Sunday, August 21, 2016

Does Donald Trump Have Any Bourgeois Virtues?

Donald Trump is a reminder that the most dangerous enemies of capitalism are capitalists like himself.

I am surprised, therefore, that Deirdre McCloskey defends Trump.  On at least two occasions, she raises the question of whether Donald Trump has any bourgeois virtues--in her 1994 essay "Bourgeois Virtue" in the American Scholar and in her most recent book Bourgeois Equality (2016).

Here's what she says in her essay:
"Donald Trump offends.  But for all the envy he has provoked, he is not a thief.  He didn't get his millions from aristocratic cattle raids, acclaimed in bardic glory.  He made, as he put in his first book, deals.  The deals were voluntary.  He didn't use a .38 or a broadsword to get people to agree.  he bought the Commodore Hotel low and sold it high because Penn Central, Hyatt Hotels, and the New York City Board of Estimate--and behind them the voters and hotel guests--put the old place at a low value and the new place, trumped up, at a high value.  Trump earned a suitably fat profit for seeing that a hotel in a low-value use could be moved into a high-value use.  An omniscient central planner would have ordered the same move.  Market capitalism should be defended as the most altruistic of systems, each capitalist working, working, working to help a customer, for pay.  Trump does good by doing well" (182).
Here's her revised version of this paragraph in her new book:
"The property developer, TV personality, and Republican politician Donald Trump, to take an extreme example, offends.  But for all the criticism he has provoked, and for all his unusual opinions about Barack Obama's nationality and Mexican immigrants and numerous other matters, he is not a thief.  He did not get his millions from aristocratic cattle raids, acclaimed in bardic glory.  he artfully made, as he put it in his first book, deals, all of them voluntary. (In a New Yorker cartoon a father explains, 'Yes, I do make things, son. I make things called deals.') Trump did not use a .38 or a broadsword to get people to agree.  In his account he bought the Commodore Hotel low and sold it high because Penn Central, Hyatt Hotels, and the New York City Board of Estimate--and behind them the voters and hotel guests and politicians--put the old place at a low value and later found the new place, trumped up, to have a high value. Trump earned a suitably fat profit for seeing that a hotel in a low-value use could be moved into a high-value use. An omniscient and benevolent central planner would have ordered the identical move. Even a Trump, in other words, does good by doing well.  Look at the manificent addition in 2008 to the Chicago skyline along the main branch of the Chicago River (spoiled in 2014 by the addition of enormous letters on the building reading TRUMP). That building, too, earned him a pretty penny, pennies showing what to do next in the way of trade-tested betterment" (230).
Trump is not a thief?  He has repeatedly gone deep into debt, refused to pay his bills, while taking as much as he could for himself, and then filed bankruptcy.  Isn't that legalized theft?  He has also defrauded this customers through deceptive business enterprises like Trump University, and then has protected himself from lawsuits by prolonged litigation.  McCloskey says that the bourgeois word "honest" means mainly "committed to telling the truth," "paying one's debts," and "upright dealing" (BE, 236).  By that standard, why isn't Trump a dishonest businessman?

Trump is also famous for using his influence with politicians to take people's property from them by force through "eminent domain."  For more than 30 years, Vera Coking lived in a three-story house off the Boardwalk in Atlantic City, New Jersey.  Trump built his 22-story Trump Plaza next door. Wanting to build a limousine parking lot for the hotel, he bought some nearby properties. But Coking and some other owners refused to sell.

Trump turned to a government agency--the Casino Reinvestment Development Authority (CRDA)--to take the property he wanted.  Again, the owners refused to accept their offers, and CRDA went to court to claim the property under eminent domain so that Trump could have his parking lot.  The property owners were forced to go through the courts for several years. But they were fortunate enough to have the help of the Institute for Justice, a libertarian public interest law firm that fights in the courts to protect private property rights from governmental attacks.  They won their case.

Trump has consistently defended his use of eminent domain.  He has said: "Cities have the right to condemn for the good of the city.  Everybody coming into Atlantic City sees this terrible house instead of staring at beautiful fountains and beautiful other things that would be good."  But then he just wanted to build a parking lot.

In 2005, the Institute for Justice lost another eminent domain case--Kelo v. New London, CT.  The Supreme Court of the United States ruled that New London could take the property of Susette Kelo and her neighbors so that the property could be given to the Pfizer company.  Sandra Day O'Connor dissented: "Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random.  The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. . . . The Founders cannot have intended this perverse result."

Libertarians and classical liberals were disgusted by this decision.  But Trump thought it was great.  He told Fox News: "I happen to agree with it 100%.  If you have a person living in an area that's not even necessarily a good area, and . . . government wants to build a tremendous economic development, where a lot of people are going to be put to work and . . . create thousands upon thousands of jobs and beautification and lots of other things. I think it happens to be good."

Contrary to what the city of New London had promised, the land taken from Kelo and her neighbors was bulldozed and then never developed.  It remains now a vacant lot.

When Trump is asked about his political contributions to both Democrats and Republicans, he says: "I give to everybody. They do whatever I want." Yes, that's it.  He's a great crony capitalist who knows how to use governmental coercion to advance his own interests at the expense of others who don't have such influence. 

Trump's casinos owed the state of New Jersey over $30 million dollars in taxes.  But once his friend Chris Christie became governor, New Jersey settled for less than $5 million.  Adam Smith warned about this, which is why he was so cynical about businesspeople.

Smith also warned about businesspeople who would use mercantilist policies to protect their business interests from the competition coming from free trade.  Trump is now proposing that the United States return to the mercantilism condemned by Smith, because Trump is confident that he can use this for his own interests.

It's hard to see any bourgeois virtues in this, or how Trump "does good by doing well."

To her credit, McCloskey does see the problem here: "The bourgeoisie is far from ethically blameless. The newly  tolerated bourgeoisie has regularly, I say once again, tried to set itself up as anew aristocracy to be protected by the state, as Adam Smith and Karl Marx predicted it would" (BE, 641).  This should make us wonder whether Smith's "system of natural liberty" is too utopian, because it contradicts the natural selfishness of merchants and manufacturers, who will always use their political influence to promote policies that restrict competition (see Wealth of Nations, 157-58, 266-67, 471, 584, 647-48).

Compare Trump and the Libertarian Party Presidential Candidate Gary Johnson.  Johnson ran a successful construction company in New Mexico.  He was respected for his honesty.  He sold the company once it was worth enough to provide him and his family with a comfortable living.  He has said this made him a free man, so that he could devote his life to activities he loved that did not require money-making.  As a libertarian, Johnson scorns crony capitalism and mercantilism.

Johnson shows the bourgeois virtues that Trump lacks.

1 comment:

CJColucci said...

Big-time real estate development is based on debt, tax breaks, and political connections. I don't criticize people who prosper through playing by the rules of a rigged system --at least not for that. But I don't mistake what they do for productive business.