Who Knew That Trump's Superpower Would Be Destroying Wealth? Part 2: Mindless Chaos and Economic Pain
Yesterday, I inaugurated this new "Who Knew That Trump's Superpower Would Be Destroying Wealth?" series. Admittedly, the titular question might seem rhetorical, because in fact the only people who did not know that Donald Trump is a lifelong destroyer of wealth are those who have not been paying attention.
All the way back in January 2016, I wrote a Dorf on Law column recounting in detail how much money Trump had inherited and walking through a report (by Dylan Matthews at Vox) showing that Trump would have been richer if he had simply invested his inheritance passively (essentially parking his untaxed inheritance in an index fund and leaving it alone), which means that he was quite literally playing grownup with daddy's money and frittering it away. He had been given so much money, however, that it took some spectacularly bad business guy-ing over decades to end up in multiple bankruptcies. Again, people paying attention knew all this, just as we knew that his comeback from being a pariah among lenders was based on becoming a fake mogul on a reality TV show.
Even so, that is not what I mean when I talk about Trump having the superpower of destroying wealth. Plenty of people can blunder their way through attempts to play with the big kids and get their heinies handed to them. My point is not that Trump the private actor has always been a terrible businessman and has destroyed his own wealth (although of course that is all true). It is that Trump the politician is constantly being wrongly described as a genius with positive superpowers that other politicians lack.
Yes, he does have a superpower, by which I mean a truly unique ability. That superpower, however, is not political savvy or any of the other nonsense that one sees attributed to him far too often even in mainstream outlets. It is his preternatural ability to use the powers of his office (real and imagined) to make the economy worse.
It has long been clear that Trump neither understands nor even likes capitalism. Economists like me often emphasize the limitations of the standard notion of "the Invisible Hand" theory of free markets, but even we readily agree that the great Scottish Enlightenment moral philosopher Adam Smith's fundamental idea is true: Under clear and enforced rules of the game, people who compete fairly in economic markets can generate wealth by making deals that end up enriching themselves and society as a whole. At its core, market economics is an attempt to let people work their way toward win-win outcomes.
In turn, that means that people who stiff their counter-parties are destroying wealth, because they are grabbing short-term gains but poisoning the well so that everyone has to waste resources on needless lawsuits and retaliatory/defensive measures. Trump has always made it clear that nothing is a win for him unless the other side loses, preferably in humiliating fashion. And that is what made him persona non grata in business circles, to the point where he turned to Russian sources for funds when legitimate players in the US and elsewhere had iced him out.
Again, however, the wealth-destroying superpower is not in Trump's personal history of failure but in how he carries it over to his political decisions now. He describes shakedowns of foreign governments as "deals," when in fact he is gratuitously inflicting pain on citizens in the US and elsewhere so that he can say that the US is "winning." A bit more than a month ago, I likened this to mob boss tactics, or governing by a Sopranos-like "bust out." There have been plenty of wealthy Republicans who have been bad capitalists (Florida Senator Rick Scott, for example, became rich by running a hospital company that defrauded Medicare), but Trump is truly in his own category when it comes to his unerring instinct to make everyone poorer by trying to prove that he is the biggest, strongest boy.
To be clear, this would be a problem even if Trump were not utterly inconsistent in his decisions. That is, he could have tried to extort money from other countries by, among other things, announcing tariffs but then sticking to the plan. That alone would definitely destroy wealth. Being mercurial about everything, however, makes it incalculably worse, because people not only have to waste time and money responding but then must hedge their bets and anticipate a TACO moment (which might or might not arrive, with the uncertainty itself destroying wealth and eliminating possible win-win outcomes). Again, this is Trump's true superpower: following his instincts and destroying wealth in ways that no other politician ever could.
Consider a very small, personal example of what can be involved in trying to plan around complexity and uncertainty. As I mentioned in yesterday's column, I recently made the decision not to write columns for Verdict for the remainder of 2025. This unusual situation, though unique to me, provides some larger lessons. Because the story involves personal financial decisions, I will of course provide only the most minimal facts. But the basic story is that while Dorf on Law has never monetized its content, Justia does, which allows it to compensate Verdict writers. Again, no specifics here, but there is non-zero money involved.
This matters to me because of what I now am calling my re-expatriation, having moved to Ireland in 2025 after leaving the US to spend two years as a visiting professor in Canada. In addition to navigating the always-complex immigration laws in a new country, expatriation necessarily involves figuring out local tax laws and their interaction with the US tax laws to which American citizens are subject (even when living abroad). The situation is inevitably complicated, which makes it expensive as a matter of both personal time spent and hiring local professionals to help figure things out.
After paying a Dublin accounting firm to look into my situation, I learned that earning any amount of labor income (sorry, labour income) here would result in a requirement to pay Irish tax on that income. So what? After all, I am a big ol' liberal when it comes to taxation, and I constantly quote Oliver Wendell Holmes's famous line: "Taxes are what we pay for a civilized society." I certainly have no problem paying taxes to a government that is making a high quality of life possible for its residents.
Although Irish tax rates are a bit higher than those in the US, they are nowhere near the level that might make even a pro-tax liberal say, "Eh, not worth it." But that level does exist, as the ridiculous persistence of the so-called Laffer Curve makes clear, with its trivially true observation that a government that charges 100 percent tax rates would surely collect no revenue. Not true here. What is true, however, is that simply triggering any tax obligation would simultaneously trigger filing costs, not only fees paid to tax professionals but time spent finding and providing the documentation that would be required to file my tax return properly. The accountancy fees are not proportional to the amount of income involved, and I figured out that paying an accountant to handle even relatively trivial earnings would create the functional equivalent of a 100 percent tax rate.
More relevantly from my standpoint, the non-financial compliance hassle would simply not be worth it, even if the functional rate were somewhat less than 100 percent. Readers will surely recognize that these marginal compliance hassles and professional fees become trivial when enough money is involved, as will be the case in future years. For this year, however, I was surprised to find that the non-tax burdens caused me to say, "I can wait." This combination of facts and circumstances "destroyed wealth" in the sense that Justia will not provide a product that it would otherwise have been willing to provide, and I chose not to provide it even though it means ending up somewhat less wealthy.
The larger lessons here are interesting. First, it took me months to reach the point where I even had enough information to make this decision, and in the meantime, I was essentially in stasis. Second, although I am fairly confident that I have received competent advice, the remaining uncertainty militated against taking any risk at all. And third, this would have been even more difficult if the Irish government were changing its tax rules for expatriates randomly through announcements on social media.
Even for businesses who are not in one-off situations like mine, and who thus have ongoing relationships with accountancy firms to navigate these uncertain waters, the introduction of unpredictable and essentially unexplainable changes in the rules of the game are absolute killers. As I noted above, even changes that are not immediately walked back are wealth-killers to a certain degree, because they result in people turning their efforts away from economic activity and toward compliance. To be sure, that is not an argument against ever making any changes to any law, but it is a reminder that such costs can in some instances be prohibitive.
Because I am now living in "these islands," the obvious example comes from across the nearby sea: Brexit. As I pointed out in a 2023 Dorf on Law column, one of the rarely acknowledged costs of successive Tory governments' decisions to treat that 2016 advisory plebiscite as the never-to-be-questioned will of the people is that it forced businesses in both the UK and the remaining countries of the EU suddenly to have to deal with policy uncertainty (and duplicative compliance costs) on an unprecedented scale. Even leaving aside the extra layers of complications that were required to figure out what to do with the border between the Republic of Ireland and Northern Ireland, the result of Brexit was that a lot of potential customers in the EU concluded (as I concluded in my current situation) that the unexpected compliance hurdles argued for walking away.
One of my favorite lines about Brexit was in a 2019 column by Anne Applebaum, "Brexit Has Devastated Britain’s International Reputation — and Respect for its Democracy." Applebaum related this waggish comment from an Italian friend: "We think our democracies are weak, elsewhere in Europe. But even if you took a bunch of Italians, Poles and Hungarians, kept them up all night and got them drunk, they still wouldn’t come up with anything as disastrous as what we are seeing in the House of Commons." But by comparison to Trump, the Tories were models of consistency and deliberation.
A common attack line from old-fashioned economic conservatives has been that governments harm people by causing them to abandon wealth-producing projects that they otherwise would have pursued. That claim has always been confused, however, because it treats "government action" as always a bad thing, whereas (as post-Brexit Britain painfully learned) having known laws and regulations is a necessary condition even to begin to engage in commerce.
Even so, Trump has exposed the kernel of truth in the paleo-conservatives' claim, which is that no one thrives when big changes happen, especially without warning or any reason to feel confident that more random changes are not on the way. I will return to the question of tariffs specifically in my next column in this series, but the lesson for today is that chaos is bad for business. Destroying wealth: what a superpower.
- Neil H. Buchanan