The Trump Kleptocracy

October 22, 2018
Tobias Stone

October 10, 2018 — President Trump speaks during a briefing on Hurricane Michael in the Oval Office of the White House in Washington, DC. Photo: Saul Loeb/AFP/Getty Images

The convictions of Paul Manafort and Michael Cohen this August shined a light on the type of people Trump chooses to work with. He said he’d employ the “best people”; instead, he employed crooks.

Behind all the outrage, the Manafort and Cohen convictions show that Trump’s government is building an American kleptocracy. The Washington Post has described how kleptocracy, or “rule by thieves,” arises when a country’s elite begin to systematically steal from public funds on a vast scale.

This is where the United States is headed. Trump’s government is powered by people who want to see tax cuts for their own benefit, without a care for the cost to others. This runs from voters backing pro-tax-cut candidates to the upper echelons of the GOP that are complicit in what Fortune magazine is calling “the biggest wealth grab in modern history.”

It is far from the first time a person like Trump has run a country. History may determine it was inevitable that the United States would go the way of countries like Russia, Turkey, China, and many others, electing a leader who could facilitate transferring the country’s wealth to a small number of private individuals. The thing about kleptocracy is that it doesn’t need to break the law because those doing it are writing the law—but the outcome is the same.

Trump was helped to power by a conspiracy of billionaires, including Vladimir Putin and Robert Mercer. From this angle, you could argue that while the Russian attack on American democracy was partly political, it was mainly just about business. After all, the Russian government is a mafia gang for whom international politics is a business operation. By helping to power a man they helped make rich, they can weaken one of the main international obstacles to their own efforts to drain Russia of cash.

The extent of Trump’s kleptocracy is becoming clear now, with his second proposed tax cut for the rich. The Trump government is ramping up the national debt by $1.5 trillion over 10 years while taking hundreds of billions of dollars out of the economy in tax cuts for the rich. In America, around two-thirds of all stocks and mutual funds are owned by just 5 percent of the people, and any tax-cut benefits for corporations will mainly just benefit that group. It is estimated that 34 percent of Trump’s December tax cuts benefit just the top 1 percent of the country’s rich.

Yet as he cuts taxes for a rich minority, Trump is also freezing public sector pay because there’s not enough money. As Forbes magazine observed:

“President Trump has cancelled the pay increases for public sector workers that were due to take effect in January 2019. His reason for doing so? The tax cuts that his administration has introduced are set to create the largest fiscal deficit since the Great Recession. Now this largesse has to be paid for.”

In effect, his tax bills have taken money out of the economy and primarily redistributed it to corporations, CEOs, and the super rich.

This is not about Republican political ideology, and it is not mere economic incompetence. It is bare-faced kleptocracy. For Trump, his family, and the less principled crooks around him, this presidency is but a brief window to grab as much cash as possible before being inevitably booted back out of the White House. They’re like a bunch of kids getting the keys to the world’s biggest candy store without any adults around to supervise them.

To understand the situation with more clarity, look at Russia, which is a more advanced version of what Trump seems to be building. In 2013, the Independent reported that just 110 people held one-third of Russia’s wealth. The story of modern Russia is that of a massive transfer of wealth from the country to a small ruling elite. According to sociologist and expert on Russia, Elisabeth Schimpfossl, “When this first post-Soviet generation passes its wealth on… it will be the single biggest transfer of assets within the smallest group of people ever to have occurred.”

Russia’s kleptocracy has laundered hundreds of billions of dollars out of the country over the years. Meanwhile, Putin’s latest attempt to increase the pension age means most Russian men will die before they are eligible for a state pension. Most Russians, especially the elderly, are already living in a state of perpetual poverty. This reflects two stark realities: First, there is not enough money left in the Russian state coffers to pay pensions, and second, Russian men have a low life expectancy—arguably because the theft of its kleptocratic government means there is not enough money for health care, education, and the other things people need.

The average life expectancy in Russia is in the mid-sixties, but that’s an average many men fall short of. If all the money tied up in former state enterprises, and then in Russian oil and gas, had flowed back into a well-managed economy run by an honest and effective government, Russian life expectancy would have gone up, people would have adequate health care and education.

The same thing is now happening in the United States. Policies designed to protect the population—but which restrict businesses from making more money—are being abandoned. Until now, the West was characterized by progress, which in a simple sense can be reflected in life expectancy. As countries become more efficient and effective, they generate more tax, and this is used to support better health care, education, and enforcement of laws that protect the population from harm.

Banning dangerous practices, such as the use of asbestos in building materials and lead in petrol, and introducing public health actions like immunization, universal health care, seatbelt laws, and smoking bans may negatively impact businesses, but it positively impacts people, which should be the point of government. People on their own cannot force rich and powerful corporations to stop harming them; they rely on the government to do that.

One of the simplest functions of any government is to ensure the people are afforded some degree of protection against the excesses of corporations and criminals, at least to the extent those excesses do not negatively impact life expectancy.

Life expectancy at birth in Russia (red), rising but still well below the West, and in America (blue), falling for the first time since the 1960s. Chart: OECD

That is why life expectancy has increased in most developed nations (the cluster of grey lines in the graph above). But, alarmingly, life expectancy is going down in the United States, primarily because the government is putting commercial and personal financial interests ahead of the health and well-being of its citizens.

Beyond the human cost of kleptocracy is the danger that progressively draining the country of money creates the sort of inequality that leads to social and political unrest. This results in political instability and ever-increasing authoritarianism to keep order. Trump is increasingly undermining the media and law enforcement because those are the two main tools a state has to prevent kleptocracy.

As Russia, Turkey, and Venezuela have shown, kleptocrats use nationalism and populism to keep their base because they cannot use economic progress to win votes. They blame foreign governments, conspiracies, and immigrants for the failures actually caused by their own wholesale theft of the country’s assets. They blame a biased media, foreign propaganda, and “enemies of the people,” when the news explains what is happening. Meanwhile, they counter the truth with media they control—which either doesn’t say what is happening, tells lies, or distracts people from reality. Gradually, the economy unwinds and the social problems caused by these policies collide with the diminished public services that can no longer deal with them.

Relaxing regulations on things that harm people puts added pressure on the health care system. The increase in sickness reduces the performance of the economy. The resulting increase in social deprivation leads to an increase in crime. Conventional policing is underfunded and undermined by an increasingly corrupt and weakened judiciary, so laws become more draconian and policing becomes more militarized. The kleptocratic policies continue to break things in a self-perpetuating cycle. The corrupt rich become even more rich, while the rest of the country becomes even more poor. The inequality leads to unrest, which is managed by ever more propaganda, less freedom, more control and censorship, and harsher policing.

Perpetually blaming others creates an ever-increasing need to find scapegoats, which spills over into outright attacks on minority groups or on foreign governments. We have seen this with Russia’s wars, used to distract people from local economic hardships. Turkey and Venezuela have blamed the United States, Hungary blames immigrants, and generally, every would-be dictator will blame anyone but themselves.

Kleptocratic leaders become trapped in a cycle of their own making. The more wealth they amass, the worse things get for the poor, the harsher the steps they take to maintain order and power. They reach a point where they are so wealthy, and the people around them are so angry, that losing power would mean losing their wealth and, likely, their lives.

Although I doubt Trump could bring about a dictatorship like this, we are already looking at a situation where he could face criminal prosecution once he leaves office. This provides a powerful incentive for him to take more drastic measures to stay in power, weaken or corrupt the legal system that could later prosecute him, and muddy the media’s ability to report on his kleptocracy. He will probably fail, but not before he does immense damage to the United States.

People have two choices: They can serve their own interests and side with him, becoming part of the kleptocracy. Or they can stop him. Complicity is the politicians who enable Trump in order to maintain their own power or see their single-issue policies enacted. Complicity is the journalists who repeat his lies instead of challenging them. But complicity is also the Trump voter who supports him in exchange for a lower tax bill, all the while choosing to ignore his crimes, corruption, lies, and challenges to the very democracy they benefit from.

History is clear — people who empower autocrats for their own personal benefit end up destroyed later. Either the system itself devours them or when it collapses, as it always does, the return of justice and democracy punishes them. Look at the early days of the Soviet Union, the French Revolution, and Nazi Germany. Look at the people who played along or didn’t speak out, only to later find themselves victims of the system they helped create.

The Washington Post has argued that America is not yet a kleptocracy because it maintains checks and balances and a rule of law. But the Trump regime is still demonstrating kleptocratic tendencies and pursuing policies more familiar with governments like Russia in the way it systematically moves money from the state to a small group of people.

In the end, Trump’s entanglement with other kleptocratic regimes and the extent to which he used the presidency to enrich himself and his family will be exposed. Those around him will fall, and order will be returned. But along the way, the United States will become a poorer place, economically and socially. It will be saddled with national debts that will haunt future generations, who will be forced to repay what Trump’s government borrowed to enrich the already rich.

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