Milton Friedman is Why Trump is About to Betray Ukraine

Bold statement, yes, but backed up by this Wall Street Journal article on the “peace negotiations” being run by Trump’s special envoy.

The take away from the article is that in exchange for getting most of what they want, territorially and in weakening Ukraine so that it is easier to invade next time, the Russian government will be allowed back into the world economy with Trump supporters taking a large cut of this renewed activity. It is corruption in the most naked form, and it is the almost inevitable result of Milton Friedman’s policies.

Corporations are the not natural. They are not like partnerships or unions or churches or other places people come together for a shared purpose — they are the creation of governments, blessed with limited liabilities and special rules meant to encourage economic activity. They are as artificial as Splenda or Ronald Regan’s hair color in his second term.

As the phrase “encourage economic activity” suggests, there are good reasons for giving those special rules and liability limits to a well supervised, well constructed artificial entity. Those artificial protections and benefits can serve to help spur economic activity, which is generally good for everyone. In exchange for these artificial handouts, though, it was understood to one degree or another, especially after the Second World War, that corporations were organized for society’s benefit and thus had many stakeholders. Workers, the communities they operated in, the governments who propped them up, etc. This was often, of course, honored more in the breach than in reality. But few people looked askance at rules, laws, regulations, and business operations that purported to take all stakeholders into account.

And then came Milton Friedman.

Now, I am being a little unfair to Friedman. The ideas in his infamous article had obviously been percolating in pro-oligarchy, anti-democracy circles for some time. He did not invent these positions out of whole cloth. He, like most everyone in history, was acting within an intellectual tradition. But his article turned out to be the most famous expression of these ideas, and he certainly reaped the rewards from that fact. So Friedman is now the face of the truly terrible idea that corporations owe nothing to anyone other than the shareholders. No other stakeholders matter and even the concept of putting anything above their immediate gratification is tantamount to theft. As a result, we now have had several generations of business leaders who have been trained to think in these terms, and who have benefited from laws and court ruling that insist Friedman was correct. A betrayal of American interests almost inevitably follows in that environment.

The people who have involved themselves with the proposed deal are venal little twerps, yes. But they are also doing what Friedman insisted that they do — place the need to enrich shareholders over the needs of any other stakeholders. It is obviously bad that Russia be rewarded for invading a neighbor. You cannot have a peaceful, prosperous world if every small nation has to spend all of its GDP protecting itself from its larger neighbors. Also, killing people for imperial ambitions is, you know, bad. But for the firms involved in the betrayal of Ukraine, they are doing what Friedman expected them to do — take a position that is good for their shareholders.

Whether or not this is good for the shareholders is irrelevant to to the argument (its pretty clear that in the medium and long term it is not likely to be). What matters is that the needs of the shareholders outweighs any other considerations. If the people running the firms judge that helping to betray Ukraine is in the best interests of the shareholders, then they should betray Ukraine, other considerations be damned. These artificial creations of government owe nothing to anyone who created them or to the societies that allow them to exist.

Shareholder supremacy is not sufficient by itself to create such nakedly corrupt activity. But it is necessary. With a more balanced approach to the obligations of the artificial entities know as corporations, the combination of peer pressure, more appropriate laws and regulations is more likely to restrain this kind of behavior. Not entirely, of course, but it certainly would help. More importantly, the idea that corporations — entities created and protected by society — owe that society nothing almost inevitably leads to corruption, self-dealing, and destructive behavior by said entities. If the highest duty is to the shareholder, what matter anyone else? You are required, under this mindset, to bend laws, disregard morality, advocate for laws that harm others but benefit you, and use the power given to you by society to immiserate that society for your own benefit.

Friedman insisted that the shackles be taken off the monster that governments created. Should we be surprised when the monster rampages through the rest of society, taking for itself what it wants and destroying anything that gets in its way?