Republicans were the party of free enterprise. That may no longer be true. President Donald Trump is taking an "unprecedented amount of control" over American businesses, edging the system toward what some economists call "crony capitalism."
The president is "tightening his control over Wall Street and corporate America," said NPR. In recent days he has called on Intel's CEO to resign, announced an "unprecedented" deal to take a cut of Nvidia's chip exports to China and urged Goldman Sachs to fire an economist who has said tariffs will raise consumer prices. Those actions are not "really free markets as Americans have understood it," said Cato Institute economist Ryan Bourne. The result is an economy in which "we have winners and losers based on cronyism," said Yale University's Jeffrey Sonnenfeld.
Fostering corruption?
If you are a CEO under this administration, "set aside a slush fund for paying tribute to the Decider-in-Chief," said Rick Newman at Yahoo Finance. Trump is "essentially extorting certain companies" for the privilege of doing business. That is expensive: Nvidia's "gratuity" to the administration for its exports will cost the company $3 billion a year. That may be "better than losing chip sales to China completely," but there are "obvious risks." Brands could suffer if consumers start to view companies as "partisan operators." Trump is plainly "reviving crony capitalism."
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Trump's emergence as the "would-be CEO of America" carries "political and substantive risk," said The Washington Post. The GOP has long held that "economic intervention by the government" hurts the economy, and charged that Democrats who "argued otherwise" are "communist" and "Marxist." But an economic system that depends on a "single individual" can "foster corruption as businesses try to curry favor in licit or illicit ways."
The interventions are "creating a risk for business leaders" who thought they could placate Trump with flattery and "splashy U.S. investment announcements," said The Wall Street Journal. Some of those leaders are fearful but only privately critical. "It's wrong for the president of the United States to be telling a major corporation's board to fire their chief executive," said Bill George, the former CEO for Medtronic. The White House counters that it is putting "Americans and America first" in its economic policies. "Businesses should follow suit," said spokesman Kush Desai.
'Short-termist, transactional style'
Some Democrats "see the appeal" of Trump's approach, said NBC News. Progressives who want to take on corporate power argue that they now have the precedent to do that if their party regains the White House. "You can't go back to normal after this," said one anonymous strategist.
Trump's "quid pro quo" approach is "ominous," said the Financial Times editorial board. The "short-termist, transactional style" of governing the economy will have a "stultifying effect on the private sector." To adapt, American companies may need to follow the example of corporations in "emerging markets ruled by similarly controlling and capricious leaders." That will be a drag on growth. Trading the rule of law for "arbitrary deals" will erode the "stable foundations on which America's prosperity has long rested."
