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Donald Trump’s Crony Capitalism

Is Donald Trump a savvy businessman who as president-elect is wielding his commercial skills to benefit America? Or is he a combination Mafioso and swaggering banana republic commandante? He isn’t even president yet, so he’ll have plenty of time to answer that question, but his actions so far suggest the less flattering answer. If he doesn’t change course, he could damage the economy, the taxpayers, and his own influence as president.

The latest flap is his “Cancel order!” tweet yesterday about Boeing’s work on the next pair of planes to serve as Air Force One, replacing planes that have been in service since the Reagan administration. Never mind that Boeing has no order to build the planes. Why this tweet now, seemingly out of nowhere? Only Trump knows, but he sent it shortly after the Chicago Tribune posted an article in which Boeing CEO Dennis Muilenberg mildly and obliquely criticized Trump’s anti-trade stance. “Get even” is one of Trump’s core principles and uglier impulses, and he seems to realize that as president he’ll be positioned to get even like no one else on earth.

The larger issue – much larger – is that the U.S. is the world’s most successful economy in part because it operates on established laws and rules as well as procedures for creating them and challenging them. Boeing’s Air Force One contract, which is not for manufacturing but only for determining the new planes’ capabilities, was negotiated according to those rules. In trampling on them, Trump behaves like a classic Mafioso. Boeing’s Muilenberg didn’t disrespect the don but apparently disrespected the Donald. For that he must pay a price.

Trump has been going after other companies, apparently on whim. In strong-arming Rexnord and United Technologies’ Carrier in the past ten days over their plans to move some production abroad, Trump sets a pattern of crony capitalism and the primacy of rule of man over rule of law. These companies are law abiding, as far as anyone can tell, but Trump will decide what they can or cannot do. Who cares what the law says if the maximum leader wants to shake you down? The president-elect of the world’s mightiest nation got what he wanted by behaving like a tin-pot dictator.

If he keeps this up, Trump will damage the U.S. as a place to do business, making it a country where the president’s mercurial mood is a significant business risk, where “retribution,” as he tweeted on Sunday, and not due process awaits companies that displease him. He inevitably sets himself up as susceptible to bribes, even if he never accepts a dime, and creates a class of self-described fixers who will claim they can influence him for a price, even if they can’t. All of this hurts employees, taxpayers, and everyone else. He will also erode his own credibility when he finds that he can’t bend the eternal bureaucracy to his volatile whims. Boeing’s contracts, for example, will likely be hammered out over a period of years by long-serving government employees following the rules they’re required to follow.

Trump has started down a dangerous and destructive path. He can easily get off it if he realizes that he’s no longer running the Trump Organization and now bears a much heavier responsibility. Whether he does so will be an early indicator of what’s ahead for his presidency.

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What We’re Reading Today

AT&T CEO says Time Warner deal…
…will “disrupt” the old cable TV model. Randall Stephenson defended the $85 billion proposed merger, telling a Senate subcommittee that the “pro-competitive” deal provides an opportunity to create new offerings for consumers. The mega-merger was under scrutiny before the election. During the presidential campaign, Donald Trump vowed to block it. WSJ

SoftBank CEO meets with Trump 
Masayoshi Son met with the president-elect for 45 minutes, sending Sprint and T-Mobil shares up. SoftBank owns 80% of Sprint and previously expressed a desire to merge with T-Mobile, but approval for such a move was viewed as unlikely under the Obama administration. After the meeting, Trump said that SoftBank would invest $50 billion in the U.S. and claimed that Softbank wouldn’t have done this if Trump hadn’t won the election. But the $50 billion investment is coming from a previously-announced $100 billion international investment fund created with Saudi Arabia. CNBC

Google to be powered by 100% renewables next year
Since 2010, the tech giant has been transitioning to wind and solar power for its data center and corporate offices. Despite indications that Trump will relax restrictions on fossil fuel use, Sundar Pichai‘s Google says that by 2017, it will run 100% of its data centers and corporate offices from renewables. The company cited the lower costs of energy as one of the reasons for the initiative. TechCrunch

Rodrigo Duterte’s war in the Philippines
When Rodrigo Duterte became president of the Philippines, he announced that he would not prosecute police for killing people suspected of being drug dealers. What’s happened as a result is a bloody, brutal war, with vigilantes, police and others slaughtering people on the streets. A New York Times photojournalist, Daniel Berehulak, reports witnessing “bloody scenes just about everywhere imaginable — on the sidewalk, on train tracks, in front of a girls’ school, outside 7-Eleven stores.” NYT

Building Better Leaders

How to plan holiday time off as a global startup
One international startup’s approach: Leave it up to employees to set their own holiday schedule. Since each country has its own national holidays, that means the company has employees  available to work nearly every day of the year. Fast Company

Fortune‘s Blue Ribbon List
The top corporate dogs, including Google, Gilead Sciences and Nike, show up on at least four out of seven of Fortune’s rankings. A good place to start looking for your next job. Fortune

CEOs vow to promote women 
Bank of America, LinkedIn and about two dozen other company CEOs have signed a pledge to speed women’s rise to the C-Suite. It’s part of an effort to achieve gender equality in corporate leadership by 2030. WSJ


Trump named Time’s ‘Person of the Year’
Surely, no one was surprised by Time’s announcement, as  President-elect Donald Trump defied the pundits and now prepares to sit in the world’s most powerful office. As Time points out, 2016 was about his rise; next year will be about his leadership. TIME

Trump to meet with tech leaders
Several CEOs of tech giants received invites from Trump to attend a round-table discussion next week. Cisco CEO Chuck Robbins and Oracle Co-CEO Safra Catz are among those who have confirmed they will attend the New York City meeting. The agenda hasn’t been disclosed, but during the campaign, Trump and Silicon Valley repeatedly clashed.   USA Today

Trump sold his stocks
A spokesperson for Trump says in June, Trump sold all his publicly-traded shares in companies such as Google, Apple, and Nike. Trump has been under fire for potential conflicts of interest. Only a small portion of Trump’s wealth comes from his stock portfolio. Fortune

Up or Out

Sears president and chief member officer Joelle Maher has left the company.  Fortune

Fortune Reads and Videos

YouTube to record labels: We pay you enough
YouTube says that it paid over $1 billion for songs last year, the first time it has publicly disclosed that amount. Fortune

Tesla recalls electric car adapters…
…which are used to charge the vehicles. There are reports that the item is overheating, which has caused the plastic covering to melt. Fortune 

Majority say Trump shouldn’t have to sell his businesses
More than two-thirds (69%) of poll respondents say Trump shouldn’t have to sell business interests in order to avoid conflicts of interest during his presidency. The poll results run counter to what legal ethics experts say. Fortune

The annual “Starbucks for Life” competition has launched
Seven winners of the loyalty game will receive free Starbucks for life. Fortune

Quote of the Day

“I have done dishwashing jobs at a hotel, I have cleaned horse poop when I was a horseback rider on the weekends…I would say, be kind to yourself and have patience…We don’t look at life as a full life, we look at it in small segments of a year or phases. Every phase is important but it’s not the end.” — Pernille Spiers-Lopez, former IKEA North America CEO  Fortune

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Produced by Ryan Derousseau