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Trump Gives U.S. Business the Ukraine Treatment

Summary:
The story that has emerged in the impeachment hearings is one of extortion and bribery. Donald Trump withheld crucial aid — aid Ukraine needed to defend itself against Russian aggression — and refused to release it unless Ukraine publicly said it was investigating one of his political rivals. Even Republicans understand this; they just think it’s O.K.And remember, the Ukraine scandal made it into the public eye only because a single whistle-blower set an investigation in motion. I know I’m not alone in wondering how many other comparable scandals haven’t come to light.Nor need these scandals involve foreign governments. What I haven’t seen pointed out is that Trump is quietly applying a Ukraine-type extortion-and-bribery strategy to U.S. corporations. Many businesses are being threatened

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The story that has emerged in the impeachment hearings is one of extortion and bribery. Donald Trump withheld crucial aid — aid Ukraine needed to defend itself against Russian aggression — and refused to release it unless Ukraine publicly said it was investigating one of his political rivals. Even Republicans understand this; they just think it’s O.K.

And remember, the Ukraine scandal made it into the public eye only because a single whistle-blower set an investigation in motion. I know I’m not alone in wondering how many other comparable scandals haven’t come to light.

Nor need these scandals involve foreign governments. What I haven’t seen pointed out is that Trump is quietly applying a Ukraine-type extortion-and-bribery strategy to U.S. corporations. Many businesses are being threatened with policies that would hurt their bottom lines — especially, but not only, tariffs on imported goods crucial to their operations. But they are also being offered the possibility of exemptions from these policies.

And the implicit quid pro quo for such exemptions is that corporations support Donald Trump, or at least refrain from criticizing his actions.

Consider, for example, what happened last week, when Trump toured an Apple manufacturing plant together with Tim Cook, Apple’s C.E.O. Trump used the occasion to make a political speech, attacking impeachment proceedings and falsely claiming that Nancy Pelosi has “closed Congress.” He also asserted that the plant, which has been operating since 2013, had just opened.

And Cook, far from correcting these falsehoods, expressed support, declaring that America has the “strongest economy in the world.”

Cook’s incentive to play along was obvious. Apple assembles many of its products in China; it’s seeking exemptions from Trump’s China tariffs. And there’s every reason to believe that the allocation of such exemptions is driven by politics, not the national interest.

For example, in 2018 a company owned by Oleg Deripaska — an oligarch close to Vladimir Putin, who is supposed to be under U.S. sanctions for activities that include interference in foreign elections — received a waiver from aluminum tariffs. The waiver was withdrawn only after Democrats in Congress noticed it, with the Commerce Department claiming that it had been granted as a result of a “clerical error.” Uh-huh.

By the way, if you’re wondering why the Trump administration has the power to play favorites, it’s because U.S. trade law gives the president a lot of discretion in setting tariffs. The purpose of that discretion was to diminish the power of special interests in Congress, based on the assumption that the president would be better at serving the national interest. But then came Trump.

And tariff policy isn’t the only area in which the administration seems to be using its power to punish corporations if they don’t show proper political fealty.

Recently the Pentagon granted the huge Joint Enterprise Defense Infrastructure contract for cloud computing (yes, JEDI) to Microsoft, shocking observers who expected it to go to Amazon. Amazon is challenging the decision, claiming that it was punishment for critical reporting in The Washington Post, now owned by Jeff Bezos — a claim that is entirely plausible, given Trump’s own repeated declarations that he was going to give Bezos “problems.”

Trump officials claim, of course, that the decision process was squeaky-clean, based on expert judgment untainted by any political influence. But seriously, is anything clean in this administration? Are we really supposed to accept on faith that people who are willing to politicize weather forecasts were totally hands-off when it came to awarding a huge, lucrative contract to a company Trump considers an enemy?

When I and others point out the ways in which Trump is using crony capitalism to lock in political advantage, we tend to get two kinds of pushback. First, we’re told that we shouldn’t feel sympathy for wealthy corporations. Second, we’re told that progressive Democrats also criticize some corporations, like Facebook, and have proposed a crackdown on some kinds of corporate behavior. So what’s the difference?

Well, these critiques (willfully, one suspects) miss the point. What progressives are proposing are rules for corporate behavior that would apply equally to all companies, not be imposed selectively on corporations depending on their political orientation.

And the trouble with Trump’s selective doling out of punishment isn’t the harm it inflicts on corporations, it’s the incentives this regime creates for political sycophancy. American voters and American democracy, not Apple and Amazon — which are, as it happens, notorious examples of tax avoidance — are the victims we care about.

Put it this way: By using his political power to punish businesses that don’t support him while rewarding those that do, Trump is taking us along the same path already followed by countries like Hungary, which remains a democracy on paper but has become a one-party authoritarian state in practice. And we’re already much further down that road than many people realize.

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Paul Krugman
Paul Robin Krugman (born February 28, 1953) is an American economist, Distinguished Professor of Economics at the Graduate Center of the City University of New York, and an op-ed columnist for The New York Times. In 2008, Krugman won the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography.

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