Dem
47
GOP
53
Communism is all about the state owning the means of production. Donald Trump has taken this to heart and had the U.S. government buy equity stakes in many companies, most notably Intel, L3Harris, Lithium Americas, MP Materials, Trilogy Metals, U.S. Steel, USA Rare Earth, Vulcan Elements, Westinghouse and XLight, among others. Now he wants the government to buy stock in AI companies. He thinks their stock will go up so the government can profit from this.
This is a bad idea on so many levels. First, the federal government is not a giant mutual fund that tries to invest in up-and-coming companies to profit from them. That is not the purpose of government and it is ill-equipped to make such decisions. Besides, sometimes there is a conflict between doing what is best for the country and what might make the most money. Bailing out the auto industry in 2008 was good for the country but not the best investment in town. The AI companies don't need any help from the government. They are doing quite nicely on their own, thank you.
Second, (partial) government ownership gives the government a say in running the companies. Trump (and government officials generally) do not know how to run large complex companies in businesses they know little about. Politicians are always focused on the short term, whereas the CEO of a big company also needs to think about what investments to make now that won't pay off for years.
Third, when the government has power over companies, corporate officials may be pressured to make decisions that are politically useful for the president but bad for the company. Think about a company being pressured to build a factory in a state whose governor is a big supporter of the president, even though it makes no sense commercially. Or the opposite, closing a highly productive plant in a state just to punish a governor the president dislikes.
Fourth, politically, Republican politicians hate, hate, hate anything that smacks of socialism or communism and do not hesitate to say this loudly. In fact, many of them want to privatize things the government already runs, like Social Security. If a Democratic president were to buy up (part of) a health insurance company, for example, to get it to change some of the conditions in its insurance policies, Republican politicians would go bonkers. However, if the next Democratic president does this and then says he is just following in Trump's footsteps, they will be in a weaker position to fight it. Then their argument won't be able to be "government buying up companies is a bad idea" and more "we don't like the choice of companies you want to buy."
Fifth, AI is very unpopular with the voters and giving the government a stake in AI's success is exactly the opposite of what many people want. They would prefer that the AI bubble bursts and disappears. They don't want their future hitched to its success when they actually want it to fail.
Sixth, AI is not a sure thing. There are many skeptics from within the AI bubble who are not sure the enormous expenses are worth it. Consider these recent developments.
AI may well be successful in certain specific areas, but the idea that it can be sprayed around and make the entire economy more productive may have been a tad premature. AI can definitely do interesting things, but whether it makes business sense when the users have to pay the actual cost is a different matter.
This is not to say that having the government help critical industries is necessarily a bad idea, but such help should be in the form of loans, loan guarantees, or grants, not buying company stock. And it should be to help create critical national infrastructure (e.g., rural broadband or developing rare earth production), not speculating in the stock market in hopes of windfall profits, which is what Trump wants.
Some Democratic-aligned politicians like the idea of the government owning companies. In particular, Bernie Sanders, who is a Democratic socialist, has proposed a 50% tax on AI companies, to be paid in stock. But Sanders thinks socialism is a good thing, not a bad thing. Trump now seems to be on the same page as Sanders, more or less. Politics makes for strange bedfellows. (V)