For a good part of the second half of 2019, the news has been filled with Donald Trump’s perceived quid pro quo with the Ukrainian government over U.S. military aid in return for investigating Joe Biden, a potential campaign opponent, and his son, Hunter, to give the incumbent president an edge in the coming presidential election. It culminated in the impeachment of Trump in the House of Representatives.
The world is filled with quid pro quos, but there is a world of difference when they occur in a free, competitive market arena versus the world of political power and pull. One potentially enhances the well-being of the two (or more) participants; the other can only improve the circumstances of some by making worse the situation of others.
Almost 245 years ago, Adam Smith highlighted the quality of almost any economic exchange in his famous work, An Inquiry into the Nature and Causes of the Wealth of Nations (1776):
But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favor, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of.
Positive Reciprocity in Free Market Trades
The nature of the free market is that all transactions entered into require the mutual and voluntary consent of those participating in trade or otherwise associative relationships. The “rules of the game,” if you will, in the market is the ethical and legal recognition of each individual’s rights to his own life, liberty, and honestly acquired property. He may not be coerced or defrauded in giving up anything that he rightfully has in his possession.
This means that anyone else who desires what he has can only acquire it from him by persuading him to part with it. Adam Smith spoke of the beggar who pleads for the benevolent generosity of others for his daily bread, but as he emphasized, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.”
This places the person who is desirous of the assistance of others to, in turn, apply his knowledge, abilities, talents, and experience in those ways that are most likely to enable him to produce a product or supply a service that others in society will be interested in obtaining in exchange, so he may obtain from them that which he wants. Market relationships are, therefore, inherently and inescapably other-oriented.
But this focus on the needs and desires of others is not one of a one-sided self-sacrifice for the betterment of others alone. It is the means by which, in a society of liberty, any individual furthers his own self-interested well-being, as he defines it for himself. It is in the logic of any reasonably developed system of division of labor that the members of society are interdependently relying on the specializations of others for virtually all that they want in life.
The self-sufficient producer may ignore and even be surly with those around him, since he chooses to get by on his own personal capacities and the physical resources that he has at his disposal; therefore, he can afford to be indifferent or even rude to those whom he meets. He does not depend upon their good graces for pursuing the ends that he has in mind.
Quid Pro Quo at Home and in the Marketplace
But in the competitive, free market society, no one can afford to act in this way without possibly harming his chances of achieving most of his goals in life. This applies at home and in the wider society. A good number of years ago, economists Richard McKenzie and Gordon Tullock published The New World of Economics (1985), which included an analysis of the economics of sex. In one of their examples, the husband liked the bedroom window open at night and wanted sex five times a week. The wife preferred the bedroom window closed, and desired sex twice a week. They reached mutually agreed terms with the bedroom window closed and sexual intercourse somewhere between two and five times a week.
No doubt, many today might find this an objectionable example, though for reasons perhaps different from 35 years ago. But what it demonstrated was that there are few corners of life in which human association does not require trade-offs and mutual agreement on the content and terms of the relationship for both parties to get more of what they want. There are quid pro quos both in the bedroom and the bakery store. And given the circumstances and the constraints, both parties must find those terms satisfactory, or no exchange takes place.
Market-based quid pro quos require compromise, consideration, and courtesy in the attitudes and the actions of the people involved. If the parties to a marriage do not find ways to maintain the terms of the relationship to their mutual satisfaction, the outcome may end up in separation and divorce. In the bakery, if the seller sets a price more than the buyer is willing to pay or the buyer offers less than the seller is willing to accept, it likely means that a trade between them does not occur. In many such instances, one wants more than the other is willing or able to give.
As buyers in the marketplace, each of us would wish that anything we want to purchase was selling for a lower price, so that in real purchasing power our incomes could obtain more of all the things we desire. As sellers of goods and services, we wish that we could raise the per unit price of what we are offering, and experience a higher rather than a lower total revenue from total sales. But both sides of any bargain – any quid pro quo – have to find the terms agreeable, so both parties to the trade view themselves as better off. Otherwise, they have the liberty to walk away rather than view themselves as a “loser” from any deal.
Saying “Yes” or “No” to a Quid Pro Quo
What is crucial here is that each of the parties in a personal or market relationship has the individual and legal ability to say, “No.” They cannot be legally compelled to enter into or stay within a personal or market relationship that no longer sufficiently maintains or increases the betterment of each, as they, respectively, see it. The ease or willingness to not commit to or to end a personal or market relationship depends, of course, upon the individual’s circumstances.
Sometimes people stay in “bad” marriages because the perceived costs of going separate ways are too great. How will one or both spouses successfully support themselves financially without the income of the other? Or how will a separation or divorce impact on any children in a family? Sometimes, someone finds it difficult to leave a “lousy” job because of the uncertainty of finding alternative employment and at a salary at least equal to what is currently being earned.
But at least in a free society options do or can exist, both in the household and in the marketplace. If a marital partner is abusive in some way, or is no longer the man or woman they “originally” fell in love with, self-supporting employment or charitable organizations can assist people escaping from and transitioning out of those “failed” relationships. In the market arena, other jobs usually can be found in the face of an “intolerable” existing work environment, even if the alternative employment or the pay, at first, is not what a person would prefer to get out of their current job.
Nonetheless, these options of a free society surely are better than in the past when people found themselves legally and socially “stuck” in a bad marriage, or were bound to the land or in an occupation from which a legal alternative did not exist or entailed a heavy, sometimes illegal, price to be paid to get away from it. Life is made up of trade-offs of sundry types each and every day. But, institutionally, the free market order has provided degrees of freedom and choice that no other social and economic system has even come close to providing.
Political Quid Pro Quo and Other People’s Money
Compare this to quid pro quos in the political arena. To begin with, modern democratic government, with its prevailing degree of regulatory intervention and compulsory redistribution, is of a radically different sort. Think about the current electoral cycle, and, indeed, any other such cycle in any of our lifetimes. Listen to those running for office, and what do we observe? Each and every one of them is, in fact, offering a quid pro quo: Give me a campaign contribution and your vote on Election Day, and when in political office I will supply you with other people’s money.
What, other than this, are the quid pro quos being promised, for instance, by all of the Democratic Party would-be’s for the presidency? Give me your financial support and your vote in the voting booth, and when I am sitting in the Oval Office I will push for you to have guaranteed healthcare coverage, with “the rich,” or the “one-percent” being taxed to pay for it. Make me president of the United States, and I will see to it that greedy corporations are taxed to fund you and your children’s college education for “free.”
Pull that lever on the voting machine that catapults me into the White House, and I will see that everyone has a guaranteed job; a “living wage;” a planetary climate free from “change;” a reparation of other people’s money for all the real and imaginary “injustices” of the past that may have occurred decades, if not centuries, before anyone living today; I will see to educational and employment quotas for any imaginable “marginalized” and “victimized” group, at the expense of those labeled as the “privileged” in society, separate from the actual conduct or responsibility or merit of distinct and living individual human beings.
Can you say “no” if you do not think any of these political quid pro quos is right or just or economically viable? Can you choose not to be either a beneficiary or a victim of any of these quid pro quos if you are in the voting majority or minority after the election and policies are implemented? Can you pick and choose which, if any of them, you are willing to be taxed to fund? The answer to these and many similar questions is, “No.” The government can force you into any of these categories, and compel you to pay for it.
Donald Trump’s Political Quid Pro Quo
President Trump has been impeached by the U.S. House of Representatives partly due to the charge that he withheld Congressionally-funded military aid for the government of Ukraine until the president of that country implicitly agreed to undertake an investigation into corruption accusations surrounding former Vice-President Joe Biden’s son, Hunter, who was sitting on the board of an Ukrainian oil company with a salary of $50,000 a month for no other reason, it is said, than to curry favor with the Obama Administration through the office of the, then, vice president at a time when Ukraine was in a shooting war with surrogate secession groups supported by Russia.
Donald Trump, therefore, abused the office of the president to gain “dirt” on a serious potential political rival, looking to the election of 2020. Trump, not surprisingly, denies the charge, saying it’s all a politically motivated witch hunt by the Democrats against him. And the Ukrainian president has said no “pressure” was put on him for such an investigation. But given Trump’s track record of how he thinks he can use the office of the president, his modus operandi of trying to pressure other governments to get what he wants, and his too clear ignorance or contempt for constitutional restraints, I, personally, wouldn’t be at all surprised if the charges turn out to be true. It should be the purpose of a trial in the U.S. Senate to determine “the facts of the case,” and whether they are serious enough to remove Donald Trump from the office of the presidency.
Previous Presidents’ Quid Pro Quos
But what is Trump being accused of that could not be equally made about virtually every president of the United States since, at least, Franklin Delano Roosevelt? FDR played loose and free with the Neutrality Acts of the 1930s, which Congress had passed and that he had signed, when he wanted to edge America closer into the Second World War on the side of Great Britain against Nazi Germany. He got around Congressional restrictions on direct aid to belligerent countries before the Japanese attack on Pearl Harbor by using his executive authority in announcing Lend-Lease, by telling the British that if they wanted some old U.S. Navy destroyers, they would have to agree to long-term leases to military bases on British-controlled islands in the Caribbean. A clear quid pro quo to get around the Neutrality Acts.
Another quid pro quo was in the Marshall Plan after World War II. Billions of U.S. taxpayer dollars were supplied to Western European governments in the name of assisting reconstruction after the war and bolstering European resistance to Soviet and internal communist threats. But less emphasized was the requirement that those European governments spend a large proportion of those dollars right back in the U.S., buying American goods, especially American agricultural products. Thus, the Truman Administration used those U.S. tax dollars, through a quid pro quo with those Western European governments, to provide indirect subsidies to various sectors of the American economy.
The U.S. government has bought votes in the United Nations, financed the overthrow of foreign governments, funded assassinations and torture of declared “enemies” of the United States, and used taxpayer dollars to generally try to manipulate the internal politics of foreign countries numerous times over the decades since World War II. These were all quid pro quos with those backed by the U.S. to support American foreign policy goals when they are in charge of the governments in those other lands.
But it might be said that former presidents and their bureaucratic assistants only did these things when matters of “national interest” were at stake. Who defines “national interest” in these instances? If we are frank about this, it is very presidents who are interested in being reelected to the office of the presidency, or who are concerned with their “legacy” in the future history books in which every child in the decades ahead will learn to revere and honor them. There are also those who man the bureaucracies and who are ever-watchful to maintain and increase their departmental and agency budgets as well as widening their authority and mandates. And it includes the various networks of private sector special interest groups who use their influence to gain and maintain government contracts, subsidies, or other regulatory protections and benefits from the domestic and foreign policies of the United States government.
These are the participants in quid pro quos between those in positions of governmental power and decision-making and the others in society who hope to gain some of that “other people’s money” by supporting the office holders through campaign money and votes. This is how the “national interest” is decided upon and determined.
Trump is Just Cruder and Ruder than Most Previous Presidents
What stands out about Donald Trump, compared to most other presidents, or politicians in general, is his blunt rhetorical honesty. He wants to pressure foreign governments to increase purchases of specific American goods that he often directly names. He tells you that he thinks that his opponents are despicable power-lusters that he holds in contempt. He chooses not to be nice in front of the cameras when in the company of his Congressional counterparts. He tells you that he views himself as the smartest person he knows, so why does he need to heed the advice of virtually anyone else, including those in his own administration?
In other words, he is brash, boorish, rude, crude, and vulgar in ways that often embarrass those in his own political party, as well as arousing the anger, hatred, and revulsion of those in the official opposition. Why can’t he just “play nice in the sandbox,” the way all the others do in the Washington, D.C. political arena? That is, according to the rhetorical and behavioral political rules of the game that covers the reality of power, privilege, plunder, and paternalism that underlies all that they do and which goes on.
Donald Trump may or may not be found guilty of those impeachment accusations. If he is found guilty, they may or may not be sufficient to justify his removal from office. But that is less relevant than appreciating, I would suggest, that what Trump has been accused of is an essential aspect of modern-day democratic politics almost everywhere around the world. And, certainly, in the United States. What needs to be remembered is that political quid pro quos create winners and losers through taxing and spending, and regulatory and redistributive powers of government in our day and age. This is made possible due to that unique government authority: the legitimized use of force to impose fiscal, regulatory, trade, and other foreign policies on the citizens of the country.
The free society and the competitive, open market economy abound in quid pro quos. But their unique characteristic is that they are based on and derived from voluntary and mutually agreed to terms of trade and association. This means that, while rarely do we get everything we want the way we would most want it, we always are participants in two-sided gains from the market’s quid pro quos.
So, it is not the occurrence of quid pro quos that are a problem in society. It is all a matter of whether they are free and voluntary, or the result of political compulsion, so that, in the latter case, some may get what they want, but at other people’s expense.
Made available by the American Institute for Economic Research.