Neal B. Freeman
NR
All of us New Yorkers of a certain age remember Fred Trump. For several decades, he was the go-to guy for the city’s middle class. In a vast archipelago stretching across the “outer boroughs,” he built single-family homes, lots of them, and clusters of apartment buildings, whole villages of them. Fred’s projects were “affordable housing” in the anodyne sense of that ominous phrase. A Trump home may have had few frills, but it was well built and well maintained. The neatly trimmed lawns were posted with signs scolding, “Positively No Ball Playing Allowed.”
Fred was a legendarily hard worker, a nickel pincher, and, by most accounts, a straight shooter. And so in the predictable order of things — this was 20th-century America, after all — Fred became a financial success, so much so, in fact, that his son Donald would become while still in short pants one of the richest kids in the country.
When young Donald came of age and entered the family business, he learned quickly, and well. He glowed in the reflection of the family’s sterling reputation. He plugged into Fred’s citywide network of contractors, politicians, lobbyists, and bankers. The striving son seemed to be on track to succeed the founding father.
But after a few squabbles it became apparent that a durable partnership between the two strong-willed men was not meant to be. The basic problem was that Donald was not an outer-borough kind of guy. He wanted to take Manhattan, but not the Bronx and Staten Island, too. He grew antsy in Fred’s boxy little office in Coney Island. For his part, Fred could never bring himself to stamp his buildings with a giant, gold-leaf T. He was an outer-borough kind of guy. So Fred staked Donald, opened some important doors, and, with mixed feelings, sent his son across the East River to seek his own fortune.
Thus began the much-celebrated but little-understood business career of Donald Trump. Let’s talk first about the celebration.
It’s probably not too much to say that over the past 30 years Donald Trump has become the single best-known businessperson in America. After a long series of ghosted books, reality-TV shows, beauty pageants, and get-rich-quick seminars (packaged with characteristic understatement as Trump University), Donald Trump is today the first and, in some quarters, the only name that springs to mind when the subject of American business is raised. His business career has been so successful that, as he may have mentioned, he has become very rich.
There’s nothing particularly novel in this story of business success. What’s different is that Trump has not used celebrity status as a license to attract and monetize the ongoing flow of suckers born (or immigrated) into this great country of ours. He has used it as a political credential. That maneuver represents innovation. Americans have never elected a businessperson to political leadership, but, that record notwithstanding, Trump has parlayed a business credential into a front runner’s role for 2016. In so doing, and wholly inadvertently, he has come to pose an existential threat to the conservative movement.
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All of Trump’s comments about his personal finances — the market valuations, that is, to be assigned to his assets — are covered with several inches of public-relations goo. The basic arc of the career, however, can be traced from public record.
Donald Trump began his solo career by doing in Manhattan pretty much what Fred had done in Queens and Brooklyn. Only glossier. Donald moved dirt and poured concrete and — Donald’s touch — installed oversized windows to build high-rise apartments. He then sold off the units, not to the middle class, of course, but to the moneyed class of what Donald thought of as the “real New York.” So far, so good. Trump enjoyed success that he judged to be “fantastic” and made enough money to make him, again in his judgment, “really, really rich.” But then — imagine this — Donald got full of himself and expanded aggressively into areas where he was, let us say, part of the low-information crowd. Hotels, casinos, airlines. Things didn’t go quite as well in that phase. He got sued repeatedly and the bankruptcies began to pile up, at least four of them.
Bankruptcy is never fun. It ensnarls, generally speaking, three groups of people. The first group is the people who cobbled the deal together. For the most part, they put up only token money and, from the get-go, extract fees from the deal. Their risk is thus reputational: They survive financially, but may have trouble floating their next deal.
The second group is the vendors. They are the people who provide services to the dealmaker, everybody from the people who move the dirt and pour the concrete to the people who wax the floors and push the lunch carts. Think of them as the little people. They get stiffed.
The third group is the investors, the people who put no-kidding money into the deal, either as debt or as equity. Excepting the odd Asian or Arab pigeon, real-estate investors tend to be part of the high-information crowd. They know what’s going on, they don’t like it, they litigate fiercely over exit terms, and they take steps to make sure it doesn’t happen again.
Trump never stands still. In the next phase of his career, he either adopted a new business model or perhaps had one thrust upon him. He moved much less dirt while doing much more promotional work. He was no longer building buildings. He was building a brand. He put his name on development projects in which other people were making the deal, much in the way that, say, Mickey Mouse puts his name on a tourist attraction.
In the most recent phase of his career, Donald Trump has edged even further away from the real-estate business and, with typical gusto, has jumped into the business of being . . . Donald Trump. He has hawked Trump chocolates (no question, the best in the world). And Trump cologne (you should have your own series of leggy wives). And Trump dress shirts and cufflinks (c’mon, the least you can do is look rich). And Trump steaks (fantastic, and they’re huge). And Trump bottled water (fabulous, makes Perrier taste like horse water). It goes without saying, but perhaps it shouldn’t, that all of these products are made by somebody other than Donald Trump. He has become omnipresent in the marketing world, in some markets eclipsing the Mouse himself, and well on his way to becoming — what? — the Kim Kardashian of business?
Which leads us to the lingering question about Donald Trump’s fabled business career. Is he a Kim Kardashian–type success, a businessperson who earns an enormous income for being Kim Kardashian? Or is he more a Steve Jobs–type success, a man who has earned enormous wealth by providing a valuable product to the free marketplace? To put it more directly: Did Trump build assets of lasting value, the hallmark of a successful businessperson, or does he earn a big living for being famous — the hallmark of a celebrity?
The question for the credential inspector is this: Has Donald Trump added anything to his family’s wealth?
I don’t know the answer. Along with everybody else, I have the goo problem. But I know that Donald Trump likes to make deals. So how about this, Mr. Trump? If you open your books, I will hire a reputable accounting firm to determine, in constant dollars, a) Fred’s net worth the day he died and b) your net worth today. If we find that b) is greater than a), I and my associates will donate $100,000 to your favorite charity (excepting only Planned Parenthood, which I could not bring myself to support). Or if we find that a) is greater than b), you will donate $100,000 to my favorite charity, which I designate hereby as the National Review Institute.
Do we have a deal?Read more at:
http://www.nationalreview.com/article/424351/donald-trump-business-record
