The Fix: Killing Yourself With Corruption

The whole “anticipating the consequences of your actions” thing is not Trump’s forte.

Credit: Victor Sanchez / Shutterstock

In the last issue of The Fix, we saw how Trump is setting the stage for his own demise through his wanton authoritarian overreach. By targeting so many potential opposition centers at once, he has unwittingly brought into being a sustained mass resistance movement (albeit not on a scale that might directly threaten his regime just yet).

And we are barely four months in.

But there is another aspect of his recklessness which we have not yet considered, and that is his laughably egregious corruption. Trump’s first administration was already the most corrupt in U.S. history to that point—by a long shot, too. His second promises to exceed it.

I wrote my PhD dissertation on elite corruption in Eastern Europe. With the exception of Estonia, every place I visited featured a stunning amount of graft. In one key respect, however, Trump’s illicit conduct is worse than anything I observed in the countries I researched—not in terms of scale (this would be hard to pull off in four months) but certainly in its flagrancy. In Eastern Europe, elites hid their dealings behind complex webs of offshore entities. Trump and his allies are just doing it out in the open.

Up the Creek…

While Qatar’s personal gift of a new Air Force One has garnered the most attention, it is only the tip of the iceberg.

Take the numerous dinners Trump has hosted featuring “donors” who pay millions of dollars a plate. The funds’ reputed destination is his presidential library which, thanks to legal loopholes, in practice operates as a personal slush fund.

Trump is helping out his friends, too—and his most special friend, in particular. The administration has applied relentless pressure on foreign countries to buy Elon Musk’s Starlink technology. Look beyond the multi-billion-dollar business and complicated technology involved and you will find an elementary mafia protection racket. There are no shell companies concealing the names of the beneficiaries—indeed, there cannot be, since we know who owns the company that sells the product.

Also happening in public view is Trump’s crypto corruption. To be sure, such schemes benefit from a certain degree of obscurity since most people are not familiar with how these transactions work. Well, I do know how they work, and I can assure you that the grifting on display is ludicrous.

For starters, Trump and his family have issued their own crypto coins, which offer the possibility of rent-seeking on multiple levels. Before the coins go on the market, a select few insiders have the opportunity to buy huge amounts for practically nothing. Then, as soon as the coins launch, the insiders watch as the value of their holdings soar by ten, twenty, or even fiftyfold. Nor is that all, because Trump earns a transaction fee every time somebody buys or sells a coin, a benefit which has likely made him hundreds of millions of dollars thus far.

In sum, when we see these multimillion-dollar purchases of $TRUMP coins—and we can literally observe the transactions in real time (though not the identities of the buyers and sellers)—we are watching people stuff cash into the president’s pockets.

As if to underscore the blatant influence-peddling at the racket’s core, Trump introduced the $TRUMP coin just a few days before taking office. As of mid-March, his crypto assets were worth an estimated $2.9 billion.

And that was before the launch of his stablecoin. Unlike conventional crypto coins, whose values fluctuate widely, stablecoins are designed to maintain a constant value of $1, similarly to a money market fund. They are (wrongly) considered “safe” vehicles which can be used for storing cash or conducting large crypto transactions. For instance, people might purchase $TRUMP coins using stablecoins instead of cash or, in the event that they are selling their $TRUMP coins, accept payment in stablecoins.

But here is the catch: When investors buy a stablecoin, the stablecoin’s issuer can invest the money elsewhere and keep any profits those investments yield.

Normally, this does not pose ethical concerns. But when the stablecoin’s issuer also happens to be the president of the United States, it does. In late March, World Liberty Financial, a firm effectively controlled by the Trump family, issued its own stablecoin to great fanfare. Since then, wealthy individuals and foreign countries have been lining up to purchase billions of dollars-worth of it. By doing so, they are flat-out bribing the world’s most powerful head of state.

Having spent years immersed in a cesspool of post-communist graft, I must say that watching government officials and their relatives publicly announce their corruption at staged media events is a first for me. These people are making no attempt to hide their self-dealing. There are no anonymous bank transfers or smoke-filled rooms; it is just a bunch of idiots accepting bribes and bragging about it to the rest of us.

…Without a Paddle

Corruption involves a trade-off. On the one hand, it enriches you and your friends. On the other, it makes everyone else mad. In this way, the benefits come along with costs.

In Eastern Europe, the way in which those costs manifested themselves depended on the type of regime in which the corruption was occurring. In democracies, corruption scandals routinely brought down governments through no-confidence votes and election defeats. Whenever a government fell, in fact, corruption—not the economy or foreign policy—was far and away the most likely culprit.

Corruption is not as costly for authoritarian rulers because they insulate themselves from public backlash. Accomplishing this takes work, however. In particular, it requires creating structures and institutions that are capable of taming civil society.

Establishing control over the media is the bare minimum prerequisite in this regard. Before turning his country into a cash register for himself and his oligarchic clients, Hungarian autocrat Viktor Orbán made sure to rein in the press. He withdrew public advertising from critical media outlets, which is a big deal in Hungary since the state accounts for nearly all media spending. He created a new agency to regulate the media which is empowered to impose fines and revoke licenses. He enacted a law requiring journalists to reveal their sources for any story related to national security or “public safety.” He pressured domestic media owners to sell their outlets to his cronies. And he did all of this within a year of taking office.

Other autocrats went further. In his first decade as Russia’s president, Vladimir Putin did not face much in the way of societal resistance. While he did rule as an autocrat, you could still sit outside at a bar and discuss politics without looking over your shoulder. You could also find plenty of independent press coverage—not on TV but certainly in print and online.

Only in the run-up to the 2012 presidential election did Russian civil society start to mobilize in earnest. In response, Putin began work on a vast system of repression. Within a few years, he would have under his personal control a half-million-strong National Guard force (Rosgvardia) tasked with suppressing protests.

Today in Russia there is no longer anything resembling a civil society. Every single opposition figure is either dead, imprisoned, or exiled while ordinary Russians face long prison terms for errant social media posts. The upshot is that Putin and his ruling clique can engage in the most brazen corruption imaginable without fear of public backlash.

Trump is putting none of these measures in place. He is certainly trying to subordinate the media and in a few cases has had some success. But even outlets which have capitulated to him continue to put out critical coverage. This is not to mention the plethora of independent media organizations, NGOs, and watchdogs that have not given into his pressure and never would. Repressing them all would be impossible even for a competent authoritarian. Trump, needless to say, is not a competent authoritarian.

As for building organs of repression, he has barely even begun. His executive order directing federal resources to state and local police departments is a start but is a long way from a Russian-style Rosgvardia. He could try to use the army for this purpose, but can he really count on professional soldiers to beat and murder peaceful protesters—and on a scale that would have the requisite deterrent effect? I seriously doubt it. Regardless, no matter what type of force he manages to construct, it would never be sufficient to crush a nationwide civil resistance movement.

Sowing the Seeds

Thus, at the same time that Trump is publicly flaunting his graft, he lacks the necessary coercive apparatus to subdue the resulting backlash. Like his other weaknesses, this one can be used against him.

Still, when it comes to quashing dissent, he is certainly trying. In addition to his efforts to intimidate everyone and their grandmother, his unabashed corruption is one more manifestation of his authoritarian overreach.

Corruption is dangerous; it triggers an innate sense of unfairness in a way that, say, the improper use of the Justice Department does not. People who are not necessarily moved by the sight of immigrants getting rounded up might well lose their patience when they see a president openly raking in bribes.

Representative democracy and individual rights are not intuitive to the human mind. More than six thousand years of civilization elapsed before philosophers even discovered the concepts. But when those in power hoard for themselves what should rightfully belong to everyone, the inherent injustice of it is something a five-year-old can understand.

Astoundingly, it can even make Chuck Schumer bristle. The same guy who sat idly and watched as the president burned the republic down has suddenly perked up in response to the Qatari plane scandal, announcing that he would block any further Trump nominees to the Justice Department. (Trump was doing things in January which would have warranted this, but whatever.)

In fact, the Qatar affair marks the first time that Trump’s misconduct has prompted opposition from his own allies. If he keeps upping the ante—and it is reasonable to expect that he will—his ballooning corruption could help forge a nationwide civil resistance movement that is powerful enough to do him in. But it will not happen on its own; it will instead require coordinated messaging and activism on the part of civil society, with the Democratic Party taking the lead.