Adam Davidson’s New York Times Magazine article, “What Donald Trump Doesn’t Understand About ‘the Deal’,” provides fresh insight into Trump’s deal psychology. If you take the analysis a bit further, you get a window into the Trump presidency.
In an ordinary deal (say, a consumer buying a washing machine or teams trading baseball players), there’s some transparency and an exchange of value. Both sides make the deal because they feel they’re getting value. As Davidson points out, economists analyze free economies based on the idea that, for the most part, people are exchanging value on a moderately level playing field.
But economists also talk about “rents.” As the Times article explains:
In economics, a ‘‘rent’’ is money you make because you control something scarce and desirable, whether it’s an oil field or a monopolistic position in a market.
Trump is a consummate deal-maker (just ask him). He gets the edge in deals — particularly real-estate deals — by acquiring control of scarce resources (Manhattan real estate, for example), and then using that advantage to squeeze the other party. Davidson provides a new insight into Trump’s thinking: that he thinks he can make better deals (on healthcare, on trade, on military procurement, on getting walls built) by gaining an advantage that hasn’t been there before. That’s how rent-seeking deal makers win.
The terrifying deals of a Trump presidency
America’s influence springs from our strength. We tend to win with economic vitality, innovation, and military might. So why haven’t we done better?
Because there are limits. Pesky little things like morality, fairness, treaties, reputation, and the rule of law.
What makes our country great (in reality, not in Trump’s mind) is not just our strength, but trustworthiness, (small d) democracy, a still vigorous press, open debate, and humanity. We operate by rules — for example, the Geneva convention, the NATO Treaty, negotiated trade agreements, due process, and a court system based on laws.
Or as Trump would put it, we’re getting taken.
In Trump-world, we can toss all those pesky notions aside and embrace our power — that’s our advantage, our rent-seeking. So here’s what the “deals” under a Trump presidency might look like:
- If China unfairly devalues it’s currency, we retaliate by slapping a tariff on Chinese goods. Since we’re their biggest customer, they’ll back down. USA wins!
- ISIS is a problem. So we threaten to nuke northern Syria unless Arab countries like Saudi Arabia take them on. Unused nukes are wasteful.
- Drug costs are too high. So we federalize drug buying and set the price at what we think it should be.
- Putin responds to strength. See how he likes it if we start flying drones over the Ukraine to destroy pro-Russian forces.
- Drug addiction is a problem. Let’s fix it permanently. Make treating heroin overdoses illegal. Get DEA agents to pose as drug dealers and around fake, poisoned meth. Sure, there will be a few dead addicts — but also a lot of scared ones. That will solve the drug problem right away.
Do you have any doubt that President Trump would make “deals” just like these to restore American strength and power?
And if Congress or the courts attempt to stop him, he’ll certainly turn the power of his supporters to bear. He’ll hit you with the “rent” he owns: a mass of fervent believers. That’s completely consistent with his behavior as a candidate.
With its combination of trampling on rights and government interference, policies like these will bedevil people on both sides of the political spectrum, but they’ll “Make America Great Again” by wielding the power of America. It sounds pretty cool if you’ve just lost your job at Carrier or can’t afford health care.
You can see why Trump admires Putin. He wants to be Putin. When you autocratically control the government and the military, you can win a lot.
The risks here are immense. These sorts of deals will turn the world against us, hollow out the soul of our nation, destroy our democracy, ruin our markets, and might get a lot of Americans killed. But we’ll be “winning.” That’s a hell of a deal we’re getting.