Summary

According to CNN, all-out war with Iran may be about to resume: The US military has developed new strike plans that include potentially using the so-called “mother of all bombs” to target Iranian energy infrastructure and nuclear sites should President Donald Trump give the order to resume combat operations either before or after the midterm elections, according to multiple US officials familiar with the matter. Trump says that he won’t order a strike before the midterms. But Robert Pape, author of the Substack Escalation Trap, argues that we shouldn’t believe him — that the bombs may well drop before the midterms. And while I am not a strategic expert, I believe that Pape may well be right, because his analysis of Trump’s political position is something I recognize from financial economics. You see, it’s a well-understood proposition that the owners of businesses that are on the verge of going bust often engage in destructive behavior. And Trump is about to go bankrupt — not financially (he’s made billions through corruption) but politically. So he, like a failing businessman, has strong incentives to wreak havoc. Pape’s argument is basically a version of the phenomenon — a particular form of moral hazard — often called “gambling for resurrection.” When a company is on the edge of failure, it makes sense for the company’s owner to make highly speculative, even crazy investments that are highly likely to fail but might, just might, make enough money to pull the company back from the brink. After all, for the owner it’s heads he wins, tails his creditors lose. In Trump’s case, all indications are that his party is heading for defeat in the midterms. And while a normal president might be able to live with a Congress controlled by the opposing party, there has been so much corruption and malfeasance over the past two years that Democratic control of Congress, and the subpoena and investigative power that will bring, will have catastrophic consequences for Trump and everyone around him. So Trump has an incentive to do something, anything, that might shake up this election. Attacking Iran would probably lead to an even bigger Republican defeat, but it might, just might, rally Trump’s base enough to change the outcome. True, a president who cared at all about what is good for America wouldn’t pursue disastrous policies for the slim chance of saving his own political skin. But this is, after all, Trump we’re talking about. Pape’s argument, then, makes a lot of sense. But I suspect that Trump’s impending political bankruptcy will have even worse consequences than Pape suggests — and that these consequences will continue and intensify after the midterms. When I read Pape’s analysis, I found myself thinking about a classic 1993 paper by George Akerlof and Paul Romer, “Looting: The economic underworld of bankruptcy for profit.” Akerlof and Romer were inspired by several historical episodes of widespread bankruptcy, including the U.S. savings and loan crisis of the 1980s. In these episodes, they argued, owners of banks and other companies on the verge of failure didn’t gamble for resurrection. Instead, they simply took the money and ran, transferring as much of their companies’ assets as possible into their own pockets before the hammer came down. So what would looting by a politically bankrupt Trump administration look like? I don’t mean financial looting — Trump has been doing that all along, on an epic scale. What may be about to happen — indeed, is already happening — is what we might call policy looting: Trump using his remaining power to take actions that are both deeply unpatriotic and deeply unpopular but fit his own preferences and prejudices. Freedom, wrote Kris Kristofferson, is just another word for nothing left to lose. Once the midterms are over, Trump, with nothing left to lose, will be free to be his worst self — a malignant narcissist who instinctively supports authoritarians and is preoccupied with revenge against anything and anyone that threatens his fragile grandiosity. We can already see that happening in U.S. policy toward Ukraine. It has long been obvious that Trump loves dictators and despises democracy, and that he has special affection for Vladimir Putin and hatred for Volodymyr Zelenskyy. However, as long as there was some chance of limiting the damage in the midterm elections, Trump was cautious about explicitly taking Putin’s side. Over the past few weeks, however, Trump has grown ever more open about supporting Putin’s attempted war of conquest — buying Russian diesel, canceling sanctions, and most recently by attempting to sabotage Ukraine’s defenses by degrading its access to Starlink. Something similar has been happening on domestic policy where, for example, Trump has increasingly stopped pretending that he cares about illegal immigration or immigrant crime, and is veering into flat, open racism — so far specially directed against Somalis, but it won’t stop there. So will Trump resume the bombing of Iran before the midterms? Obviously I don’t know, but Pape is surely right that normal political logic, under which a deeply unpopular president would avoid resuming a deeply unpopular war, no longer applies. And anyone who believes that Trump will become more cautious, more moderate in the aftermath of midterm defeat just doesn’t understand the new political reality. The truth is that political bankruptcy will free Trump to pursue his true desires. And those desires are horrifying. MUSICAL CODA