Nobel Prize-Winning Economist Offers a Unified Theory of Trump

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1:27Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. 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.

2:07It 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 Daron Asimoglu. 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 upcoming new issue that does really a deep dive into President Trump's first year in his second term.

2:44Jerome, 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 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?

3:25Well, thanks. Thanks for having me on the program. Look, I mean, obviously there is a flood the zone 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 either from institutions or norms. So even the foreign actions are all about increasing domestic power. Even the sort of unconventional appointments 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 U.S.

4:16political 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 U.S. cities or for a president to continue to be involved in his family business while 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?

4:54Well, 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 attempt.

5:42And 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. And 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 of after another of this edifice that was constraining other presidents that are now gone for President Trump.

6:26So, Jerome, so basically, right, we thought this checks and balances would work, right? Three branches, 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 a judge saying Dominion Energy can resume a wind 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?

7:02Is 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 the 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 with, you know, not just the Congress and the judiciary, but also the independent agencies acting like the fourth branch. 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.

7:39And part of the concern is that right now it's really the parts of the judicial branch that are standing up against Trump indeed. But 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 stance 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 U.S. 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.

8:26And 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 they're 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 talk about the bond market now because the stock market hasn't reacted.

9:05But I think that just really underlies that 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.

9:51In some sense, both of them are things that both the administration and the business community are watching. But I wouldn't bet on 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 President Trump can invite people to his office and say, give us 20 percent of your shares. Yeah. That's all something. Yeah. There's just moment after moment where many would say this is kind of remarkable. We're talking with Daron Asimoglu.

10:28He 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 U.S. playbook? And to be fair, that's what I'm worried about. Exactly. I mean, you know, because, look, I mean, Trump is an agent of change. He is really reshaping norms and institutions. But he is himself a symptom of what was wrong, in some sense, with the U.S. system. There was a lot of inequality. There was a lot of discontent.

11:08And there was also some gridlock. You see more executive orders by Bush than by Obama, than by Biden. So Trump is 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 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 studied 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.

11:50And 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 Carol's question, what that means for the future of the U.S. 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 U.S.

12:28assets, treasuries, corporate debt, stock market. Why? Because people trust U.S. institutions. They want to be subject to U.S. 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 sauce of the U.S. economy would be heavily damaged, too. So we're not China, but we're something else?

13:02Just got about 10, 15 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. Well, we're getting close to that.

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