BLIND TRUST OR BLIND FAITH
by James Kallman
Patriots seeking to serve their country are presumed to have made their money before entering politics.
Among the myriad of questions that the U.S. presidential election has thrown up is who will be looking after the Trump billions should he actually be elected to office in November. From the days of Lyndon Johnson back in 1963, most presidents have used blind trusts to deflect any accusations of conflict of interest, although President Barack Obama was an exception as his holdings are in Treasury notes and the like.
Donald Trump would pose far different questions – for example, he has a luxury hotel he’s developing just five blocks from the White House on federal land, to his many investments overseas, although not in Russia he has stressed. We do know he’s on record as favoring tax cuts for the wealthy, but could Trump’s foreign policy decisions be influenced by his holdings too?
There’s no Federal law that actually requires presidents to disclose their financial holdings, but while lawmakers on Capitol Hill are barred from voting on legislation that directly affects their personal investments, U.S. presidents are presumed to be above such underhand practices. The same does not hold true everywhere, of course, and in a number of African countries, for example, citizens’ declining standards of living have been inversely proportional to the avarice of their entrenched rulers.
In theory, the blind trust appears to be the perfect answer for those holding public office, whereby they place their assets in a trust controlled by a trustee who administers affairs without any direction from the beneficiary. It does provide a degree of insulation from claims of conflict of interest while, being managed with extreme care, it is unlikely to experience any decline in value during the term of service. As such it is a far more equitable system than merely reporting assets before and after the term in office, as practiced in Indonesia, for instance.
Nevertheless, this quest for independence in both fact and appearance does not come without cost, as it’s not cheap to set up such a trust, while the trustee’s concentration on avoiding losses rather than seeking gains will not fund optimal return. However, patriots seeking to serve their country are presumed to have made their money before entering politics, and not be in a rentseeking position.
There have been claims that blind trusts are used to protect the identity of slum landlords, but the Trump name adds major value to his business empire. Not that he is currently thinking about a blind trust. Claiming he’ll be too busy running the country, Trump’s comments to date have suggested he would turn day-to-day running of operations over to daughter Ivanka and sons Eric and Don, along with his executives. So with blind trusts not the flavor of the month in the Trump household, I guess it’ll be a matter of blind faith if the vote goes his way in November.
**This article was published in the Forbes Indonesia, September 2016. You can also read this article on Forbes Indonesia.