Donald Trump began his career in the late 1970s with financial backing from his father, Fred Trump. This transfer of wealth over the years amounted to a gift of about $500 million in today’s value. My rough calculation is that if he had just taken that money, not recklessly leveraged it, passively invested in Manhattan real estate, partied, womanized, played golf, and collected and reinvested his rent checks, he would have had a net worth of over $80 billion by the time he took office as president in 2017.
But Trump’s fortune wasn’t $80 billion in 2017; Forbes estimated it at $2.5 billion. Given the difficulties of valuing and accounting for his real estate, it’s actually between $5 billion (£4 billion) and nothing (or less). In this sense, Pulitzer Prize-winning New York Times reporters Russ Buettner and Suzanne Craig call Trump a “loser.” He is certainly one of the world’s biggest losers. He has squandered a large part of his potential net worth by trying to run a business, instead of simply sitting back and letting the rising tide of his chosen field take his wealth higher than the moon.
How he did it is meticulously documented by Buettner and Craig in a book chock-full of facts and figures, with a dash of irony and dark humor, especially as they contrast Trump’s public bravado with the often pathetic reality of his financial management. This combination turns what could have been a fairly boring tome of interest only to trained financial professionals like me into a page-turner. Buettner and Craig portray Trump’s business as “an illusion built on inherited wealth, shady dealings, and a relentless pursuit of appearances over substance.” And yet, like the Road Runner, he jumps off the edge of a cliff, looks down, shrugs, and keeps going until his feet touch the ground again on the other side.
Buettner and Craig psychoanalyze that Trump cannot withstand the blow of acknowledging his relative incompetence.
Buettner and Craig have dug deeper into this case than anyone I have met. They have done interviews and newspaper morgue research, cross-referenced it with 30 years of tax information and business records, and have looked in unprecedented detail into the true workings of Trump’s financial empire. I think they have uncovered as much of the truth behind the story of Trump’s wealth and its essential backing as we can: the myth of the genius businessman that Trump created and that, unfortunately, has been swallowed by much of the media and his supporters. Their conclusion? That he has always exaggerated his wealth and has always teetered on the edge of financial collapse.
But while he squandered a lot of money, he was also very lucky. First, and most importantly, he benefited from the Manhattan real estate boom. Second, he managed to navigate what should have been total and irreparable bankruptcy at many key times. Third, he was able to use his image as a famous developer and tycoon to attract new business partners after his old ones pulled the plug. He was also lucky that many of his partners were indifferent to his shenanigans; they were happy to go along with it and didn’t get a judge to shut them down.
What psychology produces this behavior? Buettner and Craig psychoanalyze Trump’s inability to withstand the blow of admitting his relative incompetence. His desire to be recognized by the public as a master dealmaker led him to make increasingly risky decisions again and again. His need to maintain the illusion of success at all costs meant he had to bet even bigger after each loss.
So, at the start of 2017, Trump was remarkably successful, despite all the odds. Buettner and Craig call this an “illusion.” I couldn’t agree more. To repeatedly escape bankruptcy — shifting the blame to business associates while escaping — shows considerable skill and a certain ingenuity. Trump has demonstrated great cunning and resilience (even at a low level) in the face of what seemed almost certain financial, entrepreneurial and business ruin. Buettner and Craig say it was a combination of “bravado and branding” that allowed Trump to always “walk away with something,” usually at the expense of others.
Many of us hope that the Trump saga will have a fitting end, that a proper and just moral order will be restored to the universe, and that his galactic arrogance will finally summon a satisfying nemesis. Until then, we must view him as a remarkable success, although few philosophers would judge his success to be a worthy one.
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Brad DeLong is professor of economics at the University of California, Berkeley. Russ Buettner and Suzanne Craig’s Lucky Loser: How Donald Trump Squandered His Father’s Fortune and Created an Illusion of Success is published by Vintage (£25). Support the Guardian and Observer by ordering at guardianbookshop.com.
