Trump may be inaugurating an era of market failure in economics and ideas: Don Pittis

Cynics may believe that business is based on a pack of lies, butat every level of business, from buying a used car to a billion-dollar stock deal, truth is precious.

Investors have been pouring their money into stock markets on the assumption that U.S. president-elect Donald Trump has been telling the truth.

They may be disappointed.

There is increasing evidence that not only has truth been set aside, but the institution created to discover truth has beendamaged.

It wasthe libertarians' heroJohn Stuart Mill,in his1859 bookOn Liberty,who first integrated the principle of the economic free market with the concept of the marketplace of ideas.

He was drawing on thepoet John Milton's famousrationale for free speech. Milton's big idea was that the freedom to speak and write means the truth will come out.

"Let (Truth)and Falsehood grapple," wrote Milton. "Whoever knew Truth put to the worse, in a free and open encounter?"

Deny, deny, deny

But suddenly falsehood has a new champion.

"He speaks in falsehoods all the time. They report him and give credibility to his falsehoods," Saskatchewan lawyer Garrett Wilson said shortly after watching Trump's news conference last week.

Wilson is the author of Deny, Deny, Deny, a book about the long trial and conviction of Saskatchewan politicianColin Thatcher for the murder of his ex-wife JoAnn Wilson.

The title of the book comes from the advice of a divorce lawyer to clients whose wives desperately want to believe them.Wilson draws a parallel between those cheated wives and Trump's supporters.

He worries that, after an entire election campaign of giving credibility to Trump's incredible statements, it will be hardfor the media to signal when as president he is "speaking misinformation."

"I don't know how thehell they're going to do it," says Wilson. "I think the horse is out of the barn on that one."

After a campaign of juicy headlines, last week's press conference showed that most reporters weren't necessarily seeking truth, says media critic Jasmin Mujanovic.

"The media was trying to get him to say something scandalous so that they would have leads for that evening's news cycle," Mujanovic told Laura Lynch onCBC Radio's The Current on Friday.

Freedom ofspeechand the freedom to buy and sell in fair markets have become deeply integrated into the U.S. concepts of liberty and equity, so much so that those freedoms are just assumed.

Orwellian rules

As investors havediscovered in countries with authoritarian governments including Russia and China, when a government candeclare what is true, business information becomes unreliable.

There is a danger the U.S. may be moving that way.

Under the new Orwellian rules, scandals are dismissed as fake news in the face ofevidence.

Freedom from conflict of interest is demonstrated witha pile of file folders.

Climate change is declared a hoax and vaccinations the cause of disease despite the weight of scientific proof.

Media organizations that report facts in this caseCNN, which reported the existence ofspy documents about Trump are deniedthe media's life blood, the ability to ask questions.

Meanwhile, middle-of-the-roadmedia iscompelled to report both sides, truth and falsehood as truth,to demonstrate its lack of bias.

Politicians are known for bending the truth. In the1960s that was labelled the credibility gap. Under the Trump presidency can we expect a credibility chasm?

After all, as Garrett Wilson says, Trumpgot away with it for an entire campaign andwon. Why change?

Trump has reminded ushow fragileinstitutions of democracy can be.Voting, the free press, governmentregulation, all falling before a barrage of untruth.Will the courts survive?

Already there is evidence that free markets have been distorted. Now Trump is promising tax cuts that will tilt the balance further. Will the border tax help or hurt?

Experts have questioned whether such short-term measures are economically sustainable.

Business enthusiasm stalling?

After the election, markets showedenthusiasm for Trump.But last week that enthusiasm seemed to stall.

In business it is crucial to know who you can trust. With Trump so willing to play fast and loose with the truth, can he be trusted?

Is Trump really acting in the interests of the U.S. economy and U.S. business? Or, like countries without trusted institutions, is he in someone's pocket? Or is he just acting for Donald Trump?

Without a free press allowed to ask hard questions, how can investors be sure?

The institution of free speech and the market of ideas havebeen grapplingagainst falsehood for nearly400 years sinceMilton proposed them. We can onlyhope they can sustain themselvesduring the Trump presidency.

Asforfree markets, they can be fooled for a long time. But they have a way of coming back to reality with a bump.

Follow Don Pittison Twitter @don_pittis

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