When House Speaker Mike Johnson lashed out at last weekend’s “No Kings” rallies soon to arrive on Washington’s National Mall, he reached for an old conservative refrain: “They hate capitalism. They hate our free enterprise system.”
I am sure he’s correct about some of the protesters. But the message rings hollow coming from a party leader who stands by as President Trump does precisely what Johnson rightly decries: substituting political control for market choice and ruling by executive order.
Indeed, what began as a populist revolt against so-called elites has become a program of state ownership, price fixing and top-down industrial control. Take a look.
Recently, the Trump administration quietly converted CHIPS Act subsidies into an $8.9-billion equity purchase in Intel, making Washington a 10% owner of one of America’s largest technology companies. Commerce Secretary Howard Lutnick insists “this is not socialism.” That’s semantics.
Socialism is government control of the means of production. When the government becomes your largest shareholder, that’s a strong first step.
The Intel case offends two basic economic truths. First, no group of officials can ever know enough to guide a complex industry better than millions of private investors, engineers and consumers spending their own money. Second, the power to “partner” with business is the power to control it.
The more political capital the government invests, the more it demands in return. It’s only a matter of time until politically favored locations, suppliers or hiring quotas shape Intel’s decisions. That isn’t capitalism.
The administration has taken shares in companies before, and it probably will again. In July, the Pentagon became the largest shareholder in MP Materials, considered the only fully operating rare-earth mine of scale in the U.S. The deal guarantees a 10-year price floor for MP output at nearly double the current market rate. MP competitors were rightly shocked.
Yet Treasury Secretary Scott Bessent recently told CNBC that Washington will continue to “set price floors” and “forward-buy” commodities “across a range of industries” to encourage more investments into U.S. production and away from China.
Although this may encourage more U.S. investments in the short term, guaranteeing an unfair advantage over competitors by setting a minimum price reduces American companies’ long-run incentives to innovate and produce better output. Economists have understood for more than a century what happens when the government fixes prices above their market level: Buyers purchase less, sellers produce more, surpluses pile up and waste follows. It’s the logic of failed farm-price support in the 1930s.
There are far better options than schemes like these. As for those rare-earth minerals, the U.S. sits on billions of dollars’ worth, yet MP is almost alone in extracting them. That’s in part because excessive regulation keeps the potential locked underground, deterring investment in innovative mining solutions, processing plants, magnet factories and the skilled workforce needed to turn our geological abundance into economic value. Deregulation is the free-market way. Mimicking the Chinese model isn’t.
If that’s not enough, the administration has nationalized all but in name the company called U.S. Steel. To approve its market-driven purchase by Nippon Steel, Trump required a “golden share,” giving him veto power over plant closures, production levels, investments, even pricing. The White House effectively dictates how U.S. Steel can operate inside the United States.
In the name of economic patriotism, we have re-created the structure of the state-owned enterprises that American trade negotiators once fought against in China and Europe. The same government that lectures Beijing about state capitalism and non-market behaviors now practices it at home.
Future presidents of either party will inherit this precedent and run with it. If the White House can seize control of a steel company today, it can do the same to an automaker, chip designer or energy producer tomorrow in the name of whatever is deemed an emergency at the time.
Republicans once warned that socialism begins with good intentions and ends with bureaucratic command. They were right. If we ever see a Sovietization of American capitalism, it probably won’t come through a Workers’ Party or a proletarian revolution. It will more likely come through populists managing markets.
The U.S. became prosperous because the government did not own or direct industry. Entrepreneurs built the modern economy precisely because they were free to invest, trade and fail when something doesn’t offer enough to consumers. Interventionist industrial policy betrays that legacy.
So, Mr. Johnson, although many of the protesters don’t share my free-market beliefs, it’s not obvious to me how an administration that sets prices, owns companies and dictates production loves capitalism or free enterprise, either.
Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate.
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