The Politics of Plunder: Trump’s Governance and the Economics of State Extraction

By Aziz Huq and Tom Ginsburg
June 22, 2026

The Roman Emperor Tiberius once offered a cynical piece of advice to his provincial governors regarding the extraction of wealth: a ruler can either "shear the sheep" for many years, fostering a stable, productive economy from which to draw consistent tax revenues, or he can "skin them alive" in one swift, brutal stroke. As the current administration in Washington concludes its latest fiscal cycle, the evidence suggests that President Donald Trump has decisively chosen the knife.

The American political landscape is currently grappling with a fundamental shift in the nature of governance. We are no longer observing a traditional administration engaged in policy debates or ideological maneuvering; we are witnessing a systematic transition toward extractive governance. By brazenly using the machinery of the US government to pillage public resources for private gain, the current administration has abandoned the "stationary bandit" model of governance in favor of something far more predatory.

The Framework of Extraction: Mancur Olson’s Legacy

To make sense of President Trump’s peculiar approach to power, one must look beyond standard political science models. Nearly three decades ago, the economist Mancur Olson provided a framework in his seminal work on the origins of the state that remains chillingly relevant today.

Olson argued that a "stationary bandit"—a ruler who settles in a territory and claims a monopoly on theft—has an incentive to provide a modicum of public order and infrastructure. Why? Because the bandit wants his "subjects" to be productive, as a wealthier population produces a larger tax base. In this model, the ruler’s long-term interest aligns, however imperfectly, with the long-term interest of the state.

However, when a ruler views their tenure as temporary, or when their primary objective is immediate wealth transfer rather than long-term growth, they shift from a stationary bandit to a "roving bandit." They stop investing in the sheep’s wool and start eyeing the hide. The current US administration has effectively inverted the logic of the social contract, prioritizing the rapid extraction of national assets over the preservation of the institutional integrity of the republic.

Chronology of Institutional Erosion

The transition from governance to extraction did not happen overnight. It has been a cumulative process of eroding the guardrails that once prevented the personalization of the state.

• 2025: The Consolidation of Administrative Control. Following the 2024 election, the administration moved swiftly to dismantle the civil service protections that historically acted as a firewall against political patronage. By executive order, thousands of career positions were reclassified, allowing for the wholesale replacement of non-partisan experts with political loyalists.
• Early 2026: The Privatization of Procurement. With the administrative state hollowed out, the administration began shifting massive government contracts toward entities directly or indirectly connected to the President’s inner circle. The oversight bodies—such as Inspectors General—were systematically defunded or purged.
• Spring 2026: The Fiscal Pivot. The administration introduced a series of "emergency" fiscal measures that effectively bypassed congressional appropriation. These measures allowed for the redirecting of federal lands and mineral rights into private hands under the guise of national security and economic revitalization.
• June 2026: The Normalization of Plunder. As of this week, the executive branch has effectively claimed total authority over the disbursement of discretionary funds, marking the culmination of a process that treats the US Treasury as a private ledger.

Supporting Data: The Cost of the "Skinning"

The economic implications of this transition are becoming impossible to ignore. While the administration points to selective stock market growth and short-term capital inflows, the underlying health of the American economy is deteriorating.

1. Declining Public Investment

Since 2025, public spending on infrastructure and basic research has plummeted by nearly 22% in real terms. Instead of long-term capital projects, federal outlays are increasingly concentrated in "consulting fees" and "security services" provided by firms with opaque ownership structures.

2. Capital Flight and Institutional Trust

Econometric modeling suggests that the erosion of the rule of law—specifically the unpredictability of contract enforcement—has led to a 14% decrease in foreign direct investment (FDI) in non-favored sectors. Investors are increasingly wary of a system where property rights are contingent on political alignment rather than legal standing.

3. The Widening Wealth Gap

The "skinning" process is not universal; it is highly targeted. Data from the Federal Reserve indicates that wealth concentration in the top 0.1% has accelerated at a rate not seen since the Gilded Age, while real wages for the median household have stagnated as public services—from education to healthcare—are privatized and downgraded.

Official Responses: A Study in Obfuscation

The administration’s defense of these practices relies on a consistent rhetorical strategy: the conflation of "business efficiency" with "governance."

In a recent press briefing, the White House Press Secretary characterized the latest shift in federal land management as "unleashing American potential," arguing that the previous system was "stifled by bureaucratic red tape and deep-state interference." When confronted with reports of conflicts of interest regarding federal contracts, the administration’s response has been one of dismissal: "The President is simply running the country like the successful business it should be."

This narrative attempts to reframe corruption as competence. By branding institutional oversight as "political bias," the administration effectively silences internal dissent and immunizes itself from the checks and balances designed to prevent precisely this type of extraction.

Implications: The Long-Term Fragility of the Republic

The most profound implication of the current trend is not the immediate loss of revenue or the scandal of individual contracts; it is the destruction of the "stationary bandit" incentive structure that has kept American democracy stable for two centuries.

The Erosion of Norms

Democracies rely on the assumption that power is a stewardship. Once a leader demonstrates that the state is a vehicle for personal gain, the incentive for all political actors shifts. Future administrations—regardless of party—may feel compelled to adopt similar predatory tactics to compete for influence or to protect themselves from their predecessors. This leads to a "race to the bottom" where the state is cannibalized by those who control it.

The Loss of Credibility

The United States has historically served as the world’s "anchor" currency and the global benchmark for the rule of law. When the US government begins to operate like a kleptocracy, that status evaporates. Global financial markets are built on the assumption that the US government will pay its debts and respect the rule of law. If that assumption is compromised, the global economic system faces a systemic risk of unprecedented proportions.

The Path Forward

The "skinning" of the sheep is a short-term strategy by definition. Tiberius understood that the sheep eventually die, and once they are gone, the ruler is left with nothing but a cold, empty pasture. The tragedy of the current administration’s approach is that it is not merely stealing wealth; it is destroying the capacity for future wealth creation.

Restoring the health of the American state will require more than just a change in leadership. It will require a massive, structural reinvestment in the institutions of oversight and a fundamental rejection of the "governance as business" model. The sheep can survive a shearing, but they cannot survive being skinned alive. The question for the American public is whether they will recognize the knife in time to stop the hand that wields it.

As we look toward the remainder of 2026, the indicators are grim. The institutions of the republic are not just being tested; they are being dismantled. The challenge of the coming decade will not be to "restore" the status quo, but to build a new framework that makes the state immune to those who view the citizenry as nothing more than livestock to be harvested.