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Notes -
The US government is seeking stakes in Intel, TSMC, and Samsung, among other firms:
Similarly, a few months ago, the Trump administration approved Nippon Steel's acquisition of US Steel contingent on the USG receiving a golden share that gives it considerable supervisory authority:
It's an interesting turn for the traditionally market-oriented, small government party to start making a play for the commanding heights of the economy. The Federal government has a long history of giving out subsidies as a matter of policy, but it generally hasn't tried to assert an actual stake in recipient businesses (it will sometimes assume control of failing institutions, but this is generally an emergency measure rather than a long term plan).
The worst part of these deals is the
bailoutCHIPS Act which already happened. It appears that while the Intel stake (which is quite large, 9.9% of the company) is technically common stock, the government isn't allowed to vote it independently."The government also agrees to vote with the Company’s Board of Directors on matters requiring shareholder approval, with limited exceptions."
Since it looks like there were strings attached to the CHIPS Act funding which are being dropped, this could be anything from an effective takeover to a mere minor technical restructuring; someone would need to dig deeper into it to find out.
As for the questions:
No, I don't think so. It's a turn towards industrial policy (so collectivist), but not in the Western leftist tradition. I think Trump is probably taking his cue from Japan and South Korea here. The idea seems to be to make money, not improve the lot of the workers or anything like that.
There's always risks of corruption, but this doesn't seem any worse than other things the government does.
These are the big problems, especially the last. Although I'm far more worried about the other direction, increased political control of the large firms using the government's power as a stakeholder (which may be less limited than the government's more direct political powers). The government acting in ways which helps American companies isn't necessarily bad. Acting in ways that helps Intel and other large firms over smaller competitors is bad, though not particularly novel. But the threat of the government setting Intel's corporate priorities while protecting Intel from competition... it seems we have a microchip shortage, comrade!
Why not buy units in private equity funds then? Much better returns than Intel lmao
Furthermore, if that is the goal, why do we think government bureaucrats and elected officials are better capital allocators than Wall St et. al? Are we pretending government employees are hyper competent now?
Not to speak for The_Nybbler, but I think the intent is to both exercise control and make money. You could conceive of a similar bailout not concerned with making money off the deal that's solely about protecting jobs / paying off unions / encouraging local investment even if it turns out net negative.
Buying into private equity funds would simply result in the government getting better returns while the investment goes to foreign countries / companies if that's the most efficient way to get returns. Buying directly into a company like this with these restrictions is certainly a market distortion but the idea is that it should still be financially net positive, just less so than in the most economically efficient world possible, and help support (their idea of) national interests.
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