The Carrot, the Stick, and the Buggy Whip

Is it time to dust off the word fascist to describe Donald Trump?


As 2016 came to a close, dictionary makers Merriam-Webster posted a pathetic little tweet—a cry for help, really—that quickly went viral: "'Fascism' is still our #1 lookup. # of lookups = how we choose our Word of the Year. There's still time to look something else up."

Why the sudden interest? As Donald Trump wrapped up the Republican nomination and then the presidential election, political commentators and opinionated uncles at dinner parties started tossing around this vintage 20th century political terminology with abandon. Which caused a bunch of intrepid dictionary searchers to wonder: Here at the dawning of the Trump era, does fascism mean what we think it means?

In a technical sense, the word is a pretty good descriptor for what we've seen of Trump's economic policy so far. That is to say, he seems to be embracing the notion, which blossomed in Benito Mussolini's Italy, that the business of government is best conducted where an authoritarian state dominated by a powerful strongman and the leaders of large corporations meet and decide the fate of a nation.

But in its more common use, fascism is at once too generic—it's frequently deployed to describe any old bossy jerk, and is formally defined as "a tendency toward or actual exercise of strong autocratic or dictatorial control"—and way too specific and extreme, with its grace notes of Blackshirts, one-party rule, nationalization of industry, and violence.

What's wanted is a way of describing the love-hate, push-pull, utterly dysfunctional, and horrifically co-dependent relationship between big government and big business that Trump was already expert in, just from the other side. The gentler term for this is crony capitalism, or cronyism for those of us who don't like to see one of our favorite words besmirched.

Yet that phrase shows up most frequently in contexts where the corporations are in the driver's seat: They come to elected officials or bureaucrats to demand special favors. They are granted those favors in exchange for promised gains for the tax base or contributions to the campaign funds of the relevant politicians—classic rent seeking, in the jargon of economics. If they're really lucky, the corporations manage to cozy up to and capture some regulators to keep in their back pockets as well.

But as far as we know, the heating and air company Carrier was minding its own business when Trump came a-knockin'. The firm was in the midst of executing a run-of-the-mill decision about the best place to locate a production facility when boom, it became the very first test case for the fledgling Trump administration in the none-too-judicious application of the carrot and the stick. The carrot was subsidies to keep jobs in the United States; the stick was almost certainly the threat of the revocation of valuable military contracts from Carrier's parent company. (For a deeper exploration of how this deal went down, check out David R. Henderson's cover story on page 18.)

Carrier isn't alone on the receiving end of Trump's attentions. Boeing's stock price took a hit after he tweeted in December that "Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!" Trump also took credit for keeping an auto plant in the U.S.: "Just got a call from my friend Bill Ford, Chairman of Ford," Trump tweeted in November, "who advised me that he will be keeping the Lincoln plant in Kentucky—no Mexico." He followed up: "I worked hard with Bill Ford to keep the Lincoln plant in Kentucky. I owed it to the great State of Kentucky for their confidence in me!" Ford quickly clarified that it was only considering moving production of one model, the Lincoln MKC, out of the Kentucky facility, but also carefully said nice things about the incoming administration. And a Boeing spokesman obligingly responded to the president-elect's tweets: "We look forward to working with the U.S. Air Force…to deliver the best planes for the President at the best value for the American taxpayer."

Foreign companies, too, are looking for ways to play the situation, brandishing their own carrots in an effort to stave off the sticks. "Masa (SoftBank) of Japan has agreed to invest $50 billion in the U.S. toward businesses and 50,000 new jobs," the president-elect tweeted after a congratulatory meeting with the company's CEO, Masayoshi Son, at Trump Tower in December. "Masa said he would never do this had we (Trump) not won the election!"

Despite the fuss about first daughter Ivanka Trump's jewelry product placements at government meetings and the sudden influx of dignitaries taking rooms at D.C.'s shiny new Trump Hotel, the big worry here isn't that Trump will use the power of the presidency for personal enrichment. Would that he were so petty. Instead, it's that he will use the coercive power of his office in the service of his own particular variant of nationalism. You can't say he didn't warn you; he printed this basic plan on approximately 100 million red trucker hats.

During the campaign, it looked as though Donald Trump might not have much of a guiding ideology: He ran as a patriotic pragmatist. He is certainly not, as was suggested in The Washington Post in December, an "Ayn Rand–acolyte" (if only!) who is stacking his Cabinet with Objectivists. (The leading paper of the nation's capital made that mistake after discovering that successful Republican businessmen tend to read and occasionally recommend books where businessmen are presented as heroes. Breaking news, indeed.)

It now looks like Trump is settling into something more like corporate authoritarianism. The real trouble, though, with government control of the economy is that it makes businesses behave in less economically efficient ways for political reasons. At first glance, this might not seem like a big deal, but the closer the U.S. gets to a centrally planned economy—the more the president wields tariffs and trade restrictions and tax incentives and subsidies to keep manufacturing jobs where he wants them—the more likely we are to wake up one morning and discover we have become a nation of buggy whip makers.

Like the proverbial flogger manufacturers from Harvard Business School professor Theodore Levitt's classic 1960 essay, businesses that fail to think and act dynamically in response to a changing economy are doomed to be usurped by upstarts. Presidents or governors who step in to stop that failure, or worse—as in the case of Carrier—to stop efficiency improvements or innovation itself, are even more likely to be myopic than the stodgy businessmen Levitt was addressing.

Presidents tend to suffer from a failure of imagination when it comes to innovations in business practices—even presidents who are "super successful" tycoons themselves. Whether or not you are impressed by Trump's business credentials, they don't qualify him to run all of the large corporations within the territorial United States.

In the end, surreal won out over fascism as Merriam-Webster's word of the year, with the company's lexicographers noting that searches spiked three times in 2016. The first jump came in March, after the Brussels terror attack. The second came in July, after the coup attempt in Turkey and the terror attack in Nice. The largest spike was the third, following the U.S. election in November.

Here at Reason, we don't hesitate to drop f-bombs when the situation calls for it, and we reserve the right to do so in the future, but we're not quite there with this particular seven-letter word. Yet.