Commentary — March 2, 2017, 11:53 am

Dealmaker in Chief

Trump’s economic authoritarianism

On January 5th, 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 in November, 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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Serving as a US Air Force launch control officer for intercontinental missiles in the early Seventies, First Lieutenant Bruce Blair figured out how to start a nuclear war and kill a few hundred million people. His unit, stationed in the vast missile fields at Malmstrom Air Force Base, in Montana, oversaw one of four squadrons of Minuteman II ­ICBMs, each missile topped by a W56 thermonuclear warhead with an explosive force of 1.2 megatons—eighty times that of the bomb that destroyed Hiroshima. In theory, the missiles could be fired only by order of the president of the United States, and required mutual cooperation by the two men on duty in each of the launch control centers, of which there were five for each squadron.

In fact, as Blair recounted to me recently, the system could be bypassed with remarkable ease. Safeguards made it difficult, though not impossible, for a two-man crew (of either captains or lieutenants, some straight out of college) in a single launch control center to fire a missile. But, said Blair, “it took only a small conspiracy”—of two people in two separate control centers—to launch the entire squadron of fifty missiles, “sixty megatons targeted at the Soviet Union, China, and North Korea.” (The scheme would first necessitate the “disabling” of the conspirators’ silo crewmates, unless, of course, they, too, were complicit in the operation.) Working in conjunction, the plotters could “jury-rig the system” to send a “vote” by turning keys in their separate launch centers. The three other launch centers might see what was happening, but they would not be able to override the two votes, and the missiles would begin their firing sequence. Even more alarmingly, Blair discovered that if one of the plotters was posted at the particular launch control center in overall command of the squadron, they could together format and transmit a “valid and authentic launch order” for general nuclear war that would immediately launch the entire US strategic nuclear missile force, including a thousand Minuteman and fifty-four Titan missiles, without the possibility of recall. As he put it, “that would get everyone’s attention, for sure.” A more pacifically inclined conspiracy, on the other hand, could effectively disarm the strategic force by formatting and transmitting messages invalidating the presidential launch codes.

When he quit the Air Force in 1974, Blair was haunted by the power that had been within his grasp, andhe resolved to do something about it. But when he started lobbying his former superiors, he was met with indifference and even active hostility. “I got in a fair scrap with the Air Force over it,” he recalled. As Blair well knew, there was supposed to be a system already in place to prevent that type of unilateral launch. The civilian leadership in the Pentagon took comfort in this, not knowing that the Strategic Air Command, which then controlled the Air Force’s nuclear weapons, had quietly neutralized it.

This reluctance to implement an obviously desirable precaution might seem extraordinary, but it is explicable in light of the dominant theme in the military’s nuclear weapons culture: the strategy known as “launch under attack.” Theoretically, the president has the option of waiting through an attack before deciding how to respond. But in practice, the system of command and control has been organized so as to leave a president facing reports of incoming missiles with little option but to launch. In the words of Lee Butler, who commanded all US nuclear forces at the end of the Cold War, the system the military designed was “structured to drive the president invariably toward a decision to launch under attack” if he or she believes there is “incontrovertible proof that warheads actually are on the way.” Ensuring that all missiles and bombers would be en route before any enemy missiles actually landed meant that most of the targets in the strategic nuclear war plan would be destroyed—thereby justifying the purchase and deployment of the massive force required to execute such a strike.

Among students of nuclear command and control, this practice of precluding all options but the desired one is known as “jamming” the president. Blair’s irksome protests threatened to slow this process. When his pleas drew rejection from inside the system, he turned to Congress. Eventually the Air Force agreed to begin using “unlock codes”—codes transmitted at the time of the launch order by higher authority without which the crews could not fire—on the weapons in 1977. (Even then, the Navy held off safeguarding its submarine-launched nuclear missiles in this way for another twenty years.)

Following this small victory, Blair continued to probe the baroque architecture of nuclear command and control, and its extreme vulnerability to lethal mishap. In the early Eighties, while working with a top-secret clearance for the Office of Technology Assessment, he prepared a detailed report on such shortcomings. The Pentagon promptly classified it as SIOP-ESI—a level higher than top secret. (SIOP stands for Single Integrated Operational Plan, the US plan for conducting a nuclear war. ESI stands for Extremely Sensitive Information.) Hidden away in the Pentagon, the report was withheld from both relevant senior civilian officials and the very congressional committees that had commissioned it in the first place.

From positions in Washington’s national security think tanks, including the Brookings Institution, Blair used his expertise and scholarly approach to gain access to knowledgeable insiders at the highest ranks, even in Moscow. On visits to the Russian capital during the halcyon years between the Cold War’s end and the renewal of tensions in the twenty-first century, he learned that the Soviet Union had actually developed a “dead hand” in ultimate control of their strategic nuclear arsenal. If sensors detected signs of an enemy nuclear attack, the USSR’s entire missile force would immediately launch with a minimum of human intervention—in effect, the doomsday weapon that ends the world in Dr. Strangelove.

Needless to say, this was a tightly held arrangement, known only to a select few in Moscow. Similarly chilling secrets, Blair continued to learn, lurked in the bowels of the US system, often unknown to the civilian leadership that supposedly directed it. In 1998, for example, on a visit to the headquarters of Strategic Command (­STRATCOM), the force controlling all US strategic nuclear weapons, at Offutt Air Force Base, near Omaha, Nebraska, he discovered that the ­­­STRATCOM targeting staff had unilaterally chosen to interpret a presidential order on nuclear targeting in such a way as to reinsert China into the ­SIOP, from which it had been removed in 1982, thereby provisionally consigning a billion Chinese to nuclear immolation. Shortly thereafter, he informed a senior White House official, whose reaction Blair recalled as “surprised” and “befuddled.”

In 2006, Blair founded Global Zero, an organization dedicated to ridding the world of nuclear weapons, with an immediate goal of ending the policy of launch under attack. By that time, the Cold War that had generated the ­SIOP and all those nuclear weapons had long since come to an end. As a result, part of the nuclear war machine had been dismantled—warhead numbers were reduced, bombers taken off alert, weapons withdrawn from Europe. But at its heart, the system continued unchanged, officially ever alert and smooth running, poised to dispatch hundreds of precisely targeted weapons, but only on receipt of an order from the commander in chief.

Bombhead, by Bruce Conner (detail) © Conner Family Trust, San Francisco, and ARS, New York City. Courtesy Kohn Gallery, Los Angeles

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