Last summer, the U.S. government became the largest shareholder in Intel, the flagging firm designated a national champion of the semiconductor industry by Presidents Joe Biden and Donald Trump. The Trump administration, which seems to have conceived of the idea for the acquisition, had little trouble convincing Intel CEO Lip-Bu Tan to accede to its terms; the deal seems to have been concluded during a single meeting at the White House on August 11. However, as a new lawsuit alleges, it seems to have been coercion, and not economic considerations, that produced such swift negotiation and easy agreement.
Filed earlier this month on behalf of one of the firm’s shareholders, the complaint argues that Intel acquiesced to the President not to improve its operations, not to maximize the returns dispensed to shareholders, but because “[t]he Board was coerced and extorted into giving the [Department of Commerce] 9.9% of Intel stock.” On August 7, Trump denounced Tan as “highly CONFLICTED,” demanding his resignation. Scrambling, Tan set out for Washington, D.C.; in times of aggressive extra-legal economic interventionism, the energetic disapprobation of the chief executive is not to be ignored. In Trump’s own account, the indulgence that was to be paid for Trump’s forgiveness was equity: Tan “walked in wanting to keep his job and he ended up giving us $10 billion for the United States,” Trump said. “So we picked up $10 billion.”
George Will once wrote that “the real scandal in American government is not the way a few politicians break laws, but the way most politicians make laws.” President Trump, compounding the scandal, managed both, for although his bargain with Intel purports to have the force of law, no statute allows him the authority to make it. “No law authorizes the U.S. government to acquire stock in Intel or any publicly held company,” the complaint contends. Intel secured billions of dollars in federal subsidies under the CHIPS and Science Act of 2022, and those subsidies “funded” the government’s equity stake. Yet, the complaint states, that law “does not authorize or direct the DOC to demand, let alone take, an equity stake in a private company such as Intel in connection with any financial assistance provided to that company by the DOC.”
George Will’s further observation, although penned in 1971, aptly describes of the events of August 11: “Few sounds are as gamey as the carnal noises of consenting adults committing acts of government in private.”
Every subsidy—not to mention every vague-yet-expansive regulatory provision of the U.S. Code—serves as a string in the hands of federal puppet masters. Often, whenever it pleases presidents and bureaucrats, subsidization reduces supposedly free American businesses to marionettes of the state. The mixture of public money with private enterprise never comes unattended by conditions, whether known now or revealed later, whether codified in law or imposed on the whim of the resident of 1600 Pennsylvania Avenue. And conditions never come unattended by control.
At least for industries beholden for their livelihood to the federal government and subjugated by webs of subsidization and spools of red tape, the “bully pulpit” amounts to a starry-eyed fiction. “An advisory Govt is a contradiction in terms,” James Madison wrote; government’s essence is force, compulsion. The bully, if crossed, descends from his pulpit to wallop his victims; and with time, the mere fear of a mauling bends them to his will.
Governance by raised eyebrow and telling look and implication all too often suffices to fulfill the state’s aim. For example, in National Rifle Association v. Vullo (2024), a unanimous Supreme Court ravaged a covert scheme undertaken by New York officials to separate the gun-rights organization from its insurance providers. Writing for the majority, Justice Sonia Sotomayor warned of a “kind of intermediary strategy” that “allows government officials to “expand their regulatory jurisdiction to…organizations that they have no direct control over.” Although the Intel case proceeds under laws quite different from the First Amendment, with which Vullo dealt, Sotomayor’s observation about the so-called “soft power” deployed by politicians and bureaucrats pertains just as well across American life and the American economy.
Trump’s intervention in Intel’s operations—a gambit which began as an attempt to rid the company of its CEO—proceeded from no enduring, promulgated, common rule of action. Rather, although private firms’ hiring decisions reside beyond the federal government’s sphere of authority, Trump—unauthorized by Congress—intervened in a single case to enforce his will. Intel disobeyed no law. Nonetheless, the chipmaker became subject to “the inconstant, uncertain, unknown, Arbitrary Will of another Man” (as John Lock put it), violating its liberty under the law.
An advisory government is a contradiction in terms, Madison wrote. There is no comfort in this contradiction.
