European soccer fans marveled at American prosperity. This should be a reminder to avoid European mistakes.
In an act never contemplated by the Constitution, the Trump administration has used taxpayer dollars to purchase an equity stake in Intel. OpenAI, the maker of ChatGPT, has been in talks in the White House over the government “buying” a stake in the company. Days later, OpenAI quietly filed for an IPO. Senator Bernie Sanders (I-Vt.) has introduced a bill to seize 50 percent of every major AI developer.
When the federal government “buys” shares of AI developers, or any other company, stagnation follows. Who could compete with a company backed by Uncle Sam — when the government writes the rules, might have you sued by the Department of Justice, or investigated by the IRS? This would guarantee corruption. Imagine how this power will be used when the folks who “run” Chicago, Detroit, and San Francisco are back in power.
Government-run companies never turn a profit. The Postal Service can’t do it. Nor Amtrak. The maker of the East German Trabant did — but only after it became a private company in reunited Germany.
Every single country that has nationalized major industries — every single one — ended up poorer for it.
Even when companies are not nationalized outright — even when the government just “buys shares” — it undermines the profit motive. Why make your product better when you can just raise taxes? Why bother improving your business strategy when Uncle Sam can save you? And if Uncle Sam chooses to bail out something it owns, taxpayers will pay higher taxes to cover the bad judgment of the politicians who made the original error.
Every single country that has nationalized major industries — every single one — ended up poorer for it. There is no exception. Peron’s Argentina is just now beginning to get back on its feet.
Cuba, Venezuela, and Nicaragua became destitute after socialist takeovers. China and Russia had devastating famines when they collectivized agriculture and heavy industry.
Even countries that experimented with socialism while maintaining democracy, like Sweden in the 1970s, stagnated and abandoned state control after living standards declined. After nationalizing the railroads, coal, and steel, Britain became the Poor Man of Europe in the 1970s. Margaret Thatcher’s reforms in the 1980s reversed this and led to an economic boom that lasted until 2007.
Fair competition becomes impossible. The companies that get quasi-nationalized will have a direct line to the White House and will be able to survive the ups and downs of a dynamic market. Smaller competitors will not. Imagine the insider trading.
Government will not pick winners and losers — government will decide who wins and who loses.
Because cash infusions from taxpayers insulate companies from competition, nationalizing industries will see prices rise and quality collapse.
Government control of AI also directly threatens free speech and property rights. AI platforms will soon be the primary way most Americans access information online. What the government owns, it will control.
Once the government controls a piece of a company, they control its behavior. If this socialist scheme succeeds, OpenAI may enjoy a windfall, for a time. Then one day, their C-suite will wake up and realize they no longer call the shots. There will be a political officer in every compromised business. Whichever Treasury Department commissar is put in charge of the portfolio can get whatever he wants by threatening to dump shares and tank the stock price.
Speaking of Democrats, they have been trying for years to claim ownership over the achievements of entrepreneurs. Remember Obama’s “You didn’t build that”? Or the demands for a wealth tax just a few weeks ago because SpaceX had a strong IPO? Why would Republicans join this chorus? (RELATED: The Left’s Ben Franklin ‘Wealth Tax’ Fiction)
Government ownership of the means of production will push us down the road to European stagnation. Today it’s government ownership of shares, tomorrow it’s board seats. By 2050, Americans will be taking three-hour coffee breaks, paid for by European-sized paychecks.
Americans already “control” businesses large and small every time they buy a product or service — or decide not to. And when they invest their life savings for retirement.
We are all consumers. But increasingly, we are the real owners of American industry as well. In the 65 years between 1960 and 2025, the percentage of Americans who own stock increased from less than 7 percent to more than 60 percent. This number will continue to grow dramatically with the creation of Trump Accounts for all Americans between zero and 18.
Karl Marx lived a long time ago. Today, when government takes control of the means of production, it takes it away from the American people, not a small group of industrialists.
OpenAI should proceed with its IPO, but it should do so without government backing and see if anyone wants to put their own money at stake. Maybe, like SpaceX, they will succeed. But taxpayers should not guarantee it.
READ MORE from Grover Norquist:
The Redcoats Are Back With a New Tax
Trump Topples the Regulatory Tower
Grover Norquist is the president of Americans for Tax Reform.
