As of late, debates about government involvement in private industries have resurfaced, especially because President Donald Trump has recently involved the US Government in the business affairs of Intel and TikTok. Do these moves strengthen the nation’s economy, or do they just guide the nation away from true capitalism?
Advocates for government involvement believe some intervention is not only necessary, but beneficial for today’s global economy. Teaching economics at James Logan High School, Mr. Wharton said, “Sure, it interferes with pure capitalism, but we don’t have a pure capitalist economy. We have a mixed economy.” He went on to describe how European countries with “socialist mixed economies” have stronger safety nets, such as free health care and inexpensive universities, which are funded through higher taxes on wealthy individuals and corporations. “The rich aren’t as rich, and the poor aren’t as poor,” Mr. Wharton said, adding that these systems can reduce the spread of income inequality. By contrast, a purely capitalistic economy with no government involvement would have unregulated markets; private businesses would control all of the goods and services, healthcare and education would be completely privatized, and individuals would look only to themselves for financial security.
He further argues that government support can help American companies compete globally. “Sometimes the benefits of government intervention outweigh the costs,” said Mr. Wharton. “If a Chinese business is supported by the Chinese government, it can sell products at a very cheap price and still stay in operation. To combat unfair marketplace situations like that, sometimes it’s necessary to fight fire with fire.” This could be applied to the American economy through subsidies or tax breaks to key industries, investment in research and development, or such other measures so as to support companies to maintain competitiveness in international markets.
On the other hand, Mr. Nabizad, currently in his fourth year of teaching economics at James Logan High School, offers a contrasting perspective, saying the government has become too involved with the economy. “Now, there is too much intervention, I don’t see a third of my paycheck,” he said. “It can lower competition and move us further away from our capitalist foundation.”
This tension between the influence of money and the limits of government intervention underlines the continuing tension between views on how much the state should, and can, shape economic and political outcomes. Mr. Nabizad commented on the broader relationship between money and politics. “Money controls politics, nothing changes,” he said. However, he agreed that there does need to be limits to intervention: “Government should be able to intervene to however much the law allows.”
Mr. Wharton, reflecting on how political affiliation shapes people’s views, said that they very often depend on which party is in power. “Historically, Republicans were strongly anti-government intervention,” he said. “They pilloried Obama for bailing out General Motors in 2008 and 2009, yet they remained supportive of Trump for propping up Intel and other companies. If a Democrat had been responsible for the government purchasing 10 percent of Intel, Republicans would be screaming ‘socialism.’”
At its core, the government-intervention debate represents a question of balance. To some, such investments by Trump in companies like Intel and his push to regulate TikTok are practical moves in the interest of national security and to keep competitive. Others see these as a clear move away from America’s traditional model of capitalism and towards the European, socialist approach. As Mr. Wharton summed it up, “Whether you see it as protection or interference depends on what you believe the government’s job really is.”
