I posted this on facebook four years ago today. A quick google search tells me that no one else has ever put theses words together, so I guess I am the inventor.

Also, its true.

So yesterday the New York Times began to release information about Donald Trump’s taxes for the last 17 years or so, with the exception of the most recent two years. Without going into details, the main gist is that he has consistently lost money in business, so much so that for 10 of the last 15 years he paid $0 in Federal income tax, and for two of those years he paid a miserly $750.

As to the truth of this information, I obviously cannot say. The President has claimed it is “fake news”, but he has made that same claim so often, and over events that have proved to be true so many times, that I can no longer believe him. To me, he is the proverbial “boy who cried wolf.” Mind you, he could prove the truth quick enough. All he has to do is release his records, free and clear. Absent his “actual” tax data, I am forced to believe it is either true, or reasonably close. I am not alone in this decision. Most people I notice are treating this info as if it is true. 

Which comes to the point of this essay, what does it all mean? There are lots of numbers and lots of things to glean from it. The data suggests trends, patterns, methods of operation, etc. Frankly there is enough information, with enough of it sufficiently contradictory, that one could invent almost any kind of a narrative for it. The defense I hear often from Trump’s supporters is, “But it’s good business,” and it is precisely this defense that I want to unpack.

Is it good business?

While I am not an expert at large real estate transactions, I am a businessman. I’ve successfully run my own small business (a sole proprietorship) since 1993. That is 27 years of continuous and profitable operation. This business is the machine that pays our bills, makes payments on our mortgage, pays for our insurance, gas, and all our other expenses. It is the sole source of income for our household. I will not disclose how much we make, but I can say it is sufficient to pay our bills, plus put money aside. We’re not rich, but we’re pretty well off, considering. 

This was not my first business, but my third. All together I have started or helped to start five businesses, and I am very likely to do more. I am what they call a serial entrepreneur, that is to say I am comfortable starting a business if the situation merits it. 

But note those numbers. Five business. While I can honestly claim I have had much success at business, I have also had my share of failure. And this is important. I have run small businesses into the ground though my ignorance and/or poor management. I have watched small businesses wither and die as the market and our personal needs changed. In short I have fucked up. It’s not something I am proud of, no one likes to fail, but failure is instructive in business, believe me. Failure can be a master teacher, if one is willing to learn.

All of that to say I’ve seen a lot in business, both my own and for the hundreds of other companies I have worked for. And I wasn’t just working, I was also paying attention. I have not just observed my own business dealings, but those of every other company I have worked for, or of every other businessperson I have known. I have gone to school on friends, family, and total strangers, asking probing questions, yearning to understand what works and what doesn’t, because failure is expensive, and yo, my family is on the line here. If I screw this up, they suffer. And no one wants to harm their family. So I pay attention, I ask questions, I look around, I book up on certain accounting or tax topics. This doesn’t mean I am the most knowledgable around, but I treat the running of my business as if my family’s well being was on the line if I fail, because it is.

So yes, we are well aware of tax dodges in our family. We understand that you often want one business to show a loss so you will pay less in taxes, we understand that tax write-offs, if done well, mean you keep more of your hard earned money, and we understand that showing less income means paying less taxes. But there is another side to this. If you show less income it means the banks will not loan you as much money, or they will change you more interest on their loan. Trust me, being self-employed sounds great up until you try to buy a house. Even good credit is not meaningful to banks if they suspect you are a risk, and they are not afraid of expressing their concerns in terms of higher interest rates. 

All this to say there is a limit to how poorly one can show up on their taxes. Tax information is required for many business dealings, especially when borrowing money. If you lose too much, no one will lend to you. Why? Well, because you lost to much. It’s a concept not unlike your credit score, albeit one calculated with a little less precision. Basically your business finances are judged like your personal finances are, and the banks will treat you accordingly.

So is it good business to continually show a loss on your tax returns? Only if you don’t want to be in business long. You might pay less in taxes, but ultimately you will pay more in loans. Like a lot of things, there is a balance that one needs to strike in order to succeed. Pay too much and you lose. Pay too little and you also lose.

But is this true for Donald Trump? A fair question, after all I’m still running a tiny business compared to his vast empire. Well, what kind of loans does he make? We know Trump borrows money. He tax records show he has hundreds of millions in loans that will be due in the next 4 years. So where does he borrow? Not here in America. For all that he purports to make American great again, he doesn’t do much business here. Why? Because American banks won’t loan money to him. Not at any price. Why? I’m guessing because he keeps showing a loss. Remember when he shows a loss on his taxes its not just him that is loosing money. When you do business on his level there are hundreds of companies all with some kind of financial tie to yours. Everyone is vested in the same outcome. If it fails, everyone fails. 

And failure on this level is massive. If you start something like a casino, there are all kinds of losses if it fails. Not just the banks you borrow money from, but the investors you sold stock to, the businesses you hired to build your building, the people you hired to run things, the companies that gave you a lower price so their name can be associated with yours, all of those people lose money too. Even the local governments that sinks money into roads, sewer, and electrical connections, not to mention business tax breaks, will lose a chunk of money. 

If your losses are large enough, you can actually cause the local economy around you to plummet. So now your losses are not just yours, but everyone connected to you, either directly or indirectly. Not just investors, employees, and local governments, but also the bank teller down the street who loses their job because the bank closes that branch, the checker at the local grocery store that goes under because no one has enough money to buy food, the clerk at the clothing store. All of these people are now losing too. Because economies are never just a local business, they are the hundred and thousands of tiny business transactions around you. Its not just the businesses you contract with, but the businesses they contract with as well. Its not just the employees you hire, but the employees someone else hires based upon your employee’s income.

Is any of that good business? Well, maybe to you, but not to anyone around you. That 100 million dollar loss on your taxes could mean as much as a billion dollars of loss to your local economy. The nice large number in pointy brackets on your Schedule C that ensures you are saving millions in taxes, will translate directly into misery and discomfort for hundreds or even thousands of people around you.

Is this good business?

But what, you may ask, if the numbers aren’t true. What if Trump is merely using “creative accounting” to show a loss, and thereby paying less in his taxes?

This is a fair question. So let us peak into it some. My first thought is not to examine his taxes, but how the banks treat him. As I have mentioned above, banks are surprisingly circumspect with their money. They don’t just give it away, even for a “good” opportunity. They expect their pound of flesh, and they are exceedingly good at getting it. 

(A short break here for a No Bullshit Hot Business Tip: Go into the business of loaning money. it is the safest and most profitable gig around. Just do it at the institutional level, not to your neighbors and friends. Seriously. This is the one business I wish I had started a long time ago. It is much more profitable than doing art, or selling products. Money never goes out of fashion, and like an undertaker, everyone eventually needs a loan. And no, I’m not selling this tip to you. You can have it for free.) 

So back to honesty on tax returns. How do the banks treat Trump’s business? As we have been seeing for years now, American banks do not loan money to Trump. This, I think answers the question if the numbers on his tax return are real or not. The banks collectively treat him as if they are. They may be nothing more than accounting fiction, but to the banks it is a real as hard cold cash. 

Honestly, that should be sufficient, right there. The people who know the most about money and its management, the people who’s job it is to sell money, do not in fact fact do business with Trump. Let that sink in.

And while you’re thinking about that point, allow me to present another, and that is of honesty. See I’ve been doing this business thing for a long time, and one of the more interesting things about business I’ve discovered is how much honesty and integrity pay. That is, treating others well, is ultimately a good investment.

In business you quickly learn what you mostly sell is trust. If people are going to give you their money, they expect something in return, and that something better be good or they will go somewhere else. If they cannot trust you to deliver, they will not give you their money. It’s a sample as that. This is true of every business interaction, from buying coffee at the local coffeeshop to multi-billion dollar business mergers. Businesses sell trust. This is also why it is so difficult to start a business, because when you first start out you have no track record. You are literally selling yourself. After you have been around a few years you gain a reputation, and that reputation is nothing more that a large pile of built up trust. Success ensures success. People see that you have been in business for years and that makes it far more likely they will trust you with their transactions. You have proven your worth.

And the opposite is just as true. Almost always I have found that people with bad reputations have earned their reputation the hard way, by being dishonest in their business dealings. No one wants to work with them. Countless times I’ve seen someone who’s business seemed a little off, and sure enough when I asked around I found no one trusted them for a reason. They left a trail of bad decisions behind them, casting a big old stink like a fart in church. People like that rarely last more than 5-6 years in our industry before moving on to another. They get run out because their reputations loom so large that no one will trust them anymore. So what do they do? They go into another industry and do the same damn bullshit all over again. 

I’ve met men who I wouldn’t trust with a dollar. Are they rich? Sometimes. It depends upon when you catch them. Men like this are good at making money, talking up their reputation, making themselves look large and in charge. But their bad dealings eventually catch up with them, because you can’t outrun your reputation, and when that happens they go broke, and then switch to a new industry. Men like this have an interesting pattern of success and failure. They flourish for a short while, then it all comes tumbling down. Then they move not to a new place, and flourish again, but that eventually comes tumbling down too. Are they successful? Maybe, depending upon your definition of success. Is this good business? Ultimately no. You can only be a con man for so long before enough people are inoculated to your bullshit, and when that happens you end up broke. 

Does this sound like someone you know? Think back. Ever had a friend or family member who was a drug addict? Ever tried to deal with an addict of some kind? If you’re nodding your head, then you know exactly what I mean. I started my first business with an alcoholic in recovery. He was exactly like this. He was good as talking the talk, but when it came time to working the work, there was always an excuse. After a while you just stop trying to make things work with someone like this, no matter what their potential. Get burned enough times and you’re shy to do it again. 

So what about the opposite of poor behavior. What does honesty give you? Well in my small experience growing and maintaining my business relationships, it has paid off very well. I work in an industry that is full of freelancers. We are the original gig economy. And our reputations mean not only a paycheck, but are directly tied to a pay rate. A poor reputation means you not only have a harder time finding work, but when you do find it they pay you less. The people with good reputations not only find more work, but they find more success at it. They get paid well, and on time. People trust them. They establish relationships that last for years and even decades. I’ve had people recommend me who I have not seen in over 10 years. Why? Well, I hope it because I’ve been honest and caring in my dealings. People trust me. I also deliver in the work they give me, but trust me on this, you cannot always deliver. My reputation has helped me through many a dumb mistake and nightmarish project. It has smoothed the bumps in the road, making thing easier.

But also this needs to be said: There is a joy in treating others well, of being kind, of sharing hard times with others, of building professional relationships until they start to become personal. We all like it when the person at the local store remembers our name. We all like to be approached with a honest smile. We all appreciate the value of an honest hand shake. Why? Well, maybe its because we are all primates who were designed to live and thrive in small groups, but honestly I don’t care too much what the scientists say about this. Being nice just works. Having the trust of others is the greatest gift. I may not be rich like Trump, but when times get tough I have people at my back. Do you?

Is this good business? I’d like the think so.

What do you think? Who do you invite over to meet your family? Who do you let sit at your supper table? Is it the rich man with a bad reputation, or the poor man who is nice to everyone? I know my answer. What is yours?

Is it good business?

(a duplicate of something I posted on facebook, and wanted here for posterity)

I’ve been thinking a lot about this case lately and why it doesn’t sit well with so many. I am not a lawyer or a legal expert. These are just my musings, an attempt to understand the reason why this whole thing feels so unjust to so many.

So there are a few assumptions at play here that are important. The first is that State is required to act on behalf of its citizens, the second is that if there is a dispute we have a legal place to resolve them, we call it a court of law. Both of these are necessary for “justice.”

The first part is easy to see. If a citizen dies, the State investigates. If their suspect is found guilty of the crime, the State punishes. I know this is pretty basic, but its worth pointing out. The State’s job is to speak on behalf of the dead, and if necessary, punish their perpetrator. We all understand this. It is in every cop show, it is the basis of much of our laws, it is found in almost all crime fiction. This is a culturally excepted practice. Hurt someone and the State comes after you.

The second part is also culturally excepted practice. If there are any disputes regarding a crime, the State resolves them in court. We all know this, and understand it. We all carry with us a sense that we can expect “our day in court.” Again, our laws, our history, our culture, and our media all have this expectation.

But what does a court mean? A court is a strange place. There is a prosecutor, a person who’s sole job is to try and convict the perpetrator. There is a Defender, a person who’s stole job is to defend the perpetrator. There is a judge, a person who’s job is to make sure the court proceeds correctly, smoothly, and follows the law (essentially they defend the law for the State). Finally there is an audience of citizens, a jury, who’s sole job is to determine if the perpetrator is guilty or innocent. 

Note: this is an adversarial process. It is aggressive and partisan. There are sides. There is conflict. This is how it is supposed to be. In fact, long ago court cases could be settled by might of arms. We no longer have those rules (no one is allowed into a courtroom armed except bailiffs), but the idea that we resolve conflict with fierce words is still deeply important.

So, there is a verbal fight, a judge (a referee), and a most importantly, a group of every-day citizens who are the only ones who get to determine guilt or innocence. 

And notice the role of the State is not to determine guilt, only citizens do that. The state determines and defends the law, and it provides one (or both) sides of the conflict, but it does not determine guilt.

This is how we do justice in America.

Now, having laid all that out, lets see how the State of Kentucky did regarding Breonna Taylor.

First of all we know she was killed by employees of the State. While not common, this does happen, but there is a conflict here. The State is now needing to both prosecute and defend its own employees. It is essentially prosecuting itself. This is considered a conflict of interest. At the very least, the State needs to ensure that every legal proceeding has at least one person present to speak on behalf of the dead, because we all understand it would be very easy for the State to simply look away and not prosecute itself. 

So did the State do this? Was there a legal proceeding with some kind of conflict, and both sides represented? The answer is no. There was not. The State looked at a lot of evidence, some of it showing their employees acted correctly, but a lot of it showing they did not. The employees themselves did not follow proper procedures, did not fill out the proper forms, did not follows accepted practices, etc., and they did not provide exculpatory evidence in the form of body camera footage that some at least were wearing at the time.

Still in all of this the State judged their actions did not merit a trial. In effect, the State judged them innocent.

Now it is important to point out, by Kentucky law, it is entirely possible the officers involved acted within the law. It is entirely possible that if they were prosecuted, the case would end with the a not guilty verdict. These things can all be true, but we will never know because the Sate determined we wouldn’t. In effect, the State acted as the role of the Jury, the Prosecutor, and the Defender, in a case that clearly was controversial, and in which its own citizens had demanded more scrutiny.

So was there justice here? No. The state neither acted on behalf of its citizen, Breonna Taylor, nor brought the case against her killers to the proper place to resolve such conflicts. There was no opposing side given a voice in the proceedings. There was no speaker for the dead. It was the State sitting in judgement upon its own actors, and determining, by itself, that they had done nothing wrong.

If you find yourself wondering why people are protesting, this is why.

…of a song I wrote back in April of 2016.

Well you spent all your cash,
and you went through all your credit.

You fueled your high class dreams,
from anyone who would lend it.

And now that you’re strung out,
from paying off your loans.

You look to me and ask,
where all the money has gone.

This is in response to receiving a new filter kit for our Falsken Water System that removes hard water deposits from the water before it enters our on-demand hot water heater. The text below was emailed to them. I’m placing it here because I thought it deserved more exposure.

To Whom It May Concern,

I am writing to you after receiving your tHT-20RF replacement filter for our Heater Treater 20. This is the third replacement cartridge we’ve purchased from your company. I have to say I was pleasantly surprised by the packaging. Previous replacement filters came pretty bare-bones, but this one was obviously a well-thought replacement kit. It included instructions, a new o-ring, and even a little silicon lubricant packet. Opening the box (which is also new packaging) was a wonderful surprise. A bit like expecting a Chevy and finding instead a Cadillac. So good job.

But here is the reason why I am writing. Upgrading a product like this is nice, but not always necessary. As your marketing director will no doubt tell you, I am considered a “captive customer,” that is I have already purchased your product (a heater treater, demanded by our plumber as a condition of installation for on-demand heater), and I’m not likely to purchase another. Short of buying a new home we’re pretty much heater treatered up. Sales of incidentals, like replacement filter cartridges, are probably not a big profit center for you, and they certainly don’t generate more profit by adding “goodies” in with the filter.

What this tells me is that someone in your company decided to upgrade your replacement filters, and did so against most of the advice they give you in business school. Even now I bet you have a bean-counter somewhere in your company telling you this was a bad business decision. Well I’m writing to you to tell you different. This was a brilliant move, one I hope more companies will emulate. Whomever made this decision should be congratulated. I used to be a captive customer, now I am a loyal one. This is an important difference, and well worth the extra money you spent on me. Dollar for dollar, this is damn good marketing.

Signed, a very thankful customer,

Eric Tolladay