On Wednesday, while Donald Trump was standing at a lectern in New York attacking the news media and political opponents, expressing, yet again, his desire for warm relations with Russian leader Vladimir Putin and promising to apply a cosmetic veneer over his unsightly conflicts of interest, the nine largest pharmaceutical companies lost $24 billion in 20 minutes.
In his disjointed presentation, Trump said that the drug industry is “getting away with murder.” Noting that federal government programs are the largest purchasers of drugs, he vowed to “save billions of dollars.”
Like much of what the president-elect said on Wednesday, the comments were off point. No matter. The Nasdaq Biotechnology Index fell 3 percent, and the Standard & Poor’s 500 Pharmaceuticals, Biotechnology & Life Sciences Index fell 1.7 percent, with investors attributing the losses to Trump’s remarks.
Trump’s comments were ostensibly a statement, however vague, of policy. Many Democrats, including Vermont Sen. Bernie Sanders, have wanted to give Medicare the ability to negotiate with drug companies to obtain cheaper prices. Republicans have blocked that. But as the health-care site Stat reported, a president with his party running Congress has enormous power: “In the hours after Trump’s remarks, it was hard to find Republicans on Capitol Hill dismissing the proposal out of hand. They were willing to listen to what he has to say.”
The president-elect has previously promised to “bring down drug prices.” The industry had no reason to be taken by surprise.
Pharmaceutical industry leaders and investors are only human, however. They know that Trump is a man who makes stuff up. Why should they assume that his attacks on their industry would have any more substance than his claim to have a secret plan to defeat Islamic State, or his promise that he’ll replace Obamacare with an unspecified something “terrific”?
This, of course, is the new normal not only for industries, but for American politics, foreign and domestic policy, and the world at large. Does he have a clue what he’s talking about? Is he making it up? Has he thought about the consequences? And how can you tell?
Trump’s ability to use his mouth to manipulate financial incentives, analysis and context is now boundless. His willingness to do so, however, is what is different.
On Thursday, Trump used Twitter to tell his almost 20 million followers to “Buy L.L. Bean”:
“Thank you to Linda Bean of L.L.Bean for your great support and courage. People will support you even more now. Buy L.L.Bean.”
The tweet followed comments to “Fox & Friends” by Linda Bean, a granddaughter of the company founder, that some consumers were boycotting the company because she had contributed $30,000 to a pro-Trump super-PAC.
Unless the Trump administration is planning to intervene in the clothing and outdoor recreational markets, Trump’s boost to L.L. Bean was not a policy feint of any kind. It was simply an effort to use his new power to enrich a supporter.
“It’s unprecedented,” Harvard Business School professor Katherine DeCelles told The Washington Post, “for someone of his power voicing his support or being against particular companies.”
Trump’s tweet shows why his conflicts of interest never can, and never will, be reined in. Even if he sold his company and walked away, which he has made clear he won’t do, his lack of responsibility and discretion would produce additional conflicts. He has no qualms about openly disfavoring those who criticize him and rewarding those who flatter him. (Russian President Vladimir Putin seems to understand this.)
Trump’s family business, now supposedly run by his sons, will remain a source of ethical conflicts throughout his presidency. But his refusal to divest is just a symptom of the more serious ethical danger his presidency poses, one that was abundantly clear from his long history of bilking contractors and consumers, stiffing investors and spreading falsehoods.
The political system can try to mitigate a president’s shortcomings, and limit his temptations, with laws and rules and norms of behavior. But it can’t install an ethical compass in a president who doesn’t have one.
Francis Wilkinson writes editorials on politics and U.S. domestic policy for Bloomberg View.