When House Speaker Mike Johnson lashed out At last weekend's “No Kings” demonstrations that will soon reach Washington's National Mall, he fell back on an old conservative refrain: “They hate capitalism. They hate our free enterprise system.”
I'm sure you're right about some of the protesters. But the message rings hollow coming from a party leader who remains impassive while President Trump does precisely what Johnson rightly denounces: replacing political control with market choice and governing by executive order.
Indeed, what began as a populist revolt against the so-called elites has become a program of state ownership, price fixing and top-down industrial control. Take a look.
Recently, the Trump administration quietly turned CHIPS Act subsidies into an $8.9 billion Intel stock purchase, making Washington a 10% owner of one of America's largest technology companies. Secretary of Commerce Howard Lutnick insists: “this is not socialism.” That's semantics.
Socialism is government control of the means of production. When the government becomes its largest shareholder, it is a solid first step.
The Intel case offends two basic economic truths. First, no group of officials will know enough to guide a complex industry better than millions of investors, engineers, and private consumers spending their own money. Second, the power to “partner” with companies is the power to control them.
The more political capital the government invests, the more it demands in return. It's only a matter of time until politically favored locations, suppliers or hiring quotas shape Intel's decisions. That's not capitalism.
Management has purchased shares of companies before and will likely do so again. In July, the Pentagon became the largest shareholder at MP Materials, considered the only fully operational scale rare earths mine in the U.S. The agreement guarantees a 10-year floor price for MP production at nearly double the current market rate. MP's competitors were rightly surprised.
However, Treasury Secretary Scott Bessent recently he told CNBC that Washington will continue to “set floor prices” and “forward purchase” raw materials “across a variety of industries” to encourage more investment in American manufacturing and outside of China.
Although this may encourage more American investment in the short term, ensuring an unfair advantage over competitors by setting a floor price reduces the long-term incentives of American companies to innovate and produce better products. Economists have understood for more than a century what happens when the government sets prices above their market level: buyers buy less, sellers produce more, surpluses accumulate, and waste continues. It is the logic of the failed support for agricultural prices in the 1930s.
There are much better options than schemes like these. As for those rare earth minerals, the United States has billions of dollars worth, but MP is almost the only one mining them. This is in part because excessive regulation keeps potential locked underground, deterring investment in innovative mining solutions, processing plants, magnet factories and the skilled labor needed to convert our geological abundance into economic value. Deregulation is the path of the free market. Imitating the Chinese model is not.
If that were not enough, the administration has nationalized everything except nominally the company called US Steel. To approve his market-driven purchase of Nippon Steel, Trump needed a “golden share,” giving him veto power over plant closures, production levels, investments and even prices. The White House effectively dictates how US Steel can operate within the United States.
In the name of economic patriotism, we have recreated the structure of state-owned enterprises that American trade negotiators once fought against in China and Europe. The same government that lectures Beijing about state capitalism and non-market behavior now practices it at home.
Future presidents of either party will inherit this precedent and follow it. If the White House can take control of a steel company today, it can do the same tomorrow with an automaker, a chip designer, or an energy producer on behalf of whatever is considered an emergency at the time.
Republicans once warned that socialism begins with good intentions and ends with bureaucratic command. They were right. If we ever see a Sovietization of American capitalism, it probably won't be through a Workers' Party or a proletarian revolution. Most likely it will come from populists who run the markets.
America became prosperous because the government did not No Own or direct industry. Entrepreneurs built the modern economy precisely because they were free to invest, trade, and fail when something doesn't offer enough to consumers. Interventionist industrial policy betrays that legacy.
So, Mr. Johnson, although many of the protesters do not share my beliefs about the free market, it is not obvious to me how an administration that sets prices, owns companies, and dictates production loves capitalism or free enterprise.
Rugy Veronica He is a senior fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate.
