The New York Times recently carried a blog post by columnist and Nobel Prize-winning economist Paul Krugman about U.S. president-elect Donald Trump and the worries that Trump would be unable—or simply unwilling—to disentangle his business dealings from his activities as president.
Krugman argued that the real danger was not that Trump’s entanglements would foster corruption, and that said corruption would be profitable for Trump himself. The problem, Krugman argued, is the way such entanglements would warp the incentives of the world’s most important decision maker.
This is just right, as far as it goes. The problem isn’t that Trump might make money. If he ends up richer after a term as president than he was before, that in itself is not necessarily a problem. (Barack Obama, for example, is wealthier today than he was 8 years ago. Book royalties — hardly blameworthy—are the main source of that wealth.) No, the problem is that the desire to make money, or even a subconscious awareness of the opportunity to make money, will affect the way Trump, and the senior policy makers he appoints and for whom he sets an example, make decisions. When Foreign Policy A is, let’s say, “revenue neutral,” whereas Foreign Policy B stands to benefit Trump, or his blind trust (if he establishes one) or his children, what are the odds that Policy B will win the day? And will it matter to Trump that Policy B isn’t as good for America as Policy A would have been?
This is the real problem with conflict of interest. A conflict of interest is a situation in which a decision-maker is entrusted with making important decisions on behalf of someone else, and in which that decision-maker has some further, “outside” interest (often, but not always, financial) which may stand to influence their decision making. The problem here is not the opportunity for enrichment; the problem is that the responsibility to put someone else’s interests first, to do what’s right for them is in jeopardy. The professional literature on conflict of interest is pretty much consistent on this point.
But I would argue that the real worry is one step more subtle than this. As my colleague Wayne Norman of Duke University and I have argued in print, the real problem with conflict of interest is not just that this decision maker will make bad decisions this time, or even that this decision maker will make bad decisions all the time. The real risk is loss of faith—loss of faith in the entire institution in which the decision-maker is embedded. So, were a judge to adjudicate a case involving a loved one, the risk is not (merely) that she might render a bad decision. The risk is that onlookers would begin to doubt the objectivity of the judicial system as a whole. When a physician prescribes expensive medications made by a company in which she just happens to own stock, the real risk is not that this won’t be the right medicine, but that patients will come to doubt, quite generally, the motives underlying their physicians’ decision-making.
Do people already mistrust politicians? Indisputably yes: survey results bear that out. But the mistrust of politicians is, in North America at least, not universal and hasn’t resulted in, for example, widespread abandonment of political participation. Most of us are still capable of being shocked.
So the real risk inherent in the nearly inevitable entanglement of Donald Trump’s financial and political lives is not that he’ll make money, and not (just) that he’ll make bad policy decisions. It’s that the Trump era will make corruption, or even just the routine mishandling of conflict of interest, seem normal.
Chris MacDonald is director of the Jim Pattison Ethical Leadership Program at the Ted Rogers School of Management, Interim Director of the Ted Rogers MBA at Ryerson University, and founding co-editor of Business Ethics Highlights.
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