Is Trump CEO of US Inc or presiding over a new form of state capitalism?
Imagine you’re a contestant on a popular TV current affairs quiz and the question is about America.
Is it now:
(a) United States Inc
(b) State capitalism
(c) Neither, as of now
The right answer is (c).
The first option has some merit because Donald Trump appears hell bent on governing the United States like a business. He is openly seeking profit for the public coffers through transactional trade deals, mafia-style shakedowns of foreign administrations and monetised immigration schemes. But Mr Trump’s record as a businessman is patchy – he has been bankrupt multiple times – and there is little reason so far to believe that his manoeuvres are benefiting anyone other than a cabal, a small group of family, friends, allies. United States, Inc is unlikely to enable America to prosper and its people to thrive.
The second option sounds about right because the Trump administration is intervening aggressively in private business, bending rules as it pleases and making up others.
The forced takeover of TikTok comes just weeks after the US government took a 10 per cent in Intel, secured a “golden share” in US Steel as a condition of its sale to Nippon Steel, created a multibillion-dollar partnership between the Pentagon and rare-earth producer MP Materials and negotiated revenue-sharing agreements with chipmakers Nvidia and AMD in exchange for easing export restrictions.
This isn’t strictly state capitalism (a la China) but lawless governance, which distorts markets, affect private companies’ behaviour and changes political calculations.
As analysts have noted, if companies start to expect bailouts or favours from the administration, they may start to privilege politically desired projects rather than market-friendly ones. Intel itself made the following comment in its SEC filing about its unprecedented tie-up with the US administration: “it is difficult to foresee all the potential consequences” of the government becoming a significant shareholder of a private company.
China’s state capitalism has focussed on creating infrastructure in record time and largely delivered on that even as it bred corruption and waste and engaged in periodic whimsical purges.
The US isn’t quite there yet – on both good bits and bad.
