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Ken Griffin, the billionaire founder of hedge fund Citadel, is often viewed as a market maverick. This week, however, he turned politically contrarian too. Speaking in West Palm Beach, he complained that US President Donald Trump’s White House was “choosing decisions or courses that have been very, very enriching to the families of those in the administration”. In plain English: grift abounds.
And while that observation is hardly shocking — it has emerged that an Emirati royal invested $500mn in a Trump family crypto venture days before he took office and the White House unveiled pro-crypto policies — what is startling is that Griffin actually stated the obvious.
In recent months I have often heard America’s corporate elite mutter in private about the White House self-dealing. Even some Maga loyalists are becoming quietly dismayed. “It’s disgusting,” one recently told me in a (disappearing) text. Marjorie Taylor Greene, the Maga acolyte, has described Trump’s political slogan as “a lie”.
But until Griffin spoke out, no major business executive has publicly attacked Trump for this. Instead, a mood of weary resignation has prevailed, which echoes the past attitude of some elites towards sordid early rumours about child sex offender Jeffrey Epstein. Why? Fear is one factor; no corporate board wants to incur Trump’s wrath by calling him out. Greed is another: many executives want to maintain White House access because they hope to cut deals that will benefit them, not their rivals. Trump’s “divide and rule” strategy works.
However, there is a third, far less discussed, factor too: the “normalisation of deviance” problem, as engineers and sociologists might say. This phrase first cropped up after the 1986 Challenger space shuttle explosion when Nasa asked the sociologist Diane Vaughan to study its causes.
Officials had initially assumed the disaster arose because of a single engineering mistake. But Vaughan rejected that analysis. Instead, she argued that over many years Nasa engineers had gradually become inured to tiny breaches of safety protocols — such as gaps in rubber seals — quietly ignoring them, because nothing bad (initially) occurred. Their sense of “normal” subtly changed.
“Social normalisation of deviance means that people within [an] organisation become so much accustomed to a deviant behaviour that they don’t consider it as deviant,” Vaughan observed. Or, to cite the Journal of Safety Research, “in the absence of perceived losses or harm, deviant practices become acceptable”, via a “desensitisation process”. Nobody realises that risks are building up — until disaster strikes.
Experts in other sectors, such as chemical engineering, medicine and aviation, have subsequently borrowed Vaughan’s idea. So have business schools. After all, when companies are hit by scandals, it rarely happens because somebody makes a single decision to “go bad”; it is more common that standards inexorably slip over many years, as numerous tiny decisions that initially seem trivial are ignored.
However, the NoD principle also occurs on a macro scale. And Washington today is a case in point. Two decades ago, even business leaders might have howled if Barack Obama or George W Bush had taken Emirati investments in their family businesses days before entering office. So, too, if one of their spouses had a production company that struck a multimillion-dollar film deal with Amazon.
But such stories are now almost normalised; and not just under Trump, given the scandals that bubbled around Hunter Biden, son of the previous president. The grotesque revelations about Epstein are adding to the cognitive overload — and desensitisation. The result is corrosive cynicism and distrust among the public.
Of course, one remarkable detail is that throughout all this, the economy and stock market have continued to boom, And that has undoubtedly created another incentive for CEOs to stay silent — and normalise this deviance. But therein lies the danger: just as tiny, widely ignored gaps in the Challenger’s rubber rings eventually led to a crash, the cracks now building in America’s political economy could produce an explosion too.
As the historian Yuval Noah Harari observes in new film The AI Doc: “If you lose all trust then democracy is impossible.” US business and finance have hitherto thrived on the back of a predictable, rules-based form of capitalism; a loss of credibility could eventually create both political and economic costs.
Is there any solution? Back in 2014, Nasa officials outlined six steps to counter NoD in an engineering sense: “never use past success to redefine acceptable performance”, “prevent groupthink”, “keep safety programmes independent from those activities they evaluate”, and so on. These are eminently sensible.
However, what is really needed now is far simpler: CEOs should follow Griffin’s lead, most notably by realising how deviant the current climate has become — and loudly challenging it. Yes, there is a moral imperative to do this. But there is a self-interested reason too — if CEOs want to preserve vibrant capitalism.
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