"Direct, transactional government intervention in companies to secure critical industries and serve other policy ends will inevitably lead to favoritism, inefficiency, higher costs, and lower growth. Frontier companies are already pulling away from their competitors; discretionary intervention may further increase market concentration and widen the gap between the large incumbents and industry champions that benefit from government deals and access and the companies that do not.
Even for the businesses that benefit, the new discretionary state capitalism is a mixed blessing. They will face rising uncertainty and risk falling into governments’ cross hairs as everything from antitrust approvals to international mergers and acquisitions becomes less subject to predictable rules and more subject to the whim of political processes. Governments, meanwhile, may be eager to use the full range of tools available to them, but a heavy-handed, volatile state can quickly dampen economic activity and competition. Discretionary policymaking can distort corporate behavior, pushing companies to focus less on productivity and more on lobbying for political favor. And perhaps most important, a government will not succeed in securing its country’s economic future through investment in critical technology and manufacturing unless it also addresses underlying constraints, such as labor availability, skills gaps, or a burdensome regulatory environment. Economic history is littered with experiments in state capitalism that ended in failure, including U.S. price controls in the 1970s, which contributed to energy shortages and did little to tame inflation, and the 1975 nationalization of British Leyland Motor Corporation, which struggled mightily despite billions in government investment and was eventually dissolved. Policymakers keen on muscular intervention today must tread carefully or risk meeting the same fate."
https://www.foreignaffairs.com/united-states/trouble-state-capitalism#
#USA #Trump #StateCapitalism #Kleptocracy
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