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Presidential Business Ethics

facade of the Trump International Hotel against a blue sky
photo by Sean MacEntee

At noon today Eastern time, plus or minus a commercial break or some technical difficulty, Donald Trump will take the oath of office and become the 45th president of the United States.

Exactly one minute later, Trump will continue to be the controlling shareholder of The Trump Organization, the umbrella under which the sprawling Trump family business operates. He will still own his business empire tomorrow, next week and throughout his term, as far as we can tell. But will the controlling shareholder actually be in control – and how much does it matter, even if he is?

Quite a few ethics arbiters, many of them self-appointed but some of whom legitimately carry the word “ethics” on their business cards, think it matters very much indeed. They see an unavoidable conflict of interest between the duties of a president and the aspirations of an entrepreneur whose holdings span the globe and run the gamut from steaks to hotel suites. “Nothing short of divestiture will resolve these conflicts,” Walter Shaub, the director of the Office of Government Ethics, stated in remarks at the Brookings Institution. “I don’t think divestiture is too high a price to pay to be the president of the United States.”

Indeed, divestiture might not carry any price at all to Trump – someone out there, perhaps a consortium of Russian oligarchs with close Kremlin ties, could be willing to pay a handsome premium to purchase some goodwill from the incoming president. Now, that would be a big conflict of interest. But the point eludes someone like Shaub. Shaub has spent nearly his entire career on the public payroll as an attorney at various agencies (with a brief stint in private practice as an employment lawyer) before being appointed to his current post by soon-to-be-former President Obama. Shaub apparently saw no ethical conflict in accepting his post after his modest donation to Obama’s campaign.

Having built nothing and run nothing of any consequence in the course of his working life, naturally Shaub sees no downside to demanding that someone like Trump forcibly tear his family out of the large and (with prominent exceptions) successful enterprise they have built over generations, employing thousands in the process.

Trump has handed over operating control to his sons Eric and Donald Jr., and has said he will not discuss the organization’s operations with them during his time in office. Ivanka Trump has filled leadership positions in the Trump Organization in the past, but family attorneys announced she will no longer be involved in the business for the next few years, The Wall Street Journal reported. In a press conference, Trump also said the management team will add an ethics adviser, who will review deals that could pose conflicts of interest.

Trump cannot, as a practical matter, give away ownership outright, since it would involve exposure to a massive gift tax, beginning with an inevitable fight with the Internal Revenue Service over the actual value of the companies he has given away. Any resolution of such a dispute would, naturally, trigger cries that Trump is rolling over the federal tax bureaucracy for the financial benefit of his family. And, should repeal of the gift tax be part of an estate tax repeal measure (which Trump has said he will support), his detractors will portray that as him acting out of self-interest, too.

But the incoming president seems to know better than to fight battles on terms that preclude any chance he can win. He would never have satisfied critics by releasing his tax returns, so he didn’t. He will not satisfy critics by divesting his business interests, even if he wanted to, so he didn’t.

In the end, the only audience that matters is the voters – and, in sufficient numbers to get Trump elected, they don’t care about this nonsense. Every interested voter was aware that Trump refused to release his tax returns before the election. Certainly, everyone was aware of the approximate size and scope of Trump’s businesses. He won more than enough electoral votes to put him in the White House anyway. His critics are merely throwing whatever stones they have at hand at a person whose election they cannot stomach.

This is not to say that presidential ethics do not matter, to me or to anyone else. They do, and of course they should. It’s just that ethics are very much a matter of personal tastes and priorities. I find something much more ethically questionable in a sitting secretary of state running a family-directed foundation that accepts money from foreign donors than in anything Trump may have put on his tax returns before he ever entered pubic office. I have deep ethical concerns about a politician who opposes same-sex marriage, not out of conviction but out of political expedience, no matter whose families are hurt while that politician’s position “evolves.” I think anyone who promises to put the entire coal industry out of work without even a thought to the communities and families that would be devastated suffers a profound case of ethical macular degeneration. These happen to be my ethical priorities; yours will doubtless be different. We should each consider these matters when we vote.

And yes, Trump comes with all sorts of ethical question marks, particularly in how he treats people he perceives as being either hostile to or weaker than himself. I hope his ethics rise to the level that the office he assumes today should command. But there is nothing but cynicism behind the criticism that someone who has built and run and continues to own a large business is inherently disqualified, on ethical grounds, from being president of the country in which his enterprise is based. To the contrary, Trump has as much at stake in “making America great again,” as he puts it, as any of the rest of us.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us” and Chapter 4, “The Family Business."

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