The US is shifting its approach to national security by taking minority stakes in strategically vital firms, particularly those involved in the production of semiconductors, rare earths, and lithium. This move marks a departure from traditional laissez-faire economics, as the government seeks to safeguard critical industries and deter foreign takeovers. By investing in key companies, the US aims to ensure strategic autonomy and industrial sovereignty, while maintaining a broadly open and innovation-driven global economy. Dr. Elly Rostoum emphasizes that this emerging model of state capitalism may provide a prudent way for the US to compete with China and defend its economic interests, but it also carries risks of political interference and protectionism.
DramaticSimple4315 on
The current regime is breaking one by one all the explicits norms and parameters that led analysts and historians to refuse to assimilate them to a modern incarnation of the fascist movement:
• agressive imperialism
• impunity for the people allied with the supreme leader
• state capitalism marked by a systematic drive for entanglement between main business interests and figures of the regime
• meanwhile, super retrograde approach bordering on straight dismentlement related to working rights and social rights
• fight for control of the universities
• fight for control of the press
• reckless fiscal policy that puts the regime on a fateful track in which the absurd contradictions of internal policy need be resolved by predation to the outside world
jayfeather31 on
There’s a certain amount of irony in play that the United States is opting to take on an economic stance that is similar to their chief rival in the Chinese. If this were about ideology, China would have something of a propaganda coup on their hands.
It’s also kind of hilarious to see supposed **conservatives** doing this. I wonder what else they’ll nationalize in the name of national security. Maybe someone can trick them into nationalizing the healthcare industry for national security?
HistoryVibesCanJive on
Hmmm…
The shift we’re seeing in the National Security Strategy represents a fundamental “vibe shift” in American political economy.
We are moving from neoliberalism to what some are calling “Strategic State Capitalism.”
For decades, the US used subsidies (carrots) or regulations (sticks).
But the move toward direct equity stakes in firms like Intel and MP Materials suggests that Washington has identified a specific market failure. Here is the thing, I suggest that most of the sub *will agree on this point*: the “Short-termism” of private equity vs. the “Long-termism” of geopolitical rivals.
Breaking the “Crisis-Only” Precedent: Historically, the US only took equity during “Black Swan” events (the 1930s Reconstruction Finance Corporation or the 2008 GM/AIG bailouts).
Those were reactive and temporary. The current strategy is proactive and structural. It’s an admission that for semiconductors and rare earths, the market won’t price in “national security” until it’s too late. It isn’t a comfortable place for us to land, but nevertheless, it is required at this juncture.
The “Third Way” of Ownership: Unlike the Chinese SOE (State-Owned Enterprise) model, which dictates operational management, the US is mimicking the European “Minority Stake” model (like France in aerospace).
So in essence our goal is to act as a stabilizing anchor. By holding a 9.9% stake in Intel, the government isn’t picking the CEO; it’s effectively making sure the company can hold against foreign hostile takeovers and signaling to private CAPEX that the floor won’t drop out.
The Risk of “Zombie Firms”: The prickly (and valid) counter-argument here is Moral Hazard. If the Department of War (as it’s now being called in this context) is the largest shareholder, does the firm still have an incentive to innovate, or does it just become a rent-seeker?
We saw this in Europe with state-backed airlines that became zombies honestly. Basically, too big to fail, too inefficient to compete.
The Bottom Line: We are watching the US try to thread a very thin needle: using the tools of state capitalism to protect a liberal market order. Whether we can maintain “non-controlling” stakes without sliding into “political interference” (like keeping inefficient plants open for votes) will be one of the defining economic tension of the next decade.
gym_fun on
Words truly lose meaning.
The right wing government in Taiwan took minority stakes in TSMC. Is Taiwan state capitalist?
The right wing government in South Korea took minority stakes in Samsung. Is Korea state capitalist?
The Thatcher government took golden shares in their steel industry. Before then, the left wing government nationalized the steel industry. Is the UK state capitalist?
The US holds minority, non-controlling stakes in strategic industries. There is far different from the Chinese / Russian model, where they demand mandatory government board representation to control the almost all major companies.
This is just an industry policy to strengthen some vulnerable but critical industries.
tryexceptifnot1try on
They are a bear market away from total collapse. We are literally selling oil from a tanker we stole from Venezuela and stashing the money in a Qatari account with minimal oversight. China isn’t engaging in state military sponsored piracy. They also aren’t overtly trying to buy SE Asian countries. Taiwan is not comparable to Trump going after Canada or Greenland for myriad reasons. We are legitimately one of the worst countries on earth if you are pro-capitalism and democracy.
6 Comments
The US is shifting its approach to national security by taking minority stakes in strategically vital firms, particularly those involved in the production of semiconductors, rare earths, and lithium. This move marks a departure from traditional laissez-faire economics, as the government seeks to safeguard critical industries and deter foreign takeovers. By investing in key companies, the US aims to ensure strategic autonomy and industrial sovereignty, while maintaining a broadly open and innovation-driven global economy. Dr. Elly Rostoum emphasizes that this emerging model of state capitalism may provide a prudent way for the US to compete with China and defend its economic interests, but it also carries risks of political interference and protectionism.
The current regime is breaking one by one all the explicits norms and parameters that led analysts and historians to refuse to assimilate them to a modern incarnation of the fascist movement:
• agressive imperialism
• impunity for the people allied with the supreme leader
• state capitalism marked by a systematic drive for entanglement between main business interests and figures of the regime
• meanwhile, super retrograde approach bordering on straight dismentlement related to working rights and social rights
• fight for control of the universities
• fight for control of the press
• reckless fiscal policy that puts the regime on a fateful track in which the absurd contradictions of internal policy need be resolved by predation to the outside world
There’s a certain amount of irony in play that the United States is opting to take on an economic stance that is similar to their chief rival in the Chinese. If this were about ideology, China would have something of a propaganda coup on their hands.
It’s also kind of hilarious to see supposed **conservatives** doing this. I wonder what else they’ll nationalize in the name of national security. Maybe someone can trick them into nationalizing the healthcare industry for national security?
Hmmm…
The shift we’re seeing in the National Security Strategy represents a fundamental “vibe shift” in American political economy.
We are moving from neoliberalism to what some are calling “Strategic State Capitalism.”
For decades, the US used subsidies (carrots) or regulations (sticks).
But the move toward direct equity stakes in firms like Intel and MP Materials suggests that Washington has identified a specific market failure. Here is the thing, I suggest that most of the sub *will agree on this point*: the “Short-termism” of private equity vs. the “Long-termism” of geopolitical rivals.
Breaking the “Crisis-Only” Precedent: Historically, the US only took equity during “Black Swan” events (the 1930s Reconstruction Finance Corporation or the 2008 GM/AIG bailouts).
Those were reactive and temporary. The current strategy is proactive and structural. It’s an admission that for semiconductors and rare earths, the market won’t price in “national security” until it’s too late. It isn’t a comfortable place for us to land, but nevertheless, it is required at this juncture.
The “Third Way” of Ownership: Unlike the Chinese SOE (State-Owned Enterprise) model, which dictates operational management, the US is mimicking the European “Minority Stake” model (like France in aerospace).
So in essence our goal is to act as a stabilizing anchor. By holding a 9.9% stake in Intel, the government isn’t picking the CEO; it’s effectively making sure the company can hold against foreign hostile takeovers and signaling to private CAPEX that the floor won’t drop out.
The Risk of “Zombie Firms”: The prickly (and valid) counter-argument here is Moral Hazard. If the Department of War (as it’s now being called in this context) is the largest shareholder, does the firm still have an incentive to innovate, or does it just become a rent-seeker?
We saw this in Europe with state-backed airlines that became zombies honestly. Basically, too big to fail, too inefficient to compete.
The Bottom Line: We are watching the US try to thread a very thin needle: using the tools of state capitalism to protect a liberal market order. Whether we can maintain “non-controlling” stakes without sliding into “political interference” (like keeping inefficient plants open for votes) will be one of the defining economic tension of the next decade.
Words truly lose meaning.
The right wing government in Taiwan took minority stakes in TSMC. Is Taiwan state capitalist?
The right wing government in South Korea took minority stakes in Samsung. Is Korea state capitalist?
The Thatcher government took golden shares in their steel industry. Before then, the left wing government nationalized the steel industry. Is the UK state capitalist?
The US holds minority, non-controlling stakes in strategic industries. There is far different from the Chinese / Russian model, where they demand mandatory government board representation to control the almost all major companies.
This is just an industry policy to strengthen some vulnerable but critical industries.
They are a bear market away from total collapse. We are literally selling oil from a tanker we stole from Venezuela and stashing the money in a Qatari account with minimal oversight. China isn’t engaging in state military sponsored piracy. They also aren’t overtly trying to buy SE Asian countries. Taiwan is not comparable to Trump going after Canada or Greenland for myriad reasons. We are legitimately one of the worst countries on earth if you are pro-capitalism and democracy.