On Tuesday, Alibaba CEO Jack Ma, one of the richest men on the planet, met with President-elect Donald Trump at Trump Tower. After emerging from the meeting, he stood alongside Trump and announced: "We specifically talked about ... supporting 1 million small businesses, especially in the Midwest of America. Small businesses on the platform selling products -- agriculture products and American services -- to China and Asia because we're pretty big in Asia." Trump shook Ma's hand in front of the cameras and announced, "Jack and I are going to do some great things," before shaking hands.
This is good news, obviously. Bringing investment to the United States is worthwhile, and opening trade is excellent. The minipresser was skimpy on details, as most of Trump's economic big-win meetings have been. What does Ma get in return for the headline? Or is he simply moving toward investment in the United States on the basis of broad-based economic policy, including deregulation, from Trump?
There is one big problem with photo ops like this: They promote the myth that great men run the economy.
Since Trump's election, he has met at Trump Tower with CEOs from major companies and then trotted them out to the press, shaken their hands and announced new investments. This is in Trump's interest -- he gets terrific headlines about how his very presence has boosted the economy. It's in the interest of the individual companies, too -- they are on the good graces of the president-elect, plus they get the halo effect of being perceived as more patriotic and self-sacrificing.
But this routine creates the impression that the economy is essentially a series of negotiations between the president of the United States and individual companies, that the economy is, in simple terms, a rigged game. Advocates for such optics thrill to them. Isn't it showing that Trump is business-friendly? Doesn't it demonstrate that an activist commander in chief can bring the economy roaring back so long as he exerts the force of his will?
Recommended
It's the force-of-will argument that's troubling to advocates of economic freedom. Economies do not thrive because command-and-control businessmen determine the fortunes of individual companies, or because they threaten individual businesses with governmental repercussions if they dare to engage in profit-maximizing activities. Economies thrive because of broad, consistent policies that create reward for positive risk-taking and increased productivity.
But the aesthetic of the Great Leader standing beside the Great Businessman runs precisely contrary to this reality. It fulfills a public thirst for someone to run things, even though that thirst generates an outsized picture of what the president can and should do. The aesthetic perpetuates an ugly cycle: Great Leader purportedly runs the economy in coordination with business; economy goes south; Great Leader blames business; public calls for more power for Great Leader; and businesses are called onto the carpet to make concessions to the Great Leader. All of this generates a less free, less dynamic economy.
We can all cheer news that more companies want to invest in the United States; we can all hope and pray that Donald Trump's economic policy draws more dollars and jobs to the country. But we should not fall prey to the economic misconception that the president ought to act as a benevolent economic dictator, bestowing favor upon all those who please him.
Join the conversation as a VIP Member