The Democratic Socialists of America (DSA) released their platform last month, and let’s give them credit for candor. They want public ownership of large corporations, the abolition of police and prisons, a defunded Pentagon, and open borders. Conservatives read that document and saw the future they have been warning American voters about: the government seizing the commanding heights of the economy and becoming owner rather than referee.
Their alarm is warranted. The socialist program would be a catastrophe. So, here’s an awkward question: Why is a Republican administration quietly doing the public ownership of businesses part on its own?
Last week, the Commerce Department announced that letters of intent have been signed to provide federal incentives to seven more companies under the CHIPS program. Each letter of intent is conditioned on the government taking an equity stake. By a Cato Institute count, that brings the federal corporate portfolio to roughly 30 firms.
A year ago, these deals looked like improvisation—one-offs stitched together under pressure with President Donald Trump’s fluid negotiating style. Now, the department announces them in batches. Federal ownership of private companies has become routine, and it is happening on the right even as members busily point fingers at the left for its socialism.
To be sure, this is not the abolition of private property that some in the DSA would love to see. But strip away the label and look at the mechanism. Socialism’s defining move is to put ownership and decision making in the same collective hands. A government equity stake does exactly that. Washington already regulates these firms, buys from them, and subsidizes them. Now, it owns pieces of them. Every lever it controls—tariffs, permits, contracts, the next tranche of subsidies—moves the value of its own holdings.
Colorado Gov. Jared Polis, a Democrat, sees the implication of the government stake ownership more clearly than most Republicans do. “When government owns part or all of private companies,” he writes, “government is no longer just setting the rules—it becomes a player in the game and sets the rules to its own advantage and against the people.” Polis adds: “Socialism concentrates political and economic power in the same hands.” He is right, and it ought to sting.
Polis later asked during a Fox News segment where the Republicans denouncing this policy are. There are some, like Sens. Josh Hawley (R–Mo.) and Rand Paul (R–Ky.), but it’s a fair question. The answer is probably that politicians condemn a thing only until their own side does it too. Still, the silence from most of the GOP on so fundamental an issue is truly baffling.
As Cato’s Tad DeHaven notes, “The seven nonbinding letters of intent would provide up to $874 million in CHIPS and Science Act research and development incentives.” Remember when most Republicans were against the CHIPS Act passed under former President Joe Biden? I do. And remember when they claimed to care about fiscal responsibility?
How about opposing ownership stakes simply because the right may not always be in charge? An executive branch that can hand out ownership at its discretion has acquired a permanent power, and such powers outlive the people who establish them. Picture a future Democratic president inheriting 30 companies’ worth of shareholder rights and the leverage that comes with these: board seats, emissions mandates, conditions bolted onto the next round of funding.
This is no paranoid fantasy. The Senate’s defense bill would give the Pentagon its own equity portfolio, which means Congress may write the administration’s practice into statute rather than kill it. The right is loading a gun and trusting that only its friends will hold it. LOL, as the young people say.
The economics of government ownership of company shares are worse than the politics. A government does not allocate capital to its highest-valued use; it allocates capital to its most politically valued use. A project that moves forward in a fair market does not need taxpayer money. A project that moves forward due only to government intervention is a loser that the taxpayer is buying.
Either way, the equity stake fixes nothing. It stacks a conflict of interest on top of a market-distorting subsidy. And once the Treasury owns a slice, a failing firm will always be ripe for a General Motors-style bailout.
Finally, you can spare me the national-security argument about needing the domestic chip capacity, steel, and rare-earth materials that these companies provide. Government ownership is not the instrument. Procurement contracts and long-term purchase agreements can secure supplies without making the Commerce secretary a shareholder.
The DSA at least tells Americans clearly what it wants. The danger on the right is quieter: a government acquiring the means of production one letter of intent at a time, and a political party acting as though socialism is something only the other side can do.
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