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Saturday, October 8, 2016

Yet Another PR Mess Caused by Trump

He is the worst conceivable representative of the capitalist class

The public-relations disaster that Trump has caused the GOP won’t soon be repaired.

The whole Trump phenomenon has created a terrible mess for the reputation and cause of  economic liberty.But I’m worried about another, and ultimately more serious problem: the damage that Trump has inflicted on the reputation of capitalism, business, and commerce – the very basis of our standard of living that is forever under attack. Trump has given no one a reason to support capitalism and every reason to regard it as dangerous, hateful, and aggressive.

Think of it. At long last, a successful businessman with no prior political experience received the nomination of a major political party. For those of us who celebrate markets and entrepreneurship, you might think this would be something to celebrate.

Except that it’s not. The whole Trump phenomenon has created a terrible mess for the reputation and cause of  economic liberty. It’s a correctable setback in the PR war, to be sure, but active explanation is necessary.

The Cartoon Capitalist

The point was underscored by the last presidential debate. Clinton cited the many instances, now heavily documented, in which Trump had stiffed workers.

Clinton: I have met a lot of the people who were stiffed by you and your businesses, Donald. I’ve met dishwashers, painters, architects, glass installers, marble installers, drapery installers, like my dad was, who you refused to pay when they finished the work that you asked them to do.

We have an architect in the audience who designed one of your clubhouses at one of your golf courses. It’s a beautiful facility. It immediately was put to use. And you wouldn’t pay what the man needed to be paid, what he was charging you to do…

In retrospect, it makes sense why he would choose politics, a terrain where you can fool more people for longer than you can in the business world.Trump immediately shot back without thought: “Maybe he didn’t do a good job and I was unsatisfied with his work.”

The response seemed to concede the truth of what she said. The message here is that capitalists have all power and pay when they want, as if contracts have nothing to do with it. The rich have all the power to decide whether to pay, he implies.

We’ve all known people, rich and poor, who fail to live up to their commitments. This is not something markets reward; indeed the opposite is true. Markets reward promise keeping, even mandate it.

The truth is that in the world of business, Trump has a very bad reputation. Many institutions and people will not deal with him. In retrospect, it makes sense why he would choose politics, a terrain where you can fool more people for longer than you can in the business world.

Next during the debate Clinton accused him of not giving to charity (he didn’t dispute it, and there’s been no documented record of his charitable giving) and claimed he paid no taxes. Trump’s instant response: “That makes me smart.”

For those who claim that the rich are getting a free ride at the expense of everyone else, this response was the vindication of their most paranoid fantasies.

Finally, Clinton accused Trump of profiting from the housing collapse. Trump shot back: “That’s called good business,” seeming to show zero sympathy for the millions who lost their savings during that disaster. The real story of that crash is that Wall Street paid a heavy price and got bailed out by the political system just as the markets were working to punish bad judgement.

Looking at Trump’s behavior that night, you have the leftist caricature of a rapacious looter who cares about no one, wins as everyone else loses, and pays nothing back to the society he loots. It’s straight out of Marxian central casting.

Not True

Even The Wall is little more than a public-sector boondoggle.For decades, advocates of market freedom have worked to change this impression of capitalists and capitalism. Milton Friedman rightly pointed out that the main beneficiaries of capitalism are the poor and the workers. The natural state of humanity is desperate poverty; creating wealth to lift everyone out of the muck requires enterprise and private property.

Ludwig von Mises worked mightily to demonstrate that if anyone has power within the capitalist economy, it is consumers, not producers. It is their decision to buy or not to buy that determines how resources are used and who profits. The real story of markets is that profits are extremely hard to maintain in a highly competitive environment; the innovation and service to society must never stop.

And countless activists in our own time are working to free the lives of small entrepreneurs who have their innovations blocked by regulations, taxes, zoning controls, and trade restrictions. Now Trump comes along and seems to undermine the whole message in one fell swoop. We should not underestimate the potential damage a person like this does to a wonderful cause.

He Is No Capitalist

It’s not just Trump’s policies, but those matter. He jumped into the campaign advocating (as a first principle) not market competition but the opposite: protectionism. His tariff proposals are about taxing American consumers in order to block competitive goods and services from outside the country – the classic mercantilist policy that real capitalists have battled for centuries.

Trump has become the caricature of the connection fatcat that the Marxists have dreamed of, and always claimed to be the norm under capitalism.His immigration ideas apply that same policy to people. Beyond that, his infrastructure and military ideas are all about huge government spending. Even The Wall is little more than a public-sector boondoggle (the building of which will result in mass theft of private property). It’s a major opportunity for countless sweetheart deals that give well-connected contractors a free ride.

In terms of the digital economy today, he has no sympathy. He has advocated busting up Amazon with antitrust laws and imposing speech restrictions on the Washington Post. His knowledge of the greatest innovation in the history of technology is near zero. The entire debate, he kept referring to the entire digital realm as “the cyber.” Incredible.

Not the Capitalist Way

None of this is the capitalist way. To be very clear, what market liberals favor is full freedom for everyone in the commercial sphere of life, and privileges for none: no bailouts, no subsidies, no favors, no special access to power. No matter how rich or powerful or connected you are, a society of commercial freedom gives no one a legally enforced advantage over anyone else. This, not monopolistic protection for cronies, is the way the free market operates.

If this weren’t enough, in his business dealings, which are now under heavy scrutiny, Trump has become the caricature of the connection fatcat that the Marxists have dreamed of, and always claimed to be the norm under capitalism. He is their ideal, not ours, of what it means to be successful and rich.

Think of the capitalist that the fevered Marxist imagination has conjured up since the 19th century. He sells illusion to unwitting buyers and then the dream fails to materialize in any substantial way. He doesn’t pay his workers. The dream dies but the initial promoter makes off with millions. And with that the community suffers.

He Plays One on TV

No system of economics can change human nature.The more we learn about Trump’s business successes, the more we see not the market at work but the kind of tainted success generated by state intervention in the market. He uses eminent domain, litigious methods of contract enforcement, zoning regulations, subsidies of all sorts, to drive his business. He has learned to work a state-dominated, politically manipulated system. This is not the same as market success.

What’s more, deeper research into his history of enterprises reveal the surprising truth that Trump is not a winning builder and investor so much as a brand name that he sells to stamp on other people’s projects. The most successful thing he has ever done is a television show. There’s nothing wrong with being an entertainer but he is not the successful real estate investor he claims to be.

It’s also true that bad businesspeople exist even within a market setting. No system of economics can change human nature. A wonderful feature of the market (and not government), however, is that it adapts to punish such people over time and deny them a free ride. Trump’s now-famous $1 billion loss is a better indication of what the market is capable of imposing on such people.

Real capitalism is not about ripping people off and bragging about it. Truly, even though the Trump case might indicate otherwise, the justly rich are worth defending. A free society needs them. Capital accumulation is meritorious, an essential feature of a prosperous society.

But let’s never forget that capitalism is also about the Etsy seller, the Uber driver, the hair braider, the small contractor, and the tens of millions of small-scale entrepreneurs who find personal joy and fulfilment in the service of others through the opportunities capitalism provides.

Real capitalism is not about ripping people off and bragging about it. It’s about freedom, serving others, realizing dreams, spreading opportunity, better lives, and a beautiful world that is prosperous and free.

If you see something or someone who looks like a different animal, it probably is.

Prepare yourself, market apologists: we are going to be digging out from under the Trump rubble for years to come.