First published in the Lake Champlain Weekly
Written by Quentin Langley
You should be famously skeptical of anyone in New York City who offers to sell you a bridge. It is likely that the vendor lacks good title to the real estate concerned. But if anyone offers to sell you Central Park your concerns would begin if the vendor did have good title. Seven hundred and seventy eight acres of conveniently located real estate in Midtown Manhattan sounds like a bargain at almost any price, but the reverse is actually true. Even at a dollar, you would be overpaying. Central Park would undoubtedly come with covenants requiring you to maintain it at enormous cost and you would not be able to charge people for access or build on the land.
Of course if you owned land – and it would not need to be 778 acres – in Midtown, and the City granted you permission to build on it, then the City would have granted you, at no charge, something worth billions. Land is utterly valueless. Consent to do something on that land – farming, building, anything – can be extremely valuable.
This makes real estate developers especially vulnerable to corruption and extortion. Some, of course, initiate the corruption, bribing council members. Some are the victims of extortion by the council members. In either case, in the US at least, both parties have committed a criminal offence.
As a candidate for the office of President, Donald Trump boasted about how he used to bribe politicians of both parties – though it is mostly Democrats who run large cities – in order to get what he wanted from them: building consent here or some eminent domain there.
Some people are now suggesting that because Trump’s organization continues to do business around the world he is in breach of the Foreign Emoluments Clause of the Constitution. That’s a stretch. No president has ever been found to have breached it. George Washington continued to do business, selling his agricultural products abroad, and accepting gifts from foreign governments while president. The framers of the Constitution served in his Cabinet and in Congress, and saw no breach of the law in his behavior.
Washington was hardly the only president to skirt the edges of this clause, which also prohibits accepting titles from foreign governments. Barack Obama, for example, was awarded a Nobel Peace Prize by a committee established under the Norwegian Parliament. No doubt that enhances his earning potential as a speaker and author.
Will foreign dignitaries visiting the President in DC stay in Trump International Hotel? It would seem a bit rude to stay at the Marriott.
The framers cannot possibly have anticipated the complexity of Donald Trump’s business empire. The right to build in Moscow, Beijing or Istanbul would be worth billions to the Trump Organization. Governments could easily pay over the odds to book rooms and drive up the capital value of his real estate. The laws which govern these conflicts of interest have been in need of reform for a long time. The extent of this president’s foreign interests merely highlights the potential problems.
Quentin Langley lives in New York and London and teaches at the University of Bedfordshire Business School. He is the author of Brandjack: How your reputation is at risk from brand pirates and what to do about it