Unintended Consequences: The Chickens Are Coming Home to Roost

The phrase “unintended consequences” usually brings to mind something unpleasant. This is something the states of Delaware and New York are about to discover.
Unintended Consequences: The Chickens Are Coming Home to Roost
Former President Donald Trump sits in the New York State Supreme Court during a civil fraud trial against the Trump Organization, in New York City on Jan. 11, 2024. (Peter Foley/AFP via Getty Images)
Roger Kimball

The law of unintended consequences isn’t really a law. It is merely a frequently observable phenomenon.

Wikipedia, though generally a biased and unreliable source, is correct that the term was popularized by the American sociologist Robert K. Merton.

Sometimes, the consequences in question are beneficent.

The action of what Adam Smith called the “invisible hand” is a case in point.

Individuals work to achieve private, self-interested goals. Yet their labor conduces to the common good.

That larger good was unintended, perhaps unforeseen.

But with the wisdom of hindsight (what former President Donald Trump has been calling “common sense”), it might have been predicted.

Life being what it is, however, when we hear the phrase “unintended consequences,” we usually anticipate something unpleasant.

This is something that the states of Delaware and New York are about to discover.

Jeb Bush is not a paid-up member of the President Trump fan club.

But the op-ed that he and Joe Lonsdale, a founder of Palantir Technologies, wrote for The Wall Street Journal on Feb. 21 must be pleasing to President Trump.

It must also be pleasing to Elon Musk.

The U.S. Constitution (Article I, Section 9) prohibits “Bills of Attainder,” i.e., writing or enforcing laws that apply only to certain individuals.

But that is exactly what has been happening to Elon Musk and, especially, Donald Trump.

Judge Kathaleen McCormick of the Delaware Court of Chancery said that Mr. Musk’s performance-based compensation, though approved by 80 percent of Tesla’s shareholders, was unfair and must be taken apart (just how, she has yet to specify).

Mr. Bush and Mr. Lonsdale point out one likely unintended consequence.

“Mr. Musk’s performance at Tesla enriched all shareholders, but Judge McCormick’s ruling may primarily enrich Delaware trial lawyers,” they wrote.

Another is that Judge McCormick’s action has prompted Mr. Musk to change Tesla’s state of registration from Delaware to Texas.

He will not be the only business owner to do so.

In the case of President Trump, New York Attorney General Letitia James, who actually campaigned on the promise to target President Trump, has prosecuted him for allegedly overvaluing his real estate assets when applying for bank loans.

Judge Arthur Engoron found President Trump guilty and fined him $355 million.

Three-hundred and fifty-five million dollars.

In fact, the total penalty President Trump faces is more like $450 million.

But what had President Trump done? Whom had he harmed?

The case against him was a fraud case. But no one was defrauded.

He paid back the loans that Deutsche Bank had made to him on time and with the specified interest.

For its part, the bank said it was satisfied and would be happy to do business with President Trump again.

They also suggested that President Trump’s alleged optimistic valuation of his assets—a nearly universal practice among real estate developers (to say nothing of homeowners)—may not have affected their decision to make the loans on the terms they offered.

Since there was no victim in this fraud case, the state of New York will collect the money, assuming that the judgment withstands President Trump’s appeal.

Judge McCormick and the James gang in New York are crowing about how they “got” Mr. Musk and President Trump.

They have not yet accounted for the unintended consequences that are coming their way.

Many businesses have incorporated in Delaware because the state has traditionally offered a business-friendly process of incorporation.

Judge McCormick’s astonishing intervention to harm the CEO of an important company will reverberate negatively in the C-suites of many companies. They will now look for alternative places to bring their corporate business.

The unprecedented legal assault against President Trump is already having consequences in New York.

Soon after the verdict, Fox News reported that “Some nationwide real estate investors, like Cardone Capital’s Grant Cardone, have started telling their teams to pack their bags and leave New York after the verdict in former President Trump’s fraud trial.”
A headline in another outlet put it even more starkly: “Trump Fraud Ruling Could Devastate New York Economy.”

“The ruling,” that story points out, “appears set to accelerate a now years-long trend of businesses fleeing the Empire State due to its onerous tax policies, incompetent liberal governance, and now outright hostility toward conservatives and the business community in general.”

The Trump verdict is merely the most dramatic and high-profile in a long line of anti-business, “progressive” legal assaults.

From the end of 2019 to August 2023, “New York lost 158 companies managing more than $1 trillion.”

The unintended consequences to the economy are one thing.

As Mr. Bush and Mr. Lonsdale point out, the satisfaction of “sticking it” to high-profile, controversial personalities such as Mr Musk and President Trump will have to be counterbalanced against significant economic losses to New York and Delaware.

But as they point out, the unintended consequences go much further.

“The damage to the legal fabric of the country will be even worse,” they wrote.

Both Mr. Musk and President Trump have been singled out for special hostile treatment by the coercive power of the state.

This amounts to a direct attack on the rule of law, which is nonpartisan or it is nothing.

Mr. Bush and Mr. Lonsdale sound a quaint note when they say that “a dispassionate justice system is at the heart of American exceptionalism, and the country will be poorer if we lose it.”

There are no “ifs” in the scenarios they rehearse.

The states of Delaware and New York have taken sides in a wholly partisan fashion.

The “dispassionate justice system” that Mr. Bush and Mr. Lonsdale invoke is a besmirched, inoperative relic.

We are indeed the poorer for its loss.

We will not be done with the resulting damage report for years.

It will take that long for the unintended consequences of these progressive assaults on the rule of law to be tallied.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Roger Kimball is the editor and publisher of The New Criterion and publisher of Encounter Books. His most recent book is “Where Next? Western Civilization at the Crossroads.”
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