Sometimes Donald Trump tells the truth.  The problem, of course, is that he lies so often and so much Americans tend to tune him out.  But this past week, it has been hard to ignore the harsh reality there were occasions during the 2016 presidential race voters and the media should have paid more attention.  Consider the following two examples.

• At the Republic National Convention, contrary to the GOP mantra since the party’s inception that America success depends on faith in and the collective effort of its people, Trump declared, “I am your voice.  I alone can fix it.”
• On October 27, 2016 at the opening of the Trump International Hotel in Washington, D.C.  at which he claimed the project had come in “under budget and ahead of schedule,” the future White House occupant told those in attendance, “Today is a metaphor for what we can accomplish for this company.”  In other words, Trump asserted he was going to run the federal government like he ran his private enterprises.

There should be no doubt Trump honestly believes he is smarter than everyone else in the room.  He ignored his staff’s briefing materials provided before the NATO summit and decided to go it alone with Vladimir Putin.  He invited Putin to the White House without informing, much less consulting with, many of his national security advisors.  He imposed tariffs launching a trade war which may result in long-term realignments in global markets leaving the United States on the sidelines.

Yet it is the second example which so clearly came into focus the past 48 hours.  And it did not matter whether the topic was moral turpitude or trade policy.  There is one, and only one, modus operandi which underpins every transaction in which Donald Trump is involved.  Regardless of the size or composition of the nail, Trump reverts to the same hammer over and over again, paying someone to go away.

We now know, in at least two cases, Trump and/or his supporters paid hush money to women with whom he allegedly (you can stop laughing now) had affairs to buy their silence until after the 2016 election.  At least, in these instances, the payments consisted of Trump’s own funds or those of a private donor (i.e. David Pecker, CEO of American Media).

In contrast, since taking office, Trump now has a new source of funds to silence potential critics:  American taxpayers.  Consider yesterday’s announcement by Commerce secretary Wilbur Ross the administration has allocated $12 billion of trade adjustment funds to compensate farmers for the unnecessary pain they are experiencing due to Trump’s ill-advised tariffs.  Make no mistake.  This is HUSH money.  The purpose: to placate farm state voters until after the November mid-terms.

Twelve billion dollars may seem like a lot of money, but if as predicted, foreign buyers of American beef, pork and soybeans start relying on non-U.S. suppliers, this down payment is only a drop in the bushel.   It is no different from the payments to Stormy Daniels and Karen McDougal with two MAJOR exceptions.  You and I are footing the bill.  And it is not a one-time outlay.  After the mid-terms, additional outlays will be required if impacted farms are expected to make ends meet.  But no one should be surprised if public sector Trump treats farmers the same way private sector Trump handled contractors.  Can you spell “stiffed?”

Regardless of whether the issue is conspiracies to silence Trump’s paramours or a future where the Heartland is littered with fallow farmland, don’t expect me to remind you, “I told you so.”  No need.  HE told you so.

For what it’s worth.
Dr. ESP

Friday evening, in a last-ditch effort to save its Memorial Day weekend profits, Publix, “one of the 10 largest-volume supermarket chains in the country,”  announced it would no longer make contributions to the campaign of Republican gubernatorial candidate Adam Putnam.  The news came minutes before a scheduled “die-in” organized by David Hogg, a survivor of last February’s mass shooting at Marjory Stoneman Douglas High School.  Publix’s alliance with Putnam was targeted based on his bragging about being a proud “NRA sellout” (his words).  Congratulations to the Parkland students and their peers around the country who have kept their word they will not go away.

But that’s not what I came here to talk with you about.  The media coverage associated with the student protest uncovered just one more glaring example of a much larger issue in our body politic.  Publix is not supporting Adam Putnam for Florida governor because he is a Second Amendment zealot even though the chain allows employees and customers with concealed carry permits to bring firearms into their stores.  (That’s why one should never take the last artichoke in the produce section.) The real reason?  Since 2010, Putnam has been the state’s elected Agriculture Commissioner.  Among its constitutional duties, the office of the Agriculture Commission is in charge of (drum roll) regulating grocery outlets.

In a 2016 report by WFTS-TV in Tampa,  the station identified seven Publix facilities which had failed health inspections.   The day after Channel 28 aired the story, Putnam had the information deleted from the department’s website.  According to an article in yesterday’s Miami Herald, this was not the end of the Commission’s Publix-friendly actions.

Months later, a friendlier new system was put in action. Now, thanks to Putnam, if a storage room at a Publix is found freckled with rat droppings, the worst rating the store can receive is “re-inspection required.”   (Source:  “Putnam keeps his deep-pocketed friends happy,”  Miami Herald, May 25, 2018)

In the past three years, Publix has contributed in access of $670,000 directly to Putnam’s campaigns as well as an untold sum to business organizations which are Putnam’s financial backers.  I point this out as only one example to show why these unholy alliances should have been used as evidence to pinpoint the major flaw when the Supreme Court ruled in favor of Citizens United, the single most significant event which un-leveled the political playing field.   In the most “liberal” spin of Constitutional language by so-called conservative, strict constructionists, the 5-4 majority claimed corporations have the same rights as individuals when it comes to influencing political discourse.  To do otherwise, would be a violation of the First Amendment’s guarantee of freedom of expression.

But here’s the difference.  Suppose I, as an individual, donate not just thousands, but millions of dollars to every candidate who supports net neutrality because, as a blogger, I want to ensure readers have equal access to my “profound wisdom.”  And all the candidates I support win and, on day one of the next Congress, overturn the recent FCC regulations related to this issue.  Yes, I benefit.  But so does every other blogger and, more importantly, EVERY other company regardless of industry which is dependent of reaching its customers via the Internet.  In classic economics, this is what we used to call a public good.  Those who chose not to financially support the cause get the same benefit as those who did.

In contrast, a private, for-profit corporation making an equally large donation to candidates who promise to protect the FCC ruling do so in anticipation of a private benefit.  Internet service providers (ISP), such as Comcast and Verizon, if successful have surely calculated the return on investment if their campaign donations produce the desired outcome.

Furthermore, when I donate to a political campaign it comes out of my personal funds.  And the opportunity cost likewise is personal.  I may forego a vacation or a new smart phone.  Equally important, my choice is tempered by my ability to convince other stakeholders.  Imagine the following conversation.

ME: Honey, instead of that cruise we were going to take for our anniversary, what would you think if I gave the money to support candidates who favor reinstating net neutrality?

SPOUSE:  What would you think about sleeping on the living room couch?

In contrast, private corporations will argue they are making a similar choice.  Corporate donations are usually handled through a political action committee (PAC) which raises money from what is known as a “restricted class.”  For PACs associated with for-profit business, this designation is generally limited to mangers and stockholders.  The extent to which these individuals contribute to a given PAC often depends on the size of one’s salary or the share value of the company’s stock, both dependent on (drum roll) customers.  Customers who have no say or are unaware their purchases are supporting not only the business’ bottom line, but indirectly underwriting a political agenda which may be contrary to their self-interests (e.g. in the case of Publix and Adam Putnam, food safety).

But we are not helpless as proven again by the Parkland students.  If the Supreme Court, by its actions, is more interested in the Publix interest than the public’s interest, all it takes is an industrious high school student to remind us the preamble of the U.S. Constitution begins with the words, “WE THE PEOPLE.”  Now that’s something to “die-in” for.

For what it’s worth.
Dr. ESP

I have never spent a day in a classroom in the Wharton School of Business at the University of Pennsylvania, but based on the behavior of one of its undergraduates, there is only one of two possibilities.  The faculty of this prestigious institution does not understand the foundations of successful enterprises (which I doubt) or this alumnus did not pay attention to his professors or the course content.

During my nine years as a professor in the Richard T. Farmer School of Business at Miami University, I would continuously tell my students, “You can forget everything I have every said in class except this.  Business is about relationships, not transactions.”  And the example I would use was one not from my own experience, but one shared by a former associate of Ewing Kauffman when he worked for Mr. K at Marion Laboratories.

Upon returning from a sales trip to England, this Marion representative boasted how he had cut a more profitable deal with a new British customer than that available to other clientele.  Mr. K was outraged.  He asked the sales representative whether he thought the new customer would eventually find out they were treated differently than other retailers of Marion products.  And when that happened, would you expect them to place additional orders.  Mr. K told the associate to get back on the plane, meet with the client, apologize for trying to take advantage of them and renegotiate the deal.  Mr. K’s message?  You may have made a sale, but you did not make a customer.

Which brings me back to that Wharton graduate who promised us he would run government like a business.  This morning, Richard Haass, President of the Council on Foreign Relations, used similar language when asked about the cancelled June 12 summit between the the heads of state of the United States and North Korea.  Donald Trump’s off-the-cuff invitation to meet with Kim Jung Un was not about building a relationship with the North Korean leader.  It was a transaction designed to get an affair with a porn star off the front page.  But Haass went on to say, even if the original purpose, to change the media narrative, was questionable, it was an opportunity if done right.  And a real businessman would have seized the moment to lay the foundation for a win/win situation for both parties.

What we learned yesterday is Trump’s promise to run government like a business is one of his few honest statements uttered during the 2016 campaign.  With one very important exception.  His business model is not a traditional one which has served many entrepreneurs and corporate executives well, but his own unique brand of business where maximizing personal profits from each transaction takes precedence over the long-term benefits which might accrue when both sides agree it is in their mutual interests to continue working together.

Here are just two examples.  The Trump Organization is notorious for stiffing sub-contractors.  Which is more likely to increase the company’s bottom line over time?  The savings from non-payment of a single contract?  Or a relationship in which the subcontractor discounts EVERY contract because the Trump Organization is a reliable source of future revenues?

The second example, of course,  is Trump University.  Do you think anyone in the Trump Organization expected repeat customers or referrals from those who had laid out as much as $35,000 for a slipshod curriculum from unqualified instructors  and a photograph with a cardboard mannequin of Trump?  The entire scam was based on the premise, “Get their money and move on to the next sucker.”

In the case of North Korea, the now Public Trump Organization (which ironically appears to generate more profits than it private sector incarnation) made no pretense of repeating their pre-inaugural behavior.  It dispatched National Security Advisor John Bolton and Vice President Mike Pence to suggest a good outcome in North Korea would be based on “the Libyan model.”  If true, unlike Trump business transactions where subcontractors got stiffed by being shortchanged, Kim too would eventually be stiffed, as in rigor mortis.  In the spirit of recent analogies of the Trump Organization to a mafia family, this was an offer Kim COULD refuse.

We should not be surprised.  To paraphrase Ethel Merman, there’s no business like Trump business.  So, let’s go on with the show.

For what it’s worth.
Dr. ESP

The title of today’s blog is a take-off on Michael Gerber’s classic book The E-Myth: Why Most Small Businesses Don’t Work and What To Do About It (Harper Collins, 1995).  During my days at the Ewing Kauffman Foundation in Kansas City, I had the pleasure of being the host of a one-on-one conversation with Michael in the style of Inside the Actor’s Studio.  Each time Donald Trump fires a cabinet secretary or senior member of the White House staff, my thoughts often turn to the lessons from Gerber’s book and the insights he shared during our interview.

Now, no one is going to argue the United States government is a small business, but I would contend every new presidential administration can be viewed as a start-up and faces the same challenges and risks associated with any entrepreneurial venture.  Especially if you’re going to claim you are going to “break the mold” as the current occupant of the Oval Office promised.  Therefore, the dysfunction in the current White House can best be explained by demonstrating how Trump has violated several of the pillars which are the cornerstones of Gerber’s analysis and prescription for success.   Thus, Gerber’s “E-Myth” becomes Trump’s “T-Myth.”

Let’s start with Gerber’s basic premise.  Being proficient in a technical profession and running a business based on that technical competence requires two entirely different skill sets.  In his book, Gerber using the example of a woman who is urged by her friends to start a bakery because her pies, cakes and cookies surpass any available at retail outlets in her town.  She quickly learns running a bakery has little to do with baking.  Thus the “E-Myth,” proficiency in a technical skill makes you immediately qualified to run an entrepreneurial venture marketing that product or service.

Obviously, Donald Trump has not read Gerber’s book.  Otherwise, he would not have nominated his personal physician Dr. Ronny Jackson to be secretary of the Department of Veterans Affairs.  But Trump always does thing bigger and better than anyone else.  Which brings us to the T-Myth.  In Trump’s book, you don’t even have to be technically competent.  Ben Carson has no identifiable skill related to either housing or urban affairs.  [COMIC INTERLUDE:  Stephen Colbert explained Carson’s nomination this way.  “Carson is ‘urban,’ he lives in a house and Trump has affairs.”]  Rick Perry did not even know what the Department of Energy does.  Scott Pruitt does not understand the science of ecology.  Betsy DeVos has no experience in the field of education unless you equate political fundraising with PTA bake sales.

Trump also fits this mold.  He too lacks competence in almost every one of the technical skills required of a chief executive of the federal government.  A president needs to be a consensus builder.  NOT!  A president needs to clearly articulate consistent policy.  NOT!  A president needs to be a team builder. NOT!  A president needs to know how to differentiate fact from fiction.  DEFINITELY NOT!  A president needs to be a student of history.  NOT!  A president needs to appreciate the power of his office to influence people and events.  NOT!

To fully understand the difference between the “E-Myth” and the “T-Myth,” one also has to compare other major tenets of Gerber’s formula for success with Trump’s modus operandi.  One example.  “Build a system of systems, so your business does not rely on people.”  In other words, the key to running an organization is not to do all the work yourself, but to create systems that run smoothly in your absence.  In Gerber’s own words:

If your business depends on you, you don’t own a business–you have a job.  And it’s the worst job in the world because you’re working for a lunatic!

In Trump’s case, quo erat demonstrandum.

Another major tenet of the “E-Myth” is, “Think ahead.”  Never put yourself in a situation where you are forced to make a snap decision which may put you in a situation you cannot get out of.  Stuff happens.  A new hire does not work out.  There are going to be dissatisfied customers.  Your major supplier in Puerto Rico is five feet under water (literally).  Do not wing it.  Know what you’re going to do before you do it.  Need I remind you how the “T-Myth” advocates just the opposite and the resulting number of personal, financial and political headaches Trump faces for his impulsive behavior.

If I were conducting my interview with Michael Gerber today, this is the question I would close with. “Michael, the Trump presidency, including the transition, seems to affirm your theories and principles about why businesses fail, but how do you explain the success of the Trump Organization?”  This is how I believe Michael would respond.  He would argue there is a major difference between success and the illusion of success.  A business with multiple bankruptcies, does not pay its bills, is constantly in litigation and could have more liabilities than assets is hardly a success.   For all we know, the only thing Trump is good at is spending other people’s money to maintain a lifestyle and reputation he has not earned.

Maybe it is time to stop talking about the “job” of president and focus our attention on the “business” of being president.  A good place to start? Use Michael Gerber’s book as the primer.

For what it’s worth.
Dr. ESP