Now That’s Keeping Your Eye on the Ball
Ross Kaminsky
by

Having been a little rough on President-elect Trump yesterday for tweeting about flag burning and stepping on his own positive message and laudable presidential transition progress, I’m glad to report that Mr. Trump’s next 24 hours of Twitter activity showed him keeping his eye on the ball.

On Tuesday night, roughly simultaneously with the New York Times reporting the same news, Trump announced that he has reached an agreement with Carrier Corporation to keep in Indiana at least 1,000 of the more than 2,000 jobs it had previously announced it was moving to Monterrey, Mexico in order to compete in the very price-sensitive air conditioning market.

This arguably fulfills one of Trump’s most emotionally important campaign promises and (mostly) bodes well for increased economic activity in the United States, although there are some key details yet to be discovered:

Carrier’s parent corporation, United Technologies, is also a defense contractor. Was there any overt mention that when it comes to Pentagon acquisition plans, Mr. Trump is aware that certain things which the government now buys from UTX could perhaps be procured from GE, General Dynamics, or Boeing? Or that certain of the company’s products require government permission to be exported? My assumption is that this “stick” would have been well understood but never actually shown.

Might the “carrots” may have been sweet enough that they were all that was necessary? The Times reports that Trump reiterated his campaign promise to reduce the twin burdens of regulation and corporate taxes, the former of which is much easier for a president to guarantee than the latter, which will require the assent of Congress.

But here’s the most interesting part of the story: “The state of Indiana also plans to give economic incentives to Carrier as part of the deal to stay, according to local officials.”

In other words, did Carrier really stay due to Trump’s promises of economic reform? Or were they simply bribed by Mike Pence’s state? Again, we need to see the details. And we have to hope that the ability to extract a bribe from politicians spending taxpayers’ money is not the lesson that other corporations take away when asking “Should we consider moving production overseas?”

[UPDATE: Early Thursday morning reporting by Fortune suggests that the “incentives” were worth about $700,000 per year, likely not enough on their own to cause the company to stay since they gave up this same type incentive, including refunding money to Indiana, when making the original decision to move. Therefore, the unseen stick was likely a bigger factor than I originally suspected. Also, Carrier is keeping fewer than half of its Indiana jobs in the state and still moving about 1,300 jobs to Mexico. It seems that Carrier is getting its cake and eating it too.]

Nevertheless, if I were Mr. Trump, I’d argue, only half in jest, that in three weeks as President-elect I was already responsible for creating (or at least saving) more private sector American jobs than Obama created in eight years as president. After all, something close to 100% of non-government-subsidized employment growth in this country since 2008 has been despite, rather than because of, this administration’s policies.

Regardless of the details of the Carrier agreement, Trump’s accomplishment cannot be overstated in terms of political significance and potential impact on other companies’ thought processes going forward and for that he can rightfully take pride and credit. (Again, we’ll need to see whether the thought process is “he’ll pay us if we threaten to leave” or “he’ll make America a more attractive place to do business.”)

And, unlike flag burning, it’s an issue that millions of Americans really are thinking about today.

Another such issue, just slightly less in the public’s consciousness despite the effort of the “mainstream media” to make us think it’s the most important question facing the nation, is Mr. Trump’s potential conflict of interest between his serving as president and his ownership of a business empire.

Again keeping his eye on the ball, Trump sent out a series of tweets on Wednesday morning addressing this issue, although he left an important question unanswered. I’ve combined the four tweets for ease of reading:

I will be holding a major news conference in New York City with my children on December 15 to discuss the fact that I will be leaving my great business in total in order to fully focus on running the country in order to MAKE AMERICA GREAT AGAIN! While I am not mandated to do this under the law, I feel it is visually important, as President, to in no way have a conflict of interest with my various businesses. Hence, legal documents are being crafted which take me completely out of business operations. The Presidency is a far more important task!

I trust that confusion will arise — it does for me — when reading first that Trump plans to leave his business “in total” or whether he will only remove himself from “business operations.”

The oddest tweet-storm of the day actually emanated from The Office of Government Ethics, which coughed up a 9-tweet hairball praising Mr. Trump so effusively that, as one reporter put it, “The tweets were widely interpreted as sarcasm.” Of importance is the OGE’s not-so-subtle nudge that the “only way to resolve these conflicts of interest is to divest. Good call!”

The game theory aspect of Trump’s business separation calculation is intriguing. Consider this:

  • The media (and perhaps even Congressional Republicans) will not be satisfied if Trump only relinquishes control but not ownership.
  • If Trump were to relinquish ownership, it does not sound as if he would actually sell it. After all, he would not ask his children to buy him out, at least not in a one-time multi-billion-dollar transaction, and if I understand the man at all he would not allow any non-family member to own his brand. Therefore, his most likely way out of ownership is to transfer assets to his children, perhaps in return for an ongoing fixed cash payment, almost as if he bought a bond. (It’s important that the payments be fixed and not tied to the value of the assets as the latter would reincarnate a nearly identical conflict of interest.)
  • No matter who ends up with Mr. Trump’s holdings in his current empire, his children will remain its primary financial beneficiaries. This means that even if Trump were to divest ownership, many, including every Democrat in Washington, D.C., will be claiming for the next four or eight years that he still has a large conflict of interest.
  • In other words, whether he gives up control but keeps ownership, or gives up ownership to his children, his opponents in politics and the media will not be satisfied.

If I were Mr. Trump, then, I would seriously consider giving up only control and issuing this statement: “You’ll claim that my conflict of interest is just as great with my children owning the company as with me owning it. And because I love my children, you’d be right! So I will simply give up any involvement in the business operations and prove to you over time that I will conduct myself as president to the highest standard of ethics. I am more successful in business than any prior president, and that brings a new situation to the table regarding my finances. There’s no way around that. So while I pledge to you that I will serve without any effort to benefit myself financially, including refusing to take the presidential salary, I will not destroy what I’ve spent a lifetime to create. If you believe I haven’t lived up to this promise four years from now, you’ll have the chance to replace me. In the meantime, I’m already wildly successful. My goal now is to help all of you be successful.”

From Tuesday morning to Wednesday morning, Donald Trump did exactly what he needs to keep doing: Focus his attention, the media’s attention, and social media’s attention on his accomplishments. In just that 24 hour period, he was able to announce the Carrier deal, comment on yet another terrorist attack by a Muslim immigrant, reveal three important selections for his administration including for secretaries of Treasury and Commerce, and publicize his intent to deal with his potential conflicts of interest.

Now that’s the way to keep his eye, and our eye, on the ball.

Ross Kaminsky
Ross Kaminsky
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