How Would We Know If Somebody’s Stealing?
In the last ten days, a person who knew in advance the timing and content of President Trump’s tariff announcements could have made a lot of money in the stock market. If you knew he was going to announce the tariffs, and you sold tariff-sensitive stocks short (i.e. bet on them to go down), you’d have made a lot of money on the plunge. If you knew he was going to reverse the tariffs, and you bought up stocks which had cratered, you’d have made a lot of money on the rally. For anyone in the know, it was a golden opportunity.
Doing any of that would have been illegal, of course. It would have been a classic example of insider trading. Still, according to Reuters, there was a suspicious surge of stock-buying just minutes before Trump announced his tariff pullback. That’s the sort of thing which would normally trigger an SEC investigation. But now, with the SEC and virtually every other federal watchdog agency – the FBI, the IRS, the DOJ – headed by persons whose main qualification is their loyalty to the president, who will investigate? If someone the president likes – a family member, a cabinet member, a campaign donor, an obedient member of Congress – were to use insider knowledge to enrich himself, how would he ever be brought to justice?
This is the problem when law enforcement is “loyal” – loyal to a person, rather than to the law. Since Watergate, we’ve worked to make federal law-enforcement agencies more independent, so that they can pursue corruption among the powerful. What keeps an unethical mayor or governor from stealing with both hands? The fear of a federal investigation. What keeps an unethical member of Congress from taking bribes? The fear of a federal investigation. The knowledge that the FBI was out there, and the belief that it would go after criminality without fear or favor, has prevented a lot of dishonesty. Not all dishonesty, of course – nothing manmade can prevent all dishonesty – but a lot. The difference between a system with a small amount of corruption, and a system with a large amount, is a realistic prospect of getting into trouble.
None of this works, however, if heads of agencies are chosen for their loyalty rather than their integrity. One of the current administration’s first actions was to fire seventeen Inspectors General, the watchdogs inside federal agencies whose job it is to ferret out waste and corruption. Since the 1970s, if you worked in a federal agency, one of the things that kept you honest was fear of the IG. Trump fired those people and replaced them with loyalists.
If any Trump loyalists profited from the last two weeks – weeks in which non-insiders lost trillions of dollars – how would we know? How could we know? Who would go after them? Even if a newspaper broke the story, who would indict and prosecute?
It also happens to be the case that fostering corruption can be an excellent way to increase your political power. If you corrupt influential people, and retain evidence of it, you own them. That was part of how Vladimir Putin gained control of Russia. When he came into office, the most powerful people in Russia were the oligarchs, a small group of billionaires who had gotten rich buying up chunks of the old Soviet Union. They had plenty of ego, and some of them were inclined to buck Putin. He collected evidence, probably much of it accurate, that the oligarchs had done illegal things, and he used it to put a couple of them in jail. The rest got the message, and they work for Putin now. Trump is supposed to have once said admiringly of Putin, “It’s like he owns an entire country.” A key way he attained that ownership was through institutionalized corruption. The result is that if Putin now wants to do something awful, like invade Ukraine, no Russian is in a position to stop him. If he has managed to corrupt any foreign leaders, neither are they.
The tariff roller-coaster which began on April 2nd could easily have been used by the president, or people close to the president, to increase their personal wealth and personal power. Maybe that happened, maybe it didn’t. But without independent watchdogs, how can we know?
~ STUDEBAKER (Studebaker@studebakerguy.bsky.social)
