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For those who've been listening to us regularly, you might remember a conversation we had yesterday. It was with Bloomberg's Jordan Fabian, and it was about whether or not there was a focus in the White House. We asked him, Jordan, because it was another day of NonStop social media posts and flow of thoughts actions from President Trump and his administration. It is again today. It feels like it's been like that for a while, NonStop, maybe for the past year.
Looking at that and really trying to figure out if there's a philosophy guiding President Trump and his closest advisors when it comes to his barrage of executive orders and daily challenges to the judicial system feeding a NonStop White House cycle is economic Nobel Laureate Drone Asamoglu. He took a step back to see if there's some sort of theory and wrote about it in a Bloomberg BusinessWeek piece.
It's featured in the coming new issue that does really a deep dive into President Trump's first year in his second term. Jerome by the Way, Institute, Professor in the Department of Economics at the Massachusetts Institute of Technology Mit joins us from Cambridge. So nice to have you here with us, and this is a really thoughtful piece. You took a step back, you looked at this, and we're just trying to understand. You know, this NonStop White House
news cycle. Is it about the president and his team controlling that news cycle? And this is what we all chase, you know, is it something more significant beyond just kind of a flood the zone concept that we often associate with President Trump and his team. What did you come up with?
Well, thanks, thanks a lot having me on the program. Look, I mean, obviously there is a flood dozone element in there, and it looks chaotic. But in my mind, worryingly, there is a bit of a theory, which is that all of these actions are aimed at centralizing power in the hands of an executive presidency with fewer and weaker checks which come eor from institutions or norms. So even the
foreign actions are all about increasing domestic power. Even the sort of unconventional appointments that are about weakening norms that control what the president can do and bringing in more loyalists that have now more room for maneuver because all the norms that had guided US political dynamics have been broken.
So you write that it would have been viewed as completely unacceptable for Bill Clinton, George W. Bush, or Barack Obama to ask his attorney general or the DOJ to go after enemies. It would also have been considered beyond the pale for a president to invoke what you describe as a poorly documented crime emergency as a pretext for sending the National Guard into US cities, or for a
president to continue to be involved in family business. Well in office, why is it being viewed, at least by members of Congress Republicans in Congress as acceptable for President Trump to do these things?
Well, you know, part of the reason why those actions would not have been taken in the past is because they go against norms. There weren't explicit laws that said these things, so it was part of an institutional equilibrium with norms of acceptance and backed up by other politicians deviating and sort of distancing themselves if a president did that, or bigger sort of pushback from civil society or the media. But President Trump and his team have been breaking these
norms systematically for the first year. But even if you go to the first term of the president, there was already the same attend and all of these have now culminated in Trump controlling the party and the rest of the party, even part of the judicial system, are no longer able to stand up to him, and all of the norms that would have helped them sort of mobilize around some sort of objection saying this is not acceptable.
You know, we don't see them now. Recently for the FED case, a few senators have started making grambling, so perhaps there might be some limit to what the legislature is going to put up with. But the part of the agenda that is I think now very clearly visible is sort of break down one piece after another of this edifice that was constraining other presidents that are now gone for President Trump.
So Deerron to basically right. We thought this checks and balances would work right three branches of the government. It made such sense, and it for so long has pretty much worked pretty well. But there was this strategy when it comes to the legal part, certainly of the government as well as the legislative. But let's just talk the legal part, because we did have you know, a judge saying dominion Energy can resume a win project that President Trump had halted, so we have seen him lose some
of the judicial actions out there. Having said that, if he didn't have that in terms of the Supreme Court justices, would we not be maybe having this conversation today? Is that what's so much about it? Or is it all of it? That and the legislative side of it, and everybody, you know, even them GOP members of Congress saying yeah, do what you want to do. You know, it's kind of interesting because that's their job kind of being taken away.
Yeah, I mean exactly the sort of separation of powers, would you know, not just the Congress and the judiciary, but also the independent agencies acting like the fourth Brunch. Those were the things that constrained presidents and if today those constraints were working, well, we wouldn't be in this
turmoil in terms of the domestic situation. And part of the concern is that right now it's really the parts of the judicial brunch that are standing up against Trump indeed, But that's that's got its limits because there are a lot of Trump appointees, and the Supreme Court, with lots of Republican and Trump appointees, hasn't really taken a very
strong stense either. So all of these are piling up and taking us more and more to a situation where I think many of the former sort of presidents or constitutional scholars would find very scary because the structure of US government wasn't meant to function this way.
So then I'm trying to understand. And one thing that we do each and every day is we look at the markets, and we look at market reaction to these things, and I think a lot of people have been surprised that we haven't necessarily seen a bond market reaction to some of these moves. Markets were and have been kind of seen as a backstop here to at least some of the things that the president has said he will
do or wants to do. Do you think are reacting to his decisions or do you think they're saying, hey, it's all fine and good at least up until now.
Yeah, it is hard to understand why the markets haven't reacted more because some of the effects are already seen from the tariffs, And indeed, people you know, talk about the bond market now because the stock market hasn't reacted. But I think that just really underlies that, you know, the stock market is not the fifth branch of government.
It's not really a hard constraint in the same way that the other ones were supposed to be on the sort of centralization of power in the hands of one person or one group, And the tariff debacle demonstrates that the administration is much bolder and is willing to take actions that could lead to market reactions, at least in the short run. Now some people are saying, Oh, it's the bond market really that we need to watch out for.
I don't know why. You know, right now, the bond market would be much more important than the stock market, and sometimes both of them are things that both the administration and the business community are watching. But I wouldn't you know, bet on, you know, the market mechanism being a strong enough guardrail against this kind of executive imperial presidency emerging. And if it does, I think it has
really sweeping implications for how business is done again. You can see that from the fact that the President Trump can invite people to his office and say give us twenty percent of your shares. Yeah, something.
Yeah, there's just a moment after a moment where many would say this is it's kind of remarkable which I went Drona Asimoglu. He is economic Nobel laureate. He is also Institute professor in the Department of Economics at MIT, joining US from Cambridge. So I am curious is this lasting? Like I am wondering who this emboldens in terms of whoever might be in the White House next? Is this the playbook? The new US playbook?
And to be sorry, that's what I'm worried about exactly. I mean, you know, because look, I mean Trump is an agent of change, He's really reshaping norms and institutions, but he is himself a symptom of what was wrong in some sense with the US system. There was a lot of inequality, there was a lot of discontent, and there was also some gridlock. You see more executive orders by Bush than by Obama than by Biden. So Trump is, you know, accelerating that trend, but he's continuing that trend.
And I do not trust that the next Democrat or Republican is going to be much better behaved. Once the floodgates are open, I think we're going to go to a place where, you know, presidents could have much more arbitrary power, both in terms of their ideological agenda, but also in terms of corruption and kleptocracy.
You know, you've study a lot, and part of your study has included the strength of institutions and the relationship between economic prosperity and the strength of these institutions, and on the implications of this for the United States. It's widely seen as an area of the world that has had transparency, It has markets that people pay a premium for as a result of that transparency, as a result
of the regulatory environment. And I'm wondering, kind of to build on Carroll's question, what that means for the future of the US economy. If these norms are indeed shattered permanently or at least in the near future.
We would be entering a completely unknown territory. I mean, there are so many advantages that we enjoy because of our institutions. Everybody wants to have investment in US assets, treasuries, corporate debt, stock market. Why. Because people trust US institutions, they want to be subject to US law if there's a dispute. This is a very dynamic entrepreneurial economy. Why people think that if they're successful, they're going to be able to take on the biggest companies and build their
own business. Again, that depends on institutions. In many of the countries around the world. You see that incumbents crush every bit of competition. So if we start damaging that, the secret source of the US economy would be heavily damaged too.
So we're not China, but we're something else. Just got about ten to fifteen seconds. Who are we?
Yeah, well we are something else. I don't know where we're going. I mean state institutions are State capitalism is what people used to call China. While we're getting close to that.