Less than zero

All this discussion of Donald Trump’s nearly-billion-dollar losses and multiple bankruptcies reminded me of my own intellectual debt to Mr Trump. I remember reading about his bankruptcies back in the 1990s, and being genuinely confused and shocked. A mathematician inclines to think of wealth as a number, in a well-ordered place on a number-line. Positive numbers represent assets and negative numbers debts, and total wealth is the sum of all of them. A person with a million dollars has a lot more than a person with nothing, but the person with nothing — I thought — has much more than the million-dollar debtor.

That was wrong, and the Trump bankruptcy first made me realise this.

Wealth isn’t a line, it is a circle, with the large positive and large negative numbers much closer to each other than they are to zero. The person with nothing cannot get to a million or minus a million (except by fluke chances, like winning a lottery). The mogul is used to talking in units of millions, and everyone around him takes it for granted. When Trump found himself unable to meet his obligations in 1990, the banks didn’t just seize his assets. They loaned him more money, on the condition that the banks name someone to actually run his business, and he constrain his personal spending to a $450,000 a month allowance.

Imagine that: A formerly rich man finds himself with less than nothing, and the banks give him the money with which to keep paying them their interest, and himself a monthly stipend of $450,000. The condition is that he stop doing any work. And then he managed to flee his creditors into bankruptcy five years later anyway, while cheating a load of equity investors.

It’s like Napoleon being allowed to take a retinue with him to become ruler of Elba. Just because he had been a sort-of king, you couldn’t leave him with nothing. It would be too cruel, even though there are millions of people who never had anything, and didn’t have the guilt of having plunged the Continent into chaos.

And you can’t expect a rich man to suddenly get a cashier job at the supermarket. Even while you recognise that his contribution to his companies and the wider world has been purely negative. It would be too cruel. He’s one of “us”.

I suppose, as with Napoleon, they worry about the danger of a scorched-earth defense if they try to take what is owed to them in a frontal assault. The person with millions in debts (or better, hundreds of millions) can move his assets and debts around so that the positive never collides with the larger negative. And the creditors, afraid that they’ll end up with nothing, will be eager to make a deal that lets most of the negative disappear.