Brian Easton wonders whether we can trust the Trump cabinet to act in the public interest

This is a re-post of an article originally published on pundit.co.nz. It is here with permission.

Nine of Donald Trump’s closest advisers are billionaires. Their total net worth is in excess of $US375b (providing there is not a share-market crash). In contrast, the total net worth of Trump’s first Cabinet was about $6b. (Joe Biden’s Cabinet total was about $118 million and Barack Obama’s second-term Cabinet was about $3 billion.)

A US President’s cabinet is different from ours (or a British one) which has to come from the governing party caucus (or caucuses) and (partly) reflects its political balances – it may even contain members whom the prime minister loathes. The US system harkens back to the days when the kings chose their advisers who did not need to be in Parliament; compatibility need not be a problem unless the president picks a bunch of egoists.

In principle then, the President has a much wider choice, and ought to be able choose a Cabinet of greater competence. However, outsiders may not have a good grasp of the difference between business and politics. To take a simple local illustration, more than one party leader with a business background hasn’t understood that while the CEO appoints the workers, the workers/caucus appoint the party leader – which means that if the polls turn against a bullying or neglecting party leader, he or she will be out (if there is a viable alternative).

There is a tendency by the public to assume that because someone has succeeded in one arena they are expert in many others. In fact, where celebrities give opinions on which they have no expertise, their contributions are usually uninformed, with – at best – content as useful, as comforting and as platitudinous as a horoscope. Yet we listen with unwarranted respect.

In fact, the greater the success in one arena, the greater the confidence in others and the lower the competence. Nor should we assume that the luck that contributed to the success will continue elsewhere.

Before the 2008 Financial Advisers Act, a celebrity would front advertisements for a financial firm to give an impression of its integrity and competence. (A number of the firms collapsed much to the chagrin of their investors; some even had staff prosecuted for fraud-like offences.) Assessing the soundness of a financial business is not easy; auditors have not always been successful, nor have the retired bankers recruited to their boards. Why should uninformed celebrities do any better? Presumably enough of the public were credulous to make it worthwhile for the firm to outlay considerable amounts on a suitable celebrity. (Derek Quigley says he turned down a $150,000 fee to front an insurance company’s TV promotional campaign, at a time when the average wage was about $18,000 a year.)

No doubt among some of Trump’s billionaires there will be some who are competent and some who are not. But that is usual in any cabinet. The bigger concern is the extent to which they will use the opportunity to pursue their personal interests at the expense of the public interest. At his confirmation when being appointed as Secretary of Defense in 1953, the President of General Motors, Charles E. Wilson, said ‘what was good for our country was good for General Motors, and vice versa’. It is widely thought he said that ‘what was good for GM was good for America’, the sentiment implicit in his ‘vice versa’. The implication is that there are no conflicts of interest between business and the government.

You may recall that in his first term as president, Donald Trump signed a ‘historical trade deal’ with his ‘very, very good friend’ Xi Jinping that committed China to purchase $200b of additional US exports before the end of 2021. China bought none of the additional exports Trump’s deal promised.

I have not been greatly impressed by Trump’s international negotiating record. (Remember the cosying up with North Korean president Kim Jong-Un?) But perhaps I was looking in the wrong place. At the time he was doing the deal with China, that country was giving very favourable treatment to the fashion businesses of his daughter, Ivanka Trump.

Will this sort of thing be repeated in Trump’s second term, but tenfold? There will be even fewer checks on him this time, given that Congress is dominated by Trump supporters – for the next two years anyway. These were the concerns of those who designed the American constitution almost quarter of a millennium ago. I doubt they quite expected things to play out as they will over the next two years.

American social psychologist Dacher Keltner has amassed a huge amount of evidence which suggests that the more powerful people become, the more likely they are to act selfishly and ignore the consequences of their actions on others. While the conclusions are based on micro and experimental studies, they may well apply to macro-situations such as being in government. As Lord Acton said in 1887:

‘Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority, still more when you superadd the tendency or the certainty of corruption by authority.’

(Was Jimmy Carter an exception?)

While many may use the opportunities in government to enhance their wealth, the Trump Cabinet may not have ten billionaires (Trump plus nine others) when it steps down in four years time. Some may have left in frustration, either with the president or with the job. (It has been pointed out to Eion Musk charged with cutting government spending, that his new job is not rocket science – it is way much harder.) Some may end up with smaller fortunes – in some cases the current valuations appear to be based on over-optimistic valuations rather than underpinned by solid cash flow.

Moreover, there are concerning assessments that the world financial system is in the ‘Ponzi finance phase’ of the Minsky financial cycle. The last one was 17 years ago in early 2008. One could argue that a bust is more than overdue. As Herman Minsky wrote:

But in truth neither the boom, nor the debt deflation, nor the stagnation, and certainly not a recovery or full-employment growth can continue indefinitely.

The consequences of a bust would impact not only on billionaires but also on ordinary folk; indeed, more so. Providing they are not over-leveraged, the rich have much more cushion to cope with a shock. It is not uncommon for the amelioration measures to be more in the interests of the rich – recall how the financial sector made a pig’s breakfast leading to the Global Financial Crisis, but many of its employees kept their bonuses which were paid as a part of taxpayer bailouts. One would not expect a Trump Cabinet to behave very differently.

Bob Dylan sang ‘money does not talk; it swears.’

*Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian. He was the Listener economic columnist from 1978 to 2014. This is a re-post of an article originally published on pundit.co.nz. It is here with permission.