Making Corporatism Great Again

By Ron Paul

President Trump has recently endorsed a policy that is arguably as socialist as anything proposed by New York mayoral candidate Zohran Mamdani or Sen. Bernie Sanders — partial government ownership of private corporations.

Earlier this year, as a condition of approving Nippon Steel’s purchase of US Steel, President Trump demanded Nippon give the US government a “golden share” in US Steel. This golden share allows the US government to overrule Nippon’s management if the government determines Nippon is acting against US “national security,” which means the government can overrule many decisions made by Nippon‘s management.

Unfortunately, Nippon was not a “one-and-done” excursion into corporatism. President Trump recently struck a deal with computer chip manufacturer Intel to give the company 8.9 billion dollars in government subsidies in exchange for ten percent of Intel’s stock. This deal makes the US government Intel’s largest stockholder!

The Trump administration has promised that it will not use its position to undermine Intel’s board. However, the administration is reserving the right to counter Intel’s board if the administration determines the board is taking an action that would adversely impact the relationship of the company or its subsidiaries with the US government. So, the Trump administration is yet again giving itself power to manage a nominally private company.

Enabling the government to control a private company (even if the government does not actually exercise its power) means the company’s management will base its decisions on what will please those currently in power, rather than on the desires of consumers.

Government investment in corporations will cause politicians to make decisions based on what will profit the companies the government has “invested” in while those companies’ competitors will seek to attract government investment in order to win special privileges for themselves.

A corporation partially owned by government will be considered “too big to fail” since its failure would cause the government to lose the money “invested” in the businesses. So, the argument will be that a bailout will save the taxpayers money.

According to a 2024 analysis by the World Bank — an organization not known as a supporter of free-market economics, companies of which government owns ten percent or more are six percent less profitable and have workforces that are 32 percent less productive.

Some members of the Trump administration have suggested that the federal government take a partial ownership interest in defense contractors like Lockheed Martin and Boeing. Commerce Secretary Howard Lutnick has pointed out that big defense contractor Lockheed Martin, for example, is “basically an arm of the US government” since almost all its revenue comes from the US government. Secretary Lutnick has a point, but the closeness between the Pentagon and big corporations is an argument for restoring a noninterventionist foreign policy. Giving the government an ownership interest in defense contractors would allow the war party to argue that militarism is good for the taxpayer because it boosts the value of the government’s “investments”!

Government “investment” in private businesses will only worsen the twin plagues of corporatism and cronyism that afflict our political and economic systems. Instead of further entangling government and business, those seeking to make America great again should work to end the welfare-warfare-regulatory state and the fiat money system that makes it possible. The only path to prosperity is through a true free market, limited government, and a foreign policy of peace and free trade.