Big Business Should End Its Faustian Bargain With Trump – Paul Krugman | Substack
He’s out of control – and if you don’t hang together to counter him, you’ll hang separately
When Donald Trump returned to power, America’s billionaires and the leaders of its biggest corporations rushed to prostrate themselves at his feet. Some of them, especially but not only among the tech bros, did so because they themselves wanted an authoritarian regime that would stamp our wokeness. I still recall the top banker who, after Trump won, told the Financial Times that “I feel liberated. We can say ‘retard’ and ‘pussy’ without the fear of getting cancelled… it’s a new dawn.”
Many business leaders, however, understood how dangerous Trump was — they knew he was the least qualified individual, intellectually, psychologically, and morally, ever to occupy the White House. In the aftermath of January 9th, many Fortune 500 corporations announced to great acclaim that they would stop donating to Republicans. But after a few months of Republican threats of retaliation, those companies quietly turned the spigot back on.
I am sure that they convinced themselves that the Trump of January 6 was an aberration. In their minds, with enough flattery and bribes donations, and with Treasury Secretary Bessent to quietly steer the ship, Trump could be managed the way he was during his first term. Bessent, they figured, was a sensible businessman like them. After all, Bessent had worked closely with George Soros – the bete noire of the Right — and ultimately ran his own hedge fund. Trump’s anti-immigrant, anti-trade and anti-democracy rhetoric, they reasoned, was just a show in order to get elected.
Bessent certainly understood that he was a critical actor in this supposed charade. For example, when Trump first began threatening to impose enormous tariffs on our trading partners, Bessent avowed that this was only a “bargaining tactic” in order to calm panicked markets. Moreover, believing that the extremism was a charade was made much easier by Corporate America’s expectations of future profits from the conventional right-wing parts of his agenda: tax cuts plus increased freedom to pollute and defraud consumers, along with lax financial regulation and permissive anti-trust. No more pesky Democrats to get in their way.
Even now people continue to treat TACO — Trump Always Chickens Out — as if it were an established fact, although the past few weeks show that it’s just wishful thinking. On tariffs, does this look like TACO to you?
Source: Penn Wharton Budget Model
On immigration and the response to dissent, does this look like TACO?
Source: Minnesota Star Tribune
Oh, and here’s a chart that also doesn’t look very TACO to me:
Source: New York Times
Granted, Trump sometimes appears to back down. We probably won’t be invading Greenland over the next few weeks. But this is only a temporizing tactic while he finds other means to escalate, such as imposing tariffs on countries that came to Greenland’s aid. Overall, Trump 47 is escalating, day by day.
The persistence of the TACO myth is part of the broader picture: Many people, especially in the business world, are still trying to convince themselves that they’ll do OK despite Trump’s craziness. Hey, the stock market is up, isn’t it? (It is, but US stocks, which are up 16 percent over the past year, have lagged stocks in other advanced countries, which rose 33 percent in 2025.)
Well, I have news for American business leaders: You will not do OK.
I’m not just talking about the threat Trump’s madness poses for corporate bottom lines, although that threat is larger than most people realize. For example, as Trump barrels into confrontation with Europe over Greenland, of all things — even I still have trouble believing that this is happening — I’m surprised not to see more people mention that U.S. corporations have invested around $4 trillion in Europe, investments that will definitely be at risk if this confrontation spirals out of control.
I’m also talking about the personal risks businesspeople increasingly face from a regime that demands abject, performative sycophancy.
Yesterday Scott Bessent, the purported grown-up in the room, appeared on TV, delivering a cringe-inducing defense of Trump’s apparent willingness to blow up NATO in order to gain control of Greenland (!):
Peace through strength. Make it part of the US and there will not be a conflict because the US right now, we’re the hottest country in the world, we’re the strongest country in the world. Europeans project weakness. The US projects strength.
Since the tariff-setting authority Trump is claiming only applies in a national emergency, Bessent was asked what national emergency justifies imposing tariffs in an attempt to seize Greenland. His answer: “The national emergency is avoiding a national emergency.”
Who knows what Trump has on Bessent, but it’s clear that Bessent made a Faustian bargain, selling his soul in return for … something. And the terms of the bargain clearly require that he humiliate himself in public on a regular basis. He no longer acts like a respectable Wall Street insider; now he behaves like a capo helping his mob boss run a protection racket.
The degradation of Scott Bessent serves as an illustration of where anyone who thinks they can manage Trump will end up. Corporate America needs to realize that they too must make Faustian bargains if they want to stay on Trump’s good side – and that the price of those bargains will be very high. Campaign contributions won’t be enough: they must pour money into Trump’s ballroom, and/or his family’s pocket, and/or his crazy adventures in places like Venezuela or Gaza. Refraining from criticism of Trump’s policies won’t be enough. Instead they must become sycophants, enthusiastically supporting Trump’s policies — especially if those policies are deeply stupid. If they don’t go along the punishment will be personal as well as financial.
Thus Trump lashed out at Darren Woods, CEO of ExxonMobil, for blurting out the obvious truth that Venezuelan oil is “uninvestable.” Then Jamie Dimon, CEO of JPMorgan, mildly suggested that undermining the Federal Reserve’s independence might be a bad idea. Dimon didn’t even mention the truly disturbing part of the story, the announcement that the Department of Justice had begun an obviously groundless criminal investigation of Jerome Powell, the Fed chair, whose only crime was not taking Trump’s orders on interest rate policy. Sure enough, Trump not only lashed out at Dimon but threatened to sue JPMorgan for allegedly “debanking” him after Jan. 6. This comes from a president who has pardoned criminals convicted (sometimes multiple times) for defrauding consumers of billions of dollars.
The lesson for businesspeople is that Faustian bargains never end well. Take a lesson from watching Scott Bessent – appease Trump and he will demand that you debase yourself even further. It’s been astonishing how quickly corporate greed has been replaced by corporate fear: Businesses who hoped to profit from Trump now toe the line because they’re afraid of being punished.
But despite what corporate CEOs tell themselves, they do have a choice. The reality is that Trump is growing weaker by the day. Americans aren’t falling into line behind his attempted authoritarian takeover. On the contrary, their resistance is stiffening. The Trumpists can’t even cow Minneapolis into submission, let alone the rest of the country. As he flails wildly in an attempt to recapture his lost momentum, his policies keep getting crazier.
So businesspeople have a choice: Continue to abase themselves, destroying their dignity and their reputations, in an attempt to curry favor with a wannabe dictator who’s falling short, or show some spine. And that stiffening of the spine must be a collective endeavour.
To paraphrase Benjamin Franklin, talking about how to deal with another tyrant: If you don’t hang together, you’ll all hang separately
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