On Tuesday, libertarian columnist Megan McArdle posited her theory of what makes Trump tick — a theory that is at once both obvious and dangerous.
“Charging into ceaseless trade wars, casually threatening real wars, moving the U.S. Embassy in Israel to Jerusalem, supporting Brett M. Kavanaugh for the Supreme Court despite an accusation of teenaged sexual assault, all heedless of expert advice or his parlous poll numbers in battleground states … whatever this is, it’s not GOP normal,” wrote McArdle. Indeed, it isn’t anything that resembles conventional political strategy.
What it does resemble, she wrote, is real estate investment.
“The first thing to understand about real estate is that there is no theory of real estate,” said McArdle. “Economists don’t even have an accurate model of how to price land, because the parcels are so small and so many variables — from traffic patterns to aesthetically challenged neighbors — can affect the value. Real estate investors must work each deal individually, and what worked with the last deal may fail with the next. The business doesn’t favor the philosophers, mathematicians and physicists but sharp operators with political connections and an enormous tolerance for risks that can neither be perfectly hedged nor fully controlled.”
Trump, she noted, is all too happy to assume risk, and mountains of debt, because, to use his own words at a campaign rally from 2016, “There’s nothing like doing things with other people’s money.”
Because it’s almost impossible to predict whether a real estate project will succeed, said McArdle, “the real estate business rewards a certain willingness to put everything you have on a long shot; if you can’t cheerfully take risks with horrific potential downsides, you need a different job. The best argument for this approach is that some problems can’t be solved any other way — if developers demanded steady, predictable incomes like the rest of us, most of America would still be farmland.”
This is, in short, the way that Trump, who inherited a real estate empire from his father and blew a billion dollars mismanaging it, is used to doing business: ignoring the numbers, betting everything he has on wild guesses (especially when he can do it on other people’s dime), and moving on to the next thing when the current thing fails. This works for his political brand — but it is not a safe way for a president to run a country.
“There’s a reason most of us don’t live like real estate developers, or want to,” said McArdle. “Bankruptcy is a sadly normal fact of life in the real estate business, which is why Trump can tout his extensive experience negotiating with creditors. The cost of gaining wins with big bets is that you never know when you might lose everything.”
“Fans of Trump’s approach should keep that in mind,” McArdle concludes ominously. “And consider that as president of the United States, Donald Trump is now playing with more than just ‘other people’s money’ when he threatens Iran and North Korea, jerks around long-standing European allies and tears up trade deals. American jobs, and maybe American lives, are now also on the table, along with the future of a great nation.”