Corporate America Is In Denial About the Danger Trump Poses

Like many of the very wealthy, leaders of many segments of corporate think their wealth, influence and economic power will shield them from the severe turbulence a second Trump regime could unleash.  The mindset is akin to that of many in late 1920's and early 1930's Germany held in the face of growing Nazi power.  Time proved that mindset to have been disastrously wrong and ultimately wealthy Jews found their wealth would not protect them from the Holocaust and by the end of WWII, much of Germany's industrial base was in ruins. A lengthy piece in the New York Times Magazine looks at the phenomenon and lays out just how bad a second Trump regime could prove to both everyday Americans and much of corporate America. At his rallies and in unhinged statements, Trump has made clear what he wants to do if he returns to the White House that could cause extreme pain for corporate America.  This threat is made far worse by the probability that many of the so-called "adults in the room" who restrained Trump during his first regime would be absent and in their place would be ideologues and extremists who care nothing about what most Americans and corporate America want.  The column is a wake up call to corporate leaders who need to seriously understand the turmoil and economic pain Trump could usher in.  Here are excerpts:

There was anxiety in the thin mountain air when the planet’s economic leaders gathered in January at Davos for the 54th meeting of the World Economic Forum. Donald Trump had just trounced Nikki Haley in the Iowa caucuses, all but securing the Republican nomination for president. Haley was reliable, a known quantity. A resurgent Trump, on the other hand, was more worrying.

Dimon presides over the largest and most profitable bank in the United States and has done so for nearly 20 years. Maybe more than any single individual, he stands in for the Wall Street establishment and, by extension, corporate America. With his comments at Davos, he seemed to be sending a message of good will to Trump on their behalf. But he also appeared to be trying to put his fellow globalists at ease, reassuring them that America, long a haven for investors fleeing risk in less-stable democracies, would remain a safe destination for their money in a second Trump administration.

But would it? As Dimon noted, for all Trump’s extreme rhetoric in the 2016 campaign — his threats to rip up America’s international trade agreements and his attacks on “globalization” and the “financial elite” — his presidency, like most presidencies, proved to be business-friendly. . . . . And the Trump administration’s economic agenda of reduced taxes and deregulation largely suited corporate America’s interests; JPMorgan saved billions of dollars a year thanks to Trump’s corporate tax cuts.

But Trump and those around him are signaling that a second Trump administration would be very different. They promise a more populist economic agenda and a more populist governing style to match, with steep tariffs on imported goods and punitive measures against companies that do business with China. And his team has been clear about the fact that Trump is ready to move ahead without the blessing of the business community. “You’ll see loyalists,” says Brian Ballard, a fund-raiser and former lobbyist for Trump. “Wall Street’s supermen who thought they were the smartest guys in the room? That sort of stuff he won’t tolerate.”

Scholars who have spent their careers studying populist movements are not confused about what to expect. They have seen this sequence of events play out before, to disastrous effect not just on democracies but on businesses — and business leaders. If history offers any guide, they say, it’s that the Davos crowd should be a lot more concerned about a second Trump term.

For all the free-floating anxiety at Davos, America’s executive class seems to be maintaining a base-line faith that its interests aren’t really on the ballot in November — that no matter who occupies the White House, the conditions that have kept it at the center of the global economy for a century aren’t in any real danger. But those conditions could easily change, and significantly.

There may be nothing executives can say or do that would make a difference at this point. But they might want to start considering their options. . . . “They are missing that this is a moment of systemic danger for capitalist systems as we know them, and globalization as we know it.”

For decades, America’s business leaders got more or less what they wanted from the White House, regardless of who occupied it. . . . . there are no serious ideological competitors left to liberal democracy,” the American political scientist Francis Fukuyama wrote in his 1992 book, “The End of History and the Last Man.”

History had ended before. The Gilded Age of the late 19th century marked the last, climactic chapter of decades of largely unconstrained corporate growth and ostentatious displays of private wealth. Then, as now, populists protested. Depression and war came next, accompanied by a new regulatory regime — the New Deal. Years of rapid growth and reduced income inequality followed, but they came to an abrupt halt with the oil crisis and recession of the mid-1970s

After Brexit — the United Kingdom’s withdrawal from the European Union in 2016 — there could be no doubt that history had started again. A new populist wave had already been swelling for years, but the world’s business leaders were nevertheless blindsided by the referendum’s passage, having vastly underestimated the growing backlash against globalization. Stock markets around the world tanked as investors worried about what this wave of nationalism might mean for Europe and the broader economy. For many British businesses, the effects of Brexit have been devastating, reducing investments, increasing costs and creating both labor and supply shortages.

Trump’s rise seemed to mark the arrival of this wave on America’s shores, but his antiglobalist rhetoric on the stump didn’t amount to much once he was in office. The business community got the tax cuts and deregulation that it wanted, even if Trump’s public image created problems for executives who had to answer to shareholders or employees. . . . Still, when all was said and done, the Trump presidency was good for business leaders, driving up stock prices and spurring an increase in mergers and acquisitions and initial public offerings.

Their memories of that era have surely been made rosier by their frustrations with President Biden, who has been a much more proactive regulator. . . . The Biden administration is also notably light on former corporate executives.

But scholars of populism warn that a second Trump administration could be far more destabilizing to America’s business leaders and to the larger global economic order. Rachel Kleinfeld, a senior fellow at the Carnegie Endowment for International Peace, detailed the many potential dangers ahead in a report last year, “How Does Business Fare Under Populism?” Examining the recent economic histories of Hungary, Brazil and India, she found that populist governments significantly increase volatility and risk by using their regulatory power to tilt markets or outright take control of businesses. The report makes for ominous reading for those accustomed to the comfort and stability of the neoliberal orthodoxy. “The business community here doesn’t understand what is about to hit them,” Kleinfeld told me.

Trump has made no secret of his intentions. Over the course of his campaign, he has outlined a radical program of protectionism, calling for a phaseout of all “essential goods” from China, as well as a ban on investments in China and on federal contracts for any company that outsources labor to China. All of this would be concerning enough for American business. But Trump has also proposed a 10 percent tariff on all imported goods, which would amount to the declaration of a global trade war, with other countries almost certainly retaliating with their own tariffs.

Together, these protectionist policies would drive up the cost of goods, create sweeping supply-chain issues and quite possibly cause hyperinflation. “We’re talking about massive economic shock waves,” . . . And tariffs are just the beginning. Trump’s promise to initiate what he calls “the largest deportation operation in American history” could be catastrophic for employers already facing a tight labor market.

Trump’s evolving policy views are in step with the broader populist migration of the conservative movement. . . . In addition to embracing radical protectionism, it calls for the next president to reduce the power of the Federal Reserve, limiting its ability to serve as a so-called lender of last resort for banks and other financial institutions facing cash crunches. This would increase the risk of financial crises, undermining confidence in the U.S. banking system and its financial markets. . . . To limit any internal opposition to his agenda, the report also calls for Trump to reimpose an executive order that Biden revoked, enabling him to fire thousands of civil servants across his administration and replace them with political appointees.

There are other, more existential reasons for concern, too. A hallmark of populist leaders is to tighten the state’s grip on the business sector — a phenomenon that Ian Bassin, a lawyer and pro-democracy activist, calls “autocratic capture.” To get a sense of how this works, consider Hungary under Prime Minister Viktor Orban, a close Trump ally.

Like Trump, Orban governed as a traditional, pro-business conservative during his first term . . . But he has been a very different leader since returning to office in 2010. In order to consolidate and maintain his power, he has nationalized parts of the private sector, forced banks to reissue mortgages at more favorable rates, ordered utilities to lower prices, levied “crisis taxes” on various industries and imposed price caps on foreign-owned supermarkets. “Anything you were counting on by way of predictability just disappears,” . . . Along the way, Orban has made his friends and family rich, starting investigations, blocking mergers and directing the passage of legislation to devalue some businesses, which has made them vulnerable to takeovers by his allies or the government.

During a recent visit to the United States, Orban was shunned by the Biden administration but welcomed to Mar-a-Lago by Trump.

Privately, some business leaders and corporate executives have begun to express concern about at least some of what they are hearing from Trump. . . . “But they aren’t going to speak out if it’s not necessary.”

It’s easy to understand their hesitation. A number of businesses have already faced punishing backlashes from conservatives for embracing social causes like L.G.B.T.Q. rights. And Trump would almost certainly not hesitate to use the levers of government against anyone who opposed him.

Speaking out could be scary. And yet the entire global economic order might be at risk. Enlightened self-interest typically requires businesses to stay on good terms with those in power, but for Dimon and the Davos set today, that may turn out to be a fatally short-term view. “The only thing we know for sure about globalization,” Harvard’s Abdelal says, “is that it’s desperately fragile and can easily be broken.”

Corporate America needs to wake up and do everything possible to see that Trump is defeated.