The phrase “skin in the game” was coined by none other than Warren Buffet based on his belief business owners and executives should have a significant personal stake in the outcome of the ventures they run. It is a lesson taught in every entrepreneurship class. And, if you are a regular Shark Tank viewer, you know panelists such as Mark Cuban, Lori Greiner and Kevin O’Leary consistently ask the aspiring entrepreneurs, “How much of your own money have you invested so far?”
“Skin in the game” is also a sound principle outside the business arena. Take for example a medical insurance co-payment. It ensures a sometimes small, but significant level of involvement over decisions related to one’s health care. Without that out-of-pocket contribution, one can imagine the burden on the health care system from hypochondriacs who would view a visit to the doctor’s office as a daily means of recreation.
Some parents use it as a way to impress upon their offspring the value of money. A child wants a bike or a new video game? The parent offers to help, but not pay for the item in its entirety. Their theory being, children will take better care of their possessions if they have contributed to their acquisition.
Which brings me to the topic du jour. There is no better case of “skin in the game” than taxes. Besides being the revenues that support essential or even questionable public goods and services, these levies on income, property and sales are the price of demanding quality and accountability. It is the flipside of taxation without representation. Taxes are the “skin in the game,” that significant, personal stake in how we are governed. Without them, the standard would be representation without taxation. Just imagine if public services came free of charge. Of course, you could still complain if you thought the quality of promised benefits was less than par. But, federal, state and local officials would be within in their rights to question your standing. “You get what you don’t pay for.”
In a society founded on the mantra “of the people, by the people, for the people,” the value of taxes as “skin in the game” must apply to those who govern as much, if not more so, than the governed. After all, elected and appointed officials are the “business executives” of the public sector. Which is why yesterday’s revelations about Donald Trump’s tax history go far beyond questions of fraud, tax evasion or conflicts of interest. As importantly, he is CEO of an enterprise in which he allegedly has little, if any, investment.
Think about it. Why does he care if funds intended for military facilities to support the families of armed forces are diverted to pay for a border wall? It’s not his money. Or defense funding for medical supplies is instead used to buy spare parts for tanks and planes? It’s not his money. Donald Trump has no skin in his latest game. Much like he had no skin in the game when it came to Atlantic City casinos or the Trump Foundation. Which only proves the point, without personal investment, there is no need to be rational or prudent. Every time a Trump business went under, he walked away unscathed. And in some cases, such as his casinos, he actually came out ahead owning a percentage of the properties which were more profitable and better run by the new owners. That’s what you can do if you have no skin in the game.
As is likely to be the case when Trump either walks or is dragged out of the White House on January 20th. Having made no significant financial investment in his own administration the past four years, he will likely reflect on the experience as follows.
I guess I showed them I’m still the “king of debt.” Look at everything I was able to do, and I did it without using any of my own money. And now all those “losers” and “suckers” are left holding the mortgage. Ivanka, Junior, Eric, what’s next?
One can only hope, without the protection of Bill Barr and contrived DOJ policy memoranda, the IRS, District Attorney of the Southern District of New York, New York Attorney General and New York City Attorney Cy Vance will prosecute private citizen Donald and the Trump Organization for a series of legal violations. However, when it comes to America’s tarnished reputation, I am reminded of Paul Newman’s last line as Michael Gallagher in Absence of Malice, “Who do I see about that?”
For what it’s worth.
Dr. ESP