Exposing How Donald Trump Really Made His Fortune: Inheritance from Dad and the Government's Protection Mostly Did the Trick
This excerpt from "The Self-Made Myth: The Truth About How Government Helps Individuals and Businesses Succeed" tells the real story about how Trump got so obscenely rich.
By Brian Miller, Mike Lapham / Berrett-Koehler Publishers
July 9, 2012
Editor's Note: The following is an excerpt from Brian Miller and Mike Lapham's book, The Self-Made Myth: The Truth About How Government Helps Individuals and Businesses Succeed. (Berrett-Koehler Publishers, 2012). You can read AlterNet's Vision editor Sara Robinson's review of the book here.
In March 2011 Forbes estimated Donald Trump's net worth to be $2.7 billion, with a $60 million salary. Many praise and analyze his “success” as if it were self-made, and they fail to attribute the proper credit to others in society where it is deserved. Despite what Trump may espouse, his success would have been in no way possible without his father, the general public, and the US government. Unfortunately, Trump decided to forget or selectively ignore these truths while forming his political philosophy, a sentiment made particularly clear during his brief bid for the 2012 Republican presidential nomination.
Trump was born in New York City in 1946, the son of real estate tycoon Fred Trump. Fred Trump’s business success not only provided Donald Trump with a posh youth of private schools and economic security but eventually blessed him with an inheritance worth an estimated $40 million to $200 million. It is critical to note, however, that his father’s success, which granted Donald Trump such a great advantage, was enabled and buffered by governmental financing programs. In 1934, while struggling during the Great Depression, financing from the Federal Housing Administration (FHA) allowed Fred Trump to revive his business and begin building a multitude of homes in Brooklyn, selling at $6,000 apiece. Furthermore, throughout World War II, Fred Trump constructed FHA-backed housing for US naval personnel near major shipyards along the East Coast.
In 1974 Donald Trump became president of his father’s organization. During the 15 years following his ascension, he expanded and innovated the corporation, buying and branding buildings, golf courses, hotels, casinos, and other recreational facilities. In 1980 he established The Trump Organization to oversee all of his real estate operations.
Trump eventually found himself in serious financial trouble. In 1990, due to excessive leveraging, The Trump Organization revealed that it was $5 billion in debt ($8.8 billion by some estimates), with $1 billion personally guaranteed by Trump himself. The survival of the company was made possible only by a bailout pact agreed upon in August of that same year by some 70 banks, allowing Trump to defer on nearly $1 billion in debt, as well as to take out second and third mortgages on almost all of his properties. If it were not for the collective effort of all banks and parties involved in that 1990 deal, Trump’s business would have gone bankrupt and failed.
In 1995 Trump took Trump Hotels & Casino Resorts Inc. public and received a substantial financial boost from society and the Securities and Exchange Commission (SEC) regulations that enable the market to function. He initially sold 10 million shares at $14 per share and then in 1996 sold 13.25 million shares at $32.50 a share. This initial public offering granted Trump’s company a stability and legitimacy that would have been impossible without millions of people around the world trusting his organization and investing with the hope of shared success.
Despite the clear societal and governmental assistance described above, Trump continues to be outspoken in his criticism of government. In his book The America We Deserve, Trump explains that “the greatest threat to the American Dream is the idea that dreamers need close government scrutiny and control. Job one for us is to make sure the public sector does a limited job, and no more.” This quote proves to be particularly ironic when considering Trump’s feelings about eminent domain laws. He was quoted as saying, “I happen to agree with it 100 percent” when speaking of the 2005 Supreme Court decision on Kolo v. New London, which affirmed the government’s ability to transfer land from one private owner to another for the purpose of economic development in the area. In fact, Trump attempted to take advantage of eminent domain laws on multiple occasions, once even demanding that an elderly widow give up her home so that he could build a limousine parking lot.
Perhaps more disturbing than his hypocritical condemnation of the government is his failure to acknowledge anyone’s contributions, save his own, in the creation of his success. At the 2011 Conservative Political Action Conference, Trump made clear his feelings on the creation of his wealth: “Over the years I’ve participated in many battles and have really almost come out very, very victorious every single time. I’ve beaten many people and companies, and I’ve won many wars. I have fairly but intelligently earned many billions of dollars, which in a sense was both a scorecard and acknowledgment of my abilities.” Furthermore, Trump apparently sees no benefit in supporting taxes to maintain institutions such as the Securities and Exchange Commission to regulate the stock market, in which he publicly trades his company, or the court system, which actively protects his property rights: “We are the highest taxed nation—I would tax foreign countries that are ripping off the US and lower taxes for Americans.”
From the moment of his birth, Trump was set up for success. The large inheritance left to him by his father, coupled with the contributions and the protections of society and the US government made his ascension to the Forbes 400 list almost inevitable. Nevertheless, Trump fails to recognize this phenomenon and continues to express his belief that he did it alone.
Copyright © 2012 with permission from Berrett Koehler Publishers.
Brian Miller is the executive director of United For a Fair Economy. Mike Lapham is a co-founder of UFE's Responsible Wealth project.