Some business leaders, economists, and free market proponents have panned President-elect Donald Trump’s intervention to stop Carrier’s relocation to Mexico and his Twitter haranguing of other firms planning overseas relocations. These pro-business purists have clearly learned nothing from his victory.
To understand what Trump is doing, we must first return to the most basic question of society: What is a country? Is it a commonwealth of citizens in the pursuit of personal and mutual flourishing? Or is it just a geographic venue for global businesses to make money?
Too many people give off the impression that they see it as the latter. But Trump knows that a society that does not provide for the aspirations of its citizens is a failed state, no matter how economically efficient it is or how much GDP it produces.
We once understood this. Alexis de Tocqueville pointed out that one of the keys to America’s unique success was its sense of enlightened self-interest. Americans worked and competed hard for themselves, their families, and their businesses, but they understood that a purely selfish mindset was self-destructive in the long term. Tocqueville observed in Democracy in America, “Each American knows when to sacrifice some of his private interests to save the rest; we [the French] want to save everything, and often we lose it all.”
Businessmen once understood this link between national, local, and personal success. The men of the Commercial Club of Chicago who commissioned Daniel Burnham to create his famed 1909 plan for that city had personal fortunes deeply tied to Chicago. They needed the city as a whole to succeed for them to succeed. Likewise, General Motors CEO Charles Erwin Wilson once famously said, “For years I thought what was good for our country was good for General Motors, and vice versa.” He understood that his company’s fortune and America’s were intertwined: GM couldn’t make any money if no one could afford to buy its cars.
We institutionalized this even into the 1980s, with laws prohibiting utility holding companies and most banks from branching into other areas. These utility CEOs and bankers had to have broadly prosperous communities where their companies were based or they simply couldn’t make money, because their hometown was the only place they could do business.
As these restrictions were lifted, these businesses left enlightened self-interest behind in favor of quarterly profits. They forgot their community in favor of global capital. Their business models evolved to delink profits and executive compensation from broad-based American prosperity. They could take a portfolio view of local communities and even countries. It was all very economically efficient. These firms and their managers could thrive even while much of America fell into ruin.
Or so they thought.
Donald Trump’s election was a message to these companies and their leaders reminding them that we are a nation, not a free trade zone. We have one man, one vote, not one dollar of GDP, one vote. In a country where barely half of 30-year-olds now make more than their parents did at the same age, the American people demanded a national change of course.
Yes, the Carrier deal involved distasteful tax subsidies. Yes, American businesses have to compete globally and can’t afford to be inefficient. Yes, our corporate tax and regulatory systems are a big impediment to doing business here. Yes, the government’s picking of winners and losers in the marketplace is unlikely to end well. Yes, the idea of Washington using its power to pressure individual private citizens and businesses is troubling.
All of this is true. America’s competitive and structural problems need to be addressed systemically, something Trump has promised to do. But those who criticize Trump’s deal on the above points hear the words but not the music.
By focusing his rhetoric and energy directly on American middle-class, blue-collar workers, Trump is reminding businesses of the social contract they thought they could leave behind. He’s telling them that the solution to our nation’s challenges might be complex and not obvious, but they had better well be part of it, not just worried about squeezing out a bit more return on invested capital to boost the CEO’s bonus next year.
Trump is also sending a powerful message to workers that they matter and he will fight for their interests. As they’ve watched their lives and communities erode for many years, they’ve fallen into despair, with drug addiction soaring and life expectancy in 2015 falling for the first time in 20 years.
People need money, true, but also to work, contributing something of value and meaning to their community. Trump understands that, and is speaking directly to that source of money, meaning, and dignity for most of America: their job. His words and actions are aimed at the heart of their despair, encouraging people to once again have hope for a better future.
Trump is showing he’s much more in touch with the human condition than businessmen and pundits are. He’s saying that American society and its people, their well-being, and their dignity matter—not just efficiency and GDP. He’s saying that we are a commonwealth of people who ultimately rise and fall together. In this, his critics come across as tone-deaf and hard-hearted Scrooges unmoved by the prospect of their fellow citizens being permanently exiled from the middle class when they lose the last $25 an hour job they’ll ever have.
Free market purists would be well served to recapture that spirit of enlightened self-interest, before the political marketplace deals them out a far more stern discipline than Trump’s.