The America We Deserve

Renaissance Books

Contents

The Business of America Is Business

IF WE RUN INTO HARD times we need to know what resources we have, which systems work and which don't. I'd say up front that what's worked beautifully throughout American history is the freemarket economy. What has brought us low is government bureaucracy and corruption.

There are a number of monuments to the American Dream. Some would list Mount Rushmore and the Washington Monument. Others would suggest the traditional family home, Sunday dinners, happy children playing in the backyard. But my personal favorite is the New York skyline — the big, brassy picture that comes to the minds of people all over the world when you mention America. From the Statue of Liberty to the World Trade Center to the Empire State Building, the buildings of New York tell the story of our country — the American Dream in stone and glass.

Why? Because New York has seen the best of times and the worst of times, and whatever happens it always comes out a little brighter and a few stories higher. New York is for me the most dazzling example of the American Dream at work. The lessons it teaches — lessons of hope, opportunity, struggle, and accomplishment — can help support us through the good times and sustain us when hard times come.

And hard times probably are coming. The current wisdom sees no further than the latest stock market rally. Our feel-good community seems to think the economic laws of gravity have been suspended. But the fact is that throughout history what went up always came down. I talked in the introduction about the storms on our horizon. Let me give you a couple of reasons why I see hard times ahead. Then we'll get into the specifics of what we need to do to protect and continue the American Dream.

First off, as I said, I really am convinced we're in danger of the sort of terrorist attacks that will make the bombing of the Trade Center look like kids playing with firecrackers. No sensible analyst rejects this possibility, and plenty of them, like me, are not wondering if but when it will happen. Nor is there any doubt that when people are under attack, or fear societal mayhem of any type, their priorities are not on investing. Their minds are going to be on digging in and surviving, and this attitude will have major economic consequences.

Second, even without this sort of disaster, I believe we're in danger of a financial downturn because we've gone so high so fast. You can hear this opinion expressed by top business leaders, though they may not run around crying out that the sky is going to fall, because it could be a self-fulfilling prophesy. And you hear it as well from private citizens who've kept their eyes open. There is a growing consensus that our dizzying prosperity will sputter. Economists long ago recognized the phenomenon of business cycles. Business schools, such as my alma mater, Wharton, taught that economics was cyclical.

But when was the last time you heard a major politician warning of economic downturn? It's just not in the vocabulary of any public figure. Except mine.

The reason most politicians don't predict a slump is that they don't understand it. More to the point, they have no solutions. I'm positive enough to know that if we play our cards right we can get through even the worst of times. America has survived econimic disaster in the past. So have I.

Consider the current budget surplus. The Democrats want to spend all of it, using some of it to pay down the national debt. The Republicans want to give it all back in the form of deep tax cuts. They're both wrong ... and right. Now, in a period of prosperity, is the time to hedge against the economic hard times ahead. Both debt reduction and tax reduction are key and necessary. I'd rather have the people spend their money than have the government spend it. But typical of the polarized politics of Washington, both parties demand all or nothing. The proper course is to use a portion of the surplus and still provide meaningful tax cuts for working families — not for the guys in my bracket. That is the art of compromise. This course of action now will prepare us for the economic downturn ahead by reducing the government's interest payments and by allowing families to save more in preparation for the lean times ahead. But you don't hear compromise and dealmaking from Washington. Maybe it's time we had a president who was a dealmaker.

Consider this: There are companies that came out of nowhere a couple of years ago and now are worth tens of billions of dollars. If Amazon.com merged with Warner Bros., Amazon, whose directors say they have yet to make a profit, would be the majority party. Incredible, but true. Then there's eBay.com, the on line auction house, which has grown 1900 percent in four years. That sounds impressive, but wild rises like this indicate instability. Like a bipolar personality, there are high highs in the economy and then come the lows. I've seen this in real estate — prices going up through the ceiling, then suddenly crashing through the floor. These changes are made even more dramatic by modern technology. You have to remember that it's very easy these days for investors to move money around the globe. When the tide turns, investor support can shift at the speed of light. The magic carpet can unravel very quickly.

I am convinced the American people are sick of gridlock — the logjam of two parties in Washington so opposed to each other that the people's business doesn't get done. Perhaps it is time for a deal-maker, a leader who can get the leaders of Congress to the table, forge consensus, strike compromise, and get things done. That's how we will get real tax relief, Social Security reform, healthcare reform, and campaign finance reform.

With all due respect, that's my strength, it's what I do. Many times I've achieved results when others said it was impossible. I believe I could be most effective for the American people.

OUR NEXT COMEBACK

America will stage a comeback, and our next comeback must be led by people who know what works and what doesn't. That's why the New York story is so valuable. It is a story of people from all over our country and, in fact, all over the world — people who started out with next to nothing and ended up kings.

When you think of American heroes, the names that come to mind are almost always those of politicians or soldiers. Our teachers overlook some of the most dynamic parts of our heritage by not honoring businesspeople as well. A lot of them have had extremely interesting lives, full of drama. They not only grabbed the brass ring for themselves, but also created jobs and opportunities for countless other people. If I were in the movie business, I'd do films about some of these people. If we have movies about gangsters, hookers, and cannibals, why not movies about business heroes who built the greatest country in history? If businesspeople were more widely celebrated, maybe their opinions might be taken more seriously.

Look around New York City and you'll find a blockbuster success story on every block: The W. R. Grace Company skyscraper, named for an Irish kid who came to New York with big ambitions. The Waldorf Astoria, built by Conrad Hilton, a dreamer who started his career in the family hotel in San Antonio, New Mexico. Rockefeller Center, built by the heirs of the legendary John D. Rockefeller. There are important New York landmarks commemorating Cornelius Vanderbilt, Marcus Goldman, Meyer Guggenheim, Andrew Carnegie, Nathan Handwerker, and others. If you look around your own community you'll see the same thing: landmarks left by people with vision and determination, people who literally made something out of nothing.

As I've already said, my father was cut from the same cloth. Fred Trump was born in New Jersey in 1905. His father, who came here from Germany as a child, was as big and brash as any character from a Jack London novel. He went to Alaska for the Gold Rush. He owned a hotel there. After he came back east, his wife, Elizabeth, ran the family business. My grandfather Trump died when Dad was eleven years old. In those days you didn't hoof it down to the welfare line when hard times hit, you hit the bricks looking for work. At eleven years old, my father became the family breadwinner, delivering fruit, shining shoes, hauling lumber on a construction site. Nothing fancy — the kind of work that people avoid in droves these days. But my dad knew something that we too often forget: There is opportunity in adversity. Call it a cliché if you want, but I'm here to tell you that it's also the truth — and we'd better never forget it.

Dad never gave up and he kept his eyes open for opportunity. Early in his high school years he discovered a talent for the precise geometry of construction. He wasn't a skyscraper guy, but he did build his first structure at age sixteen — a two-car frame garage for a neighbor. Pretty soon he was building prefabricated garages for fifty dollars apiece, and not long after that he was building single-family homes in Queens. When I think of Dad helping other Americans realize their part of the Dream — and let's never forget that home ownership is at the heart of the American Dream — I feel as proud as any son ever felt about his father.

His secret was really no secret at all. He worked hard his whole life. And he looked for opportunity even when you would think opportunity had vanished. When the Depression hit, for example, he bought a bankrupt mortgage company and sold it at a profit a year later. Next he built a self-service supermarket in Woodhaven, one of the first of its kind. All the local tradesmen — butcher, tailor, shoemaker — rented concessions in the space. It was convenient, a natural success. There are many, many similar success stories in this city's history, but the point is this: None of these guys started out from the top. They started small. They grew tall. They stand as examples to all of us.

There are great success stories from today's news as well: Bill Gates, Steve Jobs, and the others who created the computer revolution; entertainment figures like Steven Spielberg, Ted Turner, Madonna, Michael Jordan, Bill Cosby, and Oprah Winfrey. I wish this list were even longer. I wish more people in America were famous for their remarkable successes. I'm afraid our system has prevented many from being everything they might be and giving everything they might give.

Ronald Reagan once said, in America our origins matter less than our destinations. I'm not saying that everyone makes it — not even the bright and talented. Sometimes there's too much to overcome, too much adversity. Kids who are raised in violent neighborhoods, without parents, don't have the chance they ought to have. Many good, bright people never make it because of illness, bad planning, bad luck, or other purely personal reasons. The bars and crack houses of New York are full of the disappointed. And some choose to achieve goals that don't signify success to everybody. There are artists and teachers and police officers and clergy, and other wonderful Americans who didn't choose their careers to become rich and famous. But they've had a chance to live their dream.

We have to do everything possible to keep the dream machine alive. When we hit hard times, we must protect the heart of our system — opportunity — from the people who will panic and demand that government bureaucrats run the show. And even in the best of times, we need to make sure there are as few obstacles as possible to realizing one's full potential. This takes us into the political world, where there are many good people but, unfortunately, some very bad ideas.

OUTPLANNING THE PLANNERS

Most of us think the American Dream is a birthright, but I've been around long enough to realize that, without constant care and vigilance, it can and will be whittled down to nothing. The threatening agent is not some foreign power, but people who don't understand the proper relationship between the public and private arenas. In other words, 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.

Mayor Giuliani summed it up pretty well: "Government should not and cannot create jobs through government planning. The best it can do, and what it has a responsibility to do, is to deal with its own finances first, to create a solid budgetary foundation that allows businesses to move the economy forward on the strength of their energy and ideas." He was talking about New York, but what he said is true for America.

The next mayor should stick with Giuliani's basic prescription: Provide everyone with a good, free education and clean, well-stocked libraries. Make sure the streets are safe. Ensure reasonable regulation, but no more.

It's no secret, however, that for much of this century government has been falling down on the basics, while sometimes becoming excessively involved in areas where it should play a restricted role. It has allowed criminals to have the run of the streets and the subways. Instead of putting the arm on criminals, government at all levels has saddled businessmen and women with ridiculous, dream-killing regulations. We are better off today than we were even a few years ago, thanks to a new breed of politician that recognized the problems that high taxes and rampaging regulations were causing. But if we forget what has happened in the past, we will be doomed to relive it in the future.

I will never forget the 1970s, when reckless regulators were running the show — make that horror show. New York City had a near-death experience when the city budget failed under Mayor Beame. Municipal bonds were worth less than Confederate money. You'd think that experience would have served as a wake-up call. But under Mayors Ed Koch and David Dinkins things went steadily downhill. I thought Dave Dinkins was a decent and well-meaning guy, but the absurdity of those times is preserved in the Kummerfeld Report, which was put together by a "blue-ribbon panel" commissioned by the mayor. This group looked for ways to deal with the enormous and dangerous budget deficit that New York faced in 1993. My teeth still chatter when I think of the "solutions" they came up with.

In order to protect city finances, the report recommended firing city workers. It suggested an increase in the real property tax for owners of single-family homes. It proposed an increase in the city's sales tax, already sky-high, and tolls for all of the East River and Harlem River bridges. The commission also recommended a residential garbage-collection fee, a tax on movie and theater tickets, the elimination of scheduled police hires, and cutting subsidies for day care. If you had to boil down the operating philosophy to a couple of lines, it would be something like this: Life is getting worse in New York. It is too costly and too dangerous. This decline in the quality of life is driving people out of the city and into the suburbs, which in turn is cutting into our tax base and blowing up the budget. So what should we do? Let's make life in the city even more costly and more dangerous!

This is a classic example of a cure that kills the patient. It is sort of like calling in a doctor and looking up to see the Grim Reaper coming through the door. People often make bad decisions in panic situations; hard times often create panic. It's important to remind ourselves, during good times, which steps we need to take and which to avoid when things are bad.

Like so many politicians across America, the old guard suffered from the illusion that tax cuts would only make things worse — which in fact is an illusion that remains popular among some political leaders. No one considered that encouraging people to move back into the city would actually generate the revenue needed to balance the budget. Nor did this commission understand that when the private sector expands, even the simplest projects become impossible. Let me give an example that still boggles my mind.

In my first book, The Art of the Deal, I described the fight I had to wage to persuade the city government to allow me to rebuild the city-owned Wollman skating rink in Central Park — at my own expense. My offer to help was opposed for one reason only: City Hall knew that if I took on the job, the difference between my work and the job the city was doing would expose the incompetence of city government. Once I finally embarrassed Mayor Koch and other city officials into letting me do it, even I was shocked at just how ridiculously incompetent the Koch administration turned out to be.