Is America still capitalist?

Speaker 2 Two years ago on Today Explained from Vox, we ran a series on Americans' deep and growing frustration with capitalism.

Speaker 3 Everything comes with a price, even peace of mind.

Speaker 2 We wrestled with this long-standing idea that there is no alternative to capitalism, where many people still land. But recently, a leader has come along and he has begun to question our system.

Speaker 5 I don't think that we we should have billionaires.

Speaker 2 No, it's not Zoron. It's Trump.

Speaker 2 President Trump is making some of the most unfree market anti-capitalist moves in recent memory, such as rating companies based on how loyal they are to his big beautiful bill, or talking about taking a 10% share in Intel.

Speaker 6 Everything's computer.

Speaker 2 Or pressuring Coke to change its formula, even though people like current Coke and happily pay green American dollars for it. Coming up, are we even still capitalist?

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Speaker 8 Everyone's talking about capitalism.

Speaker 4 Well, my name is Tracy Alloway. I am the co-host of the Odd Thoughts podcast over at Bloomberg.

Speaker 2 One of my favorites. All right, we're going to talk today about the ways in which President Trump is intervening in the U.S.
economy. And we're going to ask you, is this still capitalism?

Speaker 2 But before we get there, let's define the term. What is capitalism traditionally meant in the United States?

Speaker 4 This is a seemingly simple question, but I think it's quite loaded in many ways because people have this sense of, you know, classic free market capitalism.

Speaker 4 And it's one of those things where everyone has a sort of different sense of what that actually means. I think there are some hallmarks around capitalism that we can look for.

Speaker 4 So things like private ownership of production. You know, the government typically doesn't own big industries or have state-owned enterprises.
You have things like market allocation of resources.

Speaker 4 So in a free market, buyers and sellers come together and decide what exactly they want. And that decision actually leads to allocation of resources.

Speaker 4 In something that is not so capitalist, you would have more intervention from the government.

Speaker 4 What I would say, though, is that a pure free market capitalist economy is probably something that has only ever existed in like an economist textbook, because for most of history, there has always been a role for government to have in the economy.

Speaker 4 I would just caution free market capitalism, you kind of know it when you see it, but also once you start digging in, you realize that actually

Speaker 4 no one's really talking about the same thing here. Everyone has a different sense of it.

Speaker 2 So it is like porn.

Speaker 4 You said it, not me.

Speaker 2 All right, so let's talk about the ways in which President Trump seems to be breaking with with the tradition, the thing that we know when we see.

Speaker 2 So one of the big examples is inserting the government into the business, the actual business of a preeminent American chip maker. What is going on with NVIDIA?

Speaker 4 Yeah, so this is a really interesting thing.

Speaker 4 So Trump has basically directly, it seems, negotiated with NVIDIA and is basically saying, if you want to export advanced AI chips to China, you know, a country that for all all intents and purposes, America really seems to treat as an enemy economically, even though it is its biggest trading partner.

Speaker 4 But if you want to sell those advanced chips to China, you are going to have to give the U.S. government 15%

Speaker 4 of your revenue.

Speaker 6 And I said, if I'm going to do that, I want you to pay us as a country something because I'm giving you a release.

Speaker 4 That kind of revenue sharing agreement for market access is pretty unusual when it comes to U.S. industrial policy or U.S.
economic policy.

Speaker 4 And it really does look like a pretty dramatic expansion, I would say, of the leverage that presidents have over corporate transactions.

Speaker 4 And you can imagine, and we've seen it already, that in the future, big U.S.

Speaker 4 tech companies are going to have to take that kind of agreement into account when they're formulating their future business plans in a way that they didn't have to before, right?

Speaker 4 Like this is pretty new.

Speaker 2 There's also something afoot that has had even responsible people talking about nationalization or nationalizing a company, and that is what Trump is doing in the U.S. steel industry.

Speaker 2 What's going on there?

Speaker 4 This one is really interesting because this one, you can kind of draw a direct connection between what the U.S.

Speaker 4 is doing now under the Trump administration and what China has been doing for some years now. So, the U.S.
has basically said the government is going to take a stake in the steel company

Speaker 4 in U.S. steel in order to get this transaction done.
And it's something called a golden share concept.

Speaker 6 We have a golden share, which I control.

Speaker 4 And basically, it gives the U.S. government a lot of corporate control when it comes to decisions that are made for the company.

Speaker 4 So, you know, things like where are they going to move production or where they're going to be headquartered, stuff like that.

Speaker 6 That gives you total control. It's 51% ownership by Americans.

Speaker 4 And the reason it's such an interesting parallel with China is because the golden share concept has existed in China's sort of, call it state-guided economy for many, many years now.

Speaker 4 This is something that is very, very normal in China and not necessarily normal in the U.S. until very recently.

Speaker 2 So some of these flew by me in an academic sense. And I was like, oh, that's very interesting.
And I would like to read a few more articles and sort of make up my mind.

Speaker 2 But there was one that I kind of can't get over personally and it is when everyone was expecting that prices would go up because of tariffs and President Trump just kind of came out and told CEOs like don't you dare raise prices

Speaker 2 truth social Walmart and China they should as is said eat the tariffs and not charge value customers anything.

Speaker 4 I'll be watching and so will your customers well uh i think i would say the jury is still out on whether that tactic will work or not you know it's that he did it's that he tried it totally totally but i will say it's not like you've you've never seen politicians come out and say like please don't price goug in an emergency that that does exist but the fact that you know it's kind of an emergency of trump's own making in this instance so he unveiled the tariffs then he says what he doesn't want is companies raising their prices in order to offset the cost of those tariffs.

Speaker 4 That seems pretty circular. And you're right that I guess the level of involvement of the Trump administration in the economy seems to be growing and, in that sense, is quite new.

Speaker 2 Some number of very, very smart commentators, including one at Tracy Alloway, have pointed out that some of this is reminiscent of how capitalism works in China.

Speaker 2 What do you mean when you say that?

Speaker 4 So this is what I find so fascinating about our current moment in economic history.

Speaker 4 All of us growing up for the past, you know, 30 or 40 years, we were always told that China was going to develop into basically America, right?

Speaker 4 We're going to see America, American-style shopping malls and free market capitalism, and the country was going to open its market to outside investment and all of that.

Speaker 11 The case for trade is just not monetary, but moral.

Speaker 11 Economic freedom creates habits of liberty, and habits of liberty create expectations of democracy.

Speaker 11 There are no guarantees, but there are good examples from Chile to Taiwan. Trade freely with China, and time is on our side.

Speaker 4 And instead, what we've sort of seen is that the U.S. is moving closer to China in a number of ways.

Speaker 4 And I don't want to say this is exclusively a Trump administration phenomenon, because the truth is it's not.

Speaker 4 You know, the first Trump administration started some of this when it unveiled its first set of tariffs against China, but those were continued by the Biden administration.

Speaker 4 And the Biden administration, in many ways, took on a much more active industrial policy role after the pandemic.

Speaker 12 Folks, we need to make these chips here in America. to bring down everyday costs and create good paying American jobs.

Speaker 4 And I think this is really key key to understanding what's happening right now. You have a moment in time where you have all of these big things that are happening.

Speaker 4 There are all these choke points in our economic system that free market capitalism hasn't recently seemed very good at solving. And so that's one of the reasons we've seen governments in the U.S.

Speaker 4 and also elsewhere in the world kind of step in and say, actually, we need to intervene here. We need to think about building out capacity.
We need to think about supply.

Speaker 4 And because China is one of the countries that has been doing this for arguably the longest time,

Speaker 4 China really becomes like kind of the role model for how you build out that additional capacity. From that perspective, it's not necessarily surprising that the U.S.

Speaker 4 is starting to look more like China in the sense that the government is becoming much more active in encouraging certain parts of the economy that it wants to see well or certain areas that it wants to discourage.

Speaker 4 But it's still a very big departure from, I think, what everyone kind of expected to see just 10 or 20 years ago.

Speaker 4 Why

Speaker 2 does it feel wrong?

Speaker 2 Is there anything actually wrong with that?

Speaker 4 So China, again, is a very useful example of this.

Speaker 4 And it is true that in the States, if someone talks about, you know, state intervention in the free market economy, people tend to have a knee-jerk reaction, which is, oh, this sounds really bad.

Speaker 4 This sounds like communism and all of that. There are problems with having such an active role of the government.

Speaker 4 And in China, the number one problem has been that you tend to get overproduction, right?

Speaker 13 China has the ability to produce roughly twice as many cars as it sells at home each year. In Hangzhou, we came across hundreds of new EVs stored out in the open, many of them waiting to be sold.

Speaker 14 Solar panels,

Speaker 14 electric vehicles, and the batteries that power them.

Speaker 14 China alone is producing more than 100% of global demand for these products, flooding markets, undermining competition, putting at risk livelihoods, and businesses around the world.

Speaker 4 And this is one of the interesting things about the Chinese economy. You know, we are used to nowadays talking about China as an economic powerhouse in many ways.

Speaker 4 But if you look at the Chinese stock market, the stock market has like gone sideways basically for 20 years now.

Speaker 4 And one of the reasons is because you have a lot of companies who are making stuff, but aren't necessarily doing so at a profit. There's an overproduction issue.

Speaker 4 And so I think that's what people are kind of worried about.

Speaker 4 They're worried that we're going to create industries that end up being wasteful, that produce too much, that sort of lead to a distortion of incentives.

Speaker 4 You know, maybe everyone decides to get into industry X because the government is supporting it, but we should have been looking at industry Y instead.

Speaker 2 Tracy Alloway, she co-hosts the Odd Lots podcast. It's very good.
Coming up, what does a leading socialist think about President Trump's recent moves? Which leading socialist did they get so wrong?

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Speaker 2 you're listening to today explained i'm noelle king boskar sankara is not Zohran Mamdani. He has many other things, though.
He's the president of The Nation magazine.

Speaker 2 He's the founding editor of Jacobin. He's so so sochi that he actually conceived of Jacobin whilst in college, famously, a time for good ideas, but then he went out and he made it real.
Very cool.

Speaker 2 Jacobin, if you don't know it, is a magazine dedicated to making socialist ideas accessible. All right, Boscar, this first question I'm going to ask you, I'm not going to use any proper nouns at all.

Speaker 2 You're just going to give me your thoughts. What do you think about the state, the government, getting involved in private industry?

Speaker 18 Yeah, so obviously as a socialist, I start from the principle that private industry should be subject to more democratic control and oversight.

Speaker 18 I don't think that the state should run every aspect of the economy. You know, I'm a market socialist.
I think markets are useful as a coordinating mechanism for much of our economic life.

Speaker 18 But I also think there needs to be, you know, clear rules of the game.

Speaker 18 There needs to be moments where we say, okay, in this case, the state is going to uniformly step in, not just to regulate, but to actively shape the economy's development.

Speaker 2 Okay, so now we're going to put the proper nouns in. President Trump is taking a stake in an important American industry, the steel industry.
He's inserting the U.S.

Speaker 2 government into an important company, NVIDIA. He's gotten other foreign countries to commit like more than a trillion dollars in investment to the United States.

Speaker 2 And he says that he personally will direct the investment. Now, you have seen that old school free market capitalists, such as those at the Wall Street Journal, are freaking out about this.

Speaker 2 Is capitalism dead? Is it in trouble?

Speaker 18 You know, I wish it was dead for a variety of reasons.

Speaker 18 Like I said before, I think it's perfectly legitimate for the state to intervene in private enterprise.

Speaker 18 In the U.S., I think we often frame the free market as a conservative ideal and state intervention as a socialist ideal. But history shows it's really a lot more complicated than that.

Speaker 18 So in the 20th century, you had right-wing authoritarian governments in places like South Korea and Taiwan using really heavy state direction.

Speaker 19 In 1987, the government supported the creation of Taiwan Semiconductor Manufacturing Company, TSMC.

Speaker 19 which would go on to become the world's largest dedicated independent semiconductor foundry.

Speaker 10 In South Korea, while companies like Yundai, Samsung, LG, Lotte, and Kumo have been private enterprises since their inception, they were hand-selected by the government to receive special protections and privileges.

Speaker 18 They used tariffs, subsidies, credit allocation, and they built out globally competitive industries and they lifted their countries out of poverty.

Speaker 18 You know, they did a lot of horrible things against political rights and labor rights and so on, but they did that to their credit.

Speaker 18 In the U.S., we sometimes just knee-jerk, just say, okay, more state intervention means that's more socialist. So, you know, for me, the real question is, is what we're doing coherent?

Speaker 18 Does it make sense?

Speaker 18 My worry with Trump's approach and just knowing Trump, like many Americans, I feel like at this point, we've seen him so much, we know him at a very personal level.

Speaker 18 My worry with Trump's approach is that it looks more like ad hoc favoritism and punishing some industries and subsidizing other industries at a whim and less like a long-term plan.

Speaker 2 Where do you stand on the tariffs?

Speaker 18 I have a lot of the same concerns. You know,

Speaker 18 think that there's really a place for tariff in the toolkit of creating a viable economy. I think there's a place for protecting certain industries as part of a wider plan.

Speaker 18 I really appreciate that Trump in his first term actually put on the table the toolkit of tariffs and talking about industrial policy.

Speaker 18 I didn't agree with how he executed those tariffs in his first term, but I think it paved the way to Joe Biden much more successfully being able to wield industrial policy.

Speaker 18 And at a time when other countries like Germany were losing hundreds of thousands of manufacturing jobs, the U.S. was gaining hundreds of thousands of manufacturing jobs.

Speaker 18 So I think there's definitely a place for it. But in this particular case,

Speaker 18 I just can't see the long-term plan behind Trump's use of tariffs. And I really worry that it will make the U.S., in the long run, a poorer country.

Speaker 18 And that won't be good for any sort of egalitarian politics.

Speaker 2 The thing Joe Biden was never willing to do was to call companies and say, don't you dare raise prices on Americans.

Speaker 2 This is one of those things that, again, with Trump, if you are working class and you hear that the president has called a corporation or telegraphed to a corporation, the tariffs may be pushing up the cost of goods, but you are not going to raise them on American citizens.

Speaker 2 It's appealing. It's a little strong man, but it's appealing, right?

Speaker 18 I'm not impressed because I don't think it's sustainable. Huh.

Speaker 18 And also, I think Trump was able to get away with this stuff or has been able to, partially because he is a right-wing president who came in with a lot of goodwill from business, or at least initially.

Speaker 18 He delivered huge tax cuts for them,

Speaker 18 for the wealthy at least. And capital, at least until recently, I think trusted him.

Speaker 18 I don't think the markets would have been nearly as as tolerant if it was President Bernie Sanders trying the same thing.

Speaker 18 You know, it's very clear to people that he's trying to rig the game to reward friends and punish enemies.

Speaker 18 And because of that, you know, CEOs like Apple's Tim Kim Cook, you know, feel like they have to play along and stay on his good side.

Speaker 18 And that's behind the very like awkward and kind of embarrassing and to some level like gauche like gift giving of, you know, you go visit the sovereigns.

Speaker 18 You better come with this kind of big, gaudy gift.

Speaker 20 He was resigned by a U.S. Marine Corps corporal, a horror one, that works at Apple now.

Speaker 1 He's done well, designed to treat it.

Speaker 20 And the base

Speaker 20 comes from Newton

Speaker 20 and it's 24 Karakali.

Speaker 18 And the irony is that, you know, a lot of the American right has spent decades railing against left-wing, you know, in their mind, strongmen, you know, leaders

Speaker 18 governing in this fashion. And yet Trump is really mimicking the worst of that style.

Speaker 2 Your side of things. Socialism has found a very shiny new avatar in Zoharan Mamdani in New York.

Speaker 2 And you'll be aware that some people who like to maybe think too much have said Trump and Mom Dani have more in common than we realize. They want a strong state.

Speaker 2 They want a state that intervenes on behalf of who they say their constituency is, right? With Trump, it may be on any given day. With Mom Dani, he's been pretty consistent.

Speaker 2 You don't like what Trump is doing.

Speaker 18 Where do you stand on Zohan? I love Zoran Mamdani. I love him so much that I almost refuse to say more about my love for him because I don't want to alienate people.

Speaker 18 I think that at a more fundamental level, what they're doing just seems to me to be polar opposite. So Trump is redistributing wealth from the bottom to the top of the economy.

Speaker 18 And he's doing this through the extension of the tax cuts for the rich, through cuts to the public sector and cuts to social programs like Medicaid.

Speaker 18 Someone like Zohran Mamdani, it seems to me, you know, obviously given the limited constraints of what he can do as mayor of a single city, wants to tax the wealthy more.

Speaker 5 I don't think that we should have billionaires.

Speaker 18 He wants to invest more in public goods.

Speaker 10 I'm Zohran Mamdani, and as mayor, I will create a network of city-owned grocery stores. It's like a public option for produce.

Speaker 18 And he wants to raise the floor for working people through,

Speaker 18 you know, encouraging higher wages and trying to find ways to lower rents.

Speaker 1 I'm freezing. Your wreck as the next mayor of New York City.

Speaker 2 So we know, I imagine you have rubbed your hands in glee looking at the polling

Speaker 2 that shows us that Americans are frustrated with capitalism.

Speaker 2 Really frustrated with it. Young people in particular giving up on it.
We did a whole four-part series about this. Whether you like him or not, President Trump is doing an un-capitalism.

Speaker 2 Zoran Mamdani would like to do an un-capitalism. Do you think we're at a point where the left and the right are converging on America with socialist characteristics?

Speaker 18 I love being contrarian.

Speaker 18 I would love to tell you, love to tell you that

Speaker 18 Trump's action is bringing us closer to being a socialist country. I'm a socialist.

Speaker 1 Democratic socialism.

Speaker 18 My wife is more of a mainstream liberal, but also a Zoran fan.

Speaker 18 And she will occasionally, maybe two, three months after the fact, listen to my podcast appearances and get very angry at my contrarianism.

Speaker 18 But in this case, I honestly believe, I'm not trying to just save myself from a battle in December, but I honestly believe that Trump is taking us further away from my vision of a good society and further away from any vision of a socialist society.

Speaker 18 And I think in part because he's deploying legitimate tools of economic policy, like I said, like tariffs, like industrial policy, but in such a chaotic, self-serving way, I think he's going to create a backlash that makes it harder for the left to use them in the future as well.

Speaker 2 You sound like a depressive more than a contrarian, but you made your point, and I appreciate it. Thank you so much, Boskar.

Speaker 18 Thanks so much for having me.

Speaker 2 Boskar Sankara of the nation, also the founder of Jacobin. Thank you to the Wall Street Journal's Greg Ipp, who wrote America with Socialist Characteristics.
Miles Bryan produced today's episode.

Speaker 2 Jolie Myers edited Patrick Boyd and Howe, Andrea Christian's daughter 2. Laura Bullard is both.
I'm Noelle King. It's Today Explained.

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