By Brian Posner, Executive Chairman, Curation Corp.
Sometimes things happen faster than expected. It may be coincidence. It could be fate. Then again, sometimes there is an inevitability to certain things — good or bad.
Two weeks ago I wrote about an emerging and significant risk factor for all stakeholders: the ability to rely on the “rule of law.” I referenced a number of “straws in the wind” and commented that “yellow flags are being waved.” Seemingly within hours, those yellow flags began to turn red and this emerging risk became quite tangible. Sometimes things just happen faster than expected. Maybe this risk at this moment in history was always inevitable.
On 5 February 2020, the US Senate acquitted President Donald Trump in his impeachment trial. From that moment, he has moved swiftly and aggressively against those he views as opposition while strong-arming justice in the favor of those he considers allies. He has acted with impunity and no concern for codified rules, norms or the rule of law.
In this regard, the past fortnight has been dizzying and disorienting. It began with the President purging from his administration officials who testified, under order of subpoena, in the impeachment hearings. It continued with him directing his attorney general, William Barr, to protect two loyalists, Michael Flynn and Roger Stone, from the consequences of their respective guilty plea and verdict.
He is attacking judges, jurors, and lawmakers with reckless abandon. As Mother Jones’ David Corn wrote, “With impeachment behind him, Trump has been acting like Michael Corleone on steroids, intent on settling all ‘family business.’” More so, he is “rigging the justice system, trashing norms that have been in place for decades and attacking the notion that the rule of law is essential for democratic governance.”
Undermining the rule of law is all encompassing. It is predicated upon corruption. Ultimately, it knows no bounds. While the President’s actions over the last week have been mostly politically motivated, past behavior makes clear his willingness to interfere with commerce and the economy. His interest is not in encouraging the “invisible hand” à la Adam Smith, but ways in which he may benefit, directly or indirectly.
Attacking the rule of law is an assault on property and contractual rights, the cornerstones of business and our economy. Absent the ability to rely on contracts, the sanctity of property ownership, and laws itself, trust evaporates. Absent of trust, economic growth and investment returns are severely impaired.
Add into the mix some indiscriminate political interference as well as other anti-democratic acts, and one has created a recipe for an economic disaster. While not nearly on the scale of the US, Turkey’s recent experience is a relevant and cautionary tale.
In 1925, President Calvin Coolidge famously said, “the chief business of the American people is business.” As such, it is incumbent upon global business — individually and collectively — to speak out in defense of its free market interests. Possibly more so than any given candidate or political party, business leaders are best positioned to arrest and ultimately reverse the damage being done to the rule of law. Some leaders, like Jeff Bezos, have spoken out and acted to protect their companies’ rights and interests. More must do so.
We have witnessed how fragile democracy is — even the world’s oldest democracy. It requires trust. It demands faith in the integrity of the institutions that serve the people and confidence in the existence of the rule of law.
Markets are even more fragile. Liquidity has a way of evaporating rather quickly. And like democracy, markets and commerce depend on a special type of trust, reinforced by an explicit contractual understanding that, in turn, is itself dependent upon the law.
Business cannot, therefore, remain silent amid attacks on the rule of law without exposing itself, as well as the economy more broadly, to a significant negative re-rating. The risk is real and it is upon us. A crony capitalist system will yield significantly more losers than winners. And, what of the cost to those who “win”?
The threats cannot be ignored or rationalized away.
If you see something, say something.
A version of this column was originally published on 23 February 2020 via Curation Corp. The views expressed are solely those of the author.