Chidem Kurdas
Donald Trump’s contributions to Democrats may lead one to wonder why he entered the presidential race as a Republican. But his defense of his political donations raises issues beyond him and the political affiliations of his beneficiaries.
“I support politicians,” he said at a debate. “In 2008, I supported Hillary Clinton. I supported many other people, by the way. And that was because of the fact that I’m in business.”
So, he’s is a developer and to do business he has to pay politicians. Many of his real estate interests are in New York, where Democrats dominate. Therefore he pays them more than Republicans.
On another occasion Mr. Trump emphasized that his pattern of giving is rational, based on the fact that Democrats win more elections: “So what am I going to do – contribute to Republicans? One thing: I’m not stupid.” Like other big donors, he spreads the goodies around but more to electoral winners than losers.
You have to admit that on one level his defense is persuasive. America has become a place where governments interfere in just about every economic activity; without the good grace of officeholders, a business is at risk of all sorts of adverse government actions. Mr. Trump is in the situation of a pizzeria owner who knows that if he does not render tribute, his window will be smashed. In a sense, he’s a victim.
Thus the $41,000 he gave then attorney general (Democrat) Elliott Spitzer was money well spent. Otherwise Mr. Spitzer might have come after him rather than concentrate on Wall Street, where his cases against mutual fund trading used New York’s vague Martin Act to criminalize what was previously not a crime and exploited publicity to pressure the accused into plea bargains—the one bank executive who refused to plea was cleared of charges by a jury. You really needed to be on the good side of Mr. Spitzer whatever type of business you did; if you ran a prostitution service you were lucky to have him as your client—he prosecuted a prostitution ring he did not patronize.
Certainly Mr. Trump did not create the political extortion system that works through regulations, prosecutions, taxes and subsidies. He’s just trying to run his business. What else is he going to do but make donations?
That said, there’s another side to the story. Political connections can be used not only for defense but also for actively extracting rent – or extra value – from people who do not have the connection.
As it happens, an instance of this came up during the presidential campaign. In the 1990s Mr. Trump tried to use the government’s eminent domain power to buy houses at low price in Atlantic City. In one case he coveted a retired widow’s house next to the casino he built, to use the land as a limousine parking lot according to some accounts. Trump’s associates wanted a government agency to condemn the house and demolish it, allowing the land to be acquired on the cheap. But the homeowner and her lawyer fought back; litigation went on for years.
Recently the Washington Post published an article based on this attorney’s experience. According to the lawyer, Mr. Trump offered a deal for the homeowner—at a price roughly half of what another developer had offered earlier. Then he suggested he’d hire the lawyer to represent other homeowners who were resisting an eminent domain threat from a rival, the casino magnate Steve Wynn. That is, Trump wanted to gain from eminent domain while obstructing his competitor’s attempt to do the same. Plus, he tried to bring to his side a lawyer representing the homeowner who stood in his way.
This is a vivid example of how government power can be used to extract rent and block competition. It shows Mr. Trump as predator, like a pizzeria owner who gets the goons to break his rival’s window. He does not object to eminent domain, regulations or special tax breaks as long as he benefits from them—naturally he objects to them if his competitors gain. That’s very far from the mindset of an advocate for honest and small government. More than his contributions to Democrats, this should disqualify him from becoming the Republican presidential candidate.
A Trump spokeswoman told the Washington Post the account is false and “ancient history”— though it is hard to understand how it can be both.
Tags: Donald Trump, Election, Washington Post
HedgeFundSmarts 
Leave a Reply