Billionaire hedge fund manager Ken Griffin has warned that Donald Trump’s plan to raise rates across the board will result in corporate welfare that will harm America’s long-term economic growth.
At The Economic Club of New York on Thursday, Citadel’s founder and CEO said U.S. companies protected from foreign competition will inevitably get fatter and complacent because of the “sugarcoating” of import taxes.
They will soon realize that lobbying on Capitol Hill is the easiest way to ensure their survival, rather than the hard way of innovation and productivity.
“I am seriously concerned that the rate hike puts us on a slippery slope to crony capitalism.” he warned Billionaire speculator Ken Griffin, CEO of Citadel hedge funds, on Thursday.
Removing competition eliminates the need for innovation
It’s not the only one. Walmart Chief Financial Officer John David Rainey tied with the Americans on Thursday, telling the fox News that US customers would be the ones to pay the cost increases associated with tariffs that the retail giant can’t absorb.
The Citadel’s Griffin worries that the tariffs will have a lasting impact on American productivity, a key measure that drives inflation-adjusted economic growth.
By preventing or even removing competitors from the playing field, market forces cannot direct or punish managerial decisions as effectively as they otherwise would. Capitalism, however, only works if the rewards of developing new products and services sufficiently outweigh the financial risks of starting a new endeavor.
Over time the companies most protected from these forces risk ending up as recipients of state-dependent corporate welfare to survive at home.
Corporate lobbies descend on Congress in ever-increasing numbers
“Once you’re in a world where companies know their very existence is because of tariffs,” Griffin said, “now you’ll find the halls of Washington filled with special interest groups and lobbies.”
Perhaps even worse, they will become increasingly competitive in global markets over time.
A perfect example of this is the automotive industry. More than 60 years ago, the United States, in a negotiation with Germany, wanted to punish it Volkswagen for threatening domestic automakers with theirs The iconic VW bus.
He imposed A Brutal import duties of 25% In commercial vehicles the Big Three caused the pickup market to be carved up from one another it lasted until today.
Partly due to General Motors and Ford fighting to compete against the Asians and Europeans in the passenger car segments, compact sedans and hatchbacks, and remain largely dependent on the fat profits they sell. big trucks in North America
