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Putin’s Oligarchy as Trump’s Business Model

July 1, 2019


Why does Trump gaze upon Putin with such rapt adoration? Why does he endorse Putin’s positions and reject the conclusions of US intelligence agencies? Why does he never criticize Russia or Putin? Is it because Russia holds compromising information about him or his businesses? Is it because he’s beholden to Putin for getting him elected? Or is it because Putin is what Trump wants to be?

(These explanations are not mutually exclusive–all could well be true.)

Putin represents everything a corrupt authoritarian demagogue could hope to achieve. He sits atop a small group of fantastically rich businessmen–the oligarchs–who control the country’s leading corporations and resources. He is the arbiter among them and can make decisions that directly affect their interests, and therefore they defer to him and enrich him. He is the nexus for major financial transactions, which require approval from and a payoff to him.  By some estimates, Putin is world’s most wealthy man.

Moreover, he is almost entirely unconstrained by electoral politics, an independent judiciary, or a critical free press. Russian elections are thoroughly manipulated, and opposition leaders who become a possible threat are hobbled by various means, including imprisonment or even poisoning. Such incidents are never seriously investigated or prosecuted. Similarly, journalists who get out of line can wind up beaten, jailed, or killed. The press is therefore essentially state-controlled or cowed into submission.

The regime isn’t really ideological, except insofar as it favors policies that enrich the oligarchy and crushes any that would reduce its power. It’s basically a neo-czarist system, and it exploits religion and ethnic nationalism to bolster support. It uses memes like gay-bashing to get loyalty from socially conservative lower classes who derive little benefit from all the money rising to the top. The egalitarian vision of communism is truly dead, but its repressive apparatus is thriving and a few are getting super rich.

If all this sounds like a more dystopian version of what America is heading toward, there’s a reason for that. The concentration of both wealth and income in the top one percent of the population is actually worse in the US than in Russia. Among developed countries, the US ranks second in concentration of wealth, just behind Ukraine (Paul Manafort’s old stomping grounds), and ahead of Russia.

Trump didn’t create the increasing concentration of wealth, which has been building since the 1980s, but this accretion didn’t just happen in a vacuum and is a direct result of changes in tax policy and deregulation. But more than anyone else, Trump has figured out how to exploit it both economically and politically. And his policies are designed to increase that concentration and to perpetuate it. The most important example is his “tax reform”, which amounts to a massive transfer of wealth to the richest percentile of the population.

The “one percent” that we talk about here–the people who buy $40 million condos in Manhattan, fly their Gulfstreams to the Masters, and schmooze at Mar-a-Lago–are our oligarchs, though they may have arrived there by somewhat different routes. They may not all like everything about Trump, but a lot of them like that he lets them keep their wealth protected and amass ever more of it. So they support him and give astonishing amounts of money to keep him and his Republican acolytes in power, and some of that money even winds up in his pocket. 

One problem for Trump is that, unlike Putin, he doesn’t own the entire oligarchy–yet. If Sheldon Adelson and his wife can donate an amazing $123 million to Republican candidates just in the 2018 election cycle, then Michael Bloomberg can donate $95 million to the Democrats. The US economy is about 12 times the size of Russia’s (in nominal terms), which means it’s a much larger pie to divvy up among more rich people, whose interests are more diverse. The rapid privatization of Russian state assets starting in the 90s meant that a relative small number of insiders with close ties to the old Soviet Communist Party were in a position to gobble them up and that Putin (as head of the FSB) was well placed to guide who got what even before he became acting president of Russia in 1999. The privatization of public wealth in the US has been a slower and bitterly fought process, and there was proportionately less in the public sector to begin with, but with Trump the pace has picked up, accelerating the concentration of wealth.

What that concentration means for American democracy is that what the average voter wants has less and less impact on what actually happens. A fascinating statistical study by eminent political scientists Martin Gillens (Princeton) and Benjamin Page (Northwestern) shows that “the preferences of average Americans have only a minuscule, near zero, statistically insignificant impact upon public policy” when pitted against economic elites. The study concludes that in the US,  “the majority does not rule—at least not in the causal sense of actually determining policy outcomes. When a majority of citizens disagrees with economic elites or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the U.S. political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.” To put it in everyday terms, money talks.

Trump and his Republican allies don’t yet have a totally compliant judicial system that will automatically endorse whatever they want, but they are certainly working to achieve that. Again, this process predates Trump, but has become starker since he took office. Mitch McConnell declared open war when he refused to allow Obama’s nomination of Merritt Garland to the Supreme Court to get so much as a hearing in Senate, and McConnell is perhaps the most enthusiastic enabler of big money in politics as well as the most determined foe of campaign funding reform. The Roberts court is now reliable on key issues affecting political participation having ruled in the oligarchy’s favor on three landmark cases that essentially removed any limits on political campaign contributions, gutted the Voting Rights Act, and (most recently) approved partisan gerrymandering. Lower federal courts are also being packed with ideologically approved judges. After stalling confirmations during the Obama administration, McConnell is now filling vacant slots with unprecedented speed.

Add to that a Justice Department headed by William Barr, who has jettisoned the traditional independence of that office from the White House and acts as Trump’s advocate. As Attorney General, Barr and his newly appointed subordinates are in a position to quash investigations and decide which cases are litigated. Whether career professionals at Justice and the FBI will be able to countervail such pressure remains an open question.

Then there is the increasing ugly White House campaign against the independent press, or as Trump calls it, the “enemy of the people.” According to the New York Times, at the recent private meeting with Putin in Osaka, Trump (after joking about meddling in our elections) “offered the sort of disdain for journalists sure to resonate with an authoritarian like Mr. Putin. ‘Get rid of them,’ Mr. Trump said. ‘Fake news is a great term, isn’t it? You don’t have this problem in Russia, but we do.‘” What’s not a problem to Trump is Fox News which functions as a quasi-official propaganda organ for the Republican Party and the Trump White House–more or less like TASS and Isvestiya in Soviet days. The message then gets amplified, often in more extreme form, in on-line and radio outlets like Breitbart and Rush Limbaugh and repeated by local TV and radio stations owned by conservative organizations like Sinclair and Clear Channel which dominate smaller media markets across the country. Trump doesn’t control newsmedia yet, but there’s really no doubt that he wishes he could.

The signs are everywhere if you look–from symbolic (like turning the 4th of July celebration on the National Mall into a political event) to deeply if more distantly disturbing (like trying to politicize the military). I’m certainly not the first to notice. Anne Applebaum wrote a prescient op-ed in the Washington Post three years ago before the election headlined “The Secret to Trump: He’s Really a Russian Oligarch“, in which she observed that he is “an oligarch in the Russian style — a rich man who aspires to combine business with politics and has an entirely cynical and instrumental attitude toward both…His transition from donor to candidate, although partly motivated by megalomania, has also been designed to shore up his businesses. Just as Russian businessmen use political power to direct money to their own companies, so does Trump.”

What’s different now is that Trump isn’t just another crooked billionaire trying to work the political system to get richer. He’s now the capo di tutti capi. In Russian terms, he’s not Oleg Deripaska, he’s America’s Putin. Or at least that’s what he aspires to be. If only he can smash enough democratic institutions to let him achieve his goal.

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