Trump Says He Hates Socialism. So Why Is He Acting Like a Socialist?
To support chipmaker Intel, the president used our money to buy 433 million shares of Intel stock. That's not a free market.
"America will never be a socialist country!" says President Donald Trump.
I hope not.
Trump rightly declared socialism "the wrecker of nations and destroyer of societies."
But I fear he's confused about what socialism is.
"Trump says he's against socialism, but he is having the government get involved in owning companies and directing companies," complains economist Daniel Mitchell in my new video.
When Trump took 10 percent of Intel, his commerce secretary, Howard Lutnick, said, "It's not socialism. This is capitalism!"
But when government takes partial ownership of companies, that is socialism.
I said to Mitchell, "It's just 10 percent."
"It doesn't have to be 100 percent," he replies. "If you're Intel, there's no way you're going to antagonize the Trump administration or some future AOC administration by doing something that the government doesn't like."
Even Trump worries about that, saying, "I'm a little concerned whoever that president might be."
"I don't trust Donald Trump to control the share correctly," says Mitchell, "but I definitely don't trust some of the folks on the left. All of a sudden, you've created this precedent of government being a senior partner sitting in the boardroom.…It's going to be a disaster for the U.S. economy."
Lately, both parties have been eager to subsidize politically connected businesses.
Some Republicans say such deals are needed to keep America safe.
"If a company is important to America's security," says Mitchell, "make it easy for them to operate in the U.S. Fix the regulatory process.…That's a much better approach than government handouts."
Trump's not the first president to make deals with companies. Former President Barack Obama squandered billions on companies like Solyndra. Then, Republicans rightfully objected.
But now Trump's doing the deals.
To support chipmaker Intel, he used our money to buy 433 million shares of Intel stock. This is after former President Joe Biden offered Intel an $8 billion grant.
The handouts didn't stop Intel's decline. This year, the company said it will let 20,000 workers go.
Government handouts interfere with the creative destruction that helps economies really grow.
"Let the weak companies go away," says Mitchell. "Then resources, labor and capital can go to the young new companies that actually create wealth. Allow creative destruction to operate. Politicians, they look at the seen but ignore the unseen. The seen is, 'A company in my district is closing and factory jobs will be lost.' They're not paying attention to the new companies, the new entrepreneurship that makes us much richer in the long run."
The "unseen" is also the company that might have started, might have become even more valuable, if government hadn't thrown our money at the older, politically connected, declining businesses.
"Japan was one of the richest, most prosperous countries in the world," Mitchell points out. The media said, "We needed to copy Japan. 'They had this great industrial policy.' It turns out they suffered several lost decades, largely as a consequence of trying to prop up zombie companies."
Japan's economy fell behind as freer economies surpassed them.
"No country has ever prospered with that kind of system," says Mitchell.
Businesses collecting government grants stagnate partly because executives start chasing political favors instead of innovating.
After Trump gave Pfizer a tariff exemption, the CEO groveled: "Mr. President, I want to thank you for your leadership…for your friendship."
After Intel got your money, its executives did lots of photo ops with politicians like Joe Biden.
"The market," says Mitchell, "is better than government at delivering things we need [because] there's a bottom-line incentive to use resources intelligently and efficiently. With politicians, it's about, 'Does a factory have jobs in a key state?' 'Are the executives donors to my campaign?' This is a recipe for rampant cronyism."
It is.
Bizarrely, today, Democrats say they will defend free markets from Trump.
California Gov. Gavin Newsom: "[Trump] has completely perverted capitalism.…It's crony capitalism."
Sen. Elizabeth Warren (D–Mass.): "A partner with a corporation….That's just Donald Trump doing another shakedown."
I don't know whether to laugh or cry.
Both parties should butt out of business. Let markets work.
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