Chairman Trump's Great Grift Forward. Move over, Mao.
Millions of Americans voted for Donald Trump multiple times
because they thought that because of his experience in business, he must
understand the American economy — and know how to make it work.
CNN Business
In reality, however, whatever success Trump had in his
career was built on insight not into the workings of capitalism but into the
darker corners of human nature. He succeeded through scams, lies, and bullying,
using the power he had over others to enrich himself at their expense.
So no one should be surprised that he brings the same spirit
to policymaking. In his second term, Trump is at last unleashed to fully
realize his vision, and on economics, that means a new kind of mobster state
capitalism.
Case in point: When Trump looked at the chip maker Intel, he
saw a vulnerable company to which he could put the screws. So after getting the
ball rolling by publicly attacking its CEO, Lip-Bu Tan, and demanding he
resign, Trump made his demand and got what he wanted: The federal government
will purchase a 10 percent stake in the company for $20 a share, about $5 less
than the current value.
The president wants everyone to know this “deal” was a
product of intimidation.
“He walked in wanting to keep his job and he ended up giving
us $10 billion for the United States. So we picked up $10 billion,” Trump said
last Friday.
And what exactly did America get? Other than leverage over a
troubled corporation by becoming a major shareholder, it’s hard to say; a bump
in Intel’s share price won’t exactly make the government enough to pay down the
debt. Is the man who gave the world Trump University going to be advising Intel
on how to turn its fortunes around, leading to a boost for the whole economy?
It’s hard to imagine.
This is only the latest in a series of moves Trump has made
to give himself control over specific companies, most of which involve him
spotting a firm that’s in a difficult position — or putting it there — then
demanding some kind of tribute.
Trump approved the sale of US Steel to a Japanese company, but only on the condition that the government receive a “golden share” that gives him the ability to dictate the firm’s future. In exchange for granting export licenses to sell chips to China, he demanded 15 percent of the sales Nvidia and AMD make there.
He told Goldman
Sachs to get a new chief economist after it predicted that tariffs would raise
prices. His bizarre obsession with the supposed evils of windmills has expanded
into an assault on renewable energy unlike anything we have seen before from
even the most conservative Republican administrations; according to
one estimate, his policies have led to the cancellation of $19 billion in clean
energy projects this year.
Exemptions from
his capricious tariffs are given to favored industries or companies. He even
claims (falsely) that pledges by foreign countries to invest in the US in
coming years are personal payoffs to him that he will control.
“They gave me $600 billion, and that’s a gift,” he said about
one such pledge from European countries. “They gave us $600 billion that we can
invest in anything we want.” (Spoiler alert: not remotely true!)
Trump’s version of mobster state capitalism also means
pressuring companies into reflecting his values and those of his MAGA movement.
While he has no legal authority to force companies to shutter their DEI offices
and make sure they never again speak a positive word about diversity, he and
his administration have simply acted as though he does, issuing statements
demanding that companies comply with executive orders that have no force of
law, especially over the private sector.
For instance, Federal Communications Commission chair
Brendan Carr — whose devotion to Trump is so idolatrous he wears a
gold bust of the president on his lapel — sent letters to
companies the FCC regulates demanding that they end their perfectly legal DEI
policies. Verizon did so — and just hours later, got its purchase of Frontier
Communications approved by
the FCC.
That may have been less floridly corrupt than the shakedown
of Paramount, which consented to a
$16 million payoff to Trump’s future “library” (which we can assume
will be nothing but a slush fund for him to use after he leaves office) in the
hopes of securing approval for its merger with Skydance. But the result in the
two cases is the same: Mergers will be approved not on the basis of antitrust
law or what might be good for consumers or the economy, but on which companies
have displeased or mollified Trump.
The White House has even gone so far as to create a loyalty
rating system scoring over 500 companies on their “support of present and
future administration initiatives.” According to one report,
“In addition to considering companies’ support of Trump’s agenda, the
scorecards also take into account companies’ social media posts, press
releases, video testimonials, advertisements and attendance at White House
events.” Any corporation looking to avoid Trump’s wrath doesn’t want to be on
his naughty list.
What distinguishes Trump’s version of state capitalism from
what you might find in other places is its random character, with every
decision driven by the whims of one erratic man. This isn’t like the Chinese
government deciding to subsidize the production of solar panels to make the
country the
world’s biggest supplier — even if you don’t like the idea of a
government exercising that much economic control, at least one can understand
the objective and the methods used to achieve it.
The party of “free enterprise” is oddly silent
Joe Biden had an industrial policy too, one based on
increasing manufacturing and reviving troubled
areas that had experienced job loss and displacement. Its success may
have been limited, but at least it had a purpose that was hard to argue with.
On Monday, a reporter asking about Intel noted to Trump that
while he called Kamala Harris a “communist,” the Biden-Harris administration
never nationalized any corporations. So is government seizing this much control
over particular companies the new way of doing industrial policy?
“Yeah, sure it is. I want to try and get as much as I can,”
Trump responded. “I hope I have many more cases like it.”
With just a few exceptions, Trump’s party of
small-government, private-enterprise conservatives is strangely unconcerned, at
least in public.
Sen. Tom Tillis of North Carolina said,
“You’re going to have to explain to me how this reconciles with true
conservatism, with true free-market capitalism. I don’t see it” — but Tillis is
retiring. Others are left to perform logical
somersaults in an attempt to reconcile Trump’s policies with the
ideology they supposedly believe in.
How many thousands of times have we been told by conservatives that the market should be left to operate without the heavy hand of government mucking about in it? Regulation to protect consumers and workers, a robust social safety net, attempts to compensate for market failures — all are attacked as affronts to the market’s purity and wisdom.
And creating a
version of capitalism unencumbered by government meddling was supposed to be
good as both a moral and practical matter. Not only would it allow individuals
to live and act with maximal liberty, it would produce the best economic
outcomes, enabling the economy to flourish and create wealth from which all
would benefit.
But if nearly the entire Republican Party has no objection
to Trump shoving his fingers so deeply into individual corporate
decision-making, then they don’t actually believe in “free
enterprise.”
For many years, Republicans fancied themselves the
party of ideas. Unlike the Democrats with their grubby coalitional
politics, trading favors and distributing spoils, they claimed to believe in
things — foundational principles guiding ideas about what government does and
how society should work. But Trump revealed them for who they truly are.
Perhaps the most important thing to understand about Trump’s mobster state capitalism is that it isn’t about economic efficiency or stimulating growth, let alone a vision of how the economy works and what it should create. It’s about power, pure and simple. Trump is expanding his own personal power in every direction he can — over Congress, over universities, over civil society, and over American business.
One
manufacturing CEO compared Trump’s
attention to the Eye of Sauron — business leaders just hope it doesn’t fall on
them and they find themselves subjected to a shakedown, or punished in some
other way.
You can understand why they’d want to keep their heads down.
But this is no way to run an economy. And everybody — including both the
socialists and the capitalists — knows it.
