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OPINION

Trump's Industrial Policy Is Realism, Not Socialism

united states presidency sovereign wealth fund politics and policy

U.S. President Donald Trump, alongside then-Secretary of Commerce nominee Howard Lutnick and Rupert Murdoch (not pictured), speaks to the press after signing an executive order to create a U.S. sovereign wealth fund, in the Oval Office of the White House - Feb. 3, 2025, in Washington, D.C. (Jim WAtson/AFP via Getty Images) 

Daniel McCarthy By Tuesday, 26 August 2025 07:00 AM EDT Current | Bio | Archive

Is it Comrade President now?

Some conservatives are up in arms about Trump's decision to have the government buy a stake in Intel.

That's state ownership of the means of production, isn't it?

Classic, textbook socialism.

"If there is anyone who was a halfway prominent mainstream conservative . . . 10 years ago who now tells me they wouldn't have screamed about incipient 'socialism!' or 'fascism!' about Trump's Intel 'investment'," writes Jonah Goldberg on X, "I presumptively assume they are lying . . . "

In fact, a whole school of thought on the right, going back decades, has championed industrial policies as bold as Trump's, if not bolder.

The public face of that school was Pat Buchanan, who was way ahead of the national debate on industrial policy just as he was on immigration.

President Donald Trump is not a socialist, and America has a long history of government getting involved in owning companies  Amtrak is a familiar example.

The for-profit but government-owned passenger-rail company was created under Republican President Richard Nixon.

What Trump is doing with Intel is different from earlier precedents, however.

Trump sees the Intel deal as a first step toward creating an American "sovereign wealth fund," with many more investments to follow.

The president isn't looking to the past: this is about keeping America competitive with other nations in the 21st century, including Communist China, which controls the world's second and third largest sovereign wealth funds.

A sovereign wealth fund is much like private investment funds, consisting of stocks, bonds and other assets expected to appreciate in value.

Traditionally, countries rich in national resources, particularly oil, have used sovereign wealth funds to diversify and grow their economies.

Instead of being at the mercy of oil prices, petroleum-rich nations like Norway and Saudi Arabia channel some of their oil revenue into sovereign wealth funds, which then  much like, say, multibillion-dollar university endowments in America  can produce enormous returns.

Norway pays for about 20% to 25% of its national budget with the world's largest sovereign wealth fund, the Government Pension Fund, which holds more than $1.7 trillion in assets.

Is it a bad thing to pay for government with market profits rather than by raising taxes on citizens or selling debt that eventually has to be repaid with interest?

A nation pays interest on its national debt but earns interest from a sovereign wealth fund.

Mainstream conservatives more than 10 years ago were already behind a plan with many of the same advantages and disadvantages of a sovereign wealth fund: "privatizing" Social Security.

The idea was to let Americans put their compulsory Social Security payments into government-approved funds of their own choosing, which would generate higher returns from market investments than the Social Security Trust Fund could reap from investing exclusively in U.S. Treasury securities.

Conservatives embraced that as a good free-market idea.

Is a sovereign wealth fund any different?

They both carry the same risks, above all what economists call "moral hazard."

The country got a taste of it in the Great Recession, when financial institutions that bankrupted themselves with bad investments were declared "too big to fail" and had to be bailed out by Washington and the Federal Reserve.

The government can't allow Social Security to go bust, and if the retirement system's money is invested in private funds, how many of those could Washington allow to fail, even if they made lousy investments?

Trump is actually taking a double risk  most sovereign wealth funds only aim to maximize returns, producing revenue for the government.

The president, however, also wants to conduct industrial policy with a sovereign wealth fund, by buying into strategically important but economically troubled companies like Intel.

Yet the question isn't just whether America can run a sovereign wealth fund right  it's also what happens if we do nothing and rivals perfect the strategy.

Beijing has the $1.3 trillion China Investment Corporation, Hong Kong's $1 trillion SAFE Investment Company, as well as smaller funds with billions in assets.

During the Cold War, when America faced an international communist threat sponsored by Moscow, conservatives knew absolute devotion to free markets was self-defeating.

William F. Buckley Jr., just coming into his own as a conservative leader in 1952, was staunchly committed to capitalism and small government.

Nevertheless, he wrote:

"Conservatives, and many Republicans, have got to think this problem through. And if they deem Soviet power a menace to our freedom (as I happen to), they will have to support large armies and air forces, atomic energy, central intelligence, war production boards and the attendant centralization of power in Washington . . . "

Trump is thinking through the problem of our time and how a sovereign wealth fund can tackle it.

Daniel McCarthy, a recognized expert on conservative thought, is the editor-in-chief of Modern Age: A Conservative Review. He's also a regular contributor to The Spectator's World edition. He has a long association with The American Conservative, a magazine co-founded by Pat Buchanan. Mr. McCarthy's writings appeared in a variety of publications. He has appeared on PBS NewsHour, NPR, the BBC, the Australian Broadcasting Corporation, CNN International and other radio and television outlets. Read more of Daniel McCarthy's reports — Here.

© Creators Syndicate Inc.


DanielMcCarthy
Is it a bad thing to pay for government with market profits rather than by raising taxes on citizens or selling debt that eventually has to be repaid with interest?
intel, socialist, nixon
867
2025-00-26
Tuesday, 26 August 2025 07:00 AM
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