When the sovereign trades in the same goods he regulates

The New York Times reports that President Trump is pushing a domestic and international nuclear energy agenda — including a proposed deal with Saudi Arabia — and that his family and political supporters hold business ties that could position them for gains from precisely that agenda. The paper is careful to note that no direct line can always be drawn from policy to profit. I will be equally careful. But the pattern requires no direct line to be dangerous. The pattern is the thing.

In The Wealth of Nations I observed that the interest of merchants and manufacturers is, in any particular branch of trade, always in some respects different from, and even opposite to, that of the public. The merchant wants high prices; the public wants low ones. The merchant wants restricted supply; the public wants abundance. When the merchant also writes the regulation, the consumer pays twice — once at the market and once through the policy that was sold to him as serving the national interest. I called that arrangement mercantilism. Whatever we call it today, the mechanism is unchanged.

Nuclear energy, as I must reason by inference rather than recollection, is a capital-intensive industry in which the licensing, the subsidy, and the international agreement are everything. A foreign government does not buy a reactor from a free and open market; it buys it through a negotiation in which a sovereign's favor is the decisive factor. When the sovereign negotiating that favor holds, through family and allied interests, a stake in the outcome, we have not a market but a private toll — and a very large one — erected on what ought to be a public traffic.

I want to be precise about what I am not saying. I am not saying that nuclear energy is unworthy of public support. A case can be made — I would have been open to it — that certain infrastructure investments, including those touching national defense and energy security, are legitimate public goods that the market alone will not supply at the right scale. The question of whether to promote nuclear energy is separable from the question of who benefits from the promotion. It is the second question that demands institutional scrutiny.

The institutional corrective I would propose is the one I always proposed: transparency, disclosure, and the separation of the sovereign's private interest from his public function. A monarch who trades in the same commodities he taxes has no credible interest in honest weights. A president who advances an energy policy from which his own circle profits has, at minimum, a duty of full and public disclosure — and the legislature has a duty to demand it. Without that framework, the invisible hand cannot work, because one very visible hand is already on the scale.

The deeper moral point is this. Commerce rests on sympathy — on the confidence of each party that the other is not deceiving him. When the rule-maker and the beneficiary are the same person, that confidence is not merely strained; it is structurally impossible. The New York Times has done the public a service by naming the pattern. The question that remains is whether the institutions of law and legislative oversight will do their part. That question, I regret to say, is one no economist can answer alone.