What Trump Doesn't Understand About The "Deal"

I have noticed, along with about a jillion other people, that Donald Trump puts damn near everything in the context of money -- how much he has, how much he can borrow, how much he made on this deal or that.  It's how he expresses himself -- his only yardstick, the only thing he knows or cares about.

Here are excerpts from a great article along those lines by someone who's far smarter about it than I -- Adam Davidson of "Planet Money."  Link to the full article follows.  (Read it!)
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Donald Trump's obsession with "deals" isn't just egotism.  It's a dangerous and outmoded vision of the whole economy.

Donald Trump loves the word "deal."  His book is titled "The Art of the Deal."  He wants to "beat" China in a "trade deal."  When asked how he would guarantee health care for the uninsured, he answered, "I would make a deal."  He plans to "make deals" with pharmaceutical companies and hospitals.  On immigration, of course, he promises the greatest deal of all time -- making Mexico pay for a border wall.

But the winner/loser "deals" central to Trumponomics are tangential economic concepts.  They defeat the microeconomic purpose of a mutually beneficial agreement.  And the key issues of national/global macroeconomics -- inflation, unemployment, currency-exchange rates, overall growth -- are impossible to control through any sort of Trump-style deal.

Trump is a spokesman for a different sort of economy, one that often goes by the technical name "rent-seeking."  In economics, "rent" is money you make because you control something scarce and desirable, e.g. an oil field or a monopolistic market position.  There is a bit of "rent" in every transaction.

The transactions in life that make people the most frustrated are "rent-seeking" transactions in which some force is imposing a better "deal" for just one party.  Your cable service costs more and is less responsive because deregulation allows monopolistic behavior.  Your local pro sports franchise threatens to leave town unless the city builds a new stadium.

A classic "rentier economy", as they're sometimes known, was Iraq under Saddam Hussein.  Business success in Iraq came not from being better or more efficient, but from knowing the internal family politics of the Husseins.  That was the force imposing "deals."

The quintessential American rent-seeking/rentier economy -- in which markets don't function, in which excess profits are held by a few -- is Manhattan real estate development.  Just 23 square miles, with many more people who want to own property than there are available housing units.  Manhattan real estate development is about as far as it is possible to get from that Econ 101 ideal of mutually beneficial transactions.        

This is the world Trump knows.  Everything he has gotten -- as he proudly brags -- came from cutting "deals" in this rentier environment.  Accepting the notion of a zero-sum game, he set out to grab more than his share.  And his policies would force the American economy to conform to that worldview.

It's no accident that, around the world, rentier states tend to be run by un-elected dictators* -- the ultimate dealmakers-in-chief.

http://www.nytimes.com/2016/03/20/magazine/what-donald-trump-doesnt-understand-about-the-deal.html?rref=collection%2Fsectioncollection%2Fmagazine&action=click&contentCollection=magazine&region=stream&module=stream_unit&version=latest&contentPlacement=10&pgtype=sectionfront&_r=0
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*In addition to his facism, Trump demonstrates other dictatorial traits -- he says he will "unsign" laws, "tear up" treaties and agreements, and force compliance with his wishes.  "If I say do it, they're gonna do it."  In the business world, if you own your own private company, maybe you can get away with that tyrannical horseshit, but it just won't fly in democratic government.  You can't fire all your detractors just so you can get your own way.  You need the votes in Congress.  The Donald is delusional.  He should go buy himself a banana republic and leave the rest of us alone.