Article posted on AdvisorPerspectives
The world watched Iowa Republicans – the party of Lincoln – give a big boost to Donald Trump Monday night, January 15.
The Iowa campaign and media coverage illustrated how politics and fiduciary principles converge. Threats to the foundation of our democratic republic and fiduciary principles are one and the same. In both, it’s a matter of trust and the culture’s tolerance for dishonesty.
Law professor Tamar Frankel says it best in her 2006 book, Trust and Honesty. She wrote,
Something different from the past and more basic has been happening to America. America is becoming used to abuse of trust and deception. It is that American culture has been moving toward dishonesty, regardless of whether fraud has been actually rising.… Culture reflects the habits of society; at its base is a set of assumptions that we take for granted about how people behave.…[In my research] I found evidence of a move toward greater acceptance of Dishonesty… ” (page 3)
Is the difference between honesty and dishonesty significant? Frankel thinks so:
Honesty relates to integrity and openness [while]… dishonesty represents the opposite: deceit, corruption, shame, cheating and duplicity towards others. Trust is based on belief in other people, while distrust and mistrust represent the opposite.
Does mistrust matter? Frankel explains:
Mistrust corrodes the wheels of exchange and commerce and contaminates trusted professional services.
Trump’s record on dishonesty is historic. He may be the most ethically flawed, untruthful and constitutionally uninformed candidate for president in American history.
With this background, the question is why his dominance among Republicans? We’ve heard little independent commentary, but some observers (critics of Trump) – Peter Wehner and David French – offer their takes.
Last May in an article in the Atlantic, The Minds of Trump Supporters, Wehner cited a list of Trump’s transgressions and then listed four reasons why Trump supporters remain loyal. Generally, they overstate his accomplishments and the threat of the far left, while they are blind to his defects and demonize Biden.
Wehner explained more basically why supporter loyalty overcomes all his foibles or far worse. Trump is on their side. He wrote:
But all of that [hubris], and far more than that, is acceptable because he fights for their cause, which they are convinced is just, true, and right. More than any other Republican politician, he understands the viciousness of his opponents and will respond in kind.
Meanwhile, French, a conservative columnist at the New York Times, offered an explanation last weekend:
Eight years of bitter experience have taught us that supporting Trump degrades the character of his core supporters (and polling data) again and again backs up the reality that the right is abandoning decency in alarming ways.
French also cited Trump for calling opponents “vermin” and that illegal immigrants are “poisoning the blood of our country.”
Cultural shifts in norms usually evolve slowly. In fiduciary investment advice, shifts in the central meaning of conflicts of interest have evolved over the past 15 years. The SEC has led the effort to label all compensation inherently conflictual, in contradiction with the traditional reading of the Investment Advisers Act.
There is likewise little doubt that the continued acceptance of dishonesty in the advice industry will work to make fiduciary advice irrelevant. In the most recent Gallup poll bankers and stockbrokers are rated, alongside car sales people and members of Congress, as least trusted professions. Professor Frankel has written on fiduciary duties for half a century and understands the role of honesty and trustworthiness in a culture. She has persuasively argued what choosing a culture of dishonesty means for a society. We should heed her warning.
