After meeting with the CEO of a major tech firm this week, President Donald Trump is apparently set to demand a piece of the company. Unfortunately, it’s hardly the first time.
Lip-Bu Tan, the CEO of Intel, visited the White House on Monday. The visit came after Trump had criticized Tan and called for his ouster.
“The CEO of INTEL is highly CONFLICTED and must resign, immediately,” Trump posted last week on Truth Social. “There is no other solution to this problem. Thank you for your attention to this problem!” The social media missive came shortly after Sen. Tom Cotton (R–Ark.) sent a letter to Intel board chairman Frank Yeary, saying Tan’s “ties to China are concerning.”
But after the meeting, Trump seemed to change his tune. “The meeting was a very interesting one. His success and rise is an amazing story,” he posted later that day. “Mr. Tan and my Cabinet members are going to spend time together, and bring suggestions to me during the next week.”
In a statement, Intel referred to it as “a candid and constructive discussion on Intel’s commitment to strengthening U.S. technology and manufacturing leadership.”
As it turns out, the president had more on his mind than Tan’s background. “The Trump administration is in talks with Intel Corp. to have the US government take a stake in the beleaguered chipmaker,” Bloomberg reported Thursday, “in the latest sign of the White House’s willingness to blur the lines between state and industry.”
Such a move would be an enormous overreach of presidential authority, completely ignoring any considerations about the proper role of government. But as the Bloomberg report notes, this is only the latest example of such a deal in Trump’s second term.
Last week, Trump agreed to exempt tech firms like Nvidia and Advanced Micro Devices from export controls and allow them to sell semiconductor chips to China, after a meeting with Nvidia CEO Jensen Huang. In exchange, the companies agreed to forfeit 15 percent of the revenues from those sales to the government.
MP Materials, which operates the only mine for rare earth minerals in the country, announced in July that the U.S. Department of Defense had agreed to “a multibillion-dollar package of investments and long-term commitments,” including a $400 million stock investment that would see the Pentagon “become the Company’s largest shareholder.”
“I want to be very clear, this is not a nationalization,” MP Materials CEO James Litinsky told CNBC at the time. “We still control our company. We control our destiny. We’re shareholder driven.” Maybe so, but Litinsky’s new largest shareholder also happens to control the world’s largest military, under the control of an infamously capricious president—how motivated will MP’s other shareholders be to rock the boat?
“President Donald Trump will personally control the so-called ‘golden share’ that his administration has forced U.S. Steel to accept as part of the terms of a deal” to be acquired by Nippon Steel, Reason‘s Eric Boehm wrote in June.
As a result of the deal, “U.S. Steel’s charter will list nearly a dozen activities the company cannot undertake without the approval of the American president or someone he designates in his stead,” The New York Times reported at the time.
And in January, while still president-elect, Trump said that in the event an American company purchased TikTok away from its Chinese-owned parent company, the federal government should get a 50-percent stake.
It goes without saying that negotiating a deal with a private company on behalf of the state is an egregious abuse of executive power. It’s also a bad deal for each side: A 2004 report on state-owned enterprises listed their “core governance deficiencies” as “multiple and conflicting objectives, excessive political interference, and lack of transparency.”
“By owning stock in a corporation, the government assumes the roles of both a shareholder and a regulator of the corporation,” according to a 2016 article in the University of Tennessee’s Journal of Law and Policy. “For some scholars, the predominant concern when the government owns stock in a corporation is that the government will attempt to ‘induce the corporation to pursue political or policy goals rather than maximize the corporation’s value for the proportionate benefit of all its shareholders.'”
As Boehm noted, conservatives used to oppose these sorts of deals as forms of “economic fascism.” In 2009, as part of the plan to bail out the three biggest U.S. automakers, then-President Barack Obama’s administration provided emergency loans while in exchange exerting greater control over their business decisions. At the time, conservatives likened it to the actions of Italian strongman Benito Mussolini.
“Just as Mussolini did (in slightly different words), Obama repeatedly talks about using government to ‘leverage’ private investment for the greater good,” Quin Hillyer wrote in 2009 at The American Spectator.
What a difference a few years make. It was a bad idea then, and it’s an even worse idea now, given how much more control Trump is demanding. The only difference seems to be the party in power.
The post Intel Is Reportedly the Latest Company Trump Wants a Piece Of appeared first on Reason.com.
