‘The Message Is Clear’: Trump’s Amazon Obsession And Economic Authoritarianism

On Saturday morning, Donald Trump – who, you’re reminded, is still the President of the United States – took to Twitter to reveal what he’d do to Amazon and the Washington Post if America had already completed its hideous metamorphosis from fledgling dictatorship to full blown authoritarian hell.

You can read our full take on the President’s Saturday morning diatribe (to the extent you can describe 280 character bursts as “diatribes”) here, but what’s important to note about this particular exercise in windmill tilting is that it’s in many ways just as unnerving as Trump’s attempts to commandeer the nation’s law enforcement apparatus. As The New Yorker’s Adam Davidson put it:

I know we’re all numb, but this is very serious. This is not just a comment. It is an important economic act that is restructuring our economy. Trump is making clear that companies that publicly praise him can get billion dollar deals from government agencies. Companies that don’t will face billion dollar charges and costly regulation. This is an open negotiation and a clear message. Trump will transfer wealth to those who praise him and take it from those who don’t. He will do this in macro economically significant amounts.

Let that sink in.

 

And once it has, recall the following piece penned for Harper’s by Owen Davis more than a year ago – we think you’ll appreciate how it’s even more relevant now than it was when it was originally published on March 2, 2017.

Via Owen Davis for Harper’s

On January 5th, 2017, Donald Trump, then the president elect of the United States, aimed an incriminating tweet at one of the world’s largest car manufacturers. “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S.,” he wrote, likely on his unsecured five-year-old Android phone. “NO WAY! Build plant in U.S. or pay big border tax.” It was an odd threat; the new plant was in Guanajuato, not Baja, and it shifted jobs from Canada, not the United States. Nevertheless, the company signaled conciliation. “Toyota looks forward to collaborating with the Trump administration,” it announced as its share price plunged.

Since winning the presidential election, Trump has targeted more than a dozen companies with his one-hundred-forty-character broadsides, sending public-relations departments into overdrive and even prompting some tech firms to hire employees to monitor @RealDonaldTrump in the wee hours of the morning. When the president jawbones Boeing for a cheaper Air Force One or prods Chevrolet to move jobs back from Mexico, he claims to be strong-arming companies while boosting the economy as a whole—forcing executives to sacrifice profits for the sake of the American worker. Chief executives from companies like Ford and Sprint have struck a tone of civic duty, pledging to do their part to fulfill Trump’s economic promises, even if it will hurt the bottom line. But history suggests the opposite is true: corporations that strike deals with Trump stand to benefit at the expense of everyone else.

Throughout his campaign, Trump criticized the U.S. government for making “bad deals.” To him, the Trans-Pacific Partnership, NAFTA, the Iran nuclear deal, and the Paris climate agreement are all examples of inept negotiations carried out by career politicians in Washington. “I do deals. It’s what I do,” he told a crowd of supporters in October, pledging to fight for working-class Americans. Of course, the executive who builds a new plant in the Rust Belt expects something in return. When the manufacturer Carrier agreed in November to keep seven hundred and thirty jobs that had originally been slated to move to Mexico, the company won tax incentives and a vague promise of lighter regulations. Carrier’s tax break, $7 million over a decade, didn’t come close to recompensing the company for the $65 million it had hoped to save by sending jobs to Mexico. But other incentives were at play. Carrier’s parent company, United Technologies, can now rest assured that its government contracts, worth more than $5 billion a year, are safe from Trump’s whims. And though political goodwill can’t be tabulated on a balance sheet, Carrier’s executives can count themselves on the right side of Trump’s ledger of friends and enemies. “I was born at night but not last night,” United CEO Greg Hayes said after the deal. “I also know that about 10 percent of our revenue comes from the U.S. government.”

History has shown that direct interventions like these tend to produce corruption without broader economic gains. Researchers who study authoritarian regimes, where such tactics are common, say that targeting individual companies causes industries to focus less on innovating and more on currying favor. Pleasing the president becomes the fastest path to profits, and businesses race to take advantage. One study that looked at forty-eight countries over a period of thirty-five years, from 1950 to 1985, found that corporate profits tend to rise during a shift to autocracy. CIA-backed coups toppling foreign leaders throughout the mid-twentieth century provide the most dramatic examples of this phenomenon. For instance, after the 1973 coup that installed Augusto Pinochet as ruler of Chile, the country’s two major banking conglomerates, nicknamed “the piranhas” by international investors, grew at an unprecedented clip. As Pinochet enacted sweeping market reforms, the holding companies Vial and Cruzat-Larrain rapidly consolidated their grip on Chilean business, together controlling fully half of the total assets on Chile’s public stock exchange by 1978. It didn’t hurt that the two conglomerates maintained close ties with functionaries in Chile’s central bank and budget office. Meanwhile, the economy as a whole crumbled: As corporate profits boomed, inequality spiked and average wages fell, not to return to their 1970 levels until 1992.

For decades, presidents have largely respected what post-war business leaders called the “right to manage,” letting individual companies operate without direct interference. America’s last dealmaker in chief was Richard Nixon, who, like Trump, pursued an unabashedly transactional mode of politics where economic outcomes were subordinate to political ambitions. In May 1971, for example, Nixon found himself in need of funds for his upcoming re-election campaign. One of his targets was the International Telephone and Telegraph Corporation (I.T.T.), which was seeking to merge with Hartford Fire Insurance in what would be the largest corporate tie-up in memory. “Does I.T.T. have money?” Chief of Staff H. R. Haldeman can be heard asking on Nixon’s secret tapes. “Oh God yes,” Nixon replied. “That’s part of this ball game.”

The I.T.T.-Hartford merger had already been flagged by Nixon’s justice department, which opposed the deal on the grounds that it would increase market concentration and allow I.T.T. to give its subsidiaries favorable insurance rates at the expense of consumers. But Nixon said he would force the department to drop its antitrust action if the company paid up. He told his aides to “cut a deal” with I.T.T. and leaned hard on Richard McLaren, a meddlesome antitrust regulator, to allow the merger. “If it’s not understood, McClaren’s ass is to be out of there within one hour,” Nixon said. “The I.T.T. thing—stay the hell out of it.” Two months later, the merger went ahead as I.T.T. quietly pledged $400,000 to the 1972 Republican National Convention.

After Nixon was impeached, Congress enacted a raft of rules to prevent Nixon-style horsetrading, including disclosure requirements that opened government meetings to the public. Corporate America, ever agile, responded by building a subtler system of cocktail hours, revolving-door hires, and the soft corruption of limitless political spending. Lobbyists regularly wine and dine congressional aides, who return the favor by running industry-friendly legislation up the flagpole. Successive rollbacks of political spending limits, Citizen’s United being the most famous, have allowed corporate interests to fund massive communications efforts pushing their agendas. That system has been effective at giving business a huge advantage. Researchers recently found, for instance, that Americans pay about twice what Germans do for cell-phone service because our telecommunications firms wield such extensive market power and political connections.

Many economists worry that Trump could preside over a fundamental realignment of government-business relations and usher in an era of naked corruption. Matthew Mitchell of the Mercatus Center explained that when leaders direct punishment toward selective companies, “You’re really just inviting firms to ingratiate themselves to policy makers.” Take antitrust regulation, an area of policy where candidate Trump made occasional anti-monopoly rumblings. So far, Trump has only expressed concern over monopolies that involve his political enemies. He has condemned Amazon, whose chief executive Jeff Bezos owns the Washington Post, and opposed the merger of AT&T and Time Warner, which owns the cable-news network CNN. Analysts have mused that Trump may make the deal contingent on Time Warner dropping CNN.

The message is clear: show loyalty to Trump and reap the rewards. That may explain why markets have stayed strong even while the media gives Trump credit for “bodyslamming big companies,” as one Post columnist put it. Corporations know that the president’s demands are publicity stunts that will be accompanied by tax cuts, deregulation, and direct access to the levers of government. Wall Street has tried to persuade the public that those policies will accelerate economic growth. But a University of Chicago survey of prominent academics found that while 62 percent agreed that Trump’s policies would increase corporate profits, only 16 percent predicted quicker economic growth that would benefit the average American. Daron Acemoglu, an economic historian at MIT who took part in the survey, condensed his thoughts into a tweet-length summary: “[Trump’s plans],” he wrote, “are much more likely to be disastrous for the economy.”

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5 thoughts on “‘The Message Is Clear’: Trump’s Amazon Obsession And Economic Authoritarianism

  1. Here’s a message that’s clear….Pence and all those cabinet members (depends on his mood today)
    (as of 3/28/2081: https://www.theatlantic.com/politics/archive/2018/03/trump-cabinet-tracker/510527/ )

    All of them sitting on their lazy incompetent asses, inserting thumbs “you know where”, are not even aware they have the power to remove this beast from the WH. But why would they? Where else will they get such an easy cushy job of just kissing his ass and cashing those checks? All the while, he is busy destroying the United States of America. Bezos/Amazon should sue his ignorant ass for continuing to make loud repetitive public statements that are clearly not true and are causing a loss of income (damages) to the company and all the investors. Ask this moron if he even knows how much a stamp cost! clueless fucking jackass.

  2. But now it will be easier for USPS to get another .50 to $1.00 per package without losing the business. For the past 50 yrs. I have seen private business take advantage of Local, State, and the Federal Government simply because the govt. negotiators had no concept of profit let alone profit maximization. I wonder how many incremental votes Trump will get from his current rant which is really very supportive of USPS and it’s workers

  3. This giant ass has bragged about not paying taxes because he is smart and knows how to manipulate the rules and take advantage of the loopholes – remember those comments during his debates? And now he rants about someone or anyone who runs a business so well that others cannot compete and lies about Amazon not paying taxes and accuses them of using USPS as their “delivery boy”. I think this fool does not understand that Prime Membership with Amazon (that I pay for annually) which entitles me to “free shipping” is only free to me – not free for Amazon who does pays USPS for that postage! Kinda like the other day when he announced he did not understand what Community College was! He also apparently has never heard of Vocational Schools. He is a complete buffoon.

    Now, back to his bragging about how smart he is — and not paying taxes — basically cheating but he calls it taking advantage of loopholes. Those taxes he does not pay like you and I do, that goes to many uses for our country’s needs — like infrastructure, those roads and bridges that he also rants about not being maintained by all the crappy presidents that preceded him. Those same things that he does not pay for when he cheats our country out of his share of those taxes!

    And now he appoints incompetent and inexperienced people to head departments of our government who have no ability to succeed but are really good at decorating their office or traveling via private jets or military escort, running a public school system by someone who has never been inside a public school building.

    OH! Wait until he finds out the current Postmaster General is a Democratic female who was appointed by the Postal Board of Governors for office in 2015 when Obama was the President! The first female to ever hold that position and has been a part of the postal service since 1986 and has a remarkable record of service with USPS. Check her out – he sure as hell won’t! https://en.wikipedia.org/wiki/Megan_Brennan
    He’s been wanting to put Keith Schiller (his former body guard) into a job – maybe he would make a good Postmaster General?

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