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This is On Point. I'm Meghna Chakrabarty. So I think it's a great gesture from Qatar. I appreciate it very much. I would never be one to turn down that kind of an offer. I mean, I could be a stupid person and say, no, we don't want a free, very expensive airplane. Earlier this month, ABC News reported the Trump administration was preparing to accept a Boeing jumbo jet from the royal family of Qatar.
The luxury plane worth some $400 million would replace Air Force One. Trump posted on social media it was, quote, a gift free of charge. He also called it, quote, a very public and transparent transaction, end quote.
ABC News reporter Rachel Scott pressed Trump on the jet during a press conference last week. Mr. President, what do you say to people who view that luxury jet as a personal gift to you? Why not leave it behind? You're ABC fake news, right? Why not? Only ABC. Well, a few of you would. Let me tell you, you should be embarrassed asking that question. They're giving us a free jet. I could say, no, no, no, don't give us. I want to pay you a billion or 400 million or whatever it is.
Or I could say, thank you very much. Well, this week, CNN reported that the Trump administration first approached Qatar about acquiring the plane, not the other way around. So the plot thickens.
Meanwhile, tomorrow night, the top 220 investors in President Trump's cryptocurrency meme coin will sit down to an exclusive dinner with the president. The meme coin launched in January just after Trump's inauguration. 80% of it is controlled by the Trump Organization and affiliated entities. And the exclusive dinner will be at Trump's golf club in Virginia.
White House Press Secretary Caroline Leavitt was asked earlier this month why Trump is attending the dinner with the coin's top investors. The president is abiding by all conflict of interest laws. The president has been incredibly transparent with his own personal financial obligations throughout the years. The president is a successful businessman, and I think, frankly, it's one of the many reasons that people reelected him back to this office. But one reporter pushed back on Leavitt, saying, "...some do see this as an opportunity to influence the president."
For example, a logistics company called Freight Technologies said it would buy $20 million of Trump's meme coin in order to advocate for its position on trade between the U.S. and Mexico. Levitt responded. I can assure you the president acts with only the interests of the American public in mind, putting our country first and doing what's best for our country, full stop.
Ultimately, the logistics company was not invited to tomorrow's dinner because it did not buy enough Trump meme coin.
Now, it's not hard to imagine that not so long ago, overt presidential quid pro quo like this would have been the stuff of endless headlines, congressional investigations, even calls for resignation. It was customary in the past for a U.S. president, even a presidential candidate, to try to avoid the appearance of corruption, let alone outright corruption or conflict of interest.
Recall that people like Mitt Romney. Romney had to put his millions into a blind trust when running for president. Jimmy Carter did something similar with his peanut farm. Trump, however, isn't doing anything blindly. He's putting the overlap of his personal business interests and presidential power in full view. In other countries when this happens, we call it corruption.
Is he normalizing corruption in the United States? I mean, Trump's behavior in this administration is in line with his first administration. But voters, particularly his voters, didn't see those conflicts of interest as an issue. They put him back into office. So there's already some normalization there. But at what point do we...
The American people become so inured to it that the acceptance of corruption starts to trickle down and erode our belief in or expectation of integrity at every level of government, from president to the proverbial dog catcher. It's a question that I'm going to turn now to Darren Acemoglu. He's the Institute Professor of Economics at the Massachusetts Institute of Technology, MIT, and
In 2024, he and other researchers also won the Nobel Prize in Economics for their studies of how institutions are formed and affect prosperity. Professor Asimoglu, welcome to On Point. Hi, Meghna. Great to be here with you. First of all, the word corruption, I will acknowledge, has been thrown around so much. And in fact, the Trump administration uses the word corruption a lot when talking about its people they don't like.
I'm going to ask you about your actual definition of political corruption so that we're operating from a common basis of knowledge. What would you define it as?
I think it's commonly defined as abuse of public office for personal gain. And I think most of the time people have in mind personal financial gain, but it could be other forms of gain as well. But when in daily usage, it could also mean other sorts of abuses, perhaps ideological abuses. And I think that's part of the meaning that Trump and his supporters
supporters sometimes use the word. So in this case, in analyzing President Trump's behavior, we should focus on the financial personal gain, you'd say. Absolutely, financial personal gain. But I think Trump as a whole is more than financial misdeeds.
He is in power in part to amplify his own prestige, his own power to influence things. So I think there is a sense of corruption when he's using the office in order to glorify himself as well. I see. OK, so with that in mind, I mean, I guess you already answered the next question, which is, do you believe that Donald Trump has behaved in a corrupt manner as president?
I think a lot of corrupt behaviors in the United States are defined by norms. Donald Trump, since his first presidency, or perhaps even sooner than that, started bending and breaking norms, especially about his own and his family's business dealings, but also about the way in which he goes in situations of conflict of interest that became blatant. So institutions...
Yes. So then in that case, you see him as in this, especially in the second presidency, as a person who is trying to get the people to trust him.
As beginning to normalize an acceptance of corruption in the United States? Absolutely. And I think, again, it started in his first presidency, although his powers were more restricted, both because of the mandate that he and his supporters thought they had and the people who were surrounding him and because civil society was much more robust in mounting resistance against him.
against Trump in his first term. So I think those shackles have essentially been undone. So he's acting in more sort of capricious ways in every domain, and especially when it comes to him and his family benefiting from his
public office, I think we are seeing the outcomes of that quite clearly. Okay. And to your point, maybe some of the forms of corruption that we saw in the first administration, in fact, the one that led to his first impeachment, right, was the deal he tried to strike with President Zelensky in Ukraine to investigate the Bidens in exchange. Exactly. And that's a gray area. But I had something like that and that one, especially in mind when I said it's not just personal financial gain, but other sorts of gains. So in that problem,
The issue was that he was trying to pressure a very important U.S. ally for potential political gain. Mm-hmm.
We're going to talk about norms and institutions in just a second, Professor, but I can't believe I have to ask a Nobel Prize winner this, but people are interpreting the Qatari jet in so many different ways that from what we know thus far, just the existence of a foreign nation, the leaders of a foreign nation giving a jet, whether or not the Trump administration asked for it, to the president of the United States, is that corruption? Let me ask you the question. If it wasn't a foreign government...
But a company or a wealthy individual giving you a house or a jet while you are in office and you can make important decisions about their businesses, wouldn't that have a whiff of corruption? Now, when it's a foreign power, I think it's much worse. The United States actually has typically set much more strict guidelines on foreign powers being able to influence lawmakers for good reason.
Mm hmm. It's just that the Trump administration insists, you know, just to at least give voice to their retort to this, that, you know, it's not corruption. It's for the United States. It's for the good of the country, et cetera, et cetera.
Yeah, I mean, I think there's a gray area there. So it depends on, at the end of the day, who owns the plane and who has the use rights for the plane. I mean, obviously, I think the subtext here is that even if they go for an arrangement in which, at the end, the plane is not owned by Donald Trump and his family, you know, he's going to benefit from it for the next three and a half years. But I guess that would at least be paying lip service to some of the laws that
At least it's not a personal gift. Yeah. I mean, you said very accurately that institutions rely on trust specifically in order to operate fully in a democracy. And corruption is the tip of the spear in eroding that trust. I mean, the actual word, right? Corrupt to corrode or corrupt something.
But do we have this a little bit backwards already that perhaps Americans are accepting Trump's overt corruption because we are already lacking in trust in our institutions? I mean –
are symptoms of a large number of Americans' disillusionment with our politics, disillusionment with our economy, and disillusionment with our media that they think they do not have enough voice. And you can see those numbers in Pew's or Gallup polls. People's trust in Congress, in media, in experts are at an all-time low, I mean remarkably low. But the fact that Trump is a symptom of
doesn't mean that he's also having a huge accelerating effect on the decline in that trust, the decline of the quality of those institutions. In fact, he has already brought, in my opinion, U.S. institutions to the brink of
complete, irreversible change, which would be very costly for American democracy and American economy. Well, Professor Acemoglu, hang on for just a second, because with that in mind, we need to take a quick break. But that is exactly what we want to explore when we come back. This trickle down corruption, as I've called it. We'll be back. This is On Point. On Point.
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Follow Is Business Broken wherever you get your podcasts and stick around until the end of this podcast for a sneak preview. Joining us now is Sumitra Jha. He's associate professor of political economy at the Stanford Graduate School of Business. Professor Jha, welcome to On Point. Thank you so much for having me. So I wanted to frame this conversation as the possibility of trickle-down economics because, you know, my chief interest is how does this impact the entire nation down to the level of dog catchers I said earlier.
And this comes from a personal experience that I had several years ago in India where we were just going through a local airport. And because the security guard recognized me and my parents as, quote unquote, non-resident Indians.
He pulled aside my father's bag, didn't even try to look at it, didn't open it, didn't even claim that there was any kind of security concern over my father's bag. He just asked for money. He said, give me $50, U.S. dollars, and I'll give you the bag. It was so overt, and I just thought, this is part of daily life. So can corruption like that be one of the end results when there's overt corruption at the national level, Professor?
Well, firstly, I'm sorry that happened to you. I think... It's okay. It seems like it happens to Indians every single day. So...
Often it's much less overt, however. I think the euphemism that's often used is, you know, could you please give me some money for sweets for the kids? You know, so it's a socially acceptable way of, you know, sharing the wealth. I do think, you know, if you look at Indian headlines, oftentimes in the news, there'll be exposure of what you might call retail corruption, you know,
various policemen, unfortunately, or police people being implicated in bribery. I think what's different with that is it's kind of a regular Tuesday when that news breaks, whereas when you see corruption at the very top, that can have a very different impact. You know, the way we think about it is that, you know, apex politicians are often the most focal people in our society. So in an environment where
We're trying to make our daily decisions based on what we think others are doing. There's an idea economists have about strategic complementarities and that corruption involves that kind of activity. If I believe that others are going to act in a corrupt way, I myself might act differently.
more corruptly. Everybody's doing it, so to speak. So if you see people at the very top engaging in what might be perceived as corrupt activity, and you know that everyone else is seeing them too, this can really actually change the way we coordinate and the levels of corruption in society more generally. This seems to be vitally important to understand. You're talking almost like about a corruption virus that can spread through the body politic of a whole country. Yeah.
Yes, that's the scary part. And I think that's the reason why we really should be trying to hold our leaders to a very higher standard because they are so focal. They're also role models. You know, they if we believe that, you know, these are people who should be governing our countries, we see them, you know, as examples to emulate. And we know the others see them, too. You know, these things can be internalized as well. So I think, you know, even if people might say, well, this is a regular business deal, you know,
I think at the very top, we need to be extra careful because it can really change the way we think about it as individuals in our daily lives as well. Professor Asimoglu, can you pick up on this thought? And I would love you to relate it directly to your research on democratic institutions and prosperity. Because if, as Professor Jha is saying, one of the key things that corruption can do is just change individual decision making, certainly that impact is amplified when it comes to normal society.
functioning of key institutions. Absolutely, 100%. You know, look, let's take a step back. The U.S. economy depends on innovation. If you look at the U.S. success over the last five decades, six decades, it's been driven by new sectors, new technologies from aerospace to pharmaceuticals, especially digital innovation, now AI, but also innovation in financial services, innovation in manufacturing.
innovation is forward-looking. You make a big investment in R&D or putting a lot of effort because you think that you're going to succeed in coming up with a new technology or a new product or a new service. And oftentimes, the really valuable one comes from small companies, people in their garages or when they're trying to sort of just make it big in a particular market. Why are they doing it? Because they trust that if they are successful,
They can implement that technology, scale up their business, compete against incumbents, expand their market share, go global. All of these depend on institutions.
If some companies are favored because of corruption or because institutions, including the judiciary, have become ineffective or corrupted, then incumbents are going to be able to block the new technologies or the procurements from the government are going to go not to the best company, but to people who are connected to the president or to other decision makers. All of these would have an amazing chilling effect on innovation. So we would be essentially killing our real comparative advantage.
So this is basically diminishing our prospects for the future beyond the actual just dollar cost of the corruption. It would. Amazing. Dollar cost of corruption is small.
It's really the future. And the problem is, you know, when you are thinking of innovative activities, it takes time. You won't see these effects in one or two years. It will take five years, 10 years, perhaps even longer, because innovation is very forward looking. And the way in which people start changing their behavior in the most dynamic sectors of the economy wouldn't be instantaneous. It would take a while. Is there any way, Professor, to convert that future cost of lost innovation, for example, into a dollar figure? Yeah.
That would be hard because, you know, we would need to know exactly how corruption is affecting society.
Current activities and future activities, it would be very specific to the US. Others have done studies looking at the relationship between corruption and GDP per capita, and it's a very strong relationship. But of course, there are issues of what's causing what, and there are lots of other factors that are institutional that are distinct from corruption that are bundled in there. So you would have to sort through those things. But we would be, if indeed...
Trust in institutions in the innovative sector is damaged. We're thinking not millions, not billions, trillions of dollars of damages. Well, I'm seeing here that at least one measure, as you were saying, Professor, I'm seeing one from the United Nations and the World Economic Forum that they estimate that the global cost of corruption – and this is actual dollars in loss to corruption –
is perhaps 5% of the entire world's GDP. That's quite a number in and of itself. That is an underestimate because it doesn't take into account what corruption is doing to investment and innovation, what corruption is doing to keeping some of the countries in Latin America or in South Asia really below their potential. Professor John, please jump in here. Go ahead and feel free to talk to each other because this is absolutely fascinating to me.
There's sometimes a debate in economics, as you know, about whether corruption actually might be a good thing. You know, greasing the wheels of the economy, allowing an auction to take place for allocations and so that the persons who are willing to pay the most will get the resource. But...
The challenge is the systemic challenge. It might work to overcome certain bottlenecks that exist, but it can create this culture, as Daron was saying, which can be very, very pernicious in its effects more generally, particularly on people's faith in each other, on their willingness to invest and their faith in democracy itself. We're seeing, you know, in our research, we found that democracy
just being exposed to corruption scandals at the very top has made people become less supportive of democracy and more supportive of authoritarianism. And you can sort of see why. I mean, if it's the case that you don't think democracy is delivering, maybe people believe you need a strong person to take over and clean the shop. The fact that people...
People on both sides of the aisle in many countries talk about draining the swamp. It means that I think people really believe there's more corruption in our government than there actually is. In the U.S., 73%, according to Gallup, believe that corruption is pervasive in the government, which is actually above the world average.
It's above the world average. I mean, this explains a lot of why some many people say that they don't bother voting, for example. They've just retreated from the democratic process entirely because they don't see the point in it because, quote unquote, everything's corrupt anyway, which then is kind of a feedback loop, which allows the authoritarianism to sink in even further, Professor Jha.
Yes, we've been finding that both in cross-country studies looking at people surveyed just before and after the corruption scandals, but also in randomized control trials where people are exposed to evidence of top people exchanging stacks of cash. And we found that unlike simple information about policy underperformance, which actually can make people rally and turn out to vote,
seeing the apex corruption can really undermine people's willingness to vote and even support democratic institutions and even their trust in one another. So, you know, as you were talking about with the trickle down, it's affecting the social fabric in important ways. Professor Asimoglu, let me turn back to you because this is now expanding. I had first just thought of it in terms of
purely economic terms. But now, I mean, we're talking about the cost of corruption to democracy. And as you've also put it to, you know, the very future of a nation's prosperity, it seems to be a much, potentially much larger impact than I had originally thought. Absolutely, yes. And, you know, exactly like Sumitra said, this normalizing effect really changes politics. What happens is that after a while,
If you think that all high-level officials are going to engage in corruption and also couple that with the argument that Sumitra was saying
mentioning, which I am very dubious of, which is that sometimes corruption is good for greasing the wheel. There is very little evidence for that. Then what happens is that incumbent corruption is not punished at the polls because voters think, well, anybody is going to be corrupt anyway, and the government is doing some stuff, is building some roads. What if they're taking 20% of the cream on top? That's okay. So that completely dulls the power of the democratic process. The democratic process
by and large, votes with the following principle. If somebody in office is underperforming, is not doing what they promised, you vote them out. If that stops,
The whole democratic process is in danger. And that can stop because people stop turning out and just the partisans rule or because people become so disillusioned that they say everybody's corrupt. Why should I kick out this particular corrupt politician? Then you're really in trouble. How does a nation function when that happens?
Well, it doesn't. I mean, we're seeing so many strong leaders doing that. Look at Putin in Russia, Recep Tayyip Erdogan in Turkey, Viktor Orban in Hungary. All of these leaders have played out of the same book. They have learned how to play the system differently.
First, by controlling the media. Second, polarizing the environment. And third, normalizing their corruption, which again goes both in the direction of financial gains and also engaging in corrupt practices in order to boost their power. Professor Jha, I'm thinking of the...
almost 80 million voters who voted for President Trump for the second administration. I mean, is there any argument to make that an expansion of the acceptance of corruption will ultimately have a direct impact on their lives? Because clearly at this point in time, they don't see that as a possibility. Well, I mean, I think part of it is what Daron was saying, that corruption is often used, you know, not just in democracies, but often in authoritarian regimes as a way to
denigrate the other side and thus to centralize power. And so if you can say, well, the system is broken, I need to fix it. You know, sometimes we're looking for a hero or, you know, a heroic figure who can do that. And so,
In some countries, there are very honest leaders who actually could be a big threat to democracy precisely because they're so honest that people believe that they shouldn't have the checks and balances. And I think in the United States, we have a slightly different problem. But it is one where I think, you know, as soon as you begin having this endless feedback loop of everyone accusing each other of corruption, it does lead to corruption.
an undermining of support for the checks and balances of democracy. And this can mean that, well, maybe my guy has more power today, but maybe someone else will have more power tomorrow. And it does mean that democracy as a whole might suffer because we're going to be much more at the behest of the whims of individuals rather than of our system. Professor Asimoglu, let me turn back to you again on this question of
Well, at one point in time, it was norms in American institutions that were the bulwark against pervasive corruption. Those norms have been broken. And I think we can argue even that the Republican Party as a whole has accepted a completely new way of thinking about corruption.
self-dealing, perhaps even the Democrats have to, I don't know, but it's just more overt in the Republican Party. Can institutions that have been compromised like that push back? I mean, how do you change in the other direction? They can. You know, institutions change all the time. They are in flux, especially in a world subject to many other disruptions. But
It is difficult. And, you know, my work and Sumitra's work together with my student Eduardo Rivera shows one aspect of that, which is that once voters become convinced that democracy is corrupt or is unable to control corruption, their support for democracy declines.
They say, oh, well, you know, perhaps we should support authoritarian leaders or we shouldn't be so tied to a democratic system or they don't turn out to vote just like Eduardo Rivera and Sumitra's work shows. So democracy itself is weakened. And if your hope, my hope, is that it's going to be the democratic system that ultimately controls corruption and reinstates the norms of honest politics, that becomes harder.
You know, I mentioned being maybe not so sure about Democratic big Ds and the party corruption, but I know that you've said that, well, Hunter Biden was really happy to leverage his president's name for his own personal gain. Do you see that as sort of equally unvirtuous as what the Trump administration or... Well, there are degrees. Yeah. I think if you implicitly or explicitly say to foreign companies that...
I am linked to the president. I'm the president's son or nephew, and I'll give you special access. Even if you don't actually get that access, I think that's a corrupt act. But that's very different from actually getting into questionable dealings with Gulf countries or other big powers. So there are questions of degree here. We'll be back. This is On Point. On Point.
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I just want to ask you a quick question to follow up something on you said a little earlier, Professor Jha, that what, 75% of Americans already believe there's widespread corruption in the United States. Is that correct? Right now, I believe, according to Gallup, it's 73%. Yes, I believe. And it's above the world average. It's actually striking. It's higher than Mexico slightly. It's higher than India slightly.
Yeah, so it's quite striking that that statistic exists. Higher than Mexico a little bit, but it's roughly on par with similar numbers we see from Latin America as a whole. It's higher. It's higher? Okay. Well, you do some of your research in Latin America, is that correct?
Yes, that's right. So this is a joint work with Enrique Serra and, as Darren mentioned, his student Lalo Rivera. Yes, we did a randomized control trial, as I mentioned, where we actually gave people evidence of top level corruption, both by the incumbent and the opposition. And we found that it really did undermine their willingness to turn out to vote and their support for institutions. We tried to offset this using evidence.
sort of a nation building type of approach where we gave them a video reminding people about their Mexican sacrifices for democracy and it actually had very mixed effects. It made people more
in some ways with each other, but it didn't make them more supportive of democracy. And in some other work I've seen, tried to see whether we could give people shares in the common good through the stock market. And we found that actually this increases trust and actually does have an offsetting effect on support for democracy.
So I think there are ways to get out of it as well, but it's still a very open area of research. I think we're just beginning to understand the pernicious effects of corruption on democratic values. So this has specifically to do, your research has to do with people's belief about the level of corruption and how that can have an impact on sort of the civic health of the nation. But in some of these Latin American countries, the belief is not unfounded, right? I mean, there is quite a bit of corruption. Yeah.
Yes. So, you know, these perceptions, you know, they tend to be fairly well correlated with the amount of, you know, the bribe taking the people report and firms report. So at least at the cross national level, these seem to be quite strongly correlated. So it doesn't seem like there's
This is sort of divorced from reality. At the same time, the fact that people in the United States think that corruption is pervasive in the government and at the similar levels as we see in other countries where arguably there's a bit more of that going on suggests that perceptions can be sometimes unmoored in such a way that can have their effects on their own. So I think that this again raises this issue that even
For our leaders, I mean, they need to be extra careful because the perception itself can have these potential effects. Well, this is such an important point because, again, what you're saying is in the U.S., there isn't, for now, as much widespread corruption, but the belief is there. And that in and of itself is very, very corrosive to the country. Well, with all this in mind, we wanted to hear from someone who's living in one of these other highlander,
highly corrupt countries. And in fact, you're going to hear from someone who's living in one of the most corrupt countries in the world. We even say that in Nicaragua there are no organized crime because the government is organized crime.
This is Carlos Herrera. He's a journalist from Nicaragua, where he says corruption is just a part of daily life. You can see corruption with the police in the streets. Maybe they can stop you when you are driving and ask you for a bribe. Maybe tell you that this can be a faster solution if you give him something. People don't want to get in trouble with the police, so
So they pay the price. There's a lot of corruption in all the institutions, so you have to pay them. And most people get used to it. Most people get used to it, you heard him say. Get pulled over when driving? Maybe pay the cops so they don't take your car. Want a judge to rule in your favor? A little cash might help.
Carlos says bribes can be anywhere from $10 to $10,000, depending on who's paying and for what. And the thing is, those bribes are accepted. And he says connections help, too.
If you have a problem with someone who has power, you have very, very few possibilities that the law is going to make things right. We had a friend that was involved in a car accident and our friend died.
And the person who killed him, it was a daughter of some government people with power. That case was not investigated. The group Transparency International scores countries based on their perceived level of public sector corruption. The scale goes from zero to 100, with 100 meaning very clean and zero meaning highly corrupt.
Nicaragua scores 14. As an aside, the U.S. currently scores a 65. Number one, aka perceived as least corrupt, is Denmark with a score of 90. Well, Carlos has spent nearly his entire life in Nicaragua, so we asked him how it feels to live in that system.
Carlos fled Nicaragua himself in 2021. That's because under authoritarian President Daniel Ortega, journalists like Carlos have received death threats
And Carlos does not trust the justice system to treat him fairly. And he worries about his home country's future. We have younger generations growing in this kind of society where if you don't take advantage of these opportunities, this corruption, you are the problem and you are the slow one.
And so it's going to be a hard job to get a better society when the dictatorship is not longer there. And one last thing from Carlos. He has a warning or at least a piece of advice for Americans. He says, you do not have to get used to corruption anymore.
to don't have to get used to. The people in the government have to be like public servants. You don't have to support a person that is in the government to take advantage for himself. So the United States have like a very big and strong government and institutions. You have to support the institution, the independent institutions that are investigating people that maybe is being corrupt in the government.
So that's Carlos Herrera, Nicaraguan journalist currently living in Costa Rica. He's also founder of the investigative journalism outlet Divergentes. Professor Acemoglu, what do you think about that? Oh, absolutely correct. It's very, very debilitating. It makes people powerless and helpless.
And it's not unique to Nicaragua. There are so many other countries that work in exactly the same way. There is very interesting research by an economist, Raul Sanchez de la Sierra, who went and documented how, for example, the police force in the Democratic Republic of the Congo is organized such that they maximize corruption and it's shared up violence.
from the policemen on the beat to all the way to police commissioners. And it's just an amazingly elaborate system. And why does it exist? Because there's no check on it. The institutions don't
don't try to restrict corruption. The judiciary system, judicial system doesn't work. And because the country is not sufficiently democratic, people don't go to the polls and say, we're going to kick out the corrupt people. And they think the alternative is corruption as well. That's the danger for the United States. If we let our existing institutions, which weren't perfect and
And there were quite legitimate concerns that people voiced about where the United States was in terms of inequality, in terms of opportunity, in terms of voice. But if we make them worse and if we also completely destroy trust in institutions and democracy, it's very difficult to rebuild. But this is where we're also seeing overt changes that are being driven by this, let's call it a corrupt mindset, because not only do we have the self-dealing, as we talked about earlier, but the
The institutions that we're talking about themselves are being changed as we speak, right? I mean, the New York Times just reported, or actually others as well, this month that the FBI...
The Trump FBI is disbanding a squad that handles investigations into members of Congress, handles investigations into fraud by federal employees. But I think that's very, very important, you know, because it would be a mistake to think that the only thing driving the current administration is corruption. I don't think that's the case. I think there is a bigger problem.
institutional agenda here, which you can think of it as an attempt to build an executive presidency, a presidency which is much more powerful, much less constrained by both the legislature and the judiciary. And many of Donald Trump's appointments
of loyalists to the Department of Justice, to SEC, to the Office of Management and Budget, to FBI, are to be viewed in this light that he's trying to make these agencies, which had some degree of independence, as well as the judiciary, much more subservient to the executive branch. And of course, once he does that, that's also going to
boost his own power as the president and his own immunity against any kind of charges, including those of corruption. But this institutional transformation, or at least the attempt, is a very important one, and I don't think we should ignore it. Right, but there's a whole worldview here. Professor Jha, I'll turn to you in just a second, but just to add sort of fuel to this, it's not only that he's
seeking to disband the FBI's sort of investigation unit on public corruption domestically. But back in February, the president signed an executive order pausing enforcement of the Foreign Corrupt Practices Act, right? But that would... That's... Just to remind folks, that's to...
to limit corporate corruption in foreign countries because the president said he thinks by limiting that the the act, it would mean a lot more business for America. He sees as allowing for corrupt corporate corruption as positive. But Professor Ja, go ahead.
Yeah, so I was about to raise the same thing. The Foreign Practices Act was already somewhat weaker than the UK's anti-bribery statutes and those in the European Union. So already it was the case that facilitating payments like speed money was deemed more acceptable under US law. But the fact that we've put that on pause is, I think, not a terribly good sign. But I think it's also good to remember that
We've been here before as a country. I mean, in the 19th century, we had the spoils, you know, a very strong spoils type of
patronage system emanating from the presidency and allegations of corruption. But this also led to a lot of internal conflict as well, as you know, particularly before and after the civil war during reconstruction. So it took a really long time to put in these checks and balances and change the norms such that we have a much, well, we've had much cleaner government in much of the 20th century and 21st century. So I...
you know, going in the other direction. It's something we can't come back from, but it took a really long time. I'm glad you made this point, right? Because being utterly focused on what's happening now as being new is not helpful. And in fact, you know,
What you just said reminded me that we did a show about just exactly what you said not that long ago, that it was sort of the corruption of federal services, that it's one of the things that led to the establishment of the civil service in the United States, right, in order to ideally stave off corruption.
a lot of the pay for play that was happening in the time period you're talking about. And of course, it's the civil service that's under in the crosshairs of the Trump administration as well. But this has been a very both depressing but also strengthening conversation at the same time, right? Because once we know what we're dealing with, we can figure out how to do this, how to prevent this.
trickle down corruption, changing our entire view of how America is supposed to function. And that'll be my last question to both of you. And Professor Jha, you first. I think, you know, we really, how you began is really important. We can't normalize this at the top. If we think
think that it's okay for our leaders to engage in these types of transactions, it can have an effect, even if it might be seen by them to be innocuous. You know, the perception of apex corruption can have its own effect. So I think we need to remind our leaders that, you know, they need to be even cleaner than anyone else to some extent, even though that's really hard to do.
Professor Asimoglu, I'll just add a little bit to that because it seems like someone in the Democratic Party are at least trying to start to push back, saying they're going to hold up judicial nominees, et cetera, et cetera. Is that enough? No, I don't think that's enough. I think we need to make this much more central. And there are levers we can use. First of all, the United States still has a fairly independent and
non-corrupt judiciary. And I think the judiciary is the most important institution when it comes to dealing with some of these issues. Second, some of my recent research shows that if you actually can communicate with voters in a non-partisan, credible manner, for example, in Turkey's last major presidential election, when we provided information to voters about what has happened to free media and the role of free media and corruption, they actually respond to that.
People are not completely irrational. Partisanship really colors their views, but they are open to new information if they think it's true and it's not trying to manipulate them. Who provided that information and how? We provided that information working with independent canvassers going door to door. So that was part of a very large project.
organization in the third largest city of Turkey. But the important thing is that it really has to come across not as manipulation. I think the problem that polarization has created in the United States is that if it comes from democratic politicians, the Republican base doesn't trust it. So I think that's what we need to break.
Well, Professor Darren Asimoglu is a professor of economics at MIT and one of the winners of the 2024 Nobel Prize in Economics. Thank you so very much for joining us. Thank you. And Sumitra Jha, associate professor of political economy at the Stanford Graduate School of Business. It's been a great pleasure having you on, Professor Jha. Thank you so much. Thank you so much. It's been such a pleasure. I'm Meghna Chakrabarty. This is On Point.
Support for this podcast comes from Is Business Broken? A podcast from BU Questrom School of Business. How should companies balance short-term pressures with long-term interests? In the relentless pursuit of profits in the present, are we sacrificing the future? These are questions posed at a recent panel hosted by BU Questrom School of Business. The full conversation is available on the Is Business Broken podcast. Listen on for a preview.
Just in your mind, what is short-termism? If there's a picture in the dictionary, what's the picture? I'll start with one ugly one. When I was still doing activism as global head of activism and defense, so banker defending corporations, I worked with Toshiba in Japan. And those guys had five different activists, each one of which had a very different idea of what they should do right now, like short-term.
very different perspectives. And unfortunately, under pressure from the shareholders, the company had to go through two different rounds of breaking itself up, selling itself and going for shareholder votes. I mean, that company was effectively broken because the leadership had to yield under the pressure of shareholders who couldn't even agree on
on what's needed in the short term. So to me, that is when this behavioral problem, you're under pressure and you can't think long term, becomes a real, real disaster. Tony, you didn't have a board like that. I mean, the obvious ones, I mean, you look at, there's quarterly earnings, we all know that. You have businesses that
will do everything they can to make a quarterly earning, right? And then we'll get into analysts and what causes that. I'm not even gonna go there. But there's also, there's a lot of pressure on businesses to, if you've got a portfolio of businesses, sell off an element of that portfolio. And as a manager, you say, wait, this is a really good business. Might be down this year, might be, but it's a great business.
Another one is R&D spending. You know, you can cut your R&D spend if you want to, and you can make your numbers for a year or two, but we all know where that's going to lead a company. And you can see those decisions every day, and you can see businesses that don't make that sacrifice. And I think in the long term, they win.
Andy, I'm going to turn to you. Maybe you want to give an example of people complaining about short-termism that you think isn't. I don't really believe it exists. I mean, you know, again, I don't really even understand what it is. But what I hear is we take some stories and then we impose on them this idea that had they behaved differently, thought about the long term, they would have behaved differently. That's not really science.
Find the full episode by searching for Is Business Broken wherever you get your podcasts and learn more about the Mehrotra Institute for Business, Markets and Society at ibms.bu.edu.