Trump is rewriting the rules of the economy. … Is it ‘crony capitalism’?

0:00President Trump has taken a pretty unusual hands-on approach to the economy, using billions of dollars in taxpayer funds to purchase shares in private companies like Intel for the U.S. government. I said, you know what you should do if you're smart? Give the United States of America 10 percent of your company. And he looked at me and he said, I'll do that. The U.S. government also has positions in a handful of other companies, many involved in minerals and energy. President Trump has publicly pressured CEOs and forced the restructuring of social media giants like TikTok. Members of the administration argue that these moves are essential for national security.

0:40We've got to have the infrastructure to help our national security and our economic security. And that's what Donald Trump is bringing to America. But critics like California Governor Gavin Newsom call it, quote, crony capitalism. This notion of crony capitalism, I don't like it. It's corruption. people that can afford to make a phone call, afford to get an exemption on a tariff, afford to get something no one else can get, afford to even get in the door. I've never seen open corruption like this in my life. Consider this. What is the boundary between business and presidential power? And how is the Trump administration rewriting those rules?

1:24From NPR, I'm Elsa Chang.

1:36It's Consider This from NPR. President Trump has spent his first year back in office rewriting the rules of American capitalism. But what will that mean for the future of our economy and of our government? Well, those are the questions that NPR financial correspondent Maria Aspen set out to answer. Intel is one of America's original tech startups. Remember this sound from its Intel Inside commercials?

2:04Founded back in 1968, Intel made some of the first computer chips that have become so crucial to today's tech boom. By the start of this century, its chips had made the tech company into a giant of American capitalism. But last year, Intel became something very different, a symbol of how much President Trump is taking control of private companies. In August, Trump publicly threatened Intel CEO Lip Bu Tan, calling for his resignation over his ties to China. Then Tan went to the White House to meet with Trump. I said, you know what? I think the United States should be given 10 % of Intel. And now the United States owns a chunk of Intel and several other companies.

2:48It's also seeking more control over today's tech darling, NVIDIA. Trump wants NVIDIA to pay the U.S. a 25 % cut of some sales in China, as a condition of allowing it to sell some computer chips there. Trump often makes these deals with CEOs who have gone out of their way to court him, sometimes donating to his personal projects. Like NVIDIA CEO Jensen Wang, who's among the tech billionaires and companies funding Trump's controversial White House ballroom. Here's Wong in April at a White House press conference. So I want to thank you, sir, for everything that you've done and the strong encouragement and the great policies that make it possible for us.

3:30Thank you, sir. CEOs have always tried to court the White House, whoever its occupant. But for the U.S. government, which almost never takes a direct stake in U.S. companies, this is a huge break from tradition. Now business experts across the political spectrum are worried that the United States is starting to look more like China. If companies aren't competing on their ability to innovate and develop better products, if they're competing on their ability to schmooze, then, I mean, that's bad for everybody. Anne Lipton has been working in corporate law for decades. She's a professor at the University of Colorado's law school.

4:08She says that when the government picks winners and losers, companies have less incentive to compete with each other. That leads to less innovation and less spending and less job creation, which can all hurt the economy. This has long been the conventional wisdom in Washington and on Wall Street. If you believe that the free market is the best way of generating resources and innovations and everything, then this just sort of messes with that. It certainly messes with what's known as free market capitalism, which for decades has been the gospel of corporate America. We are seeing a shift away from the type of rules-based capitalism that has made America's economy so robust.

4:53Daniela Ballou Ayers founded a consulting company and served in the Obama administration. Now she runs the Leadership Now Project, a coalition of business leaders that has endorsed political candidates from both parties. She's worried that the United States is even at risk of tipping over into crony capitalism, meaning that companies rise and fall based on how much a political leader likes them. Like, say, the Russian billionaires who own oil companies under Vladimir Putin. What we have right now is a lot of personalized decision-making, chaotic decision-making instability that we're seeing the cost of.

5:31A White House official speaking to NPR in condition of anonymity largely dismisses these concerns and says that companies like Intel and NVIDIA are crucial to U.S. national and economic security. And to be sure, the U.S. stock market is booming away. Intel didn't respond to requests for comment. In an emailed statement, an NVIDIA spokesperson says its discussions with President Trump have focused, quote, on his desire for America to win as a nation. Baloo Ayers says that it's tough for business leaders to know how to stand up to Trump, especially after he's threatened some of them. You don't want to say anything unless it's like clearly exactly in your core interests, in your core business and at no risk.

6:14But she warns that crony capitalism can have some pretty dire consequences for the overall economy, but also for individual business leaders. In extreme cases, like Russia, executives who fall out of favor then sometimes fall out of windows. The cronies and crony capitalism, they don't end up, look at the oligarchs in Russia. It doesn't really end well for many of them. And you can't predict if you're one who ends up okay or not. Russia is an extreme example. But she hopes it's an early warning to U.S. business leaders to stand up for free market capitalism. If not for the sake of the economy, at least for their own long-term self-interest.

6:56Maria Aspen, NPR News. This episode was produced by Vincent Acavino with audio engineering by Tiffany Vera Castro. It was edited by our executive producer, Sammy Yenigan.

7:12It's Consider This from NPR. I'm Elsa Chang.