The U.S. Marches Toward State Capitalism With American Characteristics

The Chief Economics Commentator over at the Wall Street Journal offers up the sobering observation today that China may be winning the 21st century war of ideologies. Reflecting on the U.S.'s deeply illiberal turn, the same week that Trump will be heading off to Russia Alaska to collude plan with Putin on carving up Ukraine, one can't help but feel something great is being lost from the world.

The U.S. Marches Toward State Capitalism With American Characteristics

A generation ago conventional wisdom held that as China liberalized, its economy would come to resemble America’s. Instead, capitalism in America is starting to look like China.

Recent examples include President Trump’s demand that Intel’s chief executive resign; the 15% of certain chip sales to China that Nvidia and Advanced Micro Devices will share with Washington; the “golden share” Washington will get in U.S. Steel as a condition of Nippon Steel’s takeover; and the $1.5 trillion of promised investment from trading partners Trump plans to personally direct.

This isn’t socialism, in which the state owns the means of production. It is more like state capitalism, a hybrid between socialism and capitalism in which the state guides the decisions of nominally private enterprises.

China calls its hybrid “socialism with Chinese characteristics.” The U.S. hasn’t gone as far as China or even milder practitioners of state capitalism such as Russia, Brazil and, at times, France. So call this variant “state capitalism with American characteristics.” It is still a sea change from the free market ethos the U.S. once embodied.

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State capitalism is a means of political, not just economic, control. Xi ruthlessly deploys economic levers to crush any challenge to party primacy. In 2020, Alibaba co-founder Jack Ma, arguably the country’s most famous business leader, criticized Chinese regulators for stifling financial innovation. Retaliation was swift. Regulators canceled the initial public offering of Ma’s financial company, Ant Group, and eventually fined it $2.8 billion for anticompetitive behavior. Ma briefly disappeared from public view.

Trump has similarly deployed executive orders and regulatory powers against media companies, banks, law firms and other companies he believes oppose him, while rewarding executives who align themselves with his priorities.

In Trump’s first term, CEOs routinely spoke out when they disagreed with his policies such as on immigration and trade. Now, they shower him with donations and praise, or are mostly silent.

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Trump is also seeking political control over agencies that have long operated at arm’s length from the White House, such as the Bureau of Labor Statistics and the Federal Reserve. That, too, has echoes of China where the bureaucracy is fully subordinate to the ruling party.

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Anything Trump and Putin agree on is meaningless without Zelenskyy.

It is preferable if government regulates commerce; but it should be done for the benefit of society, not the benefit of political figures.

Peacenik said:

It is preferable if government regulates commerce; but it should be done for the benefit of society, not the benefit of political figures.

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It’s being done for the benefit of the oligarchy.

Peacenik said:

It is preferable if government regulates commerce; but it should be done for the benefit of society, not the benefit of political figures.

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Normal regulation of commerce is fine and necessary; the thug state we're transforming into is a far cry from that.

ataraxia said:

It’s being done for the benefit of the oligarchy.

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That has to end.

Greenbeard said:

Normal regulation of commerce is fine and necessary; the thug state we're transforming into is a far cry from that.

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Oligarchism is only good for oligarchs. We want a nation which fulfills the preamble of the Constitution.

Peacenik said:

It is preferable if government regulates commerce; but it should be done for the benefit of society, not the benefit of political figures.

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The "society" will soon resemble a peasantry.

element94 said:

The "society" will soon resemble a peasantry.

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Hey, but at least when Elon Musk eventually gets to go to Mars and marry an AI of himself, surely THEN we will see some trickle down to the MAGA voting base?

Greenbeard said:

The Chief Economics Commentator over at the Wall Street Journal offers up the sobering observation today that China may be winning the 21st century war of ideologies. Reflecting on the U.S.'s deeply illiberal turn, the same week that Trump will be heading off to Russia Alaska to collude plan with Putin on carving up Ukraine, one can't help but feel something great is being lost from the world.

The U.S. Marches Toward State Capitalism With American Characteristics

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President Donald Trump’s announcement that the U.S. government would take a 10 percent stake in chipmaker Intel adds to a string of multibillion dollar compacts with major tech firms that have trampled conventions insulating private business from the American presidency and government.

The unprecedented deals over the last month have seen some of the nation’s largest public companies, including Apple and Nvidia, conform with Trump’s demands. Some pledged to invest hundreds of billions of dollars in line with his policy goals and others to pay the federal government an extra cut of revenue not required by existing taxes.

The U.S. government is set to become Intel’s largest shareholder, after the chipmaker confirmed late Friday that the government agreed to invest $8.9 billion previously allocated to the firm in federal grants to own 9.9 percent of the company.

Some Republicans and Libertarians have complained that Trump’s transactional moves are a betrayal of the GOP’s traditional commitment to free-market policies.

“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,” Sen. Thom Tillis (R-North Carolina) said in an interview broadcast Wednesday on CBS after initial news reports that the government would take a stake in Intel.

But GOP lawmakers and those in corporate boardrooms or C-suites have largely stayed quiet. Spokespeople for BlackRock, Vanguard and State Street Corporation, the three largest Intel stockholders, did not return requests for comment.

“Behind closed doors, our very capitalist CEOs and institutional investor class are not happy about this, but companies are keeping their heads down when it comes to Trump,” said Scott Lincicome, vice president of general economics at the Cato Institute, a libertarian think tank....

Trump want to turn the US into a clepocracy like Hungary and Russia.




Democrats needs to counter that with progressiv policies that reduce the last decades of increased inequality and strengthen democracy.