Ed Dolan's Econ Blog

Why Do Top Execs Fear Trump, and Fear to Say So?

It is not surprising that there is little love for Donald Trump’s presidential candidacy among the leaders of top US multinational corporations. Why then, asks Andrew Ross Sorkin of the New York Times, do they not speak out? Why do they quickly follow up their private comments with, “I could never say that on the record”? I find some of the views reflected in Sorkin’s article disturbing.

The attitudes of top executives would be more understandable if they centered on the issue of free trade, but they do not. Yes, big business has profited from past trade deals and backs new ones like the TPP and TTIP, which Trump promises to cancel. But Trump’s Democratic opponent and a majority of Congressional candidates from both parties have also joined the anti-trade bandwagon, so trade policy is in for a change no matter who wins this election. As Trump himself would say, there’s something else going on.

Trump the bully is one broader fear of the executive class. Sorkin quotes Reid Hoffman, co-founder of LinkedIn, who was one of the few willing to speak to him on the record:

People are fearful that, especially in a circumstance where he might be in a position of extreme power as a potential presidential candidate, that would be used in a retaliatory way, that would be used in vengeful way. Everyone gets worried about being attacked, and part of the logic and mechanics of bullies is that they cause people to be fearful that they’ll be singled out and attacked.

It’s the same thing like on school grounds, when people won’t go help the kid who is being bullied because they’re worried that the bully will focus on them.

Yes, it is frightening to think about the ways a thin-skinned and vengeful President might misuse the office. The entanglement of corporations with government is such that there would be many opportunities to punish enemies. Taxes, regulations, and government contracts would be some of the most direct, but backdoor methods like planting rumors or leaking documents might be easier, and just as damaging. A President Trump might install a compliant security chief who would give him access to a company’s internal phone and email communications, encrypted or not. The tools at the disposal of a spiteful president would make something like closing a bridge look like a playground prank.

Then, Sorkin makes another point, one that I find even more disturbing:

Technology companies are afraid that Mr. Trump might criticize their approach to privacy, as he did with Apple. Wall Street banks worry he might seek to break them up. Health care companies are nervous that he might attack them over pricing. Multinationals are worried about trade. All of these are valid issues on the campaign trail — but with Mr. Trump, unlike other politicians, the criticism seems more personal and vitriolic.

I interpret this as saying that the executives do not so much fear that Trump will interfere with their legitimate business activities, but rather, that he will stop them from doing things that they shouldn’t be doing in the first place. It suggests that the biggest corporations are trembling at the prospect that this populist outsider would break up the cozy relationship they have had with government for as long as they can remember.

Corporate leaders are, apparently, confident that no business-as-usual administration, whether led by a Bush, an Obama, a Clinton or a Romney, would barge into the temple and overturn the tables of the money changers. Under a normal president, the big banks know they could continue to run outlandish risks with other people’s money (ours). Big Pharma could continue to charge $100,000 for pills that cost $10 to make. The lords of Silicon Valley could continue to snoop on our every key stroke and sell the data to their corporate pals. Their fear, it seems, is that Trump would expose their game. With a campaign style that is less dependent on expensive TV ads, he might spurn their campaign contributions. He might even ban their lobbyists from his golf courses.

So where does this leave us? I see the fear of Trump as bully-in-chief as valid reason to vote for anyone else, but the prospect of Trump as the enemy of crony capitalism would, if credible, incline me to consider voting for him.

On balance, though, it is my judgement that the first fear is better grounded than the second one. I can more easily see a President Trump using the institutions of government to take revenge on perceived enemies than I can see him breaking up the game of corporate rent seeking.

The fact is that Trump himself has played the game of crony capitalism for years. It would probably be easy for Fortune 500 executives to coax and flatter him into making the kind of deals they want, just as Russian President Putin might flatter him into trading Estonia for the right to build a Trump Tower across the street from the Kremlin. Also, the President just isn’t powerful enough to break up the banks or order drug companies to change their pricing policies by executive action. For the most part, big business could still count on allies in Congress, the courts, and the regulatory establishment. (On trade, it is another matter. As Justin Wolfers points out, a President Trump could start a trade war with surprising ease.)

Still, with Trump, there is always a risk. No one can know for sure what he would do or what kind of deals he would make. On the whole, Clinton is has to be seen as a safer bet for Corporate America. Even though a Clinton White House, too, might be tempted to bully those it didn’t like, there is little danger that President Hillary would threaten the core interests of Big Banks, Big Data, or Big Pharma. After all, that is what the Democratic primaries were about, and Clinton won those.

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