Atlantic City Casino Owner Carl Icahn Answers CNBC Questions on the Economy and American Workers
Carl Icahn, the owner of the Tropicana Casino and the Trump Taj Mahal, gave a television interview to CNBC’s Ian Schwartz on Wednesday. In the interview, Icahn discussed a wide range of topics. Most of the discussion focused on the U.S. economy and how it affects the upcoming presidential election.
Non-Americans have wondered openly in the past year how the United States can entertain serious thoughts of Donald Trump as a president. The pat answer from Democrats is you should not blame America, but instead blame the Republican Party. Or put more pointedly, they should blame the GOP’s years-long appeal to suspicion and resentment (they call it “fear” and “hatred”), while implementing a policy of obstruction.
There’s some validity to those arguments, but the 15,000,000 people who voted for Donald Trump in the primaries can’t all be hate-filled reactionaries. That is, their suspicion and resentment should not simply be dismissed as bigotry and ignorance. At the heart of their anger lies brutal economic truths, and both American political parties can be blamed for the anti-establishment mood of the US electorate.
Some might laugh that Carl Icahn, who just laid off 3000 casino workers out of a sense of pique, is speaking on behalf of US workers. Yet Carl Icahn’s interview shows how an American of intelligence rationalizes Trumpism.
In the interview, Icahn gives a glimpse into the mindset of the investor class in America in 2016. He also speculated about the mindset of those who support Donald Trump, while suggesting that those who dismiss Trump are ignoring facts on the ground in America.
Closure of the Trump Taj Mahal
For an American gambling media which has savaged Carl Icahn a lot recently over his decision to close the Trump Taj Mahal, thus costing 3,000 much-needed jobs in Atlantic City, Icahn’s expressed sympathies for the American working class might seem surprising. No doubt, many will view his sympathies as insincere.
Yet, the message Carl Icahn relates has its own interior logic. One can see that he views America’s entrepreneurs and executives living in a symbiotic relationship with American workers. He sees the relationship as one of job creators and employees, where the good of the one is the good of the other. And he sees government regulation, globalism, and a service economy standing in the way of that relationship.
Icahn’s Advice: Stick to the Economy
Carl Icahn is known to be friend’s with the Trump Family. When it became obvious that Carl Icahn would buy the Trump Taj Mahal, Ivanka Trump posted on social media that she and her father were thrilled. She described Carl Icahn as a family friend and said the family knew he would turn around the struggling casino. Shortly after, Donald Trump came to arrangement to keep his name on the casino he founded–something he earlier suggested might not happen.
Thus, Carl Icahn gave his opinion about the 2016 Presidential Election.
He said, “I think he’s right on about the economy…He is exactly right on. And our country cannot exist when the government is at war with business. And that’s exactly what we have.”
Then, the casino owner and phenomenally successful investor gave advice to Donald Trump and the Trump Campaign. He added, “I think if you stick to the economic message, there is no question that you cannot — an economy can’t exist, a capitalist economy can’t exist when the government is perceived to be at war with business.”
Regulations Hold Back the Economy
At the heart of that message is a concern about the regulatory agencies, whom Icahn characterizes as stifling innovation and investment in the United States. This is a traditional mantra, but to Carl Icahn, it’s a repetition of a simple truth.
In many ways, Carl Icahn’s political philosophies echo those of the American business class down through the decades: regulations hurt the economy. He said that entrepreneurship requires risk, but people are afraid of taking risks, because regulation is arbitrary and creates a thin margin for success.
He said that American investors and entrepreneurs in the post-Recession recovery still hoard their resources, because of a basic fear of risk.
Speaking as an investor and a job creator, he said, “How do you have business exist? How do you have people put money in–I own 20 companies, I got 93,000 workers and I take chances and I’m scared to put more money into equipment and manufacturing because I’m frightened about what the god-darn EPA is going to do to me, what the FTC is going to do and on and on and on.”
Carl Icahn: The Simple Truth
Carl Icahn said the key to his success has been the ability to see the simple truth. While that ability has served him well in his time as an activist investor, he said it also helps him see the simple truth in the 2016 presidential campaign.
At the heart of Trumpism is an economic reality: people see their jobs going overseas. To Carl Icahn, 2016 is a ‘Status Quo Election’, in which people have a choice between voting for the establishment or voting for an agent of change.
Mr. Icahn said that the choice is simple for millions of Trump followers. He said, “Why the hell should he vote for a system that is not giving him a good paying job? You know that’s true. I don’t think anybody’s going to argue about that.”
Questions the Service Economy
Carl Icahn questioned the decision to embrace globalism and the service economy, which replaced the industrial economy the United States traditionally embraced. Icahn said, “I still question the pundits that said, oh, it’s great, we’re a service economy. What does it do? What does that mean? We sit around and just text each other.”
He continued to savage the ‘economic gurus of the Democratic Party‘, saying their embrace of free trade for the past generation has led to the current struggles of middle class Americans. The billionaire investor questioned the idea that embracing the Information Age allows the United States to remain ahead technologically.
Icahn retorted, “And even in technology we really don’t because if you think about it we make the iPhones in China. So the only thing we do is send messages to each other and say isn’t that wonderful sit around all day and text each other. And go and send tweets to each other. And how do we compete as a nation?”
Icahn Explains People’s Anger
Carl Icahn explained the anger that people who support Donald Trump share. Instead of seeing the issue in social or demographic terms–a privileged majority seeing that majority status slipping away–Carl Icahn suggested that the anger has more to do with everyday living conditions. When people see the job situation grow steadily worse year-after-year, they start to blame the leadership.
Icahn started by saying that people do not quite understand the whys and wherefores of economic policy, “But people don’t understand the problems with our economy. That is something that’s not hard to educate people to.”
He quickly added that those people do understand something is wrong with those economic policies. They don’t care about answers; they want solutions. Icahn said, “People do know many, many, many millions of people do not have good jobs. They do know that. But they don’t know why. And I’m making it simple why. The regulatory agencies and other pacs are just scaring the hell out of them.”
An Agent of Change
In this philosophy, party affiliation hardly matters. Both Democrats and Republicans have supported free trade over the years, but middle class Americans essentially agree with Donald Trump on free trade. When China manipulates its currency to keep manufacturing costs down, it robs Americans of jobs.
Free trade in this context isn’t fair trade, but an excuse for the American middle class (or those economic conditions) to be exported to China. China can’t be blamed for slanting things to their advantage, but in the minds of many American voters, US leaders can be blamed for pursuing globalist agendas instead of national interest, which is what they were elected to do.
Carl Icahn’s America
It’s a decidedly old school philosophy. Icahn’s critics are going to say he is pining for an America that no longer exists. We live in the Information Age and America needs to be on the bleeding edge of the information explosion. These proponents tend to call Carl Icahn’s attitudes as paleo-conservative. They claim that China did not steal the jobs, but technological innovation and advancement did. Machinery replaced the factory jobs.
Even Icahn’s identification of Trump supporters as “Archie Bunker” types is an old-fashioned way to identify them.
These people say we live in a post-industrial age, and yet China’s rise to economic strength over the past 15-20 years has been about the rise of an industrial economy. It still seems cheaper to manufacture with real people in China than it is to have industrial plants driven by machinery in America.
One has to ask why everything is an either/or proposition. Perhaps it is the spoiled American mentality to ask, but why does having a service economy mean America cannot have manufacturing jobs? Three possibilities exist. One, it is too expensive to manufacture in the United States anymore. Two, it could be done, but US executives have sold out and shipped jobs overseas in order to please their shareholders and win bigger salaries for themselves. Or three, we could have both, if we gutted federal regulations and lowered the corporate taxes in the country.
Given the number of outrageous things Donald Trump has said and the many groups he’s offended, it seems highly unlikely he can win the November election. The underlying economic issues which has won him many votes are unlikely to go away. Expect to see a Republican politician analyze the 2016 nomination process and isolate the economy as a winning issue.
Four years from now, expect a strong push from some GOP politician to run on the same issues that Carl Icahn and Donald Trump have touched on, perhaps with a little more polish and inclusion. It’s an issue which would win many votes, without an appeal to the worse angels of our nature.
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