Industrial Policy: The Peril of Rule by Deal
The current American industrial policy relies heavily on individualized negotiations instead of a unified strategy, creating a system critics call “rule by deal.” Chris Hughes, Facebook co-founder and co-chair of the Economic Security Project, highlighted this issue during an interview on CNBC’s Squawk Box.
Critique of Transactional Government Intervention
Hughes pointed out that this approach, seen in sectors like semiconductors and rare earths, is less about economic nationalism or state capitalism and more about government intervention through specific transactions. He expressed concern over the pattern of the government making one-off deals with select companies rather than following a clear plan.
Discussion of Trump Administration Policies
In his conversation on CNBC, Hughes analyzed the effects of the Trump administration’s industrial and tariff policies, alongside potential government investment in AI data centers. His main worry was the absence of transparency and long-term thinking in these bespoke deals.
“I see a group of dealmakers… going one by one, picking winners and losers.”
Hughes warned that this method favors companies with direct White House access, enabling them to secure large amounts of public funds and private investments without adequate evaluation of market conditions or overall industrial policy objectives.
Summary
The American industrial policy's deal-driven approach risks favoring select firms and undermines strategic, transparent economic governance.
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