U.S. Secretary of Commerce Howard Lutnick smiles as he attends a cabinet meeting hosted by President Donald Trump in the Cabinet Room of the White House. (Photo by ANDREW CABALLERO-REYNOLDS / AFP) (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)
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Is the U.S. drifting toward socialism? It’s beginning to look that way. Socialism never works. And the U.S. will be no exception.
Not since the early days of President Franklin Roosevelt’s presidency in the 1930s have we seen the federal government get so intrusively involved in the peacetime American economy as we’re witnessing now. Roosevelt’s efforts to have Washington dominate the private sector was eventually halted by a historic Supreme Court decision.
If present trends continue, the U.S. economy could end up in a stagnant rut like so much of Europe is in today. Instead of the dynamic, always-innovating, entrepreneurial economy that has made America the most successful and exciting nation in history, we’ll have Washington dominating the private sector. The never-ending stream of pathbreaking startups will dry up. Business success will increasingly be dependent on pleasing Washington policymakers and politicians. Hiring the right lobbyists will be ever-more important. The number of lobbyists will proliferate like mosquitoes in a swamp. And the swamp will expand as never before.
Look at what’s happening. Washington now owns a piece of Intel. The company knows who’s calling the shots, as evidenced by President Trump’s summoning its new CEO to the White House. The CEO needed Trump’s blessing to keep his job.
Washington gave itself a so-called golden share in U.S. Steel. Even though Nippon Steel is the theoretical owner, the White House determines major managerial decisions, as the company learned when President Trump vetoed layoffs at a certain facility.
To get permission to sell certain semiconductors to China, Nvidia and AMD had to agree to give the U.S. government 15% of the revenue from any sales. President Trump would decide where that money went. This is ugly stuff—companies paying off the government for permission to sell certain products.
Washington is taking equity positions in MP Materials, Lithium Americas and Trilogy Metals, which is an Alaskan mining outfit.
But Uncle Sam is just getting warmed up. Howard Lutnick, who is now acting more like a commissar of commerce instead of Secretary of Commerce, has mused about Washington’s taking stakes in big defense contractors. Lutnick and his fellow planners are reportedly cooking up schemes for direct government involvement in 20 or more key industries. Noises are emanating of setting up a government equity fund to pursue government ownership of key parts of U.S. industry.
Comrade Lutnick has proposed taxing successful patents, including 50% of patent royalties universities receive if they used any federal funds. This ignores the fact that the government has received substantial taxes generated by business successes emanating from these patents.
Taxing patents is a form of a wealth tax. It would be an innovation killer.
Pharmaceutical companies are feeling what it’s like in a socialistic environment. Price controls loom more and more, which will snuff out medical innovation the way it has in Europe. Pfizer recently announced price cuts in return for Washington not crushing it with tariffs.
A tariff is a tax, and the proliferation of these taxes will not only hurt economic growth but also put a premium on political pull to get exemptions or some kind of relief.
This kind of government involvement means that Washington politicians, not the marketplace, will pick winners and losers. Lobbying will replace private-sector competition for success. It will also have a chilling impact on free speech.
It takes no imagination to realize what the left-dominated Democratic Party will do if it takes control in the future.
The moves now in motion—and the precedents now being set—will lead to dreadful outcomes. They will undermine what has made America great.
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