The last of Donald Trump’s casinos, the Trump Plaza Hotel and Casino in Atlantic City, New Jersey, was demolished in 2021. Yet, in many ways, Trump’s history with casinos is perhaps most emblematic of his political style and says a lot about where America is as a society. Economic geographer, Brett Christophers, believes that the developed world has entered an era of “rentier capitalism”, in which the goal is not the doing or building of things, but having things. The rentier capitalist is an economic actor who earns a rent, or payments, “purely by virtue of controlling something valuable”. Rentier capitalism is not entrepreneurial capitalism, it is proprietary, it is about extracting rents, not creating value. Trump is a failed entrepreneur, but he is one of the first great rentier capitalists, offloading risks to others, while ensuring he walks away a winner, regardless of the impact to those who trusted him, or relied on him.
Whenever anyone discusses Trump’s casino legacy, what they point to are the series of bankruptcies (four in total) suffered by the Trump Entertainment Resorts, which ran his gambling and hospitality empire. It is true that Trump Entertainment Resorts was a failure, a failure which was eventually bought out by Icahn Enterprises and proved so fragile that, eventually, all its assets were sold off and the business closed. That, however, is only part of the story.
Trump likes to see himself as a great entrepreneur, but that is clearly nonsense. The New York financial fraud case, which has led to an enormous $350 million fine, shows that Trump is very far from being a great entrepreneur. However, what Trump’s history with casinos, and his broader business career shows, is Trump’s willingness to make big bets, and his ability to turn the most humiliating failures into opportunities to rebrand and emerge with an even greater profile.
In Atlantic City, Trump’s career there spanned 25 years, multiple bankruptcies, and an eventual sale. His inability to turn a profit was so pronounced that the Seattle Times referred to his casino ventures as a “protracted failure”. Yet, amidst protracted failure, Trump made a fortune. Rather than investing an enormous chunk of his personal fortune, Trump did what all rentier capitalists do, he offloaded his risk. After taking out personal loans, he formed a public company that bought out his personal stake in the casinos, moving the junk bonds he could not or would not repay personally, onto this public company, while collecting millions in compensation. In at least one instance, Trump’s public company bought him out at a very inflated price. His upside was enormous: if he succeeded in turning his property and Atlantic City, into a national leader, he would win, if he failed, he would still win. Trump is a terrible entrepreneur, but he is a great rentier capitalist. Those who suffered when he failed were those investors who believed in him, the employees who depended on him, the banks and bondholders who lent to him. Trump came out a billionaire.
In fact, the whole scheme made it almost impossible for his casinos to succeed. Simply buying the casino in this way immediately makes the casino less profitable. Trump didn’t just use debt to buy assets, he aggressively loaded up on debt to levels that his businesses simply could not support, because he was so determined to shift risk that Fortune describes it as a “debt addiction” that “crushed the biggest company he ever ran”.
Christophers gives the example of hedge funds who create no value, are obsessed about offloading their risk, and earn tax breaks for doing so, earning payments without creating value. Today, hedge funds control $100 trillion in assets, globally. They are involved in every facet of our lives, and they are rewarded richly simply for owning things. Building or doing stuff is no longer the heart of capitalism, possession is everything. Trump’s fortune, his political style, are emblematic of America’s turn toward this new form of capitalism.