Industrial Policy: The Peril of Rule by Deal
The current American industrial policy is marked by individualized negotiations instead of a unified strategy, risking a system of “rule by deal.” This critique was emphasized by Chris Hughes, Facebook co-founder and Economic Security Project co-chair, in an interview on CNBC’s Squawk Box.
Hughes pointed out that this trend, spanning sectors like semiconductors and rare earths, is less about economic nationalism or state capitalism, and more about a transactional form of government intervention.
Discussion of Government Policies
Hughes reflected on his article in The American Prospect while discussing the Trump administration’s industrial and tariff policies. He also addressed the government's potential involvement in AI data center investments.
“I see a group of dealmakers… going one by one, picking winners and losers.”
He warned that this ad-hoc process enables companies with direct White House access to secure substantial public funds and private investments, often without adequate evaluation of market conditions, competitive factors, or comprehensive industrial policy objectives.
Concerns on Transparency and Strategy
- Lack of transparency in individual deals
- Absence of strategic foresight in industrial policy
- Potential favoritism toward companies with political connections
- Risks of ignoring broader economic and competitive contexts
Hughes’ critique highlights the dangers of a fragmented and opaque industrial policy framework driven by deals rather than a consistent national strategy.
Author's summary: The American industrial policy’s focus on negotiated deals risks favoritism and weakens strategic economic planning, calling for greater transparency and cohesive strategy.