruption even more than we are already talking about it. I mean, his family started some damn crypto companies and then he, as president, declared that he is going to get the US government to buy a ton of crypto. He is directly selling off pardons and commutations to felons who can pay adequate bribes. He is firing prosecutors who are Democrats and installing buffoonish loyalists in important legal positions, so they can conduct witch hunts on his behalf. The world’s biggest and most complex corporations have been reduced to paying bribes in order to directly beg the president for their priorities, at the club the president owns. Trump is trying to make the Fed a part of his own political operation, endangering financial markets for short term political gain. And he is seriously flirting with defying federal courts and plunging the nation into a constitutional crisis that it may not recover from any time soon.

  This is not good for business. If you want to chuckle ruefully to yourself, think about all of the corporate executives who were mad at Joe Biden because he wanted mildly higher taxes and the right of unions to exist and therefore supported Donald Trump, who is busy replacing the world’s most sophisticated corporate legal regime with a system in which you must grovel at his toes in a ridiculous red hat in order to get anything done. The sort of government that Trump is building can benefit a handful of select business allies, but at the expense of an entire market economy. Trillions of dollars of wealth are going to drain out of America if this continues. Global companies will not want to be headquartered here. Financial markets and their activity will move elsewhere. No rule of law means no predictability for business means no trust in our nation. Trump and his friends may be able to maintain their own little bubble of wealth, but America as a whole will get drastically poorer.

  This is not good for big business. It is not good for small business. It is not good for rich people, whose wealth is tied up in businesses and stocks that will be harmed by this collapse of rule of law. Bad!

  

  Is this what prosperity looks like?

• Trade War

  Trump is determined to do the tariff thing. In general, corporations hate this and so do business executives and so do investors and so do most economists. Even the interest groups that do support certain tariffs, like the UAW cheering on the auto tariffs, do so based on the assumption that the benefits of the specific tariff they like will be greater than the cost of the global trade war that Trump is initiating. That is an unappetizing bet in the long term. Trump’s affinity for tariffs is not the act of a man doing a favor for business interests. It is the act of a guy who has a weird idea in his head and has clung to that idea for decades because he believes he is the smartest man in the world.

• Real War

  In just months, Trump has cost the American weapons manufacturing industry hundreds of billions of dollars by scaring European and other allies so much with vague threats that they determined that buying American weapons is a risk that they can no longer take. That is not the sort of thing that Boeing and Lockheed Martin would lobby for. Nor is it the sort of thing that leftist peace advocates would hope for. It is an act of increasing global tension while harming US companies at the same time. A neat trick.

  By bizarrely threatening Greenland, Canada, and Mexico with various forms of hinted-at US invasion, Trump has gone a long way to destroying longstanding diplomatic and economic relationships with many of our closest allies. Is that good for companies who do business across these borders? No. It is not. Though war has historically been a way for certain victorious segments of capital to get rich, in this case, Trump is pursuing an inexplicable bellicose path that will result in extreme and unnecessary economic downside. If he actually takes any military action, he will cost American businesses a huge amount of money by disrupting their global operations, in exchange for… what… some air force bases in Greenland? The right to pillage the wilds of Canada for lumber? It’s a very Hitlerian idea of economic growth, frankly. Did Hitler’s wild invasions ultimate make Germany richer? No. They started a world war. And, no matter what anyone tells you, world war is not good for business.

  Imagine that the government has a choice: It can spend a million dollars to build a building, or it can spend a million dollars to blow up a building. Which investment contributes more to prosperity? Yeah.

This is just a quick and dirty sketch of a deep, dark ocean of harm that Trump is doing to the capitalists themselves. There is no 3D chess here! Unlike typical Republicans, Trump is not helping the billionaires, whose wealth is utterly dependent on strong financial markets and transparent legal regimes and smooth global trade and rising asset prices. They are going to be fucked by all of this! Their own greed has led them into a trap. In fear of short-term retaliation, they rush to support Trump’s administration, which will cause great long term harm to their interests.

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I hope that it is not necessary to point out here that this does not make Trump a victory for the left. He is not replacing the interests of capital with the interests of the people; he is replacing them with the interests of Donald Trump. This is in line with the remarkable pattern, seen throughout world history, of great nations finding themselves turned towards the service of a single corrupt ruler. What a fucking shame.

If you consider yourself politically engaged, if you are the sort of person who believes that you have a coherent theory of how politics works, and for whom, and why, Trump demands an explanation. Shoehorning his actions into the old “money buys power” slot doesn’t cover it. Here we have a rich man, supported by many other rich men, who is rapidly dismantling the system that has made all of them and their nation rich. It’s odd.

The most honest explanation for Trump’s actions are: He is insane. He suffers from a number of pathologies. That is fairly clear. The more important question is: How has this insane man managed to gain control of the government of the world’s richest and most powerful nation? That, my friends, is the unfortunate outcome of an economic system that has so profoundly failed to enforce economic equality, and a political system that so profoundly failed to protect its democracy from the influence of capital that it allowed itself to be totally captured by extreme lunatics backed by extreme wealth. And here we are. The whole thing is most notable for its absurdity. If it’s any consolation, all the capitalists who led us down this road are going to lose a shitload of money. Ha ha, fuckers.

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• Related reading: The Business Community Is Extraordinarily Stupid; Gangster Party; The Underlying Problem; Enough Wealth to Warp the Universe.

• Can we imagine a force that might be capable of balancing out the deleterious forces of capital that have drawn America into this spiraling pit of doom? Yes. It is called organized labor. The labor movement is the hope of our nation. If you want to know how and why, you might enjoy my book “The Hammer,” which is about this very topic. This weekend I’ll be speaking to the AAUP Conference at Wesleyan (which is open to the public), and I hope to see some of you there. If you’d like me to come speak to your group, email me.

• Thank you, everyone, for reading How Things Work. You may wonder: How does this bastion of free and independent media manage to keep on existing, these days? The answer is that we exist solely due to the financial support of readers just like you. I do not have a paywall on this site. Anyone, regardless of income, can read it. In exchange, I ask that, if you like this place, and can afford to pay a modest price to subscribe, you do so. All of us participating together in this system allow How Things Work to sustain itself and keep on growing. It works if we all work it. If you’re able, take a quick second to become a paid subscriber yourself right now. I appreciate you all for being here.