Commerce Secretary Howard Lutnick is defending the Trump administration’s decision to purchase a 10 percent equity stake in Intel, the multinational tech company. In a recent Cabinet meeting, he sat alongside President Trump and Secretary of Defense Pete Hegseth and explained why the federal government owning part of a massive private company was not, in effect, socialism. Take a look.
I don’t know if you noticed Hegseth’s expression, but he didn’t seem to be buying this. And neither, for the record, am I.
Trump is a trailblazer, and has completely scrambled the Republican consensus on a host of issues. He’s upended conservative orthodoxy on everything from international trade to foreign policy. On the latter front, Trump’s instincts are often right, and populists and libertarians are both pleased that the president has shifted his part away from neoconservatism and toward more restrained foreign policy vision.
On economics, Trump’s instincts are more uneven. This is a good example of that unevenness — no matter how Lutnick tries to spin this, the government owning part of Intel is, on some level, socialism. It’s at least socialism-ish!
Maybe we need a refresher on what socialism is.
I know many people struggled to define it, thinking socialism just means being further left on the political spectrum. Socialism originally referred to a political and economic system in which the means of production is owned collectively by workers — i.e., the people who work at firms — rather than by the capitalists, the owners of the firms themselves. In practice, workers do not succeed in seizing the means of production, so actually existing socialism has meant the government seizing the means of production, ostensibly on behalf of the workers in some cases.
A socialist economy is one characterized by significant government control and direction of the components of the economy: the firms, the resources, and the workers. Socialist states use top-down central planning to determine how much of a good to manufacture, what it should cost, and what you pay people to make it.
The results, throughout history, are not pretty. Centrally planned economies are consistently beaten out by free market economies. Moreover, centrally planned economies often create shortages and famines, which in turn creates social strife. Again, existing socialist governments of the 20th and 21st century have tended to become totalitarian in order to censor and crack down on the public dissent created by the system not working very well.
Conservatives have a habit of labeling every liberal policy they disagree with as socialism, which has created significant confusion. Just because you have taxes, regulation and welfare doesn’t mean your economy is socialist. Your economy is socialist if the government sets prices, fixes wages and nationalizes firms and industries.
Now it’s unfortunately the case here in the U.S. that we already do quite a few of those things. Intel, which received millions in funding from the CHIPS Act, is an example of sliding socialism, when the government generously directs public funds to a specific firm.
But owning part of the firm is a significant escalation, and smart conservatives know it. Take it from Sen. Rand Paul, who calls this a terrible idea. He writes on X: “If socialism is government owning the means of production, wouldn’t the government owning part of Intel be a step toward socialism?”
Exactly. It’s socialism. That’s why Bernie Sanders is in favor of it.
Sanders wrote: “Taxpayers should not be providing billions of dollars in corporate welfare to large, profitable corporations like Intel without getting anything in return. The taxpayers of America have a right to a reasonable return on that investment.”
Now I actually agree with the first part of what Sanders said: Taxpayers should not be providing billions of dollars in corporate welfare to large, profitable corporations. That’s precisely what the CHIPS Act, an initiative spearheaded by President Biden, did. Republicans should be looking for ways to step back from CHIPS-style socialism, not making it even more of a reality.
Robby Soave is co-host of The Hill’s commentary show “Rising” and a senior editor for Reason Magazine. This column is an edited transcription of his daily commentary.
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