Book Review: The Making Of Donald Trump by David Cay Johnston

David Cay Johnston covered Trump as a journalist for thirty years, in the course of reporting on the Atlantic City beat. He presents in The Making of Donald Trump a greatest hits of the President’s business life. And by greatest hits, I actually mean the lowlights of his behavior with women, with business partners, with lawsuits, with his employees, and with the press.

To point out that President Donald Trump is primarily a con man with easily observed personality disorders is relatively straightforward, given what we’ve witnessed of him as a Presidential candidate, and now as President. I think the time for outrage at each new Tweet or each new attempt to subvert the best traditions of the Republic is past. We know what he is. We know he will try his best to break this country’s constitutional traditions.

But to play armchair psychiatrist for a moment, Trump is not, primarily, evil. He is a deeply insecure person unencumbered by the moral boundaries which limit the rest of us. When faced with his unrelenting narcissism, a yawning chasm of need, he chooses the fastest route to a short-term fix for that sickness. Johnston’s book is a history of this sickness, in easily digested, well-researched, chapters.

Sometimes his sickness means doing business with noted mob associates. Occasionally it means cutting family members out of their inheritance. Often it means threatening lawsuits against journalists, newspapers, and other perceived enemies who jangle the nerves of his insecurity. Often it involves an unrelenting thirst for vengeance. Sometimes it means screwing over your bondholders. Historically it has involved inventing hotel prizes, and then hiring people to award them to you, as a 4-year old child would do, if given the chance. It includes cutting corners on building costs by hiring illegal labor, working under dangerous conditions. It means running a scam University making false claims and preying on financially vulnerable people.

Sometimes it means calling up gossip columnists, pretending to be a PR man, and bragging about how Madonna or Carla Bruni or some other hottie of the day is lusting after Donald Trump. Sometimes it means not actually trying to legitimately attract a woman’s attention, and just The_making_of_donald_trumpgrabbing them by the pussy.

Johnston published this book in August 2016, after Trump’s nomination by the Republican Party but before the November election. He tried to do his patriotic duty of warning the country about a con man he’d observed closely for decades.

Anyway, life is going great here in the United States since the election, OTT.1


Please see related posts:

Why I Can’t Sleep At Night (post Trump election)

Trump Part III – The Authoritarian Use of Security Crises

Trump Part IV – The Authoritarian Use of Economic Crises

Trump Part V – The Constitutional Crisis

Trump Part VI – The Need For Principled Republican Leadership Right Now

The Fall of The Roman Republic by Plutarch

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  1. “Other Than Trump”

VIDEO: The Very Intriguing Libertarian Ticket

libertarian_PartyWith Bill Weld (former two-term MA governor) joining the bottom of the Libertarian Party ticket alongside Gary Johnson (former two-term NM governor), I have to say I’m intrigued.

They can count on:

  1. Elected office experience (far more than the presumptive GOP nominee)
  2. Track record (far more, etc)
  3. A decent runway on an issue that some portion of the electorate cares deeply about (pot legalization). They are “on the right side of history,” in terms of what will happen over the next 10 years.
  4. Totally pissed off wings of the major parties, that dislike their respective leaders, opening the way for outsized third-party success in 2016.

I’m not saying they’ll win or anything, or even necessarily gain any electoral college votes, but they could be a significant factor in the election, especially in a number of states. They are worthy of attention and coverage in any case.

Please see related posts:


Trump – Sovereign Debt Genius

Clinton’s Tax Policy

Clinton on the Capital Gains Tax

The Presidential Candidates and Money



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Why Wealth Inequality Matters – Plus CEO Pay Again

inequalityLast week I wrote about the sharp rise in super-manager pay throughout the 1990s, and specifically a funny (to me) quirk of stock option awards and bad math by corporate boards. The good news is I have a bunch more thoughts on the rise of super-manager pay and – but wait – Wait — WAIT! Listen. You Guys! Before you turn the page. This is important.

The rise of CEO pay is part of a larger topic.

You might have read last week’s post and thought, on the one hand, who cares what top executives get paid, that’s their business. And, on the other hand, it doesn’t apply to you.

I somewhat agree. I wish the rise of CEO pay applied to you and me, obviously, but jealousy can only get us so far.

Wealth Inequality

We – I don’t mean you as readers of a blog and me – but rather we as a society, need to have a serious discussion about “wealth inequality.”

I know I can’t make you think it’s important. Personally, I see rising wealth inequality as one of the top three most important political, moral, and economic issues of our time.

Believe me, I understand, even putting those two words – wealth inequality – together feels political. It feels ‘socialist.’ Also, it bears repeating that I consider myself a pretty hard-core capitalist. But I feel like – just as democracy depends on outspoken critics to make it stronger – capitalism too needs its critics in order to make it stronger.

Wealth inequality in this country seems like such a taboo topic – somewhere on the scale between sex and the surprising likeability of songs by the band Nickelback – that I feel the need to make the case for even talking about it.

Shhh…nobody mention that they actually LIKE Nickelback

So I say the sharp rise in CEO pay matters, specifically, right now, because wealth inequality matters.

Political insurgencies

Do you know what these bizarrely contentious Presidential elections of 2016 are actually about? I think I do. It’s about anger from people who resent the concentration of wealth and power in the hands of elites.

The surprising insurgency successes of the Presidential campaigns of Bernie Sanders, Ted Cruz, and Donald Trump each in their own way are “anti-Establishment.” A year ago, few would have given any of those three a serious shot at making it so far into primary season.

All three – Cruz, Trump and Sanders – tap into anger at how elites (regardless of whether you label them “Washington Insiders” as Cruz does or “Wall Street Fat Cats” as Sanders does, or “Sad-Pathetic-Loser-Fraud-Establishment” as I imagine Trump might) seem to have benefitted disproportionally at the expense of ‘regular people’ over the last thirty years.

What the anti-establishment insurgencies indicate to me is that old labels of “Left” and “Right” matter less right now than whether you identify as an “Insider” or an “Outsider,” or simply part of the “Powerful” or the “Vulnerable.” We know many people in the New Hampshire primary were torn between voting for Trump or Sanders.

The collective id senses some unfair proportion of wealth and power has concentrated at the top, at the expense of the bottom.

Meanwhile, folks at the top are surprised at this resentment. Folks at the top have embraced a narrative of meritocratic success. “We earned it. We worked hard. These rewards came to us through highly moral means, such as education, savings, delayed gratification, professional advancement, and investment. What are these Cruz/Sanders/Trump supporters even complaining about?”

In that context of inequality and resentment, properly explaining executive compensation matters tremendously. Depending on your explanation, you would favor a whole series of different political choices.

Back to CEO pay

So that’s why explaining the rise of super managers in my lifetime matters, at least to me. (Also, why the heck am I not a super manager?)

The market

One logical thing to say is that in a market system, supply and demand sets compensation to the “correct” market level. Executives get paid so much because their skills are in high demand and top managerial talent is in short supply, hence the ‘price’ of executive talent rises to a market-clearing level. If that happens to be over $10 million dollars per year, so be it, that’s just the labor market for top executives.

This tautology – the market pays $10 million because that’s where supply meets demand and where the market clears – has some elegance.

Sanders sets his jaw against the problems of the market

And if that’s the explanation, and you don’t like inequality, then you might see ‘the market’ as something worth fighting, as I think Sanders and his supporters tend to do.

Increased corporate scale

The global scale at which corporations now operate creates tremendous efficiencies. Our organizations are profitable through combining technology with the cheapest global talent, both in the country (via immigrants) and out of the country (via offshoring). But if you believe CEOs are paid the big bucks on the backs of cheap labor, and domestic workers feel their wages undercut, then Trump’s plan to build a wall against that cheap labor starts to sound less insane than it really is, right?


Interlocking board members

Anybody who watches public companies knows that while corporate boards theoretically represent shareholders, in practice they represent the insider interests of corporate management and themselves. Board members – themselves often highly paid executives typically invited to join the board by the CEO – would not be so gauche as to limit top executive pay. It’s like a private club, and when you’re on the inside, you get paid quite well.

Why is he always left out of the club?

I see this “club” explanation as the sort of “us vs. them” mentality which seems to fuel Cruz’ fire. The guy never gets invited to the club, like, ever. As his Senate colleague Lindsey Graham noted, “If you killed Ted Cruz on the floor of the Senate, and the trial was in the Senate, nobody would convict you.”

Lower taxes

Personally I think taxes explain everything in life. So, outside of the math errors of corporate compensation committee boards I described earlier, I believe the drop in marginal income tax rates leads directly to wealth inequality.

And I request of our leaders: please don’t raise taxes until after I’ve gotten paid for a few years like a super manager.


Please see related posts:

CEO Pay and the Options Math Error

Inequality in America – Video and Graphic

Inequality in America – The WSJ Video

Inequality in America – The Interactive Map

Yahoo Executive Compensation – It’s all about the stock awards

Executive Pay with Equity Awards – It takes a Buffett to push this agenda



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Money and Politics – 2016 Edition

Money_and_politicsWe are deep into Presidential primary election time, so I thought I’d share my views of candidates and the system with my green eyeshades on.

I don’t have a ‘unified theory’ of money in politics, but rather a series of thoughts, some connected, the rest not.
For starters, I have a fetish about honesty when it comes to money. Like, if I know an elected official or candidate accepted money illegally or unethically, that candidate is dead to me.

Direct bribes, however aren’t usually our problem (at the federal level). Rather, grey ethical areas as well as the wholly-legal weight of money are our system’s problem.

My goal, as always, is to offend all sides of the political spectrum in roughly equal measure. If I have been too gentle on your preferred political enemy, please let me know in an angry email. (Also, feel free to use ALL CAPS so I know you really mean it.)

The Republicans

Ted Cruz had the cleverness to marry a Goldman Sachs executive (a big plus in my household!). The meanest money-related thing I can think of about him is that he has not once but twice under-reported loans to his campaign from banks, first from Citibank and later from Goldman Sachs. For the moment I’m willing to chalk this up to sloppiness rather than a pattern – but be forewarned, Cruz, I’m watching you.

Ted_Cruz_for_presidentI apply personal financial prejudices when it comes to political candidates.

Marco Rubio’s well-known struggle with personal debt affects my view of him as a potential leader. I know he has presented this weakness is a strength, as it makes him ‘relate-able’ to average Americans. But I don’t want ‘average Americans’ – at least in this sense – winning the Presidency. Frankly I don’t want someone who is financially vulnerable in that way to wield so much power (and maybe to face so much temptation.) And yes, Thomas Jefferson and Winston Churchill were both amazing leaders with out-of-control personal financial situations. Still, I maintain my prejudices.

Jeb!’s anointing as the GOP favorite through mid-2015 followed logically from his ability to quickly raise a $100 million Super-PAC war chest for his candidacy. That same war chest allowed him to hang around as a moderate alternative to the rest of the field long after his less-funded rivals folded, despite his deep unpopularity with actual, you know, voters. This is interesting and troubling.[1]

In the 2012 contest, we learned that a single billionaire – in that case Sheldon Adelson – can keep a candidate afloat – in that case Newt Gingrich – long past his due date or viability with the electorate.

I think the “billionaire primary” conducted throughout 2015 – as ably reported by the New York Times, in which just 158 families contributed half of the total money raised by political campaigns – should scare the heck out of us.

A little history

I understand that the Founding Fathers of the United States went to great lengths to ensure that wealth remained a key criteria for participation in the new democracy, through gender, race, and property-based restrictions on voting. Elites of the time greatly feared “Democracy” – that radical 18th Century notion – because the disenfranchised could theoretically vote their financial interests to the detriment of the aristocratic powers-that-be. The slaughter of The French Revolution seemed to confirm all of these fears, strengthening the resolve of elites to control the political process from start to finish.

Jefferson had issues with banks. In a related story, he was always broke.

I mention this to acknowledge that we have a long tradition of drastically tipping the scales in favor of the wealthy when it comes to politics, so what I’m talking about with the billionaire primary is not entirely new, but a certain shift on an existing spectrum. I just have this tingly spider-sense that in the 21st Century we’ve gone a bit too far back to the Aristocratic roots of our Founding Fathers.

The Democrats

Speaking of these themes, Bernie Sanders’ appeal – as the underdog who raises $75 million in 2015 at an average campaign contribution of $27 per person – remains powerful. I really admire it. I’m totally annoyed with Sanders’ understanding of Wall Street, however, which remains cartoonish in its sophistication, at best. If you really believe, as Sanders claims, that “The business model of Wall Street is fraud,” then we’re not friends and you’re not coming to my birthday party anymore.

Hillary Clinton, on the other hand, has a sophisticated view of money, to both her advantage as well as grave disadvantage. I have a hard time getting over the idea that large donors to the Clinton Foundation – like members of the Saudi royal family or a Ukrainian oligarch, as previously reported – don’t at least believe they have purchased access and influence over Clinton through their donations. I’m not saying she or her husband have done them direct favors, but I am saying it’s reasonable to assume that’s exactly why certain people donated to the Foundation while she was Secretary of State and a strong prospective presidential candidate. She should have anticipated that clear conflict, and she should have avoided it.

The Trumpians

trump_for_presidentThe Donald, meanwhile, presents an interesting money case. His supporters, I suppose, overlook his misogyny, racism, bullying and demagoguery because he’s a “successful businessman,” who would presumably apply his “negotiating skills” to solving the country’s ills. This admiration from supporters – despite some analysis that shows he would be as wealthy today had he taken his inherited wealth in 1974, bought an all-stock index fund – and amused himself by affixing gold-lettered nameplates to Lego towers he built in his playpen. That analysis is an oversimplification that probably isn’t fair to Trump or the value of his businesses today. Put it this way though: my problems with Trump aren’t money-related.

My choice

Bloomberg_for_presidentSpeaking of billionaires, I enjoyed Mike Bloomberg’s mayoralty of New York City in part because of my belief that he cannot be ‘bought’ for any price. In fact I would vote for him for President over any of the declared candidates, in a New York minute. Sadly, I expect he wont run, and if he did run, he wouldn’t win.


[1] Right up until the point when he retired from the campaign Saturday night I thought there was an outsider’s chance that he would suddenly sweep in as everyone’s third choice, kind of like Romney did after outlasting Santorum, Gingrich, Huckabee, etc in 2012. I wasn’t actually disappointed Jeb! dropped out, I was just disappointed that my contrarian bet didn’t earn me “I told you so” credibility for the next year. I would have been insufferable had I been right about Jeb! though, so it’s all probably for the best.


A version of this post ran in the San Antonio Express News


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JEB!’s Future Tax Policy

Happy Jeb

I’m going to start this post with the controversial thing, before moving on to the analytical thing.

Now, I know you. You’re going to want to angrily write to me about the controversial thing, and especially how I’m wrong. I don’t care. What I’m hoping is that we can turn quickly to the analytical thing, which is far more important to discuss.

Controversial thing

Jeb Bush is going to be the Republican nominee for President. I mean to say, Jeb!

I know, I know, he’s nowhere in the polls, lackluster in the debates and the exclamation point on his campaign logo can really only be understood ironically. Doesn’t matter.

I write as a “recovering banker” because I think a financial framework is a useful starting point for viewing the world. Jeb! is the only one in the Republican race with $100 million backing him. He will win. I expect all of you who write in an angry note about my controversial statement will also agree to mail me a dollar in Summer 2016 when I turn out to be correct. Ok? Thanks.

Analytical thing

Having said that, I want to talk about the future Republican nominee’s tax policies. Tax policy matters tremendously. Jeb!’s got a 50-50 shot at the White House (I just mean any D versus any R is a coin flip in any quadrennial) We should know what he stands for.

Tax code overhaul

In the second paragraph of his policy statement on taxes, Jeb! calls for a complete overhaul of the US tax code.

He’s troubled by the ‘thousands of special-interest giveaways, subsidies and other breaks” for Washington insiders.

He correctly points out – as have others before him – that the complexity of an 80,000-page tax code leads to unfairness, cronyism, and the need for a virtual standing army of tax lawyers and accountants. Jeb! cites a study that found the cost of complying with the US tax code reached $168 billion per year in 2010 for individuals and corporations. Which is crazy, and infuriating.

All of which is to say, I love where Jeb! is going on simplifying the tax code.

Thoughtful Jeb

Lower Taxes

Jeb! proposes reducing the number of income tax rates to three, at 10, 25 and 28 percent respectively. Most controversially, the highest tax rate would drop from the current 39.6 to 28 percent. I don’t make a million dollars per year, but if I did, that drop would save me a cool $100,000 in taxes right there, which sounds pretty, pretty sweet.

I don’t have a calculator powerful enough to tell me whether lowering and simplifying income tax rates will leave us closer or further from balancing the federal budget – which remains an important fiscal goal – but I expect some finance nerd in the campaign to fire up their spreadsheets to examine that one. Hopefully before enacting legislation.

Mortgage Interest Deduction

Jeb! would cap that at 2 percent of Adjusted Gross Income (AGI). Yay! While I benefit personally from it, I kind of hate the mortgage interest tax deduction.

Corporate Taxes

The current top corporate rate is 35 percent.

Jeb! would “lower our corporate tax rate to 20 percent  – below China’s – to bring jobs and manufacturing back to the United States.”

Ok, stop. I have to call foul on that one. Maybe the lower corporate rates are cool, I don’t know. But that’s going to bring manufacturing back to the United States? From China? No. Labor-intensive manufacturing (the kind that creates those new jobs) is not coming back that way. I’m sorry, but it’s gone. Perhaps if you lowered labor costs in the US to – I don’t know – $2 dollars an hour?

World-wide Taxation

Jeb! proposes eliminating US taxation of corporate income earned overseas. This issue comes up periodically when we read about Apple, for example, holding a $181 billion cash hoard or Microsoft amassing a $93 Billion cash pile overseas (for an estimated $2 Trillion cash-pile overseas among all US corporations) to avoid paying relatively high US tax rates on foreign earnings.

In my deep-dive into this issue (yes, ten minutes = deep dive), I’ve learned that the US is one of only six developed countries that maintains this tax on foreign earnings, down from twenty-five countries, thirty years ago.

A wave of corporate reverse mergers is currently under way in which companies like US-based Pfizer sell themselves to companies like Ireland-based Allergen in order to avoid this tax on foreign earnings.

You can choose to blame greedy companies for acting in their shareholders’ interest. Or you can choose to blame tax policy. Not that other countries are always right, but most of them have eliminated this tax and I can imagine the complicated and inefficient incentives this taxation causes. On balance I’m willing to give Jeb! the benefit of the doubt on this issue about which I’ve just now read a few articles.

This proposal by Jeb! seems reasonable to me, but I could be wrong. You can sort of see why some US multinational corporations might find a Jeb! presidency particularly to their advantage. Not that there’s anything wrong with that.

Estate/Death Tax

Jeb! would eliminate this entirely. Boo! The estate tax is the best of all taxes.

I’ve already written about that and gotten plenty of hate mail on the issue (so feel free to restrain yourselves) but the estate tax is progressive, democratic (with a small D), and distorts consumption far less than other taxes.

Jeb so much looks like W in this photo
Jeb so much looks like W in this photo

Carried Interest Tax

I saw nothing on the campaign website about carried interest tax policy – a favorite pet topic of mine – but I remain interested to learn Jeb!’s views.

Still skeptical that Jeb! will capture this nomination? Just remember, nobody actually liked Mitt Romney either as the Republican nominee in 2012. So, you know, follow the money.

A version of this post ran in the San Antonio Express News.

Next week: The Clinton campaign’s tax proposals.


See related posts:

Hillary Clinton 2016 Campaign Tax Policy

Interview on Mitt Romney and the Death of The American Dream

Adult Conversation about Income Tax Policy



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A Leader for San Antonio: Mike Villarreal

Mike Villarreal studies the data

I have something to say about the San Antonio Mayor’s race. My friend Mike Villarreal is running and he is by far the best candidate. He supports data-driven financial policies (rather than platitudes and rhetoric), he listens and acts across party lines and for the good of the whole (not just one constituency), and he’s an SAISD dad who know how important educating the next generation is to ensure long term financial future of the city. Please bear with me a bit for a meandering story about my friend, New York City, and the movie Jerry McGuire.

Unflattering picture of everyone. But you want the guy on the right

Fun with data analysis

Mike called me up one Saturday, about two years ago.

“Hey, can we meet for coffee?”

“Sure.” (Duh. I’m easy – a coffee addict.)

“I want to show you a project I’ve been working on with my laptop.”

We ordered coffee at Halcyon in the Blue Star Arts Complex. He proudly toured me through the statistical regression model he’d spent the week programming on his computer. He excitedly pointed to the results of his model, indicating pockets of properties where property taxes were higher or lower than average – statistical outliers. What if we could apply these techniques at the city, county, or state level?

When we get together with our families for lunch or dinner, my wife and Mike get into intense conversations about statistical techniques. I can follow the conversation for a short while. I get a teensy bit lost when their statistics chat turns to the z-score, chi-squareds, or p-value.

Prove your ideas

Personally, I prefer making sweeping declarations based on a few pieces of partial evidence. I’m good at that. I guess that’s why I enjoy this column-writing gig.

My wife – more of a scientist-type – accuses me of grandiose pontificating based on little data. My response to her critique (only when she’s out of earshot): “Whatever.”

But my data-oriented friend Mike also frequently (though more politely) challenges my sweeping declarations.

“I liked what you wrote in the paper, but couldn’t you get some actual data or evidence to see if you’re right or not?” he asks me.

Or, “So, how would you go about proving that?”

A mayor I admired

Speaking of public policy, I think fondly of a favorite mayor of my lifetime, Mike Bloomberg, who led New York City for eight years when my wife and I lived there.

I liked Mike Bloomberg’s disregard of political parties alot

Bloomberg was a Republican in a Democratic-dominated city. What mattered to me, however, was that he led New York for twelve years practically without reference to either party. Which is how a city should be run.

Bloomberg famously relied on data analysis and best business practices. He didn’t need to act out of ideology or loyalty to one party or another. Rather, when making decisions, he considered what worked best for the city.

Bloomberg showed that while Washington, DC stagnates with tired ideological gridlock, cities can innovate.

Why am I thinking of Bloomberg?

Mike Villarreal approaches policy as Bloomberg did. From the beginning of his campaign, Mike’s been fired up about the chance to lead the city in a non-partisan manner. “We don’t need a Democratic Party or Republican Party here, we need the Party of San Antonio” he told me last summer, when he focused one hundred percent of his efforts on running for this office.

To lead a diverse, growing, dynamic city, we need a leader who looks at all the evidence, weighs the choices, and makes the best decisions accordingly. We really don’t need a mayor who represents a limited party view, or a limited geographic base, or a limited identity.

Many talents

Beyond data-analysis, Mike has a number of talents that I admire.

I’ve watched him listen to people of all ideological stripes. He convenes alternate sides of an issue at the same table to listen to each other in search of common ground.

He takes political risks that more careful politicians would avoid, standing up to powerful forces – particularly in his own party – when it was in the public interest.

He understands first-hand the struggle of families pouring everything they have into raising children in this city. He grew here, his family did this for him, and he’s doing it for his own kids.

He’s a passionate competitor at board games, and a fired-up soccer dad.

But I guess what I admire most is his constant return to real, data-based evidence to back up policy ideas and ideals.

Antidote to cynicism

The worst thing about politics these days is our cynical belief – often borne out by experience – that our leaders make decisions based on campaign contributions, a perpetual “Show me the money!” mantra on their lips.

Mike is like the Cuba Gooding or Tom Cruise character: Show Me The Data

In a goofy way, I picture Mike in future policy meetings as a better version of the Cuba Gooding Jr. character in the movie Jerry Maguire. I picture him shouting in response to city lobbyists:

“Hey Mike, can I talk to you about my group’s housing agenda?”


“Excuse me, what San Antonio really needs for economic development…”


“Mr Mayor, the school district would like to request…”


OK, OK, Mike is not a yeller, so the analogy is not a perfect fit.

But if Mike Villarreal is the Cuba Gooding character for public policy, I guess that makes me the Renee Zellweger-character of financial columnists:

“Shut up. Just shut up. You had me at data-driven financial analysis.”

I know Mike will be a great Mayor for San Antonio.

Early voting begins April 27th. Please vote.


Please see related post from blogger, Concerned Citizen:

There’s a better choice for mayor of San Antonio – Mike Villarreal

A version of this post ran in the San Antonio Express News



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