Thursday, July 28, 2016

Trump says he’s a great negotiator, but the evidence says otherwise

Don Moore, professor, Haas School of Business | July 26, 2016


Whenever Trump has shown ignorance or confusion on domestic or foreign policy issues, he has fallen back on the argument that, as a brilliant dealmaker, he has what it takes to “make America great again.” He says he would do this by renegotiating the Trans-Pacific Partnership (TPP), relations with China, the Iran nuclear deal and partnerships with key allies such as NATO, Japan, and South Korea. If Clinton is to prevail against Trump’s perceived business qualifications, she’ll have to dismantle the painstakingly cultivated image of Trump as a great negotiator.


The two of us have studied negotiation for a combined 40 years, have taught tens of thousands of students and executives, and advised on countless corporate and government negotiations. Because we would welcome a great negotiator as president, we were keenly interested in examining the evidence of Trump’s alleged negotiation prowess. We evaluated his wealth, his deals, and his approach to negotiation. The evidence is damning.

Let’s start with his wealth. Trump boasts, “I have made myself very rich.” Credible objective sources estimate his net worth at between $2.9 and $4.1 billion. While wealth is a poor measure of deal-making skill (Bernie Madoff was richer than Trump), there is special reason to doubt that Trump’s wealth can be traced to negotiation ability. It’s been reported that if Trump had simply invested the fortune he received from his father in an S&P 500 index fund in 1982 and made no deals, he would have $8 billion now. In other words, Trump’s deal-making has actually cost him billions of dollars. The airline he bought in 1988 for roughly $365 million closed down in 1992. The football team he bought in 1984 ended with the demise of United States Football League just two years later. His hotels and casinos have struggled to make money, declaring bankruptcy four times.

Even on the campaign trail, we have seen obvious negotiation failures. By one estimate, the Trump campaign paid three times what the Sanders campaign did to run commercials during the same time slots on the same stations. Meanwhile, he has undermined numerous other deals. Both NBC and Univision declined to air Trump’s Miss USA pageant last year after he disparaged Mexican immigrants. Companies in the Arab world have severed ties with Trump after his comments about Muslims. At home, the list of U.S. companies that are severing ties with the Republican National Convention is getting longer.


If he somehow manages to prevail in November, Trump will not be the first charlatan or confidence man to have profited from the long con. The art of illusion he knows well. The art of the deal he does not.

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