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Interpreting Trump’s Deregulation Pledge

Business leaders face a new daily task: deciding how deeply to discount what Donald Trump says. For example, his repeated promises to release his tax returns should have been discounted 100%, as we learned yesterday. On the other hand, his pledges to shred the Trans-Pacific Partnership should have been discounted 0%, as we also learned yesterday. The hardest part of this task is deciding how to discount assertions that are bold yet subject to interpretation, like his statement yesterday to a dozen CEOs that “I think we can cut regulation by 75%, maybe more.”

Making this statement particularly tough to decode is the uncertain meaning of “regulation.” Business people are generally in favor of reducing it, but if they think Trump means reducing Washington’s interference in their business, they may be disappointed. Evidence is accumulating that while Trump may eliminate some written rules governing business, he may replace them with unwritten rules known only to him and subject to his moods and whims.

For example, yesterday he told the CEOs in the White House—including Tesla’s Elon Musk, Under Armour’s Kevin Plank, Ford’s Mark Fields, and Dell Technologies’ Michael Dell—“When you have a company here, you have a plant here.” No such rule exists anywhere in law or regulation—many U.S. companies quite legally outsource all their production—yet it’s now effectively a new regulation, a dictate from the president himself. Ironically, Trump even told the room that keeping operations and jobs in the U.S. was part of the price they must pay for less regulation. But is less regulation really the result?

After the meeting, Dow Chemical CEO Andrew Liveris told reporters that Trump had asked them to come back in 30 days with proposals to boost U.S. manufacturing. What the president meant, clearly, is ideas for increasing U.S. manufacturing employment; manufacturing output is rising, while employment is falling. So here’s the message: Come back in 30 days and show me how many jobs you’re going to add in the U.S., and if it isn’t enough, maybe I’ll shake you down like I shook down Carrier when it said it was leaving Indianapolis for Mexico—a plan by Carrier that was entirely legal and within regulations.

What Trump is doing isn’t deregulation. It’s rule-of-man being substituted for rule-of-law. As onerous and excessive as existing regulations may be, at least they can be influenced through defined processes and, if necessary, litigated. Regulations that exist only as presidential comments cannot be.

Business leaders don’t like regulation, but what they really hate is unpredictability. “Just tell me the rules, and I can compete,” a CEO once told me. “But if no one is sure of the rules, it’s impossible.” Heaven knows we’re early in the Trump presidency, but if he continues his new regime of business regulation by personal fiat, he could damage the economy he’s trying to invigorate.

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What We’re Reading Today

UK Parliament gets to vote on EU withdrawal
The British Supreme Court ruled that Parliament must approve triggering Article 50, which officially signals to the European Union of the UK’s decision to leave the group of nations. It’s a strike to Prime Minister Theresa May‘s plans, though she still expects to invoke the Article by the end of March. It’s unclear, however, what would happen if Parliament fails to pass a bill to leave. The Independent

Judge blocks Aetna, Humana merger
Federal judge John Bates blocked the proposed $37 billion deal between Mark Bertolini‘s Aetna and Bruce Broussard‘s Humana, in part because he found that Aetna’s claims on why it left Obamacare were false. This summer Aetna pulled ACA plans out of all but four of its 15 states, due to the costs, which Republicans have used to encourage a repeal. But Bates ruled that part of the reason Aetna did this was to punish the government for holding up the merger. Aetna will consider an appeal. Los Angeles Times

Wells Fargo branches were tipped off on inspections
As CEO Tim Sloan tries to move Wells Fargo away from the fake account scandal, some have wondered how the practice could have gone on for so long without internal risk inspectors finding out. One reason was because the branches had 24-hour notifications prior to an internal inspection, giving employees and managers time to shred and cover up documents linking to improper practices. WSJ

An attempt to save the TPP 
With President Trump‘s decision to pull the U.S.’s signature on the Trans-Pacific Deal, Australia and New Zealand have said they hope to save it by courting China. President Obama had framed the TPP as a way to write Asia’s trade rules, without China. But Trump has claimed it would cost jobs. Fortune

Building Better Leaders

Trump halts federal hiring
The executive order doesn’t include the military, national security or public safety roles. Trump spokesman says it’s to hold off the growth of the federal workforce, but the number of executive branch employees haven’t been this slim since 1965. ABC News

Find ways to monetize your network…
…in order to build success as an entrepreneur. Tapping friends, family and acquaintances can be an important initial customer base for a new business. Fortune

The top job in America goes to…
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Trump’s Latest

Trump to meet with auto CEOs
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Trump repeats unproven claim on illegal immigrants
In a meeting with congressional leaders, Trump repeated the claim that illegal immigrants cost him the popular vote. Trump lost the vote by about 3 million, but there’s no evidence of widespread illegal voting. He provided no new support for his claim. Bloomberg

Another instance of Tom Price introducing legislation…
…that would benefit his stock holdings. Three months after the Health and Human Services Secretary nominee bought into four companies with manufacturing in Puerto Rico, he introduced legislation that would benefit them directly. While the legislation didn’t pass, it’s the second time that claims of Price using his House seat to support his stock exposure have arisen. Price says that his broker handles nearly all of his investments. WSJ

Up or Out

Chase Carey has taken over the CEO role of Formula 1, now that Liberty Media’s purchase of the sport is complete. He replaces Bernie Ecclestone, who will become chairman emeritus.  BBC

Fortune Reads and Videos

Verizon new subscriber growth lags
Lowell McAdam‘s company announced it added 591,000 monthly subscribers, far less than the expected 726,000. Fortune

Marissa Mayer’s $141 million payday for the Yahoo-Verizon deal…
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Studios spend about $100 million to promote films…
…to Academy Award Voters. It’s in an effort to win the “Oscar bump,” or the additional revenues films get for winning an Academy Award. Fortune

PepsiCo to launch its new premium priced LIFEWTR…
…during this year’s Super Bowl. Fortune

Happy Birthday

Mark Fields, CEO of Ford Motor, turns 56 today.  Boardroom Insiders

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Produced by Ryan Derousseau