When Government Owns the Means of Production

With the Trump administration taking a stake in private companies like Intel, many are hailing the “treat the state like a business” approach to governing. But, just like any intervention, public ownership of the means of production is bound to create perverse incentives and lead to wasteful economic activity.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

A core principle of Marxism—the socialist system upon which is founded the more authoritarian political systems of communism and progressive fascism—is government ownership of the means of production. This economic policy, aimed as a dagger at capitalism, happens to be the avant garde economic policy position taken a couple of times now by the Trump administration. It is the same position advocated in the larger context by the self-described communist candidate, Zohran Mamdani, who is running for mayor of New York City.

The Trump administration recently took a stake in MP Materials Corp in an effort to onshore rare earth mineral mining and refinement. The particular interest is production of the seven heaviest of the 17 total rare earth minerals which have enhanced value to the electronics industry and defense. Currently, China exercises a stranglehold on world supply. $400M in equity financing was provided to Mountain Pass. The US government now holds about 15 percent control of this company in preferred stock.