Trump, and Why Corruption Matters

The New York Times recently carried a blog post by columnist and Nobel Prize-winning economist Paul Krugman about US president-elect Donald Trump and the worries that Trump would be unable, or simply unwilling, to disentangle his business dealings from his activities as president.

Krugman argued that the real danger was not that Trump’s entanglements would foster corruption and that said corruption would bring trump profits. The problem, Krugman argued, is the way such entanglements would warp the incentives of the world’s most important decision maker.

This is just right, as far as it goes. The problem isn’t that Trump might make money. If he ends up richer after a term as president than he was before, that in itself is not necessarily a problem. (Barack Obama, for example, is wealthier today than he was 8 years ago. Book royalties — hardly blameworthy — are the main source of that wealth.) No, the problem is that the desire to make money, or even a subconscious awareness of the opportunity to make money, will affect the way Trump, and the senior policy makers he appoints and for whom he sets an example, make decisions. When Foreign Policy A is, let’s say, “revenue neutral,” whereas Foreign Policy B stands to benefit Trump, or his blind trust (if he establishes one) or his kids, what are the odds that Policy B will win the day? And will it matter to Trump that Policy B isn’t as good for America as Policy A would have been?

This, at a first approximation, is the real problem with conflict of interest. A conflict of interest is a situation in which a decision-maker is entrusted with making important decisions on behalf of someone else, and in which that decision-maker has some further, “outside” interest (often, but not always, financial) which may stand to influence their decision making. The problem here is not the opportunity for enrichment; the problem is that the responsibility to put someone else’s interests first, to do what’s right for them is in jeopardy. The professional literature on conflict of interest is pretty much consistent on this point.

But I would argue that the real worry is one step more subtle than this. As my colleague Wayne Norman (Duke University) and I have argued in print, the real problem with conflict of interest is not just that this decision maker will make bad decisions this time, or even that this decision maker will make bad decisions all the time. The real risk is loss of faith — loss of faith in the entire institution in which the decision-maker is embedded. So, were a judge to adjudicate a case involving a loved one, the risk is not (merely) that she might render a bad decision. The risk is that onlookers would begin to doubt the objectivity of the judicial system as a whole. When a physician prescribes expensive medications made by a company in which she just happens to own stock, the real risk is not that this won’t be the right medicine, but that patients will come to doubt, quite generally, the motives underlying their physicians’ decision-making.

Do people already mistrust politicians? Sure. Survey results bear that out. But the mistrust of politicians is, in North America at least, not universal and hasn’t resulted in, for example, widespread abandonment of political participation. Most of us are still capable of being shocked.

So the real risk inherent in the nearly inevitable entanglement of Donald Trump’s financial and political lives is not that he’ll make money, and not (just) that he’ll make bad policy decisions. It’s that the Trump era will make corruption, or even just the routine mishandling of conflict of interest, normal, the kinds of things we all take for granted.

9 comments so far

  1. jpbauer of smashing rock on

    Well stated Professor MacDonald. A country’s legal system is only as good and effective to the degree in which it’s citizens have faith and trust that the Courts will fairly and impartially dispense justice for all.

  2. Sabrina Bagus on

    The real risk is loss of faith — loss of faith in the entire institution in which the decision-maker is embedded.

    This statement has really hit me. Of course, we are all scared now of what might happen. However, what will come after Trump? He already starts realizing some of the worst promises he made. This is more than shocking.
    But your quote goes even further. What will these politics do with the people in the system? How will it affect their general cultural and political attitude?
    Unfortunately, we can’t look into the future.
    However, somehow I hope that these drastic politics will have positive effects on the upcoming elections for us here in Germany and many people start thinking about their opinions again.

  3. Rita Watson on

    The question remains, what are moral rules and law? What is the best way for followers to respond should their leader not demonstrate positive characteristics? I think that the group (the followers) needs to have the fortitude to stay the course and not backslide because their leader is lacking in some areas. I believe that followers can and should encourage each other especially if and when a leader’s business ethics is floundering and by their good example, the leader may take notice and be encouraged to change for the better. “We are more than conquerors through Him who loved us” (Romans 8:37). It is my belief that if more leaders who follow God’s ways will enter government and corporate arenas as a legitimate place of calling, then we might see more and more positive change in the overall character and business ethics of many leaders today and into the future.

    January 29, 2017

    • Chris MacDonald on

      Thanks for your comment. But I know of no demonstrated correlation between godliness and ethics in leaders.

      • Jessica Kage on

        I believe that God is the reason that we all have instincts from natural law.
        “My argument against God was that the universe seemed so cruel and unjust. But how had I got this idea of just and unjust? A man does not call a line crooked unless he has some idea of a straight line. What was I comparing this universe with when I called it unjust?”
        ― C.S. Lewis, Mere Christianity

        If you haven’t read Mere Christianity, I definitely recommend it.

      • B Trammel on

        There is certainly plenty of truth in your statement Mr. MacDonald. What you may be missing is the fact that most politicians only claim to be Christian to influence voters. Not because they actually are. When was the last time you heard a leader quote from Scripture to correlate a sound decision?
        On the other hand, what correlation have you found between heresy or Atheism and ethics in leaders?
        Whether they subscribe faithfully to what it teaches or not, the Bible at least teaches us how to treat one another ethically. To at least have some exposure to the lessons would be better than none at all.
        Why is everyone so quick to dismiss ethical teachings simply because a number of the teachers have been shown to be unethical? I have a feeling Ken Lay and Jeff Skilling (amongst many, many others) might have attended some Business Ethics courses. Should we dismiss all ethics because of their failures?

      • Chris MacDonald on

        Thanks for that. I’ll amend my statement: I know of no demonstrated correlation between either actual OR claimed godliness and ethics in leaders. I don’t know of any evidence that (real or fake) religiosity matters. My default assumption is that religion is entirely irrelevant in this regard.

      • Chris MacDonald on

        p.s. I didn’t bring up religion; the commenter to whom I was responding (Rita Watson, above) did.

        And for what it’s worth, I don’t claim that Business Ethics classes make people more ethical, either. That’s not what they’re for.

  4. B Trammel on

    Dr. MacDonald, (forgive me for failing to make the distinction earlier) I most certainly did not mean to insinuate that you made the claim. I have a tendency to ramble and the meaning of my posts can get lost. For that I apologize.
    I was mostly put off by the dismissive nature of your comment. I know how easy it is to lose the emotive nuances in written word, but it seemed that because of your perceived correlation, “Godliness” then held no ethical/moral ground.
    I was hoping to demonstrate that with my comparison, but I as I consider the facts, Lay and Skilling could never have been considered ethical leaders I don’t suppose.

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