Column: Would a President Trump be good for business?

He may use bankruptcy to his advantage, but it's no way to create national wealth.
Published November 1 2016
Updated November 1 2016

Donald Trump trumpets that we should trust him with managing our economy because he's been a successful businessman.

Put aside whether stiffing vendors is a mark of a good businessman or of a dishonest person; whether having bankrupted companies at least six times is a mark of success or of failure; or if he would be wealthier today if he had simply taken his inheritance and invested it in the stock market, rather than engaging in a series of business adventures and misadventures.

Instead, let's focus on this essential question: Does being a good businessperson mean you'll be a good manager of our economy?

As a former senior vice president of the World Bank and chairman of the Council of Economic Advisers, I've seen firsthand what makes for success in both the private and the public sectors. They are markedly different. In fact, what makes you succeed in one can contribute to failure in the other.

We've heard multiple times now that Trump will use his authority and bluster to create jobs, make Mexico pay for a wall, and force corporations to make more goods in our country. But in our democratic society, success in government is about leadership and persuading others of the virtues of one's ideas — it's not about authority, hierarchy or bullying others around. Our constitutional system of checks and balances was set up specifically to reject this approach, which resembles that of a monarchy or dictatorship more than a democracy.

Another key difference is that in business, you can make profits by taking advantage of others — as Trump has done again and again. Just ask the thousands of American duped into spending their hard-earned money at Trump University, countless workers at his clubs and hotels in Florida and elsewhere who were denied overtime pay, or businesses like the Paint Spot in Florida that had to take Trump to court to get paid.

Even if you can get a long run in business by dishonestly outfoxing others, you can't run the government on the basis of lies and cheating. Those in government are held to a higher standard and a watchful press doesn't cut presidents much slack.

By now, neither will America's allies, as they've looked on this election in horror and disbelief at Trump's erraticism, lack of knowledge and comments about how little he regards our long-standing alliances. International relations are based on trust — but trust may become one of the scarcest commodities in the global economy under a Trump presidency.

Trump may have no compunction in repeatedly going bankrupt, but this is no way to create national wealth. This is just a zero-sum game, in which one person's gain is at the expense of another's losses. Actually, it's a negative-sum game, since as trust erodes and lawyers' pockets get lined, the efficiency of the economy declines and so does national well-being.

Reneging on our national debt — as Trump has suggested, based on his "success" in enriching himself through bankruptcy — elevates mistrust to a new and dangerous level. Reputable lenders will not lend to someone who repeatedly goes bankrupt. Who will lend to a government of a rich country that talks about reneging on its debt?

There's one more way that running a government is different from running a business. Our economy is governed by a complex set of rules. Simplistic rhetoric won't go far in making our economy perform better. What is required is understanding how this complex system works, and understanding that what is privately profitable for a single firm and what is desirable for society as a whole are two entirely different matters.

Simple maxims, like the government shouldn't borrow — it's leaving debt to our children — are just that, simplistic. For example, if a country borrows to make investments in education, technology or infrastructure, it not only stimulates the economy today but provides for the future. And when the labor market is weak, this sort of investment pays off even more, with the increase in national income a multiple of the initial expenditure. Because such investments provide the basis for future long-term growth, it means that we are leaving our children a stronger economy, not a weaker one.

Donald Trump's policies will neither help our economy grow nor will they help level the economic playing field. In fact, Moody's estimates Trump's policies will wipe out 3.4 million jobs in his first term alone.

Whatever skills and acumen that Trump may have developed in his experiences as a reality television star, casino operator, beauty pageant entrepreneur, real estate developer and namesake of a bogus "university," they're not the skills needed to navigate our country through these difficult economic times.

Joseph Stiglitz, winner of the Nobel Prize for economics, is the chief economist of the Roosevelt Institute. He wrote this exclusively for the Tampa Bay Times.

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