Witold Henisz, vice-dean of the Wharton School, questioned the wisdom of billionaires and business executives backing Trump. “The best info they have is what happened in the last Trump administration,” Henisz said. “They got tax breaks, and nothing really terrible happened. The world didn’t end.”
Sounding like the professor of management that he is, Henisz added: “That’s a mispricing of the tail risks.” In other words, they are failing to properly weigh the long-term risks. Henisz said the tail risks include worrisome threats to democracy and judicial independence. “Markets aren’t really good at pricing that,” he said. “The ultimate tail risk is change in political institutions that makes the US more authoritarian and less democratic, with restraints on media freedom and the political use of tax authorities and the judicial system” against people and corporations Trump dislikes.
Henisz warned of additional risks from Trump, pointing to his plan to reduce the Federal Reserve’s independence, which could push up inflation, and his pledge to deport more than 10 million immigrants, which, Henisz said, would push up labor costs “and seriously hurt the image of the United States in the world”.
