For a politician that ran against the socialists in the Democratic party, and is currently railing against the socialist mayoral candidate of New York City, Mr. Trump’s actions in governing are, shall we say, inconsistent. Freedom loving conservatives* understand that the government’s control in any facet of our lives, leaves less liberty for us in those domains. Further, in the marketplace, government’s incentives are political, rewarding special interest groups at the expense of the general populace, leading to a poorer overall society, even while enriching those with the levers of power. Taken to an extreme, with government controlling the means of production, you can go from countries that embraced state-owned enterprises like Great Britain and India in the middle of the last century, with the corresponding stagnation and lack of growth, to the utterly failed command and control economies of the Soviets, the North Koreans and China. Only by rejecting that path have their economies improved (with North Korea continuing to live in abject poverty due to their lack of embracing freedom).

So when we see Donald Trump demand a “golden share” to agree to let one company sell itself to another (the Nippon/US Steel deal), take a 10% stake in Intel, suggest the government wants to take a stake in many private ventures through a sovereign wealth fund**, tells Nvidia that the U.S. will allow them to sell chips to China, but only if the government gets 15% of the take, and wants a stake in many defense companies, we get a little bit nervous. As I’ve related in my last article, not least because this opens the door to the true statist to gobble up ever larger parts of the economy. Donald Trump’s actions today empower President AOC tomorrow. Once you invest in Intel, how politically do you let it go bankrupt? The corruption potential here is massive.

But the post today is to remind us how poorly industrial policy works. The WSJ had a great note on this over the weekend, recounting one of Mr. Trump’s last forays into industrial policy from his first term. Politicians always crow about how their “investment” in some business is going to transform the company, the community and lead us into a brighter tomorrow (e.g., Mr. Obama and the Solyndra deal which cost taxpayers over half a billion dollars). So while Mr. Trump’s folly was miniscule compared to Mr. Obama, it is worth recounting:

While the second Trump Administration dives headlong into industrial policy, here’s a story from the first term about what happens when it fails. This month Foxconn announced plans to manufacture equipment for data centers at a former General Motors plant in Lordstown, Ohio. This is the auto factory that the first Trump Administration supposedly saved.

President Trump lambasted GM CEO Mary Barra in 2019 for shutting down the Chevy plant. “I asked her to sell it or do something quickly,” he tweeted. “I just want it open!” GM provided electric-vehicle start-up Lordstown Motors a $40 million loan to buy and retrofit the site. Mr. Trump used the company’s prototype EV pickup as a prop in his 2020 re-election campaign.

The President called it an “incredible vehicle” and talked up sales during an event at the White House with the startup’s CEO. “The area was devastated when General Motors moved out, and then we worked together, and we made the deal on the plant,” Mr. Trump said. Trade adviser Peter Navarro suggested that the Administration’s quick action had saved northeast Ohio.

Nobody in the White House seemed to care that Lordstown had no experience manufacturing cars. Within a few years, the startup collapsed. Its trucks burst into flames during testing. Lordstown sold the factory to Foxconn in 2022 to raise capital, but filed for bankruptcy a year later. Foxconn was in talks to build EVs at the plant for Fisker and IndiEV. Both failed. Enormous subsidies for EVs couldn’t overcome weak demand.

Industrial policy makes us poorer, not richer. For those that think Mr. Trump can do it right because of his business experience, rest assured, he would not run his businesses the way he is running the country–he would not throw good money after bad (as in Lordstown). Let’s not Make America Weak Again.

* To be clear, we here at BATG love freedom not just because of our philosophical/ideological/political preference for freedom, but also because we believe that freedom is an inherent right given to us by our Creator. We are more specific than what we read in the Declaration of Independence, but not less. Indeed, I believe I’ve made a fairly compelling argument that freedom in markets is an essential part of God’s plan–both his plan in Common Grace as well as his plan for our sanctification through our stewardship.

** This is the most absurd one of all. We have $37T in national debt, and we’re going to go buy up all these private assets? Where does the money come from? IF, IF, we had the money, please pay down our national debt. Most sovereign wealth funds have arisen because of petrodollars that countries make a lot of money with but they know they’ll be depleted so they want to invest the excess profits to fund government more evenly in the decades after oil is gone. That does not describe the U.S.; we have no excess cash available.