From Subsidies to Shareholding: America’s Dangerous Turn Toward Industrial Policy
The Intel bailout shows how Washington is edging toward corporate socialism
The news that the Trump administration is considering taking a 10% stake in Intel should alarm anyone who cares about markets, innovation and economic freedom. What is being pitched as a pragmatic “rescue” of a troubled semiconductor giant is, in fact, another step down the road of partial nationalization that leads toward politicized industry and away from genuine capitalism.
Intel’s decline is not a mystery. For years, the company has mismanaged its resources, stumbled in manufacturing and fallen behind Taiwan’s TSMC in advanced chip technology. It has burned through nearly $40 billion in cash in three years while watching its stock price collapse. Those are the consequences of corporate failure, not of too little federal support.
Yet Washington’s answer is not to let the market work but to socialize the risk. Intel has already received billions under the 2022 Chips Act. Now the administration wants to convert some of those subsidies into equity ownership, turning the U.S. government into one of Intel’s largest shareholders. This is not free enterprise. It is corporate socialism, where profits are privatized but losses are nationalized. By blurring the line between state and market in this way, Washington creates moral hazard, discourages competition, and sets a precedent for ever-greater political control over private industry.
Political Control Masquerading as National Security
The justification, of course, is “national security.” Because cutting-edge chips are mostly manufactured in Taiwan, domestic manufacturer Intel is treated as too strategic to fail. But rather than spurring competition in the advanced chip tech market or investing in broad research and workforce development, the administration is reaching for the bluntest tool of all: direct ownership.
Once the government sits at Intel’s boardroom table, every business decision will carry a political overlay. Where should new fabs be located, Ohio or Arizona? Which chip lines deserve investment, AI or automotive? These questions will be answered not by engineers or customers but by politicians looking to score electoral points. The results will be inefficiency, wasted resources and weaker competitiveness for the entire U.S. tech sector.
The Emerging Corporatist Economic Model
This attempt to involve government in private industry is not an isolated episode. Trump has increasingly behaved like a central planner:
He forced Nvidia and AMD to hand over 15% of their China revenues to secure export licenses.
He inserted himself into U.S. Steel’s sale by demanding a “golden share.”
He personally called for Intel’s CEO to be fired, then negotiated a federal stake in the company days later.
As Scott Lincicome at Cato has pointed out, the demand to own shares of Intel isn’t even a novel Trumpian idea. Socialist Senator Bernie Sanders proposed almost the same thing in 2022, calling for companies receiving federal support to issue equity stakes to the government.
This is not “America First.” It is corporatism—government and business intertwined, with political leaders pulling the strings of supposedly private firms. Ironically, it is closer to the economic model of Beijing than to the free-market tradition that made America an innovation powerhouse.
The Slippery Slope of Nationalization
If Intel is next in line for socialization, why not Boeing, Ford, or Tesla the next time they falter? Once the precedent of government equity stakes is set, every major industry can be politicized. This is the very logic of industrial planning: Washington decides who survives, who gets rescued and who must bend to political priorities. It is a system that breeds cronyism, stifles competition and entrenches mediocrity.
Markets thrive precisely because failure is allowed. When companies mismanage, they restructure, get acquired or go bankrupt, making room for better competitors. Nationalizing Intel, even partially, short-circuits this process. It freezes a failing model in place, ensuring that taxpayers bear the cost of poor decisions while innovation withers.
The Better Path
America’s semiconductor challenge is real, but the solution is not to turn Washington into a shareholder. It is to create the conditions where real competition can flourish, such as:
Tax and regulatory stability that encourages long-term investment.
Open markets that attract global talent and capital.
Research support and workforce training that benefit the entire industry rather than one failing firm.
The vitality of the U.S. tech sector has never come from government ownership. It has come from risk-taking entrepreneurs, investors who reward success and a market system that punishes failure. That is the model worth defending.
The government’s latest proposal to buy a piece of Intel is not a minor tweak to industrial policy; it is a profound shift toward state-directed capitalism. If accepted, it will entrench political control in one of America’s most vital industries and set a dangerous precedent for the rest of the economy. A government stake in Intel will not save U.S. chip-making but cripple it.