According to the Horseshoe Theory of Politics, the extreme left and right are much closer to each other than they are to the center. And that is true of MAGA conservatism; much that distinguishes it from traditional conservatism is precisely its embrace of values and methods from the left. As I’ve repeatedly said here at BATG; when Donald Trump and Bernie Sanders are saying essentially the same thing, you should watch out. This is most expressed in the embracement of trade restrictions to promote a particular view of industrial policy–to rewrite the rules of the game so we will get a different market result than what consumers and producers would otherwise have done. Industrial policy is a lighter touch of central planning, but central planning it is–with elites making the decisions that determine what ultimately is produced. And central planning is socialism. End of story.

But government is always getting into something that it has no particular expertise in, as special interests habitually ask their representatives to put the government’s heavy hand on the scale of a particular issue in a way that will be favorable to their business interests. So when do we go from a form of soft socialism and mild corruption to really accelerating toward state direction of the economy? Mr. Trump took a dangerous turn for a so-called conservative weeks ago with the decision to restructure a planned grant to Intel Corp and make Intel give up a significant chunk of equity. After all, why should Intel get free money? I am very much sympathetic to the latter concern, so why not simply cancel the grant? We are $37T in debt and we don’t have money to give away. As we noted in a previous post, the administration says they want to do these deals “all day long”.

The WSJ this morning is reporting that there are significant discussions within the Trump Administration about how to administer the $550B of investment that Mr. Trump “negotiated” out of Japan to invest in the U.S. economy.

WASHINGTON—President Trump’s team is weighing a plan to spur the construction of factories and other infrastructure in a bid to jump-start the American manufacturing sector, according to documents and people familiar with the discussions. Under the plan, the administration would use money from a $550 billion investment fund established as part of trade negotiations with Japan to invest in the development of semiconductors, pharmaceuticals, critical minerals, energy, ships and quantum computing. Some of the projects would be granted preferential treatment from the government, including expedited regulatory review. The plan would mark a new frontier in Trump’s efforts to exert influence over the private sector, giving the government a central role in the reshaping of U.S. manufacturing. It comes as the president has secured a government stake in Intel, negotiated a “golden share” in U.S. Steel and persuaded chip companies to give the U.S. a cut of certain sales to China. If successful, the proposed plan could help the president deliver on his campaign promises. It would also give Trump control over which industries get the benefit of government assistance.

This ought to be of great concern. Is there anybody that believes that government really has any good idea of where to invest? As the WSJ reports, “Trump and Commerce Secretary Howard Lutnick have privately discussed building facilities that would produce gas turbines and generic pharmaceuticals. They have also discussed investing in new nuclear power plants and pipelines, the people familiar with the matter said.” We do not need the Administration centrally planning the economy. Private capital has done an amazing job; the U.S. is the richest country in the world precisely because we have left the allocation of capital generally out of the hands of politicians. The U.S. government is the most profligate entity on earth, with a record of squandering untold amounts of money (which is why our children and grandchildren are inheriting a $37T debt that is accelerating rapidly). Can you imagine the corruption that is ongoing as different entities try to get their hands on this $550B? And if this is allowed to stand, what do you think the next president is going to do? Do you think it ends there? A step down the road to socialism is, as Hayek wrote so many years ago, the Road to Serfdom. And the trip destination is not really very different if the captain of the ship is Mr. Trump or Mr. Biden.

When government expands its reach, you are losing your liberty. It’s your country, your freedom, so fight for it.

Edit Update: More from the WSJ today from columnist James Freeman:

Did we somehow end up with a Biden second term? Let’s hope this column isn’t suffering from cognitive challenges but this plan sounds like a perfect complement to the last administration’s Chips Act boondoggle. Does anyone think federal officials will invest other people’s money more wisely than people will invest their own in U.S. companies?

It was U.S. entrepreneurial capitalism, not government-directed capital allocation, that allowed free Americans to create the undisputed heavyweight champion of the global semiconductor industry, Nvidia.