Once the government owns a stake in business, it is apt to use that stake to put political pressure on the companies and enterprises in which it invests.

One of Donald Trump’s latest executive orders “directs the Secretary of the Treasury and the Secretary of Commerce to deliver a plan within 90 days for the creation of a sovereign wealth fund.” As the order tells us, “sovereign wealth funds exist around the world as mechanisms to amplify the financial return to a nation’s assets and leverage those returns for strategic benefit and goals.”

On the whole, this is a horrendous idea. The government doesn’t need to invest money, it can (and does) tax other people’s investments. It certainly doesn’t need to put away the nest egg it saved, given that its current balance sheet shows that it is $36 trillion in debt. Moreover, even if the government was likely to be good at making wise financial decisions, it is far likelier to actually make political decisions in investing — the kinds of decisions government is designed to make. And the giant honey pot of a sovereign wealth fund is apt to attract all manner of public corruption. Worst of all, once the government owns a stake in business, it is apt to use that stake to put political pressure on the companies and enterprises in which it invests. That’s how woke capital gets woke. Ask Fannie Mae and Freddie Mac how well political influence guided them to sound business decisions in the 2000s.

All that being said, with the administration discussing using a sovereign wealth fund to buy TikTok, it is worth considering that there’s a legitimate role for temporary government acquisitions of private enterprises in a narrow class of situations. The Troubled Asset Relief Program (TARP) remains controversial for good reasons, but there was some legitimate role for the government under the original Paulson plan to buy up some distressed assets to provide short-term stabilization to financial markets at the pit of the credit crisis. That role should not have been to bail out banks from failing, but to head off panicked fire sales and allow time for an orderly unwinding of the mess. In the case of TikTok, the federal government absolutely should not be buying the social-media company to run it — we’d be trading foreign espionage for a whole different corrupting and dangerous venture in government control of social media. But it is entirely legitimate, if ByteDance won’t sell, for the executive branch to carry out the command of Congress by acquiring TikTok (if necessary, by taking it under eminent domain), arranging its sale to a non-PRC buyer, and providing the constitutionally required just compensation to ByteDance (perhaps after taking a fee for the costs of administering the sale).

We should always think of government interventions in the market as analogous to the fire department. Everybody loves the fire department not only because they show up when your house is on fire, but because after that they go home. Government has a role in emergencies. But every time it sets foot into the private marketplace, it should be thinking about how quickly it can go home.