Analysis |

How Trump and Clinton Will Affect Our Pockets

Like in politics, the rules of the game are changing in business.

Send in e-mailSend in e-mail
Trump and Clinton during the second presidential debate in in St. Louis, Missouri, October 9, 2016.
Trump and Clinton during the second presidential debate in in St. Louis, Missouri, October 9, 2016.Credit: Paul J. Richards, AFP

Bad things are happening in countries that have adopted the political model called “democracy.” During elections and between them too, it seems that a practical public discourse, and certainly a serious or professional discussion about issues that are preoccupying the public, doesn’t interest anyone, especially not the politicians themselves.

A blatant example, of course, is the United States presidential election campaign. The confrontation between Democratic Party candidate Hillary Clinton and Republican candidate Donald Trump has become a mudslinging confrontation with no holds barred, that undermines all the rules of the game and the traditions that up to now have held everything together – even if fragilely.

Clinton, for her part, claims that Trump is “unworthy” of serving as president, and is casting doubt on his sanity. Trump has said that his opponent should be locked up, and that he will see to it if elected. Clinton is trying to focus the discourse on Trump’s sexism. All the while, he is making no effort to stop the threats from within his camp that if Clinton wins, a civil war will erupt in America. Only Trump’s vice presidential running mate, Mike Pence, agreed to declare: “We’ll accept the results of the elections,” as if this wasn’t obvious.

It’s not only what they’re saying about each other. Clinton has been taking hundreds of millions of dollars from banks and businessmen for herself and her election campaign, and will be indebted to them from the moment she is elected president. Trump apparently hasn’t been paying taxes and hasn’t revealed his income tax returns, business connections and real financial situation. The candidates and their supporters aren’t interested in fair play in the contest for the marketplace of ideas and the votes of the electorate. Each side is determined only to win at all costs, and there seems to be no weapon deemed off-limits or “unworthy.”

But if that’s how things look in the public market of ideas in “the world’s greatest democracy,” the market that is supposed to be most free of conflicts of interests – how will it affect the business market and competition for products and consumers, where there has always been a tendency toward aggressiveness, concentration, monopolies and a “winner takes all” mentality?

Trip abroad in return for favorable interview

It won’t be good for the business sector. If in public politics anything goes, we can already assume that the rules of the game in the business world will also change in favor of the strongest and the results they want – and to hell with all the principles of ethics, decency, transparency, fair play, consideration for society and the community, and everything subsumed by the term “meritocracy.” The strong will leave all that to nave young people and bleeding hearts, until they grow up and realize how the world really works. In other words, that will go to all the losers.

We can cite examples of this trend from the American business world, where businesses, politicians and senior officials can be bought directly, using money, donations and jobs. But for the Israeli citizen, it’s more interesting to give examples from our local market – for example the banks. Anyone who follows the banks’ battles against any proposal or regulatory change that is liable to harm their profits knows that the banks don’t hesitate to use their power to achieve their goals.

Just this week, a new modus operandi used by the banks was exposed: sending journalists on trips abroad at the banks’ expense in return for a positive newspaper interview with the banks’ directors. Here we’re referring to Bank Hapoalim: It paid for Sever Plotzker, the financial commentator of the daily Yedioth Ahronoth, to travel to the annual International Monetary Fund meeting in Washington. And in an interview published a few days ago in the business supplement, Plotzker wrote about the insights of Bank Hapoalim Chairman Yair Seroussi.

A short perusal on the Internet indicates that Seroussi’s statements were of doubtful journalistic value. Seroussi, who spoke after meetings with “governors of central banks, senior bankers, analysts and representatives of international investment houses,” repeated all the familiar narratives of the past few months, which the bank had already publicized in a press release. According to the release:”The pressure on large banks in Europe, especially in Italy, and the risks to the financial system in Britain in the wake of its anticipated exit from the European Union, are the principal causes of the unrest among global investors.”

In the interview with Plotzker, Seroussi repeated the same points, and also attacked the conclusions of the Strum Committee, the panel seeking to increase competition in the banking industry, including offloading the Isracard credit card firm from Bank Hapoalim. Why? Seroussi explained to Plotzker that everyone understands today that “a strong and stable banking system is a strategic asset,” and that “there isn’t a single stable bank in the system that has been forbidden from owning a credit card company. Just the opposite.”

The familiar rules of the game will be violated in the business sector, too

Seroussi’s viewpoint is entirely legitimate, even if it originates in the bank’s self-interest. But in the same interview, Plotzker didn’t ask Seroussi about the hundreds of millions of shekels that Bank Hapoalim had to pay for allegedly helping its customers to defraud the U.S. Internal Revenue Service. He didn’t ask about tycoon Eliezer Fishman’s debts, and why Bank Hapoalim still insists on allowing Fishman to conduct his businesses and to draw a salary of millions, despite a debt of 1.8 billion shekels ($470 million) to Bank Hapoalim alone.

Nor did Plotzker ask Seroussi the following interesting question: Why, after years of receiving an annual salary of almost 10 million shekels (9.4 million shekels in 2011, for example), are you now consenting to a salary of 2.5 million shekels, rather than retiring as former CEO Zion Kenan did?

In economics, there is a concept of “revealed preference,” in which an individual’s real opinion is judged by what he does rather than by what he says he’ll do. In that case, doesn’t your consent to continue to serve as the chairman of Bank Hapoalim after a salary reduction of over 60% negate the claim by many banks that only inferior executives will agree to work in banking after implementation of the law capping salaries of senior executives in financial companies?

This isn’t the first time that bankers and businesses are using carrots (paying for trips, recruiting former journalists to their ranks, disbursing advertising budgets and hiring lobbyists) or sticks (advertising boycotts) in order to cause the press and the politicians to present to the public the narratives that suit them.

But when we look at developments on the playing field of political-public opinion and the new rules of the game being established, there’s a fear that the efforts of the business sector to confuse the public and buy the votes and loyalty of politicians and officials will only intensify. After all, if the world has become a jungle, and if every battle is an all-out war, then in the business sector too, at least some companies will adopt a culture of “in war everything is permissible.”

What is the significance of all that for the public? As we sometimes say: Expect an attack. The attack may come through mergers and acquisitions that will lead to a reduction in competition and an increase in concentration of economic power and the cost of living. It may come through insistence on an economic policy that benefits companies, industrialists and exporters at the expense of the general public. It may come through scuttling laws and reforms in the government and Knesset. And it may come through exploitation of the media to embed the stories, the narratives and the “truths” that wealthy businessmen want the public to adopt, and to tell their children about how this world works.