Robert Rubin official Treasury portrait, 1999 – Public Domain

It’s not often that I find myself in complete agreement with former Treasury Secretary Robert Rubin, but he is definitely on the money in his New York Times column, warning that a Donald Trump effort to steal the elections will be devastating to financial markets and the economy. Rubin makes the point that openly ignoring the outcome of a democratic election will show that the United States is no longer a country that respects the rule of law. It is likely to send trillions of dollars fleeing the country, as both foreign and domestic investors look to park their money somewhere that is safe.

I made a similar argument a few weeks back. The basic point is straightforward: investors demand a substantial premium on their investments in countries that do not respect the rule of law and have leaders that can do whatever they want, whenever they want. Zimbabwe, under its former president Robert Mugabe, is the best example of extreme autocratic rule, but we can find plenty of current examples.

I used the example of present-day Kazakhstan, which has a dictatorship with limited respect for the rule of law. It pays almost 14 percent interest on its 10-year government bonds. The interest rate on 10-year bonds in the United States stands at roughly 5.2 percent, about 0.6 percentage points higher than when Trump took office. But even if interest rates never get near Kazakhstan levels, bondholders would take massive losses if rates just rose 1-2 percentage points. They all understand this and likely would look to get their money out before the crash.

There would be a similar story with stocks. Foreign investors would shift much of their money to countries that do respect the rule of law. That would also be the case with domestic investors. Most brokerage houses offer options in 401(k)s and other accounts to invest in foreign funds as an alternative to US stock and bond funds. Many people already have a substantial share of their assets in these funds. That percentage will rise considerably if Trump throws our election results in the garbage.

Donald Trump has already made huge strides toward Zimbabwification of the economy. Payments to Trump or one of his various funds are the best path to tariff or regulatory relief and to lucrative government contracts. Trump freely uses the FBI and Justice Department to harass his political opponents. In addition, Trump can be counted on to drop cases against people who have earned or bought his favor.

The level of corruption Trump has brought to the White House would have been unimaginable in any prior administration. Even Richard Nixon felt the need to try to hide his abuse of presidential authority. Trump flaunts it.

Still, throwing election results in the toilet is a qualitative leap forward. Everyone will know that whatever line Trump comes up with about “illegals” voting or machines switching votes is total nonsense. This will be a case of a dictator canceling election results he doesn’t like. And that will mean there is no rule of law since Trump can do whatever he wants.

If the United States is going to be run by an unchecked dictator, we will have to pay a dictator premium. That means stock and bond prices will plummet. Robert Rubin performed a great public service by pointing this fact out in his Times column.

This first ran on Dean Baker’s Beat the Press blog.