Washington just bought Intel—and sold capitalism

Back in 2010, I testified before Congress against reauthorizing the so-called America COMPETES Act. That legislation was the precursor to the much-ballyhooed CHIPS and Science Act subsidy machine enacted in 2022. The liberty movement fought that bill too, though in vain.

I just went back to my testimony to remind myself that the COMPETES acronym stood for “Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science.”

Even then, I offered the conventional warnings that Washington’s subsidies and interventions undermine competition and innovation and even worse, entangle science and government and derail the necessary evolution of ever-complex property rights in technologies, networks, and infrastructures. This has turned out to be the case, since nearly every complex undertaking has now become a business/government partnership rather than a shining example of capitalism or a new iteration of competitive free enterprise

Fifteen years after the COMPETES Act reauthorization and only three years after the bipartisan CHIPS Act, the fusion of business and government is taking new and alarming shape. What began as subsidies and tax breaks has now evolved into a wild new stage of outright government ownership.

Intel’s announcement that the federal government will take an 8.9 percent equity stake in the semiconductor maker represents a dangerous new level of inappropriate and disruptive public/private entanglement. The federal government—including the Pentagon specifically—now holds 433 million shares of Intel, a partial nationalization that joins a recently-transacted 15 percent Pentagon stake in rare-earth element company MP Materials.

We’ve seen nationalizations or partial ones before, but only in times of crisis. President Wilson seizing the railroads and communications during WWI, Truman’s failed steel grab in the Korean War, the 2008 bank bailouts, and the COVID-19 airline “rescues” are just a few examples of this. What makes the Intel case different—and alarming—is that no crisis exists. This is peacetime cronyism—something already rampant—taken to new heights, with no readily apparent limiting principle.

I lay out a detailed case against these new developments in a new Forbes column. A key point is that, at taxpayer expense, government equity in private firms, “derails entrepreneurship and innovation, distorts markets, fuels artificial booms, misallocates talent, blurs ownership status of discoveries, politicizes science, and adds regulatory layers while undermining risk management.” As my colleague Iain Murray jokes on Twitter/X, it’s fine apart from that.

The acquisition is not about national competitiveness. If subsidies worked, Intel would already be thriving. The company, after all, has been receiving government support at least since George W. Bush signed the COMPETES Act in 2007.

Washington’s newfound propensity to take corporate subsidies and partnerships to this new level makes it impossible to trust that regulations, merger reviews, export controls or any public policy questions surrounding owned firms will be resolved in a neutral manner. When the state becomes investor and shareholder, everyone else is relegated to second class and plays on that proverbial tilted field—but one tilted more than before.

The spectacle of a GOP administration leading this fusion of business and government unveils a political party that is really stepping in it, fulfilling the progressive left’s wildest fantasies of centralized economic control. If unchecked, there will be no need for new laws or regulations at all in these new realms; “business” will simply become an appendage of the state.

That’s why I argue we need a true wall of separation between economy and state—a constitutional amendment banning subsidies, grants, loan guarantees, and, now, equity stakes. Without a shift, the regulatory streamlining for which the Trump administration is in large part otherwise known will get out-COMPETE-d by socialist policies; particularly weird and annoying ones, at that.

For more, see:

“When Washington Buys Intel, It Owns You Too” Forbes

“The America Competes Act vs Separation of State and Economics,” Social Science Research Network

“A Constitutional Amendment Banning Subsidies, Grants And Loan Guarantees” Forbes