Donald Trump and the Art of the Political Deal

9th November 2016

If you have a quick look at President-Elect Donald Trump’s approach – as a businessperson – to legal obligations, you may see something interesting about his approach to politics.

Trump sees himself as a master of the “art of the deal”.

And he certainly has an interesting and artful approach to contract law.

By way of background, classical contract law is about the sanctity of the agreement: the bargain.

All parties to a contract agree in advance what to do throughout the period of the contract regarding foreseeable risks.  This means that there is a lot of “front-end” thought put into a contract: more time working things out in advance, the fewer problems later.

The merit of this approach is that everybody knows where they stand, as and when any foreseeable problem occurs. All appropriate risks are allocated, and so on.

But this does not seem to be the approach of Trump, at least as far as his known business record can be discerned.
For Trump, the “art of the deal” – the sheer commercial excitement – is not striking the best original bargain, but the later haggling and manouvering once contract begins.

The original bargain is often just the starting point.

The original exchange of promises is a mere opening position: enough to get him over the threshold, nothing more.

The “real” deals – the “real” business – come later.

Sometimes this means “stiffing” the counterparty.  Sometimes it means being over-generous.

And sometimes, it may be said, such a cyncial approach is good business sense: you can often force a “better deal” – for yourself.

All is fair, some would say, in commercial law between businesses: after all, it is law for grown-ups.

The problem is that nobody, especially third parties, knows where they are. No reliance can be placed on the original promises.  The benefits of the artful approach are one-sided.

The extent to which this commercial approach is transferable to the fulfillment of election promises is anyone’s guess.

Perhaps there is nothing in this comparison.  
But it seems interesting: how a certain type of businessperson would do politics and get elected.

18 thoughts on “Donald Trump and the Art of the Political Deal”

  1. Thank you for your interesting stance. Only, I’d like to re-arrange your last sentence a little bit: How a certain type of businessperson would get elected and do politics. Because until now, he wasn’t in politics really.

  2. Given that “Business Week” calculated that his fortune would have been more than 3 times larger if he had simply invested in tracker funds, I guess he isn’t actually all that good at it.

  3. Methinks that the raised expectations of “disenfranchised working class USA” will be “trumped” come 2020…

  4. interesting and somewhat alternative post; suffice to say having lived and done business in Asia (Shanghai) for the last 15 years… it is exactly how business is conducted here… with lots of post-contract adjustments!!!

    it makes for an interesting alternative to the more classic London style business i was used to…

  5. “The original exchange of promises is a mere opening position: enough to get him over the threshold, nothing more.”

    A lot of people/organisations – eg property developers – do this. It is not a Trump-specific device. An illustration: London 2012 organisers wanting to stage the equestrian events in Greenwich Park promised to reinstate the rare acid grassland habitat (a relic of the Ice Age) in the Park AND extend its area. Their promises are in the planning documents. What actually happened – in this Grade I Listed landscape – is that a large area of the acid grassland was deliberately sterilised for the cross-country course (every living thing killed to a depth of 1 metre by the surfactant). Wrecked. Not reinstated. Not extended. Your heritage and mine, wrecked. Breach of all the UK/EU conservation and environment laws. No one punished. No one had to make reparations.

    If I have to make another link to Trump – surfactants were developed for use on golf courses, such as Trump’s golf courses, not on fragile historically important UNESCO World Heritage Sites.

    1. Something similar happened where I live. A major supermarket chain (not Tesco!) was granted planning permission by the local council on old disused land with the proviso they build much-needed new affordable housing. They didn’t. They sold land for a pub and fast-food chain instead. No action has been taken against them.

  6. I’d go further, it’s becoming the norm- contract now with intention to renegotiate later- because the court is expensive, long winded and unpredictable. Personal view!

  7. Thanks for this, found it very insightful.

    Perhaps a good fit with the maxim doing the rounds (also retweeted on DAG’s law and policy blog) that ‘The establishment took him literally but not seriously, while his fans took him seriously, but not literally’. Voters were as aware as Trump that his pre-election ‘promises’ were not meant literally.

    Most of those supporters who said “What you see is what you get” surely didn’t mean they believed him when he said he was going to build a wall across Mexico and make Mexicans pay for it. More like: “This man is clearly a lover of hyperbole but it is obvious that he shares our underlying beliefs”.

    Will be interesting to see where the line is where the ‘counterparty’ starts to feel ‘stiffed’…

    Perhaps, given complicity of the ‘parties’ from the outset, this line might be more flexible than we might otherwise fear?

  8. With regards to you asking what area of Brexit people would like hear your thoughts on. For me; the possibility of a second referendum on whether to take the ‘hard Brexit’ that will surely be offered or to stay in the EU. I think leavers would win that referendum too but this represents the most realistic route for us to end up staying in the EU.

  9. Is Trump taking to the political arena the application of incomplete contracts for which Oliver Hart was recently awarded the Nobel Prize for Economics? He is, he claims, a deal maker. The theory of incomplete contracts is that behind every written agreement there are variables that cannot be determined by the parties in advance, relationships of power and the ability to “shade” performance where expectations are not met. Therefore, the written words do not cover every situation. This applies as much to international relations and treaties as it does to commercial relationships. The Nobel Cocmmittee noted that the debates around incomplete contracts have “yielded considerable insights regarding the importance of limited commitment, complexity, and cognitive limitations for the incomplete contracts we observe in reality.” Let us hope that Trump doesn’t need advice from experts like Clausewitz.

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