How Modi and Trump Treat Billionaires Differently

Musk embodies much of what India wants from its ties with the United States: the prospect of major investment, valuable technology transfer, and now a direct back channel to the White House. But viewed in a different way, India, with its system of close connections between billionaire industrialists and political power brokers, offers a means to understand an emerging U.S. economic model, in which tycoons such as Musk act as handmaidens of industrial policy but also conduits of political power.

In this environment, accusations of crony capitalism against the Indian government, meaning collusion between political leaders and business, remain common. Main opposition leader Rahul Gandhi, for instance, made this topic a central theme of his campaign in last year’s general election, which Modi went on to win comfortably.

But the relationship between India’s government and its industrialists has changed since Modi’s election as prime minister in 2014. In my book The Billionaire Raj, I tell the story of an era of rampant corruption and cronyism in the 2000s and early 2010s. During that time, a weak but scrupulously honest prime minister, Manmohan Singh, presided over what was known as the “season of scams,” in which myriad multi-billion-dollar corruption scandals erupted one after another.

Even then, India’s cronyism was sophisticated and a long way from crude bribes delivered via cash in brown envelopes or bulging suitcases. Nonetheless, it was widely perceived to be out of control: “Every cabinet minister was a sovereign enterprise,” a close observer of Indian business once put it to me, with only a degree of exaggeration, describing how under Singh’s government many political leaders ended up being accused of involvement in scandals in areas from telecommunications regulation to the licensing of minerals such as coal or iron ore.

Under Modi, the relationship between government and the ultra-rich has evolved into something more politically harnessed and directed. Like Singh, Modi enjoys a reputation for personal probity. Though corruption still exists on his watch, the number of major public scandals has fallen dramatically. Today, few Indian ministers would dare to skim off the top, for fear of offending their politically dominant prime minister.

India’s system is beginning to resemble the kind of crony capitalism common in recent decades in East and Southeast Asia—for instance, under Prime Minister Mahathir Mohamad in Malaysia in the 1980s or during President Park Chung-hee’s period of rapid growth and autocratic rule in South Korea in the 1970s. The model is that select plutocrats develop mutually favorable ties to political leaders in return for building the airports, buildings, and telecoms networks their countries need for national development.

Under Modi, the relationship between government and the ultra-rich has evolved into something more politically harnessed and directed.

The reason politicians work with powerful billionaires is because they can get big things done quickly. And if their political connections then provide tycoons with financial advantages elsewhere in their businesses—as often happened in India’s original season of scams—then that is considered an acceptable trade-off.

The role Musk plays in the Trump administration is unprecedented, straddling high politics, industrial policy, and increasingly international affairs. Certainly no industrialist in India enjoys a position as far-reaching or as globally high-profile. But in a sense, the United States and India are actually converging: Indian crony capitalism has become less chaotic and more organized under Modi, while under Trump the United States is moving the other way. A successful U.S. system of open markets and fair competition is being abandoned for one in which Trump-linked industrialists enjoy favorable quid pro quos. In international affairs and economic policy alike, the United States is turning its back on a rules-based approach.

Of course, the billionaire-politician nexus has long-term pitfalls, whatever benefits such tacit cooperation might at first deliver in terms of improved infrastructure or higher investment. One is the danger of discord. If Trump’s model of economic management involves deals with favored politically connected business leaders, that model breaks down if he subsequently falls out with them. A system that relies on the efficient cooperation of industrial and political elites remains highly vulnerable, since squabbles will inevitably emerge.

While billionaire tycoons appear in the public imagination as if unconstrained heroes in an Ayn Rand novel, across the autocratic world—be it India, China, Russia, or increasingly in Trump’s America—the reality is that business leaders are generally the supplicants. For all their power, Adani and Ambani remain deeply wary of Modi, just as Jack Ma is of Chinese President Xi Jinping or any sane Russian oligarch would be of President Vladimir Putin. Even Musk has been notably deferential to Trump in recent interviews, seemingly aware that his privileged position could be revoked at any moment. Ultimately, in the relationship between autocrat and tycoon, it is the autocrat who holds true power.

At least in India, it is possible to argue that the economy is partly changing for the better. What began as a chaotic and self-serving cronyism has shifted somewhat to become more efficient and less rampantly corrupt. Eventually, perhaps, a more rules-based market system will emerge. Under Trump and Musk, the United States is heading toward kleptocracy rather than away from it. The fear is that a U.S. season of scams is unlikely to be far away.