Trump’s business genius

Trump is running, in part, on his incredible business technique. This is already puzzling, because if he had just put his inheritance into an index fund and gone out wenching, he would be richer than he is now. But in any case, I don’t think we’ve seen the right summary of this technique, and it would be good if Democrats could tie it up into a package that could be referenced, repeatedly, in simple terms.  What Trump mainly does for a living is to steal; he’s not a businessman, he’s a goniff, of a fairly standard type.

Stealing is the golden thread through his whole career. First, he regularly stiffs suppliers and contractors. Not paying someone for work you arranged to buy is just stealing, no matter that you hide behind lawyers the victims can’t afford. *

Second, he revels in his bankruptcies: in a bankruptcy, a court gives you permission not to pay your debts. Not to pay your debts. The idea is to let someone who has had a piece of bad luck to start again, not to give a rich investor the chance to repeatedly stiff lenders, investors and creditors. First time, maybe misfortune; second and third looks like borrowing with intent to skip.  Not everything legal is right: Trump’s use of bankruptcy as a standard business tool is stealing.

Finally, he doesn’t pay taxes. Someone pays his taxes, so there’s a street for customers to get to his properties, a fire department that protects his buildings, a court for him to sue people in. But not paying your own taxes is stealing, in this case from other taxpayers.  Voters, do you really want to elect the guy who’s had his hand in your pocket for decades?

*afterthought, 27/IX: To be fair, Trump has a defense against this one: “Those people all did bad work!” But that just means “I have terrible judgment of people and talent, and I keep making bad hires again and again: wait till you see my cabinet!”


Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

13 thoughts on “Trump’s business genius”

  1. He's not only sitting on a pile of some worth, but he has led a high flying lifestyle. I'm pretty sure no index fund was going to enable that.

    As for stiffing contractors, any Joe Blow who has dealt with enough of them probably has a few they wish they didn't have to pay.

  2. As for stiffing contractors, any Joe Blow who has dealt with enough of them probably has a few they wish they didn't have to pay.

    Like this guy?

    Trump apparently has stiffed hundreds of suppliers and contractors. It's tempting to ask why such a real estate genius can't find more reliable people. But of course that's not the problem.

  3. For those who haven't read the article by "this guy," he claims that Trump would pay him only $70,000 of the $100,000 that Trump owed him, and that he "couldn't afford to sue the Trump corporation." Far be it from me to defend Trump, but I'm skeptical. If the case was as open and shut as "this guy" makes it sound, then surely he could have found a lawyer who would have charged him a lot less than $30,000, and he would have come out ahead.

    1. If he could afford to float the original $100K, plus what he would spend on lawyers during the 5 or more years Trump could delay this in the court. Sure. Not many people have that much laying around.

    2. Not following through with a lawsuit isn't the same as not having good legal standing. If "this guy" needs to make payroll at their small business they probably can't afford to wait a year or more to get paid, and they have to just take the 70k and deal with it. The possibility of a 10-20k bump in payment a year into the future just might not make economic sense if you would have to carry a loan to keep liquidity over the time frame of the lawsuit. Trump clearly understands this dynamic (at a gut level if not explicitly) and the WSJ documented it is a standard part of his business tactics:

      1. Is there any reason why the guy couldn't take the $70,000 and then sue for the $30,000? Trump could not force him to promise not to sue if he takes the $70,000, because Trump would be offering no new consideration (nothing of value) for the guy's promise.

        1. In those sorts of agreements, the consideration is generally that the person who owes the money gives up his right to sue for inferior performance. This is a part of why Trump harps on the fact that these contractors must have provided bad service; that's his legal cover for why the agreement to settle for less is enforceable.

          1. You're saying that Trump would threaten such a suit. I didn't think it possible, but you have lowered Trump in my estimation. What a disgusting creature!

          2. He doesn't have to explicitly threaten such a suit. Giving up the right to sue is a consideration even if you never actually threaten to file one. Courts are extremely reluctant to declare that something given up in an agreement is so trivial that it doesn't constitute consideration; they generally assume that, if you were willing to take it as consideration, it's consideration. The exceptions tend to be cases where actual coercion was applied (and the fact that you need the money to which you are contractually obligated does not count as coercion in court), where fraud was involved, or where the other party was not competent to make the agreement.

          3. But, if the pianos were not defective, then why would the piano vendor accept Trump's offer to give up the right to sue in the absence of a threat by Trump to sue? Wouldn't Trump's offering to give up the right to sue constitute an implicit threat to sue?

          4. I think we are getting tangled up here in talk of suits, waivers, etc.

            There are any number of reasons, some suggested by peteralstone and myself, why the vendor might not want to get involved in legal battles with Trump. Discussion of available remedies and whatnot that overlooks the huge practical problems is unrealistic.

          5. We're talking in circles. The vendor takes the settlement because he needs the money. A condition of getting the money is accepting Trump's waiver of the right to sue as consideration, without regard to whether or not Trump would actually have sued. It has nothing at all to do with whether or not Trump would really have sued, just that he is giving up the right to do so.

  4. If the case was as open and shut as "this guy" makes it sound, then surely he could have found a lawyer who would have charged him a lot less than $30,000, and he would have come out ahead.

    Hmm. Maybe, but I'm dubious. In 2011 I had to hire a lawyer to deal with an even more open-and-shut case. The legal fees were into the five figures. Maybe they would have been less in 1989, but maybe Trump would have put up more of a fight than my adversaries, who essentially folded fairly quickly.

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