… of the Federal Government.
Right-wing pundit Erick Erickson is angry at his own side for the acquisition, by President Trump the Federal government, of 10% of old chip-maker Intel. From CNBC:
Intel, the only American company capable of making advanced chips on U.S. soil, said in a press release that the government made an $8.9 billion investment in Intel common stock, purchasing 433.3 million shares at a price of $20.47 per share, giving it a 10% stake in the company. Intel noted that the price the government paid was a discount to the current market price.
It’s not explicit, but the wording suggests the source of the shares is the Intel treasury and not the market. This, in turn, can signal to the market dilution, meaning voting power and the perceived value of each share just dropped, because future growth and dividends is now divided into 10% more shares.
But that’s not Erickson’s concern. Here it is:
But, again, the United States now is the largest shareholder of Intel, which puts every other microchip company at a disadvantage. Why? Because Intel now has subsidy by taxpayers. Instead of having to let the creative destruction of the market place pick apart Intel, which has chronically made bad decisions, the leadership that made those bad decisions has been rewarded.
Uncle Sam insists it will exercise no voting with its stock. But the fine print of the deal shows Uncle Sam is getting common stock with voting rights. Saying it will not vote and not actually voting are two different things. If the situation continues and a Democrat takes back the White House, you will see ESG and DEI explode as Intel seeks to humor its largest shareholder.
This is another step down a dangerous path. Defenders will say the government bailed out Fannie and Freddie. The government bailed out General Motors. The government even bailed out Chrysler. … [Chrysler] ultimately went bankrupt and got bought by Europeans, having never fully recovered.
Note the contradiction in Erickson’s post. He implies that now Intel will be successful, and yet gives examples of failure of other government interference. Additionally, he doesn’t explore context.
This is standard libertarian cant, and I’d like to emphasize that he’s not entirely wrong. The government trying to pick winners is, in an ideal environment, not a generally positive strategy. However, I don’t say that as if Intel’s competitors are now doomed, as I consider the government as just another evolutionary force.
From theoretical aspects, given general human psychology, this is not a guaranteed success. In fact, if Intel’s really in deep trouble – and, I confess, I’ve not followed Intel’s story, as I prefer the stocks of companies with market caps of substantially less than Intel’s, even if Intel’s has dropped off. Money does not guarantee success. Unless the Trump Administration reforms Intel in some way, such as looking at toxic culture, or poor technical innovation and development, or any or all of several other areas, Intel will just take longer to slump from market irrelevance to bankruptcy.
Practically, come on. This is the Trump Administration. They fail, fail, fail. Trump nominated and caused to be confirmed a pack of people inferior to himself, as I’ve noted before, so even if he doesn’t interfere personally, his minions will botch it.
That said, I found this statement dubious:
The government keeps making companies too big to fail and hiding behind “national security” as the excuse. In fact, that has become the consensus talking point among defenders who will say things like, “I’m uncomfortable with this, but national security…”. It is an excuse and justification, but not reality.
Unfortunately, the world is a dangerous place. That’s not abnormal, actually, there’s always someone out there gunning for #1, and #1 is currently being led by a demented moron. The report from CNBC included this:
Intel, the only American company capable of making advanced chips on U.S. soil…
While You play the hand you’re dealt is inadequate to the situation, it may make sense to boost Intel in a world where the biggest and best chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), is located in Taiwan, next door to belligerent China which claims the island nation, and primary chip equipment maker ASML is located in The Netherlands, arguably not all that far from equally belligerent Russia – and those missiles its President flings about with abandon.
So it’s worth considering the assertion that the thinly hidden agenda behind Erickson’s statement to be a foolish chase after ideological purity. Libertarianism, from the time when I thought it was a serious political philosophy, was very weak in foreign relations, and boiled down to rationales for Keep taxes low! and Keep your government out of my business!
Using reductionism in foreign relations is a greedy mug’s game.
