The Art of The Deal has come to government. President Trump wants a piece of the action on transactions needing government approval or funding. He wants equity stakes in an ever-increasing number of America’s major corporations, giving him a say in what those corporations invest in, from whom they buy, to whom they sell, whom they fire and much more. The free-market capitalism that saw this nation prosper like no other is no more. The confessedly corrupt early 20th-century politician George Washington Plunkitt famously said, “I seen my opportunities and I took ’em.” Trump “seen” his.
The first opportunity was presented by a global trading system that seriously disadvantaged the US. Trump replaced it with a system of tariffs that transfers enormous powers to him. Nvidia, a world leader in AI development, was granted an export licence to sell some of its chips to China in return for directing 15 per cent of the proceeds to the Treasury over which Trump, in effect, presides.
The president now has life-and-death power over Apple, which has won exemption from tariffs on its iPhones and other devices by pouring the odd billion into Trump’s headline-generating announcements of new investments in America. Such relief is in the gift of the president, creating a giant pay-to-play casino where market forces, flawed though they were, once prevailed. Congress can read all about it on Truth Social.
The second opportunity was presented to Trump by Nippon Steel’s request for approval of its acquisition of US Steel. Permission granted, in return for which the government received a golden share in the combined company. That, added to its need for tariff protection, gave Trump considerable power not only over the new US Steel but over the auto, appliance and other industries that use the metal, both domestic and imported.
The third opportunity for power enhancement was created for Trump when President Biden ladled out billions in subsidies to chipmaker Intel. In return, in the inimitable words of commerce secretary Howard Lutnick, “We got nothing, nothing.” A Republican president of the old school might have cancelled the Biden subsidies and left Intel at the mercy of market forces.
Trump has been accused of many things, but never of being a traditional Republican. He demanded that Intel issue and turn over to the government some $8.9 billion of new shares, in effect giving him control of 10 per cent of Intel’s outstanding shares. Socialist senator Bernie Sanders professed delight. Intel’s competitors not so much. Existing rivals and those the Silicon Valley crowd expects to conjure will be at a significant disadvantage competing with businesses in which the government has a financial interest, and with which Trump’s political future is now linked.
The president promises “many more” such deals, or “shakedowns” as his critics call them — the substitution of state capitalism for market capitalism, as an economist would put it. MP Materials, a potential major producer of rare earth magnets, is to receive government financial aid that it says will position the Department of Defense “to become the company’s largest shareholder”.
Lockheed Martin, which gets 90 per cent of its revenues from the US government, might be the next of many defence contractors Trump is planning to add to the congeries of enterprises under his management. The issuance of new shares to the government, of course, will dilute the value of existing shares, and is therefore a de facto seizure of private property. And, say critics, will surely slow the pace of risk-taking innovation.
In short, the extent of presidential control of the economy has not been seen since the end of the Second World War. Trump has added to his influence over macroeconomic policy by levying tariffs, another name for taxes. He is in the process of gaining control of monetary policy by packing the Fed board and firing an existing board member for alleged mortgage fraud, no trial necessary.
Fed independence, done and dusted, control of the macroeconomy complete, he is turning his attention to the independent players that make up the microeconomic economy. With sycophants in seats once occupied by powerful advisers and the opposition Democrats in disarray, effective resistance to Trump’s power push is negligible.
Economists have long linked free markets with individual freedom, state control of the economy with the power of government to decide which companies prosper and which industries provide jobs in which states. Trump has displaced those market forces with, well, himself. Add control of the criminal justice system and the firing or demotion of two dozen January 6 prosecutors; replacement of professional number-crunchers with Maga loyalists at no-longer independent agencies; raids on the home and office of former National Security Advisor John Bolton; and plans to replace local law enforcement with what the Founding Fathers feared, a federal “standing army” under the control of the president, America’s new CEO-in-chief.
“You ain’t seen nuttin’ yet” has long been a common boast among America’s entertainment celebrities, of which the star of The Apprentice is one. Now, as president, he is favouring visitors with baseball caps emblazoned “Trump in 2028”.
