Plain English with Derek Thompson - What Is Trumponomics? Part 1: How Donald Trump Is Breaking American Capitalism

Episode Date: September 3, 2025

Today is the first of two interviews this week trying to answer this question: What is Trumponomics? From the 1980s to the 2010s, it was generally assumed that Republicans and Democrats had settled differences in economic policy. Republicans wanted lower taxes and less spending on welfare. Democrats wanted higher taxes and more social spending. Reality didn’t always conform to those differences. George H.W. Bush famously raised some taxes, and Bill Clinton famously reduced some welfare spending. But generally speaking, the socialists voted for Democrats and the corporate libertarians and free-market folks found their home in the GOP. What’s interesting about Trump's theory of power and economics is that he doesn’t just scramble this divide. He obliterates it. Some of Trump’s measures are so classically Republican, you could imagine the ghost of Ronald Reagan signing off on them. After all, his signature legislative accomplishment in both terms are two huge corporate income tax cuts. But when Trump announced that the government was taking a stake in Intel, Bernie Sanders cheered the news and Gavin Newsom called him a socialist. Trump has single-handedly instituted the biggest tariffs in 100 years—tariffs that are so unusual and extralegal that a federal court just ruled that most of them are, in fact, against the law. He’s waging war on the Federal Reserve, grabbing at an institution that has historically enjoyed independence when it comes to setting interest rates and managing monetary policy. Trumponomics is capitalist and socialist; it’s obsessed with defeating China and also obsessive about copying China; it’s sometimes focused on keeping America from getting ripped off and sometimes focused on issues so personal they have nothing to do with the national interest at all. Today’s guest is Greg Ip, the chief economics commentator at The Wall Street Journal. According to Greg, the best way to see clearly what Trump is up to is to see his economic policy as what he calls “state capitalism.” If you have questions, observations, or ideas for future episodes, email us at [e-mail]. Host: Derek Thompson Guest: Greg Ip Producer: Devon Baroldi Learn more about your ad choices. Visit podcastchoices.com/adchoices

As the 21st century was getting underway, Hollywood released a series of films that were daring, entertaining, and absolutely unmissable. Films like, 25th Hour, Bring It On, Zodiac, and No Country for Old Men. They arrived during the George W. Bush era, a chaotic time in America. Think 9-11, Katrina, the mortgage crisis. After the Bush years, the country would never be the same, and neither would Hollywood. I'm Brian Rafter. And in my new limited series, Mission Accomplished, we're going to dive into some of the biggest movies of the Bush years.

And look at what they said about the state of the nation. We'll go behind the scenes with filmmakers and experts and relive some of your favorite movies from the early 2000s. From Donnie Darko to Michael Clayton, from Anchorman to Iron Man. So slip on your sketchers, dig out your old Nokia, and join me from Mission Accomplished, starting August 12 on the Big Picture Feet. Today, what is Trumpinomics?

Between the 1980s and 2010s, it was generally assumed that Republicans and Democrats had settled differences when it came to economic policy. Republicans wanted lower taxes and less spending on welfare. Democrats wanted higher taxes and more social spending. Reality didn't always conform to those sort of archetypal differences. George H.W. Bush famously raised some taxes, and Bill Clinton famously reduced some social spending. But generally speaking, the socialists voted for Democrats. Democrats, and the corporate libertarians and free market folks, they found their home in the GOP. What's interesting about Donald Trump is that he doesn't just scramble this divide. You could say he

obliterates it. Some of Donald Trump's measures are so classically Republican that you really could imagine the ghost of Ronald Reagan signing off on them. After all, his signature legislative achievement in both terms are huge corporate income tax cuts. His administration has proudly tried to cut regulations and help oil and gas companies, all more or less in keeping with standard GOP orthodoxy. But when Trump announced that the government was taking a stake in Intel, Bernie Sanders cheered the news and Gavin Newsom called Donald Trump a socialist. Trump has single-handedly instituted the biggest tariffs in 100 years, tariffs that are so

unusual and extra-legal that a federal court just ruled that most of them are, in fact, against the law. He's waging war on the Federal Reserve, grabbing at an institution that has historically enjoyed an independence when it comes to setting interest rates and managing monetary policy. Meanwhile, some of Trump's economic behavior seems less a matter of economic strategy, and more just the behavior of an authoritarian seeking to control everything that happens to flicker onto his radar screen. When the president didn't like a recent jobs report from the Bureau of Labor statistics. He fired the director of the BLS. When he doesn't like what Disney or Paramount are doing, when he's upset that a law firm has employed a former enemy or current enemy, or when he wants,

say, cracker barrel to change its logo back, Trump has taken to intervening in the private affairs of companies in a way that doesn't really have a clear historical precedent, at least in the U.S. So Trumpinomics, its capitalist and its socialist. It's obsessed with defeating China and also obsessive about copying China. It's sometimes focused on keeping America from getting ripped off and sometimes focused on issues so personal they have nothing to do with the national interest at all. Today's guest is Greg Ip, the chief economics commentator at the Wall Street Journal.

According to Greg, the best way to see clearly what Trump is up to is to see his economic policy as something called state capitalism, an approach to managing the affairs of private companies that has a medium-long history in the U.S. and a reasonably long history in other countries, like China and Russia. Greg writes, quote, A generation ago, conventional wisdom held that as China liberalized, its economy would come to resemble America's. Instead, capitalism in America is starting to look like China. I'm Derek Thompson.

This is plain English. Greg Ip, welcome back to the show. All right, thanks very much for having me, Derek. Greg, for decades, Republicans have been the party of the private sector and the party of private markets. They've been the chief deregulators and the tax cutters. And what's notable about Trump is that he has cut taxes, he has cut regulations, but he's gone so far beyond that. He has created the largest tariff regime in a century. He's demanded a 10% stake of Intel, which got a lot of people talking about American socialism.

He intervenes in the day-to-day affairs of private companies to a very unusual degree. This isn't full-blown socialism. It clearly isn't full-blown capitalism. What is it? Those are all exactly right, Derek. And in fact, in some ways, Trump is behaving like a traditional Reagan conservative, which, as you say, he's for cutting taxes. He's for cutting regulation, especially in industries that he likes, like oil and gas. But as you say, he's also exercising this very must-

interventionist approach to private industry in ways that we have not traditionally seen any president, much less a Republican president, do before. And I guess the best label I could come up with for this was state capitalism. And state capitalism, it's not socialism because the government doesn't literally own the means of production. And it's not pure capitalism because the private sector is not being left its own devices to allocate capital to where it thinks the best return is. Rather, it's a bit of a hybrid between the two where the government, government sees fit to basically direct the private sector, where to direct its resources, how to invest, how to conduct business. And it doesn't do this with every business. It's not

telling every corner grocery or dry cleaner, like how to conduct business. But what you often see in countries is that there's this ever-present temptation to seize the commanding heights of the economy, which often means the most high-profile industries, which can often mean like utilities or high-tech manufacturing and tell them what to do. And that's kind of what we're seeing Trump do, especially with these very high-profile moves on things like steel. When Nippon Steel wanted to buy U.S. Steel, Biden said no. Trump said, yes, but you have to give us a so-called golden share, which is effectively a veto over some of its most important decisions. Same with Intel. The Biden administration said, we'll give Intel and other chipmakers these grants.

in return for them making these semiconductor plants. Trump said, hey, I got an idea. Instead of just giving you the money, why do you give us 10% of the company, right? So he's not doing that with every company, and I don't think he'll do it with every company, but you are hearing them talking about doing it with companies over which the federal government

has considerable leverage. That is very much a state capitalist mindset. Trump is unusual, but state intervention in capitalism is not so unusual. So in 2007, for example, The U.S. government in the Great Recession bails out the banks and the car companies. Under Joe Biden, you had all this talk about industrial policy, which to a certain extent is the state intervening in private capital. You had the Inflation Reduction Act, tons of money for green energy projects.

You have the Chips and Science Act, tons of money for chips. Was that state capitalism as well, or is what Trump is doing different? I think that at the moment, I'm more inclined to call it evolutionary than revolutionary with a important proviso that this movie isn't over yet. And there are reasons to see him going in directions we haven't seen him go before. But you're absolutely right. It is not necessarily a novel thing for the United States to take positions in private companies or to tell private companies what to do. During the Second World War, the War Productions Board, I think it was called, effectively took over a large swaths of manufacturing and said, hey, you Ford, you have to build liberations,

bombers and so on, you know, hey, Kaiser, you need to go build ships for us in California. And we understood why, because we were fighting a war. And those kinds of, like, exigencies required the government to get involved in the private sector in a way they hadn't before. And then there have always been these emergency situations that you just discussed, sort of like in the global financial crisis, right? If those major banks, if General Motors had been allowed to fail, there was a recognition that this would have enormous costs for the economy well beyond just the cost to the shareholders and the employees. And so TARP money was deployed for the government to take positions into those companies so that they would not go bust and could restructure themselves so that they could be viable enterprises going forward.

Importantly, though, in both those situations, the war, the global financial crisis, as soon as the crisis was over, the government got out. So before long after TARP, the banks were saying, take the money back. We don't want you telling us what to do with our executive compensation and our dividend policy. General Motors had sort of like and Chrysler had reshape themselves. They'd slim down. The government sold their shares. The government didn't not want to be in that. So is what Trump doing

is what Trump is doing now? How different is that? Well, first of all, as I said, telling white companies what to do is not that revolutionary. And as you say, the Chips Act under Biden sort of like took us down this direction. Here's the things

about Trump that might be on the revolutionary side. First of all, We're not in a war and we're not in a – some sense, his interventions are not by design necessarily temporary. There's no end date to when he will let U.S. Steel go on and do its own thing, or Intel for that matter. He seems to want leverage and control for its own sake, almost irrespective of where we are. I think that's a little bit different. We don't know how far it goes. His folks have talked about, for example, creating a sovereign wealth fund, and they will take investments in other companies.

companies like Intel to put in this, that would be revolutionary. And then the final thing that I think is also very different is that there's no statutory basis for any of what Trump is doing. So when money was put into the banks and the car companies, there was this law, the troubled asset relief program. And you could argue that the Obama and Bush administrations may have pushed the intent of that law by buying equity when the original plan was to buy mortgages, but there was still a law. There's no statutory basis really for much of what Trump is doing. And that means it's

very hard to tell what his intentions are, and there really aren't any limits to what he plans to do. One way I'm synthesizing your last answer is that state capitalism has historically been a break glass in case of emergency measure, right? World War II, break glass. National security risk, break glass. But with Trump, the glass is always broken. Everything, is an emergency if it allows Trump to do what he wants to do. You go back to the first announcements of the first tariffs in this administration. What was their justification? Fentanyl, a national security emergency.

With Intel, emergency, steel, emergency. How do you feel about this idea that Trump's state capitalism is in part defined by its claims to perma crisis, right, in part defined by the claim that Trump has a legal authority to tell private actors what to do because the moment he decides what he wants to do, it's therefore an emergency. One way of thinking about it, Derek, I think, is that even a free market person could make a case for government intervention in the presence of market failure. Now, what do we mean by market failure? So, for example, it's well understood that basic research, which has benefits to all

of us, for example, in the biomedical field, the private sector won't do enough of it because private shareholders can't capture all the benefits that come from that research ripples out to like millions of people and firms. And so the government subsidizes it. Or take a technology that's very important to national security, like rocket technology, satellites, missiles, lasers, semiconductors. Those were fields where Nassau and the Pentagon were very big buyers, if not actual investors in early industries, whether it was Texas Instruments or Lockheed Martin or a Fairchild Semiconductor, which was the forerunner of Intel. So you could make a case that where there is a market failure, it is not a violation of good economics for the government to get involved.

In fact, let me give you an example of something that the Trump administration did that fits this definition of appropriate intervention in the free market like a glove. And that's a That is the Pentagon's 15% investment in MP Materials. MP Materials is a company that uses rare earths to make magnets, special types of magnets, which are very important in things like power generation, jet fighters, computers, all sorts of things. And right now, China basically has a hammerlock on the production of these magnets. And there's a widespread recognition that it is not good for the U.S. national or economic security that we continue to depend on China for this type of magnet.

The only problem is it's not really possible to produce some problems. in the United States, because every time somebody gets some capital and decides to start out and do that, China goes and floods the market, drives a price down, and makes it impossible. So the Pentagon has said to, went to this company, it said, we'll put this guaranteed, we'll give you guaranteed funding. We promised to buy a certain amount of your output at a minimum price, and in return you goes 15% of the company. That is a, like I said, a textbook form of industrial state capitalism if you want it. That actually makes. sense because there's no way that company would be commercially viable absent those types of

price guarantees. Now, you compare that, for example, with the 15% export tax, which that's not what he calls it, but I'm going to call it that, that Trump has imposed on AMD and Nvidia to sell certain chips to China. There's no market failure here that he's trying to overcome, right? I mean, Nvidia and AMD are both selling chips extremely profitably. They do not need the government's intervention to help them sell them. All they need the government's help for is permission to sell these chips to China. And Trump said in exchange for that permission, give me 15% of your sales. I can't think of any definition of market failure that fits.

That is just Trump saying, here's an opportunity for the United States to extract some value from these enterprises because they need something from us, that, if you will, is a whole new form of state capitalism, which I think doesn't fit those normal definitions of when you want to do it.

And I think that those are the more profound questions that we're going to be grappling with going forward if we see more of those types of things. It seems to me that we wouldn't be seeing this blending of capitalism and socialism, this dabbling with state capitalism, as you're describing it, if the public and both political parties had faith that the free market was working.

To a certain extent, this awkward marriage of socialism and capitalism seems downstream of the fact that we've lost faith that free market capitalism delivers what it promised to deliver. What do you see as those failures of free market capitalism that has brought us to this moment? Well, I think you're exactly right. that this lack of faith in the free market and this willingness to experiment with interventions, it didn't begin, you know, in January 2021 under Trump. It actually began quite a long time ago. And in fact, you could argue that Trump's election back in 2016 was to some extent a recognition of the popular dissatisfaction with the free market. We had pursued market liberalization since the

1940s, culminating with the North American free trade in the 1990s, admitting China to the World Trade Organization in 2001. It seemed like a good idea at the time. But then we had things like the global financial crisis in 07, 08, 2009, which kind of looked like we had allowed the free market in the financial sector to get out of control. And then there was a recognition that in the United States, at least, you know, a lot of great jobs in industries were destroyed by opening up the market to China. Some of that was frankly just because Chinese labor was cheaper, but some of it was also because China joined the World Trade Organization, but never sort of like bought into the premises of it. China itself never actually practiced free market capitalism. It used all the

instruments of the state to basically keep out foreign competition and to give its national champions a leg up in the U.S. market. So you come forward to 2016, and I think Trump in some way captures a growing kind of dissatisfaction on both sides of the aisle, and among the working class, and to some extent, among the educated class, too, that the old model wasn't working. It hadn't worked for the average blue-collar worker. And it hadn't, you know, and it had basically left as vulnerable to a country that a lot of folks were beginning to realize wasn't really, you know, signing on to the U.S.-led order. It was actually all about creating its own Chinese-led order. So a lot of what you saw under Trump 1.0 in terms of, for example, some of its first terror,

tariffs, especially on China, then continuing under Biden, the continuation of those tariffs and the Chips and Science Act, which was about subsidized semiconductors, all of those were of a piece. They were all recognition that, hey, this kind of like reflexive belief that the government has no place in market decisions was essentially the wrong policy. It had made us suckers for countries that wished us ill, and it was time to take a different direction. It's interesting because I think that the rise of state capitalism in America has a lot to do with a story you just told about China's rise seeming to hurt the American middle class. But it also comes from the converse, which is a kind of elite envy of China. I'm thinking about the recent book by Dan Wang, Breakneck, China's Quest to Engineer the Future, where he writes, quote, China is an engineering state, building big at breakneck speed.

in contrast to the United States Lawyerly Society, blocking everything it can, good and bad. And I suppose, end quote. And I suppose as the co-author of abundance, I have to agree with a certain aspect of this. I think in our conclusion, we even talk about the fact

that a certain eagerness to get the federal government slightly more involved in things like, say, energy policy comes from an envy of China, which is building so much clean energy so quickly. So how do you think China

not just as a threat to the middle class, but as an economic model is helping to sort of bolster the case for state capitalism within the Republican Party and even within the Democratic Party. I don't think actually that there are many people in either party that look at China and say,

look at how well China's done, let's have the same model as them. But I think there's something to what you're saying in the following sense with infrastructure, with highways, with airports, with high-speed rail. And they say, why in America can we do that? And you and as a right about this at great length, very articulately

in abundance, right? And so there is a desire, a late desire to say, like, if we can only have that little piece of the Chinese model, you know, that ability to have a bunch of really wise technocrats in the capital say, hey, build that highway, build that pipeline, build those high-speed transmission lines, and don't spend 15 years litigating it with every interest group, you know, on the planet. So I think there's a lot of people who have no sympathy for the Chinese model whatsoever, who do share that sympathy. And by the way, Derek, I think that this might be part of why they say, we wanted, you know, we wanted to, like, essentially like take on the Chinese and the guy is doing it to heck with all the, you know, checks and balances and all sort of other legal niceties

that people used to worry about. The other part of China, which is also very different, is that I think that, and this is definitely true in the Republican Party, because I know that people like John Cornyn and Todd Young have told me this. Those are two the key senators behind the Chipson Science Act on the Republican side. And they have, they are dyed in the wall, conservative Republican legislators, but they will say quite off the bat, China is different. China behaves differently and requires us to behave differently. And therefore, there will be times and exceptions where we have to behave differently. And different parties have had different models of that. So for example, one idea that caught on under Biden, Biden and Treasury Secretary Janet Yellen was friend-shoring, right? Which was, we won't have full free trade and let China basically take advantage of that, but we won't fully retreat behind protectionist walls either. We'll have kind of this free trade between us and our friends, but not for people who are not our friends.

And the rationale behind that was that, hey, look, something like making a semiconductor fab is an extremely expensive, you cannot possibly. run a profitable semiconductor industry only serving your national market. You've got to somehow share that over some countries. So let's come up with a system where we do that amongst our allies like Taiwan and South Korea and Mexico and Canada and so forth. So that part, I think you've seen both sides without succumbing to the temptation to adopt the Chinese model, say that the presence of the Chinese model does require us to be a little less, you know, kind of need-jerk, you know, free market anti-intervention than we used to.

We're talking about China, and I do think that China plays a rather significant role in terms of shaping bipartisan agreements about what to do about building in America. The Infrastructure Bill under Biden, bipartisan. Chips and Science Act, under Biden, bipartisan. But I don't want to make it seem as if state capitalism is just a matter of, hey, let's get a little bit closer to China. What are other countries around the world that practice what you would call state capitalism? I mean, that's a great question because if you look around the world, it's impossible to find any country that's purely socialist, with a possible exception of North Korea, and a country that's purely capitalist. Even the United States has long history of intervening in private markets. Look at Fannie Mae and Freddie Mac, right, which were big mortgage guarantors and de facto state-owned enterprises or the Army Corps of Engineers. Most countries are somewhere in between those two extremes. I would look at, say, France, where the French government has historically had a very large presence in the

private sector, they are still the owner or partial owner of enterprises like car companies or electric utilities and so forth. Or look at Russia and Brazil, which are sort of getting more towards like the China model of a sense of state ownership. But I think a reasonable question is what makes China different? And China is different. And this goes to the point you were making about why we have seen this bipartisan embrace or bipartisan experimentation with industrial policy slash state capitalism, is that, first of all, China seems to do it better. And when I say better, I don't mean that they pour money to these industries and then they make a lot of money at it. I mean, they pour a lot of into these industries and those industries go on to become global champions, right?

I mean, it's now the case that China is a leader in a lot of technologically important industries, and that just wasn't true for any of these other competitors. The other is that China is bigger than any of these countries, right? There's something like a third of all U.S. manufacturing output. And third and perhaps, and certainly not least, they are an adversary in a way that France and Brazil never were. So the combination of those three things meant that even if you go to like a dyed in the wool libertarian, Reaganite conservative, who says, you know, all these other countries came along, the French and the Brazilians and the Germans and the Japanese and they thought they could be better than us with their industrial policy. And, you know, we always ended up,

you know, being the best and the richest. They're not quite ready to say that about China any longer. They're very nervous about the possibility that China is profoundly different from any of these other challenges. And that is why you see a willingness really across party lines and, you know, among people who would otherwise run right in the opposite direction away from any sort of government intervention, willing to make an exception. So if state capitalism responds to the public's lack of faith in free market capitalism, and it allows the U.S. government to intervene in the name of national security. And it has shown, at least in the case of China, to grow national champions that can dominate the world when it comes to manufacturing things like solar panels or electric

cars. What's the problem with state capitalism? Well, it's the same problem with any type of intervention in the private markets, which is that like free markets are just very good at efficiently allocating capital to its best use. The history of the U.S. government or any government, for that matter, figuring out what the hot new technology was going to be is just not very good. The United States back to supersonic transport airliner. That never happened. It turned out not to be a very good investment.

I mean, coming all up to the present, like, you know, I could point to the Foxconn so-called, you know, investment in Wisconsin to build liquid crystal displays. Never happened. There's a factory in western New York to build solar panels by Tesla. The New York taxpayer spent a billion dollars on that. It's really not doing what it was supposed to do. Long way of saying that we've understood that over time, governments are terrible at picking winners. And even when they pick winners, they often burden them with all sorts of public responsibilities.

Build it in this district, not that district. How dare you lay off people? I don't care how much money you're losing. Like a Great Britain, which nationalized all these industries, including iron and steel and coal and automobile. in the 60s and the 70s, and most of them were like terrible money losers until Thadr came along and privatized them all. So in some sense, it's actually a mystery why anybody wants to do state capitalism because it's just really hard to do it right. So that, I think, even in China, to be honest, everybody can talk about the great successes China has had with some of its national

champions, but we don't tend to talk about how much money they've wasted on these sectors. I I mean, Comac, their competitor Boeing, I believe, has consumed something like $50 to $100 billion in government subsidies. I mean, that's money coming out of something else. I've seen a figure to the effect that 20% of Chinese companies are unprofitable because thanks to the Chinese state capitalism, they have either been incentivized or induced to enter sectors like electric vehicles or semiconductors where there's too much supply, not enough demand, and everybody's losing money. That is a staggering waste of resources, and it's one of the reasons why China has severe fiscal problems. And I guess the final reason is that state capitalism isn't just about economic control. It's also about political control. And I think liberal democracies in particular are uneasy when the state develops such a large presence in our economy.

It's interesting because listening to you right now, I'm thinking maybe I need to make a distinction. between state capitalism and what one might call Trump capitalism. So if state capitalism is capitalism in which the state, the interests of the state, the government, are intervening in order to help one company over here, move investments to this part of the country, in a way, Trump's version of state capitalism sometimes doesn't even seem to,

honor a national security premise so much as it honors whatever Trump wants in that moment. So two quick examples I thought as you were talking. One is TikTok. Four or five years ago, Trump, I think, tweeted that we needed to ban TikTok in America. And then Congress voted to force a sale of American TikTok. And then Trump has a meeting with someone, I think Jeff Yass or something, an investor in Bight Dance, the parent company of TikTok, and just changes his mind. And right now, the forced sale of TikTok has essentially been stayed because Trump is just waiting and doesn't really want TikTok to have a forced sale because it's his personal preference that we simply don't do it.

So there's a case where Congress voted. The state interest was articulated, but Trump is intervening on his own benefit. Another example that I can think of is something like AI chip exports, right? I thought it was, it seemed to me to be a kind of consensus within Washington that we wanted to beat shine. to artificial general intelligence. And so we didn't want to export the most advanced chips, the Nvidia most advanced chips, to China. But then Trump has a meeting with Nvidia's CEO, Jensen Wong,

likes the meeting, gets a good vibe from the guy, and suddenly exports of these advanced chips to China are legal, but the U.S. government's going to get some, you know, 10, 15% cut on an export tax that Trump can say, aha, I got the tribute that I demanded from this exchange. Like, in a way, yes, I can see how that fits in. to the umbrella term of state capitalism. It is the state.

It's Trump himself who is intervening in markets. But in many ways, you see what I'm saying, that he doesn't seem to intervene for the purpose of, or to the furtherance of, any cleanly articulated goal of state interests. Like the interest that we're intervening for just seemed to be like kind of whatever Trump is thinking at that moment is the way we're going to intervene in private markets.

And that does seem to be a part of state capitalism, but also very, very specifically Trumpy. You know, you're absolutely right. Essentially, what is in the national interest is what Trump on a given day decides is the national interest. And that goes back to my point. In the past interventions, whether it was TARP or the Chips and Science Act, were basically designed under a framework that was set down in legislation. And maybe that legislation, you know, missed, you know, didn't get it exactly right. But it was an articulation of the public will about what we wanted to achieve in that regard. None of that is true about a lot of what Trump does. I recently wrote a column where I said of the, investment in Intel, I said it's a stake without a strategy, right? So when the Biden administration funneled $8 billion, or $11 billion, if I think was a total, in chips money towards Intel, they set out particular milestones that Intel had to achieve in order to get that money in various trunches. And those milestones were linked to the national security goals that Congress laid out in the original Chips and Science Act. When Trump came along and said, well, you're going to get the money,

but instead of getting it, you know, just in exchange for these milestones, you have to give us equity. There was none of that process. There was no articulation of exactly where in the U.S. strategy this fit. It just seemed to be an opportunity for Trump to say, hey, they need something from us, which is this money. And I'd like to get something for the Treasury. Give us your equity. And there was no articulation of how this like fit into a larger strategy about making the U.S. more competitive or competing. with China. In fact, it was almost the opposite because if you read Intel's filings on this investment, they tell us that all the milestones that the Biden administration had laid down in the original grants are gone. There's no requirement that Intel meet these particular milestones to meet particular type, to build particular types of fabs at certain times. So this kind of looks just like,

you know, the kind of investment your 401k would do. Hey, it seemed like a good opportunity to pick up some equity that was underpriced. And I don't see how that fits into a larger strategy. And I think, Derek, this goes to another point that I made earlier in our chat, which is that one of the question marks around state capitalism is the extent to which it is a channel not just for economic control, but political control. And by becoming so much a personal inclinations and preferences on a day-to-day basis, it also becomes a potential instrument of political control, and I'm not sure if anybody sort of saw that coming or is entirely comfortable with that. In the case of Intel, you'll recall, for example, about a week or two before this stake was

given to the United States, Trump went on social media and called for the resignation of its CEO because he had alleged ties to China. So that was in some sense a form of soft leverage that the United States had over Intel. Now, the United States is no longer asking for the resignation of the CEO. Now, I don't know what his ties were to China, and I don't know how compromising they were, and I don't know whether any sort of investigation was actually done to identify whether there was a reason for the president to call for that. All I know is that that was a threat. The threat is now gone, and I think that raises interesting questions about exactly how

this stuff is done. We also know that Trump has done things. For example, he has made the certain law firms give free law. advice and time to the administration in return for them not being penalized for, in his view, having supported, having opposed them politically in the past. We know that there was a merger between Paramount and Skydance that was held up because the president was suing a unit of Paramount over its, you know, over an election broadcast. So I guess what I'm saying here is that like while being completely open-minded as to what the president's ultimate intentions are, the type

of control he is exercising over the private sector shows how this type of intervention can become a form of not just economic control, but political control. And if you look at China or Russia for that matter, you see the same thing, right? So an example I used in my column was that in China, there was Jack Ma, who was probably the most famous entrepreneur in China at the time, the founder of a co-founder of Alibaba. And back in 2020, he very publicly rebuked the government for being too opposed to innovation. in the financial area. And what we've reported is that Xi Jinping personally saw to it that Jack Ma and Alibaba were punished for essentially having the temerity to challenge the wisdom and supremacy of the Chinese Communist Party. The initial public offering of one of his companies was canceled. It was investigated. He had to pay very large fines.

And then over a lot of parts of the Chinese high-tech economy, which happened to be also where a lot of entrepreneurs who may have had aspirations of one day, challenging the leadership of the Communist Party, were resident. So the point I'm trying to make here is that when you have the government intervening more and more in the economy, especially in methods that are not, in some sense,

circumscribed by a clear statutory basis, then state capitalism becomes a way not just for the government of the day to control the investment and employment and the production of goods and services, but all sorts of like social, political forces in our country. And I think that's an important question for us to grapple with. And as I was thinking through some of your examples, Intel, the law firms, Paramount,

the formula that just seems so clear to me, it's basically a three-step formula that Trump seems to repeat over and over again. Step one, create pain. Step two, remove pain. Step three, demand tribute, right? You take Intel, right? He makes these threats about the Intel CEO. He creates pain. The Intel CEO comes to the White House. Trump says, I'll remove the pain and not demand your firing, but I need 10% of your company. Oh, okay, here's the tribute to the White House and that Athera's over. Same with the law firms. He creates pain. He removes pain. He demands tens of millions of dollars of pro bono work for his causes. With the colleges, same thing. With Paramount, create pain, remove pain. Okay, you can go through with your merger. But I demand the tribute

of you saying nice things about me or with some of these other media companies, 15, 20 million dollar settlement with the government. And so there's a way in which, right, you can see how state capitalism is sort of the economic model into which Trump's personality has walked. But fundamentally, what we're dealing with is like almost more of a behavior than it is an economic theory, if that makes sense, right? Like, we're putting the clothes of state capitalism or mercantilism or, you know, socialism with American characteristics on Trump's behavior. But fundamentally what we're dealing with is an incredibly powerful president with an incredibly specific personality that he has said that he brings to every single counterparty, whether it's a chipmaker,

a law firm, a college, a media firm. It's the same playbook with every single counterparty. And that just seems particularly interesting to me as we're trying to figure out like, where does this, where does Trumponomics go from here? It seems to me that we're just going to keep seeing these kind of threats over and over again as he sort of billows into other parts of the economy. I want to be careful here because I don't want to wander too far into the field of speculation about what happens next or what is actually going on in the minds of the counterparties. I mean, you've made just what sounds like a pretty compelling argument and it's an interesting argument, but I want to sort of like step back a little bit before I sign on to that. In the case of Intel, for example, we don't know specifically what terms were that were discussed in that meeting.

And I would say that the fact that Intel stock did eventually rise after that, just at least there are some people on the Intel board and on the Interval Intel showover base that felt this was actually net positive for that. That's a fair point. I mean, you know, they're saying, hey, the president's going to go around and he's going to like, you know, like called Jensen Huang and Tim Cook into his office. and tell them, you know, and apply exactly the same pressure on them to do business with us, be saying, well, you know, the president is intervening, but maybe there's a positive side to that. Now, the more the president intervenes in order to make particular transactions come together, the more it starts to look like state capitalism.

But what I'm trying to say is that it's possible that there is a world in which all this sort of stuff does actually work out for the people on the other side of the transaction. But the one thing I do want to actually say, which I think is relevant here, is that you don't really have to speculate because you can listen to the president's own words. Because in the White Oval Office, he said, somebody, people, I'm paraphrasing here, the people come in here and they need something, of course they're going to pay. And people say, well, that's a shame. That's not a shame.

That's just called business. And in some sense, that is a common throughput throughout Trump's career in business and in politics. It's about leverage. If somebody needs something from him, either as a developer or as the President of the United States, they need to pay for that. You go back to the 1980s when he first started talking about how other countries were ripping off the United States. The way he always framed terrorists was people should pay for the right to sell into the United States market. It wasn't even really about reshoring manufacturing. It was about, you know, Kuwait.

Being protected by the U.S. military is very valuable to you. You should give us a percentage of all your oil sales in exchange for that. That is how his mind has always operated. So we shouldn't be that surprise that as president, he looks at everything the same way. I mean, even all the tariff deals he's been going around dealing and demands for investment money, it's all about, hey, you want access to the U.S. market, you want the U.S. protection of the U.S. security umbrella. You're going to have to pay for that. And I'm just going to set the price as high as I think that you can bear. and effectively what he has said to these companies, whether it's AMD and Nvidia and Intel or whoever else comes along, is exactly the same thing. You know, as the federal government, we have things of value that you need. And, you know, we as the United States, as the guardian of the taxpayer, are going to do deals that we think are good for the taxpayer, even if it's not written down somewhere in the enabling statute that this is a fee that you're supposed to pay.

I love that. And it really helps me as I'm trying to get my head around this question of like, what is Trumpinomics? and what is a way to understand it. And I'm coming away from this conversation with a couple points, but just two to articulate at the end. Number one, as you just indicated, is this fondness for leverage, right? One thing that unites the stories of Intel,

the law firms, the colleges, Paramount, is this fondness for using leverage in order to direct the private sector. That's really important. This other thing I think you put on the table, number two, is the way I wrote it down in my notes just now, I don't think is very felicitous,

but it's an allergy to unpriced benefits, if that makes sense, right? Like, Trump has this sense that, like, Kuwait's getting the benefit of U.S. military. It's unfair if they don't pay us something for it. It's unfair if some company is selling into the U.S. market, and there's a bunch of really rich Americans who are buying their product, but that benefit is unpriced, right? Trump wants to know that every benefit that other counterparties

when he's negotiating or countries when we're doing free trade agreements every benefit that they're getting is priced. And if it's not priced, he gets really pissed off about that and tries to create a price. Like, that's what the tariffs are. We are creating a new price for the benefit of selling your electronics to families in Missouri and New York State. We're pricing that benefit. And so I never really thought of it that way, but I think that's kind of a, that's a nice way for me to think of it going forward. Any final thoughts from you about, you know, this overall question of how to,

to understand this, I think really, really fascinating and strange combination of, as we've said before, state capitalism, capitalism, socialism, and the personality quirks of this incredibly powerful executive. Yes, I want to go back a little bit to something where we discussed about the extent to which what's going on now with the free market model that we had before even Trump came along. And you talked about, like, how Trump wants to put a price on access to the U.S. market. or access to the U.S. security umbrella. The idea that the rest of the world,

especially our allies, were freeloading off the United States, did not just come along with Trump. Presidents back long before Trump, Democrats and Republicans, had been, like, frustrated with the failure of Germany and Japan and all the others to take their own defense seriously enough.

They would, year after year, like, spend less than they had promised, their armed forces and preparedness had become a running joke to the extent that they were leaning more heavily on the United States. Angela Merkel, just, you know, she went and did a gas deal with Russia that made them more dependent

instead of less dependent on Russia. So Trump comes along and says, you guys are taking us for granted, and that's got to stop. The way he went about it is very unconventional. But I have talked to a lot of people on both sides of the aisle who are very glad

that he did it. And people who have said it was the only way to do it. The only way to get these guys to take their defense seriously was to shake them up the way President Trump has. And a little bit of that is true on the trade front as well.

I tend to be more of an economic trade person than a military national security person. And I can tell you it is not some myth invented by MAGA. It is true that the United States opened its markets more than others did, and that the United States took its obligations of free trade more seriously than other countries did. And other countries essentially were willing

to go along with open markets, free trade, only as far as they could get away with it and continue to do all sorts of things, you know, that violated the spirit of free trade. They did take advantage of the United States. That is a fact. And so when Trump comes along and says, no more advantage of us, there are a lot of people quietly nodding their heads and saying, yes. And if the only way to make that stop was this sort of like root force approach, you know, that he has taken, you're going to find a lot of people going around saying, well, you want to make an omelet, you're going to break a lot of eggs. So I guess the final thought I want to leave with Derek is that you asked me early on, is this evolutionary or is a revolutionary? I think that I'm inclined to say for

now that it's evolutionary because notwithstanding his very unorthodox way of doing it, he is, in a broad sense, pushing the U.S. international bargain in a direction that many people in this country wanted it to go and hadn't figured out a way to go about doing it. Whether it ends up being more revolutionary, because he continues to push the boundaries and what we have come to expect in our sort of like system of ordered liberty, that's an open question and I think that we all want to keep an eye on. Greg, I think you very much, sir. All right.

Thank you, Derek. Good conversation.