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Not All Interests Are Conflicts

Monday, January 9, 2017 14:17
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New Year's 2017 at Mar-a-Lago ClubThere’s a difference between an interest and a conflict of interest, and between the appearance of a conflict of interest and an actual conflict of interest.

Remembering those distinctions, understanding them, and keeping them in mind is the key to making sense of the ongoing political uproar over the financial assets and income streams of President-elect Trump, his son-in-law and adviser Jared Kushner, and his team of wealthy choices for cabinet positions.

You wouldn’t know that from the press coverage, which seems predicated on the absurd idea that being rich, owning real estate, or having business interests, is or ought to be somehow disqualifying from government service. It’s a principle that would have required George Washington to sell his Virginia farmland and put the proceeds in a blind trust before becoming president or serving as commander in chief of the Continental Army, or have required President Kennedy’s family to sell the Chicago Merchandise Mart and put the proceeds in a blind trust before Kennedy became president. It’s a principle that would have required Henry Morgenthau Jr. to sell Fishkill Farms and put the proceeds in a blind trust before serving as chairman of the Farm Credit Administration or Treasury secretary in President Roosevelt’s administration.

The idea that only those who have taken vows of poverty—say, Buddhist monks, or mendicant friars, or newspaper editorial writers—are acceptable candidates for government service is a conceit that, when you think about it, is both unworkable and unwise. Unworkable, because there doesn’t tend to be vast overlap between the ranks of the penniless and those with the financial acumen and management skill to run the American government. And unwise, because, if anything, Americans should want public servants with skin in the game, with a big ownership stake in American economic growth and success.

The attacks on would-be-public servants with business interests show how far America has strayed from its revolutionary origins. We’ve gone from a place where property ownership was a requirement for voting to a country where property or business ownership has become grounds for disqualification for public office. I’m glad the franchise has expanded, but I sometimes worry we’ve gone too far in the other direction, demonizing ownership rather than honoring it.

If it sounds like I am exaggerating, or being too abstract, let me give some specific examples of what I am talking about.

Example number one is Trump’s Mar-a-Lago club in Palm Beach, Florida. Hardly a day goes by without some dire warning in The New York Times about the dangers of Trump’s supposed “denial” of the dangers of human-caused global climate change. Since one of the risks of that climate change is sea level rise, is it a conflict of interest that Trump owns an expensive piece of oceanfront property in Florida? Or is it a confluence of interest, that is, the fact that he owns a pricey property in Florida makes it more likely that he will act in the public interest when it comes to countering the risks of climate change?

Example number two is Jared Kushner’s businesses, which, according to a long and breathless report in The New York Times over the weekend, have taken loans from French, German, and American banks, and from Chinese investors under the EB-5 visa program that, as the Times put it, “grants two-year visas and a path to permanent residency in exchange for investments of $500,000.” Again, is this a conflict of interest, or a confluence of interest? Hardly a day goes by without someone accusing Trump of racism or xenophobia, or Kushner of enabling the same in his father in law. It’s certainly possible that Kushner’s experience with Chinese immigrant investors will decrease the chances of a counterproductive American conflict with China and increase the chances that the Trump administration doesn’t slam the door shut on immigrants.

The Ethics in Government Act of 1978 requires certain disclosures of administration officials, and officials of the incoming administration will have to comply with that law. But as Kushner’s hiring of Risa Heller—a former spokeswoman for Sen. Charles Schumer and Gov. David Paterson, both Democrats of New York—and former Clinton administration official Jamie Gorelick to guide him through the “ethics” process makes clear, the Washington conflict-of-interest game has become a gotcha charade about paying the right revolving-door-insider compliance lawyers and consultants, rather than a means to honest government. It’s about the appearance of ethics, rather than actual ethics.

No one wants self-dealing or genuine corruption. But why muddy that issue with a lot of unrelated nonsense? In lots of cases, asset ownership and government service aren’t in conflict; they complement each other. And the best check on all this isn’t a lot of long and complicated disclosure forms to be filled out by lawyers and accountants; it’s the ability of the voters to throw out the politicians if they turn out to be so crooked they do a bad job for the public.


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