A selection of Goldman Sachs brass past and present as well as some unqualified (and wealthy) nominees leaves one to wonder how long his honeymoon with his working-class constituency will last
On the campaign trail, Donald Trump pledged that he would be an agent of change. He was going to drain the swamp, booting from power the entitled elites who got rich while ordinary Americans struggled. So, just how is that working out? Not very well.
By the look of his appointments so far, voters who were hoping the president-elects cabinet would be handpicked to make the US a better place for ordinary Americans is likely to be sorely disappointed.
From the nomination of Wall Street insiders Steven Mnuchin and Wilbur Ross to key posts atop the treasury and commerce departments, respectively, to selecting individuals whose qualifications seem questionable at best, Trumps choices to fill key business positions in his administration appear likely to favor the elite more than the man on the street.
Lets consider some of these selections.
The upside of Mnuchins yes, there is one is that he understands the industry he would be charged with overseeing. The downside? Well, from the perspective of those of us on Main Street, theres a lot. Trump himself is on record as opposing the Dodd-Frank rules that have made Wall Street a (slightly) safer place in the wake of the financial crisis. Mnuchin, like all good Wall Streeters, clearly would love to see those rules vanish, although he has been discreet about what he says publicly.
Mnuchin himself profited when the distressed mortgage lender he bought at a firesale price, IndyMac, foreclosed on properties owned by tens of thousands of homeowners who had taken out mortgages with his firm prior to the financial crisis. In one case, the firm foreclosed on a 90-year-old woman following a 27-cent error in her payment. Is this someone who will fight for real Americans against insider interests? Or one who is more likely to fight against them on behalf of those insider interests?
Ross is a more complex character. He has made his money as a turnaround investor, taking near-bankrupt companies and salvaging them when possible. Some of those skills might translate to the commerce secretary role, where he would be responsible for promoting economic growth and developing business, as well as trade negotiations with countries such as China. But bankruptcy turnaround also involves cutting jobs, not creating them; its about keeping costs low and acting in the interests of a companys debt holders, and possibly its shareholders. Its workers? Well, their labor contracts, with guaranteed living wages, often serve as a barrier to the kind of restructuring deals that people like Ross want to negotiate.
But then we move on to look at Trumps pick for labor secretary, and the mind is truly boggled.
After several years in which fast-food workers have taken the lead in the battle for higher minimum earnings even going on strike in hundreds of cities to demand a wage of $15 an hour it seemed as if their efforts were finally gaining momentum. In New York City, for example, pay for fast-food workers will hit $15 an hour by 2018.
Trump, however, has just tapped a fast-food executive and outspoken opponent of the push for higher minimum wages, Andrew Puzder, to serve as his labor secretary. Good luck to any Americans looking for support from the government for any living-wage proposals. Puzders response to those who have advocated for the $15-an-hour wage? They should really think about what theyre doing, he has said. We need to keep entry-level salaries low in order to be able to accommodate entry-level workers, he added. No word about what happens when workers are no longer entry level but still earning those meager wages, or when those ultra-low earnings simply leave families eking out an existence just above the poverty line.
Puzder is even a fan of immigration, unlike many of Trumps supporters. Theyre very hardworking, dedicated, creative people that really appreciate the fact they have a job, Puzder told an American Enterprise Institute conference back in 2013. Whereas in other parts of the country you often get people that are saying, I cant believe I have to work this job, with the immigration population you always have the thank God I have this job kind of attitude. So you end up with a real different feeling. Try that speech out at a Trump rally and see where it gets you.
Puzder, Mnuchin and Ross now look set to be joined by Goldman Sachs chief operating officer Gary Cohn, who is rumoured to be Trumps pick to lead the national economic council. Cohn would be the third ex-Goldman banker to get a top slot in the Trump administration this from a presidential candidate who torched Hillary Clinton for her Wall Street ties.
Then theres the nomination of Linda McMahon, the co-founder of World Wrestling Entertainment, to serve as the head of the Small Business Administration. A collective groan may have gone up from the throats of many WWE wrestlers, dozens of whom filed suit against the company earlier this year alleging it deliberately misclassified them as independent contractors rather than as employees so that it wouldnt be responsible for concussions and other major head injuries that have caused long-term brain damage. Its the second time that WWE wrestlers have battled the company over their status. The first attempt failed for procedural reasons, although some legal scholars argue that WWEs classification of its wrestlers as independent contractors appears to be patently wrong.
Lets get this straight: the individual who will be responsible for overseeing the governments policies with respect to small business ensuring that those small businesses treat their employees responsibly and that the government finds ways to help them grow is a billionaire co-owner of a (large, not small) company that may have achieved its wealth in part by exploiting loopholes in labor rules? Thats a great model for those ambitious entrepreneurs to emulate, isnt it?
Im far from convinced that any of these nominees have the public good in mind, and thats what public service is all about. Their history shows an impeccable track record of understanding private good, whether in terms of their personal bottom line or the bottom lines of shareholders or organizations they have been hired to run, oversee or represent. But as Trump himself may not yet have fully grasped, running the United States of America is not akin to running USA Inc. His picks to run business-related portfolios need to include in their calculus more than just conventional business metrics such as return on equity or profit.
Thats particularly true if Trump wants to keep his core constituents happy. Hes in a honeymoon period right now, but if this new cabinet and its denizens of the billionaire swamp conduct business as usual, ignoring the needs of the ordinary workers who arent investors and who arent large-scale consumers or campaign donors, then that honeymoon wont last long.