Perhaps we should have seen this coming.
In his first term, Donald Trump was not shy about using the bully pulpit of the presidency to attack any institution that interfered with his uniquely distorted economic philosophy. He roundly criticized the chairman of the Federal Reserve, Jerome Powell, for raising interest rates. He harangued Harley-Davidson for moving production and jobs offshore to avoid the effects of his trade war. He threatened Boeing over cost overruns in building new Air Force Ones and gave America a preview of his weaponized tariffs.
Those skirmishes pale in comparison to the interference and even extortion of Trump 2.0., a set of actions that at times bear resemblance to China’s state-directed capitalism.
Mr. Trump is muscling his way into our economy in ways that are alien to traditional Republican principles, alien even to what more interventionist Democrats have argued for, and wildly at odds with any sensible notion of how the relationship between government and business should be managed.
Most dramatically, he is now attempting to fire a member of the Fed’s Board of Governors, Lisa Cook, an action of dubious legality that could have seriously negative consequences for our economy. Just days ago he forced Intel, the struggling semiconductor company, to give the U.S. government a nearly 10 percent stake in the company in return for grants it had received in the Biden administration. (That was after demanding the resignation of Intel’s chief executive earlier this month and then changing his mind a few days later.)
I don’t know of any case, at least in my lifetime, of the government taking equity in a company simply because it could. Add these to the long list of ways that Mr. Trump is undermining the rule of law, one of the most important principles that undergirds our economic success.
When it comes to the private sector, the government certainly has an important role. Prudent regulation and tax policy are central to curbing the potential excesses of capitalism. When we are lagging in a critical industrial sector with national security implications, as we are in semiconductor manufacturing, legislation like the CHIPS and Science Act, which aimed to strengthen America’s semiconductor industry by providing billions in subsidies, can play a helpful role.