When I was a kid, Esphyr Slobodkina’s book, Caps for Sale terrified me. It involved this guy who I now understand was a cap peddler who wore many caps on his head at the same time. I thought he was Satan. I have no idea why I thought that. I was a strange kid. Anyway, I now wish that I were that peddler, because I would love to tip a hundred caps to SV Dáte who wrote the best article I’ve read in ages, The One Easy Way Donald Trump Could Have Been Even Richer: Doing Nothing.
People often ask me where I get my story ideas. I tell them it is mostly cartoons (which is true). Perhaps as a result, it would not occur to me to do what Dáte did. We all know that money makes money. And since Donald Trump was born rich, Dáte decided to look at how rich he would be now if he had just floated along: put his money in a regular investment vehicle. In this case, he chose an indexed mutual fund. These are funds designed to do roughly as well as the market itself. His results: if Trump had just put his 1974 inheritance into an index fund, he would now have $3 billion; if he had put his $200 million estimated fortune in 1982 into an index fund, he would not have $8 billion.
That a purely unmanaged index fund’s return could outperform Trump’s hands-on wheeling and dealing calls into question one of Trump’s chief selling points on the campaign trail: his business acumen.
He added that if Trump had given Warren Buffett his money to invest, Trump would now be worth almost $70 billion. But most of the rest of the article is about how much Trump is actually worth. Most recently, Trump has claimed that he is worth ten billion dollars. But that number is certainly not true. And it is possible that he is only really worth something like hundreds of millions of dollars. It doesn’t really matter. The main thing is that he hasn’t done any better than a simple computer algorithm in terms of managing his money.
At Vox, Dylan Matthews looked into the question a bit more deeply.
Even after taking into account all of the costs associated with a mutual fund (fees and taxes), it turns out that Trump currently has (based on the most liberal estimates) just about the same amount of money that he would have had. And I think the title of his article says all that need be said, “Donald Trump isn’t rich because he’s a great investor. He’s rich because his dad was rich.”
That, my friends, is the story of modern America. Meritocracy? American exceptionalism? It’s all rubbish. Donald Trump is the perfect symbol of America.