No surprise, with economic concerns topping the list for the upcoming election there’s a residual belief that Republicans are better at business. Gallup polling found that respondents believed Trump would be better (53%) at “handling the economy,” than Clinton (43%). Once riveted into the American consciousness the Myth of GOP Economic Acumen is extremely hard to dislodge. First, there’s no reason to believe that Mr. Trump would do any better than his Republican predecessors:
The only Republican who beat his immediate predecessor in average quarterly GDP growth percentage was Ronald Reagan, and that not by any spectacular amount. Mr. Trump is no Mr. Reagan. The Obama Administration has managed to outperform the Bush II Administration in the wake of a devastating Wall Street Debacle and Recession, and later in the face of unprecedented Republican obstruction in Congress. Imagine, for example, what our growth might have been had we enacted the National Infrastructure Reinvestment Bank? The legislation had the support of both the AFL-CIO and the Chamber of Commerce. The most recent incarnation of the National Infrastructure Bank idea came in the form of H.R. 3337 which was relegated to the House Subcommittee on Energy and Power – never to be seen again. Thus much for Congressional Republican interest in national economic development.
If his party has demonstrated no particularly deep and abiding interest in national economic development what of Mr. Trump’s business credentials?
Trump may be a businessman, but he’s not been exactly an illustration of an ethical or successful one. Senator Warren’s comments on point:
“Donald Trump was drooling over the idea of a housing meltdown because it meant he could buy up a bunch more property on the cheap,” Warren said. “What kind of a man does that? Root for people to get thrown out on the street? Root for people to lose their jobs? Root for people to lose their pensions? Root for two little girls in Clark County, Nevada, to end up living in a van? What kind of a man does that?” [HuffPo]
The answer may well be: The kind of man who is more of a speculator than an investor, and more of a wheeler-dealer than a job creator.
- Item: Trump’s confused, and confusing statements on how to reduce the national debt. No, perhaps he was not talking about discounting sovereign debt, but yes the government could reduce the debt by buying back Treasuries IF interest rates rise… [Politico] When pressed to provide specifics on how to implement debt reduction he returned to his default position: Reject the criticized elements of his proposal and then maintain he was “misconstrued” by a maleficent media.
- Item: Trump’s record with casino operations and management. Time reported:
“Donald Trump’s gambles don’t always go as planned. Especially when that gamble is gambling itself. In February 2009, Trump Entertainment Resorts Inc. filed for Chapter 11 bankruptcy protection for the third time in a row — an extremely rare feat in American business. The casino company, founded in the 1980s, runs the Taj Mahal, the Trump Plaza and the Trump Marina. All three casinos are located in Atlantic City, N.J., where the gambling industry has faced a decline in tourists who prefer gambling in Pennsylvania and Connecticut instead. Trump defended himself by distancing himself from the company, though he owned 28% of its stock. “Other than the fact that it has my name on it — which I’m not thrilled about — I have nothing to do with the company,” he said. He resigned from Trump Entertainment soon after that third filing, and in August of that year he, along with an affiliate of Beal Bank Nevada, agreed to buy the company for $100 million. The company reported it emerged from bankruptcy in July 2010.” (emphasis added)
The Taj Mahal is now operated by Tropicana Entertainment, and owned by an Icahn subsidiary, the Trump Plaza is expected to be closed for at about 10 years. [NJ.com] Once again, there appears to be a pattern here: Disavow affiliation with anything that’s going south, and put the onus on others for his mistakes.
- Item: Trump Airlines. There are several case study points one could make in a post mortem of Trump’s handling of what might have been a successful venture. Once more, from Time:
“In October 1988, Donald Trump threw his wallet into the airline business by purchasing Eastern Air Shuttle, a service that for 27 years had run hourly flights between Boston, New York City and Washington, D.C. For roughly $365 million, Trump got a fleet of 17 Boeing 727s, landing facilities in each of the three cities and the right to paint his name on an airplane. Trump pushed to give the airline the Trump touch, making the previously no-muss, no-fuss shuttle service into a luxury experience. To this end, he added maple-wood veneer to the floors, chrome seat-belt latches and gold-colored bathroom fixtures. But his gamble was a bust. A lack of increased interest from customers (who favored the airline for its convenience not its fancy new look) combined with high pre–Gulf War fuel prices meant the shuttle never turned a profit. The high debt forced Trump to default on his loans, and ownership of the company was turned over to creditors. The Trump Shuttle ceased to exist in 1992 when it was merged into a new corporation, Shuttle Inc. No word on whether the gold-plated faucets survived the merger.”
Somewhere some business school has a case study in what happens when a re-branding of a product or service doesn’t mesh with what made the pre-existing business successful in the first place?
Here’s a summation of one of the foundational rules of business operations:
“People choose your business for a reason. It may be convenience, service, quality, the “in” thing to do, or a combination. Knowing why your customers choose your company and how they want to be served is critical to creating a sustainable growth strategy. Without this knowledge, your marketing can do little more than fire shots in the dark.” [MultiChan]
The pre-existing business, in this instance Eastern Shuttle, was successful because the customer base wanted a quick and cheap way to make short trips. This interest is not enhanced by such things as “he added maple-wood veneer to the floors, chrome seat-belt latches and gold-colored bathroom fixtures.” But that wasn’t the only thing that grounded his little airline.
Notice the part in which Trump’s airline was heavily in debt from the outset. There were cautionary tales at the time. The People Express buying spree (and resulting debt) ultimately brought down that no-frills airline service in June 1986. There was a message there, and one repeated by Western Pacific which operated from 1995 to 1998, but was undone by increasing gate expenses and books too feeble to attract a buyer.
There’s a message herein, that remains relevant today – those airlines that are not heavily leveraged can sustain themselves during fuel price increases, and are in a position to do well when fuel costs decline. [Aviation Week] But, Trump the “King of Debt” was – leveraged. He missed the part about identifying and catering to his customer base, and he missed the section about not getting into so much debt that his operations could not sustain variations in expenses. His was not exactly a demonstration of acute business sense.
- Item: Unpaid bills. USA Today unloaded on Trump about 18 hours ago. 3,500 lawsuits later —
“The actions in total paint a portrait of Trump’s sprawling organization frequently failing to pay small businesses and individuals, then sometimes tying them up in court and other negotiations for years. In some cases, the Trump teams financially overpower and outlast much smaller opponents, draining their resources. Some just give up the fight, or settle for less; some have ended up in bankruptcy or out of business altogether.”
Trump sought to discredit the claims by saying he’d not pay for inferior work, but in at least one instance the vendor was appalled to find that Trump was not going to pay his bills, BUT offered the same vendor future contracts.
Not to put too fine a point to it, but what the Republican Party is setting forth as the candidate of the future – and of future American prosperity – is an individual who (1) benefits from 50 years worth of GOP propaganda about being “pro-business” and (2) displays a tendency toward personal aggrandizement and impersonalized detachment from his failures. It’s bluster and blather, indebtedness and default, delay and obfuscation – what it isn’t is Good Business.