The merchant in the magistrate's chair

The story reported by CNBC is, at its core, a story I spent considerable energy on in my own century, though the instruments have changed. Senator Elizabeth Warren has pressed Commerce Secretary Howard Lutnick to account for eased export controls on sensitive American technology to the UAE — eased, she notes, at a moment when UAE-linked entities had invested in a crypto venture associated with the Trump family. The technology in question is described only broadly in the lead, but the institutional question needs no technical detail to be sharp: has the power to set the terms of trade been placed in hands that hold a private stake in the outcome?

This is precisely what I called the mercantile spirit at its most dangerous — not the ordinary merchant seeking profit, whom I do not condemn, but the merchant who has secured a seat in the sovereign's council and proceeds to write trade policy as though it were a ledger entry in his own firm. In The Wealth of Nations I observed that the interest of dealers in any particular branch of trade is always, in some respects, different from, and even opposite to, that of the public. To allow those dealers to draft the regulations of their own trade is to hand the fox the keys to the henhouse. What CNBC describes — if the inference holds — is that very arrangement, except the fox is now denominated in cryptocurrency.

The export-control regime for advanced technology is, in my framework, a public good of the first order. Defense and justice are the two duties of the sovereign that I placed before all others, and the controlled export of militarily sensitive technology is an extension of the duty of defense. When that regime is relaxed, the public pays a security cost so that a private party may receive an investment return. That is a subsidy extracted not from the Treasury but from the national security account — less visible, therefore more dangerous, than a straightforward tariff or bounty.

I want to be careful here, because I speak from disposition rather than from a complete record of events I could not have witnessed. It is possible that the eased controls were justified on independent national-interest grounds, and that the timing is coincidence. Senator Warren may be drawing a connection that the evidence does not fully sustain. But the institutional point stands regardless of this particular case: a sovereign whose personal finances are intertwined with the nations whose access to sensitive technology he controls cannot be an honest referee. The conflict of interest does not require proof of a corrupt bargain to do its damage; the mere appearance of such a conflict corrodes the public's trust in the rule by which the game is played.

The remedy is not complicated, though it is politically inconvenient. Those who exercise sovereign regulatory power over the terms of trade with foreign nations should hold no private financial interest in the outcome of those terms. This is not a radical proposition — it is the baseline condition without which no exchange between public power and private gain can be called honest. Disclosure requirements, divestiture rules, and independent oversight are the institutional scaffolding that makes the market for national-security decisions trustworthy. Where that scaffolding is absent or undermined, no invisible hand will supply it; only law and the vigilance of the public's elected representatives can do so. Senator Warren is, whatever one thinks of her other views, performing precisely that function of vigilance, and it is a function the framers of any honest commercial republic must encourage.