Debate Magazine

How Risky is a Trump Presidency?

By Eowyn @DrEowyn

Scott Adams, the Gilbert cartoonist who, in 2015, had accurately predicted Hillary’s health crisis, assesses how big is the Trump risk to the economy and the country in general, based on how Trump has managed risk in the past:

  1. Diversification: Rule #1 for an investment portfolio is diversification. Although Trump probably wasn’t sufficiently diversified early in his real estate career, he now owns about 500 entities and he has succeeded across multiple fields. He understands diversification.
  2. A-B Testing: One of the best ways to manage risk is to try things on a small scale and only double-down if the test is a success. We see Trump trying out different Linguistic Kill Shots to see what sticks, changing campaign staff as needed, employing different campaign strategies depending on the situation, being decisive when things don’t work (firing people), and pivoting quickly based on what he learns from testing. That suggests a “systems” type of mind that manage risk better, as opposed to a “goal” mentality.
  3. Two Ways to Win: We often see Trump choose strategies that have two ways to win and no way to lose, which is the best risk management of all. For example, when Trump warned that Iran should release American prisoners before he gets elected, he created two ways to win and no way to lose. If the prisoners were released (and they were), Trump could claim his threat was effective. (He did.) If Iran kept the prisoners, Trump could say the United States needs a bad-ass President like him to deal with Iran.
  4. Bankruptcies: When the general public hears that Trump had several bankruptcies (out of hundreds of projects) they think that means he did something wrong. But business people see a different picture. They see a diversified portfolio of projects that are wisely siloed into their own corporate entities so some can fail without taking the others with them. That’s good risk management because one would naturally expect several failures out of hundreds of projects.
  5. Marriages: Trump is married to his third wife and still has good relationships with his exes. Apparently Trump had good prenups, and good lawyers. He managed the risk of divorce better than 90% of the people I know. (See also “Donald Trump’s ex-wife Ivana says he’ll make the changes he promised”)
  6. Alcohol and Drugs: Trump has never had a drink of alcohol or an illegal drug, because of the risk. If you have ever consumed alcohol or taken illegal drugs, you have a far higher tolerance for risk than Trump. He removed those risks from his life.
  7. Seeing the Future: One way to reduce risk is to predict the future better than those around you. We know that Trump went all-in on his run for president this time, but in prior election years he dropped out early. Apparently he made the right decision this time because he could see himself making it all the way. We have also witnessed Trump using unorthodox campaign strategies that almost everyone else in the world thought would fail. But apparently Trump predicted the future better than the pundits. His methods have worked. Trump hasn’t predicted the future correctly every time. As noted, several of his projects did not work out. But evidently he expected there could be some losers among his projects because he set them up as separate entities that could fail on their own without dragging down the rest.
  8. Listening to Advice: One of the criticisms we heard about Trump early in the campaign is that he wouldn’t listen to experts. But now we have lots of examples in which he has done exactly that. His entire campaign has transformed in the past six weeks. We watched Trump assess the changing election dynamics, take advice from advisors, adapt his approach, and spike in the polls. Trump is also good at firing people. The smartest person I know told me that the most important skill of a leader is firing, not hiring. No one is smart enough to hire the right people every time, so firing is the more valuable skill. Trump apparently has that skill. Consider how hard it was to fire his longtime friend Corey Lewandowski, and later Paul Manafort. Trump pulled the trigger both times. And both moves proved to be helpful.
  9. Trump’s Ego: Trump’s showmanship and branding comes off as ego, and narcissism, and that can be scary to the public. You want to know your President is making decisions based on what is good for the country, and not what is good for the President’s ego. But Trump’s appearance on Jimmy Fallon went a long way toward changing perceptions about his ego. Trump let Fallon mess up his famous hair on TV, and it humanized Trump. We watched Trump put his ego aside with no real effort. We also see Trump doing more outreach to the African-American community, toning down his rhetoric (mostly) and generally doing what the public has been asking him to do. That suggests a candidate who has control of his ego. He listens to the people and gives them what they want.


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