Summers: Trump’s Carrier deal could permanently damage American capitalism
Former Treasury Secretary Lawrence Summers explains why Trump may have done great damage.
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It seems to me what we have just witnessed is an act of ad hoc deal capitalism and, worse yet, its celebration as a model. As with the air traffic controllers, only a negligible sliver of the economy is involved, but there is huge symbolic value. A principle is being established: It is good for the president to try to figure out what people want and lean on companies to give it to them. Predictability and procedure are less important than getting the right result at the right time. Like Hong Kong, as mainland China increasingly imposes its will, we may have taken a first step toward a kind of reverse transition from rule of law capitalism to ad hoc deal-based capitalism…
Presidents have enormous latent power, and it is the custom of restraint in its use that is one of the important differences between us and banana republics. If its ad hoc use is licensed, the possibilities are endless. Most companies will prefer the good to the bad will of the U.S. president and his leadership team. Should that reality be levered to get them to locate where the president wants, to make contributions to the president’s reelection campaign, to hire people the president wants to see hired, to do the kinds of research the president wants carried out, or to lend money to those that the president wants to see assisted?
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