President Donald Trump’s controversial administration has been met with historic protests across the United States and around the world. In the weeks after Mr. Trump’s surprise election victory, business leaders who were wary of the unpredictable real estate mogul during the campaign held their tongues as the markets soared to historic highs on the new president’s promise of massive tax cuts and infrastructure spending.
Larry Summers, the renowned economist who served as treasury secretary under president Bill Clinton, believes companies were far too timid in their response to Mr. Trump’s protectionist trade and hard-line immigration policies.
“I was very disappointed by what I saw as the absence of a willingness to speak up, or out, on the part of the business community,” Mr. Summers told Handelsblatt. “Important aspects of dangerous U.S. policy like the demonization of Mexico have still been largely uncriticized by the business community.”
But then came Mr. Trump’s most controversial move yet – an executive order that effectively halts immigration from seven Muslim-majority countries for at least 90 days.
It seems to me that policy is moving in a reckless, nationalist direction in our international economic relations. Larry Summers, Former U.S. Treasury Secretary
Companies that have staked their reputations on diversity, particularly in the tech sector, felt compelled to speak out.
But of the 19 executives on the president’s economic advisory council, only two spoke out. Elon Musk of electric carmaker Tesla and Travis Kalanick of ride-sharing platform Uber sent Twitter messages expressing their opposition to Mr. Trump’s immigration policy. Most of the other executives have not taken a public position.
A meeting this week of Mr. Trump's economic advisory board will be an important moral test for U.S. businesses, said Mr. Summers, who led former president Barack Obama’s national economic council.
"We will see whether that group will be willing to speak truth to power, or whether that group performs primarily a function of legitimizing and cheerleading an administration which, at least in my view, and I suspect in many of theirs, is taking a number of dangerous steps," Mr. Summers said.
The Trump administration has adopted a form of corporate nationalism with a strong populist streak, Mr. Summers said, that makes decisions based on gut instinct rather than careful analysis.
“I am profoundly concerned about the direction of U.S. policy under the new administration," Mr. Summers said. "It seems to me that policy is moving in a reckless, nationalist direction in our international economic relations."
The degree of threat from our own government to our own interests is without precedent, certainly in my lifetime. Larry Summers, Former U.S. Treasury Secretary
The shift in the United States away from its “Statue of Liberty values” poses a danger to the interests of the American people and American businesses, he added.
"The degree of threat from our own government to our own interests is without precedent, certainly in my lifetime," said Mr. Summers.
Many Europeans feel that their interests are also increasingly at risk. As leaders of E.U. member states prepare to meet in Malta, there’s growing fear that the United States may have given up on any role as a guarantor of peace and stability.
One E.U. diplomat, speaking on condition of anonymity to Handelsblatt, expressed concern that the U.S. government might actively support the dissolution of the European Union. Mr. Trump has repeatedly expressed support for Britain’s decision to leave the bloc.
“The United States has been a friend of European integration since World War II and we have a much safer, more stable, more successful world as a consequence of American support for European integration,” Mr. Summers said. “I am very troubled to see that go away.”
Noting potential risks to the global system, Mr. Summers cautioned against being taken in by the so-called Trump trade that has driven stock markets to historic highs.
“Measures can be favorable for markets even when they’re very serious for long-run economic health,” Mr. Summers said. “The best period of post-election economic performance during the 20th century was the period after Herbert Hoover’s election and his period in office was a disaster economically as it ushered in the Depression.”
Torsten Riecke is an international correspondent for Handelsblatt. To contact him: [email protected].