Donald Trump claims that his business experience will help him Make America Great Again. His detractors point to failed ventures such as Trump University and Trump Steaks to suggest that his business success is vastly overrated. This debate misses the bigger point: Business isn’t politics.
Even if Mr. Trump’s success is as significant as he claims, his skills don’t necessarily translate into the Oval Office. I have been a real-estate lawyer for 48 years and have represented some of the business’s most successful people in some of its largest deals—including the 72-member bank group that held approximately $4 billion of Mr. Trump’s debt in the early 1990s. I believe the skills that make a successful real-estate entrepreneur would produce an unsuccessful president. Here are six reasons why:
1. Businessmen can always walk away from a deal. If a real-estate developer doesn’t trust a potential partner, he can find another interested party. In Mr. Trump’s line of work a different deal is almost always possible. The opposite is often true at the White House. The president cannot simply walk away from China if he does not like Xi Jinping.
What experience does Mr. Trump have in negotiating when the consequences of no deal are potentially devastating? Failed talks with Iran, Iraq, Syria, Russia or North Korea are not the same thing as an unsuccessful real-estate deal.
2. Companies usually can fire at will. In business, any employee or contractor who does not share the company’s vision, goals or methods will soon be replaced by one who does. Not so in politics. A President Trump would have to work with 535 members of Congress whom he cannot fire. Many will want him to fail. Some may have their eyes on his job.
Mr. Trump has not shown any skill at dealing with people who disagree with him—nor any desire to learn how. Instead, he has mocked and belittled anyone who has challenged him. See: “Little Marco,” “Lyin’ Ted” and “Crooked Hillary.” What would President Trump do if German Chancellor Angela Merkel voiced sharp disagreement with his international agenda? Could he restrain himself from personally attacking an American ally?
3. Executives are autocrats. Real estate is heavily regulated, but developers are not. Pretty much anyone can buy whatever he wants, as long as he has the money. It is inconceivable that Mr. Trump’s business decisions at Trump Enterprises could be overruled. Presidents, in contrast, are tightly constrained by laws, rules and regulations. Even if the White House’s actions appear to be in compliance with the law, courts may disagree.
Mr. Trump does not seem to understand the limits of presidential power. Take his pledge to make Mexico pay for a border wall. The candidate has suggested that he would recoup the cost of the wall by imposing a tariff on imports from Mexico. But such a tariff would have to be passed by Congress, and it would violate the North American Free Trade Agreement. Mr. Trump has also suggested that he would confiscate remittances to Mexico, which would require court action and proof of a criminal act. The courts would not support him.
4. In business there are rarely fact checkers. Sellers can say close to anything they want during a real-estate negotiation, which is almost always conducted in private. Those representations are eventually put in writing, and the buyer is responsible for verification. Most contracts specifically state that the parties cannot rely on anything said beforehand. If a significant misrepresentation is found, the buyer can abandon the deal. If the falsehood is found only after the agreement is completed, it is usually too bad for the buyer.
Does this sound like Mr. Trump’s campaign? How often has he said things that turn out to be untrue? Many are startled by the ease with which he does this. After participating in hundreds of real-estate deals, I’m not surprised. But words matter on the world stage. Can we take the chance that Mr. Trump, once elected, will be able to change his sales pitch? He has yet to show a willingness to even try.
5. A common ploy in business is to create anxiety. Take a loan restructuring, something Mr. Trump has great experience with. If negotiations stall, the borrower might simply stop paying, forcing the lender to contemplate a lengthy foreclosure. The proceedings might take years, all the while the lender isn’t getting paid and the borrower controls the asset. Suddenly cutting a deal doesn’t look so bad.
Sound familiar? Mr. Trump suggested that if he didn’t get the Republican nomination there might be riots or he might run a third-party campaign. He was presenting an outcome that party leaders wanted desperately to avoid—and he knew it. Well played, but does that kind of threat work in international affairs? Incorrectly calling a businessman’s bluff, at worst, ends the deal. What if the businessman has his finger on the nuclear button?
6. A business always has bankruptcy as an option. If a real-estate deal needs to be modified, the developer can threaten or actually file chapter 11—something Mr. Trump has done repeatedly with his casinos. This tactic has been successful, benefiting Mr. Trump at the expense of others. But it would be enormously destructive if employed regarding American financial obligations.
Mr. Trump has already threatened to renegotiate America’s debt, and to print more money to pay it. Markets have so far not taken this seriously, but the idea of a U.S. default or dilution of obligations will be hard to shrug off with Mr. Trump sitting in the Oval Office.
It is an axiom that people continue to do whatever made them successful. Mr. Trump promises to approach the presidency the same way he does any business deal. But a profitable record of buying real estate and licensing his name does not mean that he will be an able leader of the free world.
Mr. Pomerantz is senior counsel at the international law firm Pillsbury Winthrop Shaw Pittman.