Despite what you may have heard or read, Donald Trump has never filed for bankruptcy. His companies have, four times, but Donald Trump never has. The purpose of corporations is for investors to put a limited amount of capital at risk in exchange for the opportunity to earn money in any one of a myriad of legal ways. Investor use the corporate structure to ensure that if their bets go south, the most they can lose is the capital they invested in the first place.
Corporate bankruptcy laws can give a company an opportunity to restructure its business in a more favorable environment than it would have if it simply continued on whatever path that got it in trouble in the first place… it can give them breathing room. At the same time bankruptcy laws give creditors a legal framework through which they can exercise claims on said company’s assets. At the end of the day, corporate law, particularly as it relates to companies with millions or billions of dollars, can be complex, esoteric, bewildering, yet nonetheless be an effective tool.
It was by understanding the nuances of bankruptcy law that Donald Trump was able to navigate his way through treacherous waters for decades and seemingly emerge each time with a larger fortune than he had when he started. He used the threats of potential bankruptcy (or imminent domain action) to further his interests. He also mastered labor law, tax law and learned to orchestrate the media like a maestro. After all is said and done, the result is that four decades after a $1 million loan from his father – and $10s of millions of dollars in tax benefits from friendly politicians – Donald Trump sits on a fortune that is worth $10 billion – by his own account. That’s the equivalent of taking a $100 loan and growing it into $1,000,000. Not bad. One has to be pretty smart to accomplish something like that, because, whatever you think of the tactics, his fortune is the result of four decades of hard work, not betting it all on some lottery or dropping it into some Atlantic City slot machine.
So it is that backdrop that makes Trump’s current pleas ring so hollow. This morning he was on Fox News complaining that the Colorado delegate selection process was unfair. Had the rules been changed in March and he had no time to react, that might have been a logical argument. But the rules weren’t changed in March. They were changed in August. So it appears that with his $10 billion fortune and eight months to work with, Donald Trump was not able to field a team in Colorado who could have worked within the known system to garner delegates for him. Somehow he could figure out how to play the game in Michigan where he and John Kasich shut Ted Cruz out, but he couldn’t figure out how to do so in Colorado. So somehow there must be some cheating going on. Trump and his team waste no opportunity to suggest that Ted Cruz is somehow using “Gestapo tactics” by understanding the rules and using them to his advantage.
So, it’s not much of a surprise that we wake up this morning to hear more whining from Donald Trump. He’s very much a spoiled child. Given daddy’s fortune and connections Donald grew up not having to worry about what others said or wanted – at least as it relates to business and his public persona – and used that perch to learn the rules of a game that would serve him well for decades.
The funny thing is, Trump says he wants to change the system and Make America Great Again… he decries the fact that he’s an outsider and can’t within the GOP system. But of course he’s not an outsider. He’s been a crony capitalist his entire life.
The truth is, if Donald Trump really wanted to save the country, if he really wanted to be an outsider who upset the established apple cart, he would have run for president as a third party candidate from the beginning rather than throwing in with the GOP. Two thirds of Americans feel the country is headed in the wrong direction. If that was not a setup for a third party success then there never will be one. Half the Democrats hate Hillary Clinton. Half of the Republicans (and probably 95% of conservatives) hate the GOP establishment. Does one not think that in this environment, had Trump been willing to spend even 10% of his $10 billion fortune, that he could have almost walked into the White House?
But he didn’t run as a 3rd party candidate, instead he joined the GOP and tried to win the nomination in an established system that he didn’t understand. And now we’re supposed feel sorry that he’s feeling cheated? Either he didn’t have the courage to pursue his stated goal of taming Washington from without or he was not smart enough to recognize what it would take to win from within the GOP. Either way, he’s lost. If he wins the GOP nomination he will lose to Hillary – or Bernie if she’s indicted. If he tries to run as a 3rd party candidate now, after everything that has gone on in the primaries, the only thing he’ll accomplish is putting another Democrat in the White House. But of course that may have been his plan all along.