Saturday, 15 October 2016

Uncomfortably Rich.

I've been thinking about what Donald Trump's policies would mean for the US economy if enacted. I've been researching from different sources to make sure I gained a well rounded view of his business activities and it was eye opening to say the least. The reason I was so curious about his business dealings is that  the main case Trump makes to US voters is  'look I made lots of money in business, I'm great, I'm clever; and here's the key point: 

Trump main point to voters is, 'I will take the same techniques that I've used to get rich in business and apply them to running the country, and then America will be great again'.

But what are these Trump techniques, have Trump's business activities helped make America great and if the same techniques are applied to running the country, would they make America great again or not?

It took me a while to find out the basics of Trump's finances, as information sources don't always neatly summarise the main points, but luckily for you I'm going to! 

Donald Trump Financial Summary:

* Trump's main business is property.

* Net worth: Circa 3.7 Billion.

* Annual Income: Circa 400 Million.

* Debts of Trump companies: Circa 650 Million.

Obviously the above are the most important statistics and you can quickly get an idea of his finances from them. There's a few other points of interest to note by the way, the 650 Million debt is Trump's companies debt, not his own personal debt, also Trump comes out with a much higher 10 Billion figure to describe his net worth; there's a simple explanation for this, Trump bases that valuation on including the intangible asset of the Trump brand, which is apparently worth about 6 Billion according to Trump, that's 6 Billion of braggadociousness then! 

Various news sources make the point that if Trump had never gone into business and just invested his initial start up capital that his Father gave him in the 1980's into stocks and shares, he would be much richer. Whilst I think this point is correct, it's unfair to Trump as how did anyone know the stock index would have grown so much since the 1980's, a fairer comparison would be if he had invested the start up capital into savings accounts, something which would have shown a vastly smaller return.

A general point that people seem to make who have dealt with Trump in a business capacity is that he is an excellent salesman and showman, often persuading people to overvalue his companies with his rhetoric, but that Trumps actual business decisions are often poorly researched and leave a lot to be desired. To anyone who's been watching his election campaign chess moves, this all sounds rather familiar doesn't it.

I'll be fair and report that Trump's property ventures have often been successful, albeit with failures too. Trump seems to have a tendency to take big loans against the asset and also has a propensity to very complicated business structures, but I guess that's life in America. Trump's involvement in The Apprentice TV show has been a big success also.

Some of Trump's business failures are, the luxurious Trump airline which was launched in a market where people were looking for budget flights. A Trump University was launched, which apparently wasn't a real University, more like a Trump education certificate establishment, it failed, apparently the lawsuits there are still ongoing...

Trump's (now closed)  Casino side to his business has largely been a failure, it occurred to me, that the massive collection of complaints related to Trump's failed Casinos, could give an indication of how Trump might behave as President if things started going wrong in certain policy areas, how Trump acts under pressure kind of thing. It appears Trump does not take failing in life well, and responds to it badly.

Trump has been involved in 3500 law suits in the last three decades, many of them were people suing Trump for not paying them for their work. On one project alone, Trump's Taj Mahal Casino in Atlantic City, records show that 253 sub-contractors weren't paid in full or on time. According to Colette Nelson who is chief advocacy officer for the American Subcontractors Association developers with a history of not paying contractors are a very small minority.
This instance worked out well for Mr Trump financially, he had more money for himself by withholding part of workers wages, but it worked out very badly for the workers. Trump's business practices here, didn't help anyone except himself. Is Trump for the worker?

Retired piano dealer Michael Diel won a contract to supply $100 000 worth of grand pianos to a Trump casino in 1989. Despite Mr Diel supplying the pianos on time and in good order, Mr Trump said that his casino had run into financial difficulties and could only pay for 70% of the value of the pianos. Mr Diel, a small business owner lost $30 000 with Trump, and his little business had a hard few years, before eventually recovering.

According to a USA today investigation, Donald Trump has a track record of falsely picking holes in contractors work, to use as leverage to negotiate to pay them less than the full amount owed. Apparently if the underpaid or non paid workers commence legal proceedings, Trump uses his deep financial pockets to drag the court case out, so that his opponents run out of money and he wins the case by default, even though he was in the wrong. These practices may be just about legal but they are morally dubious.

Despite, Mr Trump showing off about being a Billionaire 'ten times over', he has likely not paid any taxes since 1996. When questioned about his non payment of tax in the first tv debate with Hillary Clinton, Trump said it was 'smart'. But we are talking about 20 years of missing tax money, which could have helped the poor in America. I wonder if the 30 000 homeless people living in the Detroit area think it's 'smart' too?

Trump brags about being a business success, but no other major US company has filed for Chapter 11 bankruptcy as many times as Trump's casino companies did. An investigation by the New York Times details that during his four Casino bankruptcies, Trump wiped clean millions of dollars of debt that he owed creditors, whilst simultaneously paying Millions from the Casinos to himself. The New York Times investigation says that Trump's casinos consistently underperformed financially as compared to other Casinos in the same City.

So we can see from the examples above that, in the least, some people dealing with Trump are being treated badly. Obviously if the problematic business practices detailed above were applied into running the US, trading partners would quickly get very fed up with the US, the country would quickly gain a bad reputation. Countries or businesses might not want to trade with a Trump style US economy that could renege on deals, or refuse to pay; and obviously that would damage the US economy. Would Donald Trump bankrupt the US economy, just like he did his Casino companies?

The idea that Trump can apply the techniques discussed into running a country, and then it will make that country great is simply false.

James Bickle