The Republican Party Must Be the Party of Free Enterprise

The GOP is moving away from the model that made America the envy of the world

One of the greatest lessons of history – oft repeated despite its failures – is that central planning is simply bad policy. Centrally planned economies are inefficient, inflexible, and concentrate too much power in too few people. There was a time not too long ago when the Republican Party at least pretended to abhor central planners and embrace freer markets. Regrettably, the tide appears to be shifting; the GOP is embracing economics that more closely resemble Vladimir Lenin than Milton Friedman.

On August 26, the U.S. government acquired a nearly 10% stake in Intel, becoming one of the company’s largest shareholders. This is part of a greater effort by the Trump Administration to change the operations of chip manufacturers and boost domestic production. President Trump’s ambitions do not end with Intel; the President took to Truth Social to promise that he would “make deals like that for our Country all day long.” This isn’t the first time the U.S. government has acquired a stake in an American corporation, but the most recent example serves as a cautionary tale.

During the 2008 financial crisis, the U.S. government handed General Motors a $50 billion bailout in exchange for a 60% stake in the company. When the U.S. sold its stake in GM, the U.S. sold at a loss of $10 billion. The deal the U.S. has made with Intel is intended to generate revenue for the government, part of a grander plan to create a sovereign wealth fund in the U.S., but one doesn’t have to go too far back to see that central planning has not yielded all of the bureaucrat's desired results – and it very likely never will.

FormerVice President Mike Pence has expressed concerns about the U.S. government's acquisition of a stake in Intel, saying, “State-owned enterprise is not the American way… a refereed private sector with less taxes and regulation has created the most prosperous economy in the history of the world.” Trump’s former VP is not alone; the business community is also concerned. Bill George, former CEO of Medtronic, said, “We're moving from a pure capitalistic economy to a much more state-engaged economy... That's a huge change for America and over where we've been. I've never seen an era like this.” It’s true that the Trump Administration’s deal with Intel is unique from the GM bailout. There is no emergency, which isn’t to concede that a government should accumulate more power with every passing emergency, and the Administration’s intentions set a more alarming precedent.

While a nearly 10% stake in a company sounds small, the U.S. government is now one of the largest shareholders in a private company. This is a step toward a more socialist society; the support from Sen. Bernie Sanders (I-VT) should be reason enough for conservatives and others in the Republican Party to scratch their heads. Sanders opposes taxpayers providing “corporate welfare” to major corporations “without getting anything in return.” Perhaps the solution isn’t to cave to socialists like Senator Sanders, but to instead embrace free enterprise.

No other system in the history of mankind has done a better job of relieving human misery than free enterprise. People once considered middle class have moved into higher income brackets contributing to the myth that the middle class is shrinking because people are getting poorer; people are actually getting wealthier; free enterprise has led to a 70% decline, globally, in extreme poverty; and industrial production in America has actually doubled in the past 50 years, expanding output and bringing unemployment to record lows. It is this "refereed private sector" which Vice President Pence spoke of that has made America prosperous and free, and this used to be a bipartisan consensus.

The acquisition of stock in private companies is not the first red flag the Republican Party has shown on economic issues lately. The Republican Party embraced Sean O’Brien, General President of the International Brotherhood of Teamsters, by inviting him to be the first labor union leader to address the Republican National Convention. He decried Right to Work laws – which prevent workers from being forced to join a union – that exist in many Republican-led states around the country, and what he called “economic terrorism,” corporations he sees as enemies of the worker. It was the sort of rhetoric one would hear at a meeting of the Democratic Socialists of America, not the RNC.

Milton Friedman believed that economic freedom was a necessary condition for guaranteeing political freedom; a free enterprise system would disperse power among various actors, keeping the government out of one's wallet and life. In the United States, we have encouraged and rewarded entrepreneurship and innovation. We have all benefited greatly from this system in the long run. People risked their lives to escape the Iron Curtain because of the considerable degree of freedom and prosperity provided by the free enterprise system. If we are to continue to be great, the GOP must reject the nationalist and populist impulses that embrace central planning and socialism.