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How Public Equity Can Promote a Revived American Democracy

Critics are assailing deals to give the government stakes in major companies—but they’re overlooking their civic dividends.

Senator Bernie Sanders (I-VT) discusses his proposal for an AI sovereign wealth fund during a June appearance at Washington’s National Press Club.

Economic policy has lately been convulsed by a proposition unthinkable under past Republican administrations: increased public ownership of major stakes in private companies. Under a growing array of public-equity deals engineered by the Trump White House, US government agencies are going well beyond their former arm’s-length initiatives to influence corporate decision-making to become shareholders in the companies themselves.

This move is stoking ideological blowback. The laissez-faire right sees it undermining the traditional divide between the market (good) and the state (bad). Adam Kinzinger and Joe Scarborough— Republicans of the Never Trump persuasion—have derided the policy as “ACTUAL communism/socialism” and called for privatizing the Trump equity stakes. Even left economist Robert Reich, whom the Cato Institute once attacked for advocating industrial policy, has now outflanked Cato by likening Trump’s taking of equity stakes to Nazism.

All this inflammatory rhetoric serves mostly to distract attention from the real policy questions at the heart of the public-equity debate, which are at their core about democracy. As technologies like AI boom, will the public get any meaningful say in how a handful of companies remake the American workplace, public discourse, and much of our common world?

Part of the problem with the Trump administration’s abrupt lurch into equity ownership last year is that public debate has played little or no role. As Trump regulators in the Commerce Department retired a Biden-era grant to semiconductor maker Intel, they demanded a 10 percent equity stake in the company itself—a position that is now worth five times more than the government paid for it. Commerce Secretary Howard Lutnick did not make much attempt to justify the move, other than to issue decidedly nonideological and pragmatic comments about national security, and a better return for the American taxpayer than what was realized under the Biden approach of “just giving grants away.”

It turns out that was just the beginning of the Trump public-equity binge. Despite having almost no support from more traditional Republicans, the administration kept plowing ahead, announcing shareholding deals with more than two dozen companies worth billions of dollars, in sectors ranging from rare earths to energy.

Despite the unease from some quarters here at home, other major economies around the world have not been shy in pursuing their national interest by holding public-equity stakes in private companies and maintaining sovereign wealth funds to manage them. China is the extreme example of a state capitalism that involves government closely in the means of production—but virtually every other country in Europe and Asia has adopted a “lite” version of the same practice. Iconic firms from Volkswagen to Renault to British Steel are owned in part or fully by public agencies, limiting the offshoring of jobs and better aligning corporate practices with the national interest.

Equity stakes can also potentially solve a problem that bedeviled economic officials in the Biden administration: speed. Traditional government tools such grants, loans, and antitrust legal actions can take years to negotiate or litigate, while markets move in hours and days. Look at the experience of the Greenhouse Gas Reduction Fund under Biden, intended to further solar and other projects. It took two years after the Inflation Reduction Act authorized the........

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