Home > Uncategorized > The capital-mobilising deal maker

The capital-mobilising deal maker

from Jamie Morgan and RWER no. 78

As a brand, Trump is also a particular kind of contemporary businessman. He positions himself as a maker of “deals” rather than a maker of things, though his wealth is rooted in construction and property. He is an owner of portfolio assets, who uses these to leverage new ventures where he is able to conjure personal gain from situations where material benefits to the many may be lacking. His skill set is one of concentration and extraction of returns, and the externalisation of costs and losses. Based on that skill set profits can artfully appear and equally disappear (with tax consequences) in ways that have little to do with the simplistic concepts of theory of the firm. The solution to any problem is an additional incorporation, a

transfer of assets, a lawsuit that deters others, a no fault out-of-court settlement that protects oneself, a debt restructure or perhaps a timely Chapter 11 bankruptcy declaration. Being proficient along these lines can make one a billionaire, particularly if one starts with a core of inherited wealth for collateral and has access to a network.[1]

Ultimately, the returns are achieved by surrounding oneself with people able to understand and exploit rules and seize an opportunity.[2] The ex post justification for this is that no one prevented it and “wouldn’t you do it too?”. This is important, because Donald Trump is the first US President to have no experience of political or military office. But he does have experience. His experience is of how to shape and exploit law and convention to achieve goals available only to a narrow interest group. Knowing how to do this does not mean he either knows how to prevent others or is in fact intent on preventing others from doing what he has made a career of. To prevent others would be to deny his own status as entrepreneur and so deny the US the value of such entrepreneurship. Moreover, his business skill set does not simply translate, mirror or reverse. It is not a simple case of poacher turned gamekeeper. For example, being “smart” enough to employ lawyers who can spot a loophole does not enable one to construct law without loopholes (if it did then the general problem would have been solved long ago).[3] In any case, concentration and extraction of returns is quite a different frame of reference than the construction of an overall economy. Developing Trump’s skill set created a social subject, some might say anti-social subject. Political economy, meanwhile, is concerned with how we choose to live. But Trump already has a default position. He is by socialisation a particular personification of powerful special interests (capital mobilizing dealmakers). His own sense of uniqueness and superiority should not obscure this nor should it obscure the underlying logic it rests on, which is what is good for this interest group is good for the US economy. This is a deep ambiguity in Trump’s appeal once one moves beyond the showmanship.   read more

Trump’s narrative is that he began with a loan from his father. It has also been pointed out Trump could have been as wealthy simply through passive investment. This is arguable and would depend on exactly what Trump is worth, which is difficult to ascertain.

[2] Beginning notoriously with Roy Cohn.

[3] One can close loopholes and create law that closes down opportunities existent under former law, but it is the interest in and attitude to exploitation that remains, unless relevant kinds of organization or practice are prohibited. Trump has shown no interest in eradicating the category of “entrepreneur” of which he is a member.

  1. Risk Analyst
    March 24, 2017 at 6:19 pm

    I believe, without refreshing my readings from a decade or two ago, that Keynes would be supporting Trump’s platform on trade rather than the Democratic platform. Keynes believed in free trade unless it was purposely manipulated for an advantage, as it seems now. I believe he advocated tariffs at certain times and warned about the prospect of war created by these trade relations. The Chinese government famously threatened in 2007 to sell their one-trillion dollars in US government debt holdings to purposely disrupt the US financial system. A more proactive attention to trade as Trump has advocated perhaps would not have led to that trillion dollar threat. Perhaps others with more study in this subject may have something to say to contradict me, but my initial impression is that this paper strongly advocates Milton Friedman’s stance on trade being benign, with the buildup of reserves just waiting to come back as future demand.

    • Jamie
      March 25, 2017 at 1:54 pm

      The nuance matters here, Wades paper in Part 2 next week captures the difference well: creating policy space for international cooperation is different than mere oppositional conflict regarding trade. What free means is also a matter of institutions and historical change so Keynes’ position would ‘change with the facts’ of this…

  2. March 25, 2017 at 8:59 am

    Let me be direct here. What the fuck do any of these entrepreneurs, CEOs, or financial traders (domestic or international) know about “the natural order of things?” They complain constantly that government involvement in “their” business is contrary to the natural order of things. This so called natural order is constantly re-designed by these business folks. To further their own ends, of course. What about the other folks involved in and effected by the “natural order of things?” Don’t they get some say in what that order looks like and how it works. Under the current American “order of things” definitely not. Trump’s election was a half-ass and misdirected rebellion by the abandoned and alienated against being left out and abandoned. The result, Trump as President is more likely to push these folks further outside and deepen their abandonment. Perhaps to the point of death, if the health care, education, farm aid, and community development budget cuts Trump proposes are implemented. At that point the nation collapses and all the rich folk move to one the “welfare” nations of Europe. After all, they will have stolen all they can from the USA at that point.

  3. Jamie
    March 25, 2017 at 12:42 pm

    hello ken, what is your comment directed at, do you think we are in disagreement?
    Best, Jamie

    • March 26, 2017 at 9:50 am

      Jamie, I don’t believe there’s disagreement here in general. I’m just sometimes frustrated by the politeness of the push back. I grew up in South Texas and worked with many oil and gas “developers.” The word developer is a sample of the politeness I detest. We had a typology for these guys in South Texas among insiders. They’re all crooks, willing to swindle just about anyone to drill a well. The typology went like this: 1) straight-shooters, often Christian; 2) wheeler-dealers, often flat broke and betting on the next well; and 3) the worst type – the raiders – often corporate and always dangerous. No one pretended these guys wanted to help anyone but themselves and no one was polite in describing what needed to be done to keep them in check. Trump is a step or two below type 3. He needs to be called out, named, and put in check. This is no game. It’s kill or be killed. Think about how many would die of the 24 million Trump wanted to remove from health insurance. He never mentioned it in any of his tweets. I was, however, pleasantly surprised that the CBO, an office filled with economists sort of honestly appraised Trump-Ryan/Care (the American Health Care Act).

      • Risk Analyst
        March 27, 2017 at 8:02 pm

        I think the anger is counterproductive and the origins are suspect. Imagine Hillary preparing for her televised primary debate. According to the LA Times Oct. 31, 2016, “One of the questions directed to HRC tomorrow is from a woman with a rash,” Brazile purportedly wrote in a March 5 email. “Her family has lead poison and she will ask what, if anything, will Hillary do as president to help the ppl of Flint.”

        So in this allegedly impromptu televised debate, Hillary is in her living room considering her answers to one or more questions that her opponent does not have. And she is practicing her response to make it appear spontaneous. There are many examples of such behavior from her. Which of those three oil driller groups does Hillary fit into or is she standing next to Trump on your scale? The Trump win provides the luxury, safety and security of not having to defend Hillary or her policies. She was promising to raise taxes just when an increasing number of economic forecasts where pointing to the increasing likelihood of a recession starting at the end of this year.

      • March 28, 2017 at 7:23 am

        Risk Analyst, Hillary Clinton fits into the procession of politicians in American history. They all have an ideology and agenda. But that fits within American history. The nearest President to which Trump can be compared is Andrew Jackson. Jackson, a populist ignored the Constitution, preferring to say his only oath was to the people of America. As a former General most of his solutions involved the military. He also succeeded in destroying the 2nd US Bank and precipitated a wave of speculation and shady land deals. He ordered the “trail of tears’ (if you don’t know, look it up), denying that treaties with Native American tribes were binding on him. He spoiled the Presidency to such an extent that the Presidents who followed were inept hanger-ons who could not prevent the coming of the Civil War. But Trump is not Andrew Jackson. Jackson was a real populist; for better or worse he loved the people of the nation. He did not like bankers, big business, or politicians None of this sounds even remotely similar to Trump. You’re correct that the Trump win provides the “luxury, safety and security” of not having to defend Hillary or her policies. Now we have to “live with” the consequences of Trump’s policies. I personally will not defend them. As for taxes, the tax code of the USA is skewed so much in favor of the rich that just about any change that helps reverse this is acceptable for me. Not much chance of that with Trump and the Republican Congress. Just read an “advance” copy of tax bills written by the Republican House. I calculate they reduce taxes on everyone earning more that $500,000 per year by about $300 billion per year; $3 trillion in 10 years. This is insane. Economic inequality will soar

      • Risk Analyst
        March 28, 2017 at 5:06 pm

        I think most here would agree that the income or wealth distribution is unhealthy. However, one lesson from the last election was that the electorate, as much as you might want to do chalkboard economics assumptions about what they believe or what you think they should believe, in reality rejected Hilliary’s class warfare theme that you echo here.

      • March 29, 2017 at 9:11 am

        Risk Analyst, I’m confused by your comment. What Americans believe about and expect to get out of economics has never been clear. Holding Trump or any corporation, CEO, politician, etc. accountable has nothing to do with class warfare. It’s about democracy. You know, consent of the governed, government that tries to meet the needs of the people. My contention is that economics reflects how a society is governed. The US has become plutocratic because our government has not done its job. It’s failed. To fix the economy we need to fix the government. Democracy needs to make a comeback in a big way. Otherwise, we’re doomed to ever worsening neoliberal and autocratic government, including the Presidency. Because democracy has always been problematic for America, this task is difficult. Some say impossible. I don’t agree. The USA was not established as a democracy, but we as citizens have the opportunity today to make it one. That will require that some “classes” be more tightly controlled and regulated, and that all citizens take a strong and active role in governing. Possible?

      • Risk Analyst
        March 29, 2017 at 6:29 pm

        Ken, you are far more optimistic than I am. The US political system has some major flaws, just as capitalism and other systems do. You seem to be pointing to stronger and more active roles of citizens as the solution to this problem but in the last election many were fully engaged while the result was three very imperfect candidates to choose among.

      • March 30, 2017 at 6:42 am

        Risk Analyst, I work with too many people each day who make democracy work to believe that’s not possible. The efforts to not make it work have been growing the last 100 years. Much of it from those who oppose democracy, such as corporations and the 1%. Even if as research suggest these efforts are counterproductive and will eventually create a push back toward democracy, the intervening totalitarianism is real. Two things would help restore democracy. First, get citizens involved in civic responsibilities and governance. Second, control the groups that want to impede number one.

  4. Jamie
    March 26, 2017 at 11:22 am

    I see your point Ken, but measured responses are also important in so far as they highlight the difference, indicating just how aberrational the object of analysis is. Also, the readership of RWER is worldwide not local. ANger may motivate argument but angry argument is not necessarily effective. IT gives the object an “out” and shifts attention (now the critic is the unreasonable one – hasn’t Ryan already adopted this stance in regard of Townhall meetings?)
    Best, Jamie

    • March 26, 2017 at 11:32 am

      Jamie, I understand you points. However, I’m not talking about anger or even disgust. I’m talking about honesty and directness. It’s not my intent to insult these folks. My aim is to let them know that I know what they are and what they do. Even if they deny it. I was a regulator for 30 years. As a regulator this directness and honesty is essential.

  5. Jamie
    March 26, 2017 at 12:20 pm

    yes Ken, seems a good point, but consider that you began with a problem of politeness, which seems to have shifted to directness with the implication that it is dishonest to be ‘polite’. language matters in many ways, what is implied and inferred can be quite different.
    best, Jamie

    • March 27, 2017 at 3:43 am

      Historically and sociologically politeness has had many uses. As a social lubricant, as a common language to facilitate negotiations, as a way to keep parties from interacting honestly, etc. The last is the one that concerns me. Politeness here is a way to hide rather reveal the concerns that might exist between conflicting parties. It simple terms, be polite, don’t disagree.

  6. Jamie
    March 27, 2017 at 8:43 am

    Yes, that seems clear. however, politeness is also an inference regarding argument form in this case rather than a definite established claim. IS an argument polite or clear is a matter of judgment. In the sense you refer to polite is simply tolerance as disinterest and so disempowering or ultimately uncaring. I don’t wish to seem defensive but is that what you think my or other essays conveyed? If so then I would consider the point of the paper a failure. The point was to argue that Trump is unlikely to deliver on his vague promises and that Trumponomics misses what would help to solve the problems to which it has emerged as an ambiguous solution… That is collective institutional change local and global to genuinely consider the needs of the majority.
    Best, Jamie

    • March 27, 2017 at 12:09 pm

      The answer to your question depends on the situation. In the South I grew up in every male was educated to be polite. To say yes, ma’m and yes, sir; to open doors for women; to protect white women from black men; to never yell or scream. But this politeness also covered over cruel and racist actions, up to and including murder. As to your essay, you seem to understand Trump well. But essays such as this one will never effect Trump’s actions. Like the Southern who believes racism and intolerance is necessary to protect a way of life, Trump, for different reasons believes defense and deference to him and his ideas is necessary to protect Trump and the Trump businesses (including the Presidency). The different reasons are, first, Trump is a sociopath; and, 2) Trump has no real allies he can depend on. Politeness doesn’t work with either of these reasons. I know, I’ve tried it. It’s amazing the number of sociopaths who run corporations or get elected to pubic office.

      You make well organized and clear arguments in the essay. But sociopaths don’t generally read such essays. And they certainly don’t think about what they say. Sociopaths are either controlled by treatment or external regulation, or by flattery and appeals to vanity. Can you work those into your essays? Plus, as a sociopath Trump has little interest in the needs of others.

  7. Jamie Morgan
    March 27, 2017 at 4:31 pm

    Trump is the subject not the objective Ken. If he was inclined to read RWER he wouldn’t be Trump and there would be no need to write these kind of essays in the first place.

    • March 28, 2017 at 6:32 am

      Jamie, so it’s not your goal to change Trump but to, understand him? explain him to others? prepare the world for him? tell people what to expect?

      As a regulator Trump and I crossed paths only twice. In hotel deals he proposed for TX. My goals were to figure out if Trump, Inc. would be a good citizen of TX as a business owner (obey labor, environmental, etc. laws and provide a positive benefit for TX) and was trustworthy. For us Trump, Inc.’s history kept it out of TX. As of 2017 Trump, Inc. is back in TX looking to build a hotel in Dallas. That project has been plagued by delays, accusations of graft, and a thoroughly unpleasant local manager. So far no regulators have looked into the deal. Shows how much 40 years of neoliberal propaganda and attacks on regulation can accomplish.

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