There's going to be a new sheriff in town, or as one businessman put it, "We now have to plan for the big fist in the sky." Doug Oberman, CEO of Caterpillar and chairman of the big-businessmen-only Business Roundtable told his members, "Some of us may bear our turn in the bullseye." And some already have. Donald Trump turned what Theodore Roosevelt called "the bully pulpit"—the platform provided by the presidency—into a bully's pulpit and accused Boeing of "doing a little bit of a number" and overcharging for the next generation of Air Force One. So, "Cancel order."
Within minutes, almost $1 trillion was knocked off the market value of the aircraft maker as investors rushed to dump the stock, which has since bounced back. Never mind that no final cost estimates have been made or contracts signed, or specifications agreed for an aircraft that must be able to operate after a nuclear attack. "That's what I'm here for. To negotiate prices," Trump announced to industry leaders who until now have seen his election as an unmitigated blessing.
And why not? Corporate taxes to be slashed. A special low-tax deal on repatriated earnings. Share prices leaping from record to record. With the exception of the very richest, executives can expect reductions in personal taxes. No more inheritance taxes. Bliss was it in that dawn to be alive.
But like the French Revolution that elicited that praise from Wordsworth, the Trump revolution has its less attractive side: the randomly applied, unchecked exercise of executive power. Macroeconomic plusses—lower taxes, infrastructure spending, fewer regulations, faster growth—come in the same package as microeconomic management by the new sheriff. Before taking on Boeing, Trump redeemed a campaign promise by persuading Carrier, a maker of air conditioners, to abandon plans to move some production from Indiana to Mexico. A victory for the president-elect, if having taxpayers pay $7 million to save a handful of jobs can be counted as more than a public-relations victory. Carrier is a subsidiary of United Technologies (UTC), a major government contractor and therefore a company over which any president has substantial leverage. "I was born at night, but it wasn't last night," UTC chairman and CEO Greg Hayes told an interviewer. "I also know that about 10 percent of our revenue comes from the federal government." Larry Summers, former Treasury Secretary put it best: "This was more a mugging than a bribe."
Ford, on the other hand, is hanging tougher. After a half-dozen conversations between Trump and Bill Ford, the motor company's executive chairman, CEO Mark Fields, reaffirmed the company's plans to shift manufacture of its Focus small car from Michigan to Mexico. He told the press, "We have made the decision to move the Focus out, and we're making that investment now." He did add that the Michigan factory would be used to manufacture "new products," but that doesn't change the fact that jobs will still be lost to Mexico. Ford is probably relying on the fact that most experts agree that Trump will not have the legal power to impose the "yuge" tariffs he threatens to levy on any Focus vehicles that Ford imports from Mexico, and that the Republican majority in the House will not back any such move. Paul Ryan and his colleagues believe it is foolish to risk a trade war when their planned reduction in corporate tax rates will be sufficient incentive for companies to keep jobs in America.
The to-be president's enemies' list will not end with Ford. Trump has ordered his staff to compile a list of companies planning to leave the United States, and to set up five-minute calls with the CEO of each one. There's more. Companies fleeing to lower-tax venues are not the only ones Trump plans to expose to his negotiating skills. During the campaign he announced: "As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few." CNN, known to some media analysts as the Clinton News Network, was not fair to Trump during the campaign—at least he did not think so. So he wants to scupper the $85 billion AT&T-Time Warner merger. But his antitrust team is made up of rather conventional lawyers, and the Antitrust Division is famous for its independence from political pressures. Or, has been so far. The antitrusters' boss will be new attorney general, Senator Jeff Sessions, a Trump über loyalist. It will be interesting to see if Sessions eschews the politicalization of his department that Obama so often found convenient.
Trump's concern for the power of the media has also prompted him to add Amazon to his enemies' list. Yes, Amazon, beloved of its hundreds of millions of shop-shy shoppers, dependent on the arrival of 500 million packages per year, creator of 269,000 jobs worldwide and growing. It seems that Jeff Bezos, the company's founder, bought the Washington Post mainly "to have political influence so that Amazon will benefit from it." Trump, whose new Washington hotel benefits from the flood of bookings by seekers after presidential favor, wants to make sure that Bezos's enterprises don't benefit from the political clout of a newspaper while he benefits from the political clout of the presidency. Trump believes the Washington Post has been unfair to him. "If I become president, oh, do they [Bezos and Amazon] have problems. They're going to have such problems."
A final enemy is Silicon Valley. Denizens of that home to proudly self-styled disrupters don't much like the disruption in their relationship with the White House, soon to be vacated by Barack Obama, one of their biggest fans. Led by Google's Eric Schmidt, Valley executives almost unanimously supported Hillary Clinton. All save Trump supporter and PayPal founder Peter Thiel and some of his associates have been excluded from Trump's new kitchen cabinet of business advisers, and, it might be added, excluded by investors from the share-price run-up that has taken prices to record highs since Election Day.
But on Wednesday the high-tech crowd will have an opportunity to be heard. Trump has summoned the industry's top executives to New York for a roundtable discussion—no agenda available—that Mr. Thiel hopes will result in a wider sharing of the financial benefits of technology. The meeting might prove less than harmonious. Charles Sacca, a venture capital investor, told the press that the only reason to attend the meeting at Trump Tower would be "to deliver the message that our industry will not be complicit in the systematic disgrace of our democratic institutions, the establishment of an authoritarian kleptocracy nor the oppression of citizens, including the minority of Americans who elected him." The fact that Trump won the presidency pursuant to a system carefully crafted by our Founding Fathers and that has worked well for over 200 years is not particularly relevant to Mr. Sacca.
Trump objects to the reliance of such as Apple on manufacturing facilities in China, and quite possibly to the Valley's almost unanimous support of Hillary Clinton. He once called for a boycott of Apple products (good luck with that), and promised, "We're going to get Apple to start building their damn computers and things in this country instead of in other countries." He told CEO Tim Cook, "Tim, you know one of the things that will be a real achievement for me is when I get Apple to build … many big plants in the United States." One estimate has it that the iPhone 7 Plus, which now sells for $769, would cost $1,200 if made in America.
"Blackmail is implicit in this approach, and it's dangerous," says Tyler Cowen, an economist at George Mason University. The most terrifying weapon of the new sheriff is his unpredictability—you never know why or when he will decide that some corporate leader is overstepping a boundary that only he sees clearly. And his belief in the sort of Caudillo Capitalism that has wrecked economies for Latin America to Russia. The best advice for those on the enemies' list comes from Washington Post Pulitzer Prize-winning columnist Charles Krauthammer, "Take Trump seriously, but not literally."