--:-- Noelle King: Two years ago on Today Explained from Vox, we ran a series on Americans' deep and growing frustration with capitalism. Everything comes with a price, even peace of mind. We wrestled with this longstanding 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. I don't think that we should have billionaires. No, it's not Zoran. It's Trump. 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 percent share in Intel. Everything's computer. 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?
--:-- [Support for Today Explained comes from Adio. Adio is an AI-native customer relationship management platform that Adio says is built for the next era of companies. A powerful data structure adapts to your business model, sinks in all your contacts in minutes, and enriches your business with actionable data.]
--:-- Noelle King: Welcome to Today Explained. I'm Noelle King.
--:-- Tracy Alloway: 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? But before we get there, let's define the term. What is capitalism traditionally meant in the United States?
--:-- Tracy Alloway: 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. 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. 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. 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 in something that is not so capitalist. You would have more intervention from the government.
--:-- Tracy Alloway: 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. 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 no one's really talking about the same thing here. Everyone has a different sense of it. So it is like porn. You said it, not me.
--:-- Noelle King: All right. So let's talk about the ways in which President Trump seems to be breaking with the tradition, the thing that we know when we see. 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?
--:-- Tracy Alloway: Yeah, so this is a really interesting thing. 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 intents and purposes, America really seems to treat as an enemy economically, even though it is its biggest trading partner. But if you want to sell those advanced chips to China, you are going to have to give the U.S. government 15 percent of your revenue.
--:-- Tracy Alloway: 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. That kind of revenue sharing agreement for market access, that is pretty unusual when it comes to U.S. industrial policy or U.S. economic policy. And it really does look like a pretty dramatic expansion, I would say, of the leverage that presidents have over corporate transactions.
--:-- Noelle King: And you can imagine, and we've seen it already, that in the future, big U.S. 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. Like this is pretty new.
--:-- Tracy Alloway: 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. What's going on there?
--:-- Tracy Alloway: This one is really interesting because this one you can kind of draw a direct connection between what the U.S. 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 in U.S. Steel in order to get this transaction done. And it's something called a golden share concept. We have a golden share, which I control. And basically it gives the U.S. government a lot of corporate control when it comes to decisions that are made for the company.
--:-- Tracy Alloway: So, you know, things like where are they going to move production or where are they going to be headquartered? quartered, stuff like that. That gives you total control. It's 51% ownership by Americans. And the reason it such an interesting parallel with China is because the golden share concept has existed in China sort of call it state economy for many many years now This is something that is very very normal in China and not necessarily normal in the U.S. until very recently.
--:-- Noelle King: 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. 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. Truth Social. Walmart and China, they should, as is said, eat the tariffs and not charge value customers anything. I'll be watching. And so will your customers.
--:-- Tracy Alloway: I think I would say the jury is still out on whether that tactic will work or not. It's that he tried it. Totally. Totally. But I will say it's not like you've never seen politicians come out and say, like, please don't price gouge in an emergency. 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. That seems pretty circular.
--:-- Noelle King: 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. 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. What do you mean when you say that?
--:-- Tracy Alloway: So this is what I find so fascinating about our current moment in economic history. 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? You were 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.
--:-- Tracy Alloway: The case for trade is just not monetary, but moral. Economic freedom creates habits of liberty and habits of liberty create expectations of democracy. There are no guarantees, but there are good examples from Chile to Taiwan. Trade freely with China and time is on our side.
--:-- Tracy Alloway: And instead, what we've sort of seen is that the U.S. is moving closer to China in a number of ways. And I don't want to say this is exclusively a Trump administration phenomenon, because the truth is, it's not. 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. And the Biden administration, in many ways, took on a much more active industrial a policy role after the pandemic.
--:-- Tracy Alloway: Folks, we need to make these chips here in America to bring down everyday costs and create good paying American jobs. And I think this is really 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. There are all these choke points in our economic system that free market capitalism hasn't recently seemed very good at solving.
--:-- Tracy Alloway: And so that's one of the reasons we've seen governments in the U.S. 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. And because China is one of the countries that has been doing this for arguably the longest time, China really becomes like kind of the role model for how you build out that additional capacity.
--:-- Noelle King: Why does it feel wrong? Is there anything actually wrong with that?
--:-- Tracy Alloway: So China, again, is a very useful example of this. 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. This sounds like communism and all of that.
--:-- Tracy Alloway: There are problems with having such an active role of the government. And in China, the number one problem has been that you tend to get overproduction, right? China has the ability to produce roughly twice as many cars as it sells at home each year.
--:-- Tracy Alloway: In Hangzhou, we came across hundreds of new EVs stored out in the open, many of them waiting to be sold. Solar panels, electric vehicles, and the batteries that power them. 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.
--:-- Noelle King: 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. But if you look at the Chinese stock market, stock market has like gone sideways basically for 20 years now. 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.
--:-- Tracy Alloway: And so I think that's what people are kind of worried about. 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. 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.
--:-- Noelle King: 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?
--:-- Bhaskar Sankara: 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.
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--:-- Noelle King: Support for the show today comes from LifeKit, the podcast from NPR. What's in your LifeKit? I'm asking. They didn't ask that. Every day you have to make choices that might shape the direction of your life, but you can't flip to the back of the book to find an answer key. Instead, you can listen to the LifeKit podcast from NPR.
--:-- Noelle King: LifeKit offers real stories about common issues like relationships, finances, parenting, and your career. If you're looking to move with more intention or just need thoughtful guidance on living better, LifeKit delivers strategies to help you make meaningful, sustainable change. From fitness routines to mental resilience, navigating personal goals to tackling burnout, each episode is full of relevant insights and clear takeaways about things we all could use a little help with.
--:-- Noelle King: LifeKit wants to help you approach your own life with confidence and clarity and walk away with a game plan you can implement right away. Enough from me. Go listen to the show, Life Kit. It's a podcast from NPR. You're listening to Today Explained. I'm Noelle King.
--:-- Noelle King: Bhaskar Sankara is not Zohran Mamdani. He has many other things, though. He's the president of The Nation magazine. He's the founding editor of Jacobin. He's so sociy 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. Jacobin, if you don't know it, is a magazine dedicated to making socialist ideas accessible. All right, Bosker, this first question I'm going to ask you, I'm not going to use any proper nouns at all. You're just going to give me your thoughts. What do you think about the state, the government, getting involved in private industry?
--:-- Bhaskar Sankara: Yeah, so obviously, as a socialist, I start from the principle that private industry should be subject to more democratic control and oversight. 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.
--:-- Bhaskar Sankara: But I also think there needs to be, you know, clear rules of the game. There needs to be moments where we say, OK, in this case, the state is going to uniformly step in, not just to regulate, but to actively shape the economy's development.
--:-- Noelle King: OK, 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. 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. And he says that he personally will direct the investment.
--:-- Bhaskar Sankara: Now, you have seen that old school free market capitalists, such as those at The Wall Street Journal, are freaking out about this. Is capitalism dead? Is it in trouble?
--:-- Bhaskar Sankara: You know, I wish it was dead for a variety of reasons. And like I said before, I think it's perfectly legitimate for the state to intervene in private enterprise. 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.
--:-- Bhaskar Sankara: So in the 20th century, you had right-wing authoritarian governments in places like South Korea and Taiwan using really heavy state direction. In 1987, the government supported the creation of Taiwan Semiconductor Manufacturing Company, TSMC, which would go on to become the world's largest dedicated independent semiconductor foundry.
--:-- Bhaskar Sankara: In South Korea, while companies like Hyundai, 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. They used tariffs, subsidies, credit allocation, and they built out globally competitive industries and they lifted their countries out of poverty.
--:-- Bhaskar Sankara: You know, they did a lot of horrible, you know, things against political rights and labor rights and so on, but they did that to their credit. In the U.S., we sometimes just knee-jerk, just say, OK, more state intervention means that's more socialist.
--:-- Bhaskar Sankara: So, you know, for me, the real question is, is what we're doing coherent? Does it make sense? 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 uh my worry with trump's approach is that it looks more like ad hoc favoritism and punishing some industries and and subsidizing other industries at a whim uh and and less like a long-term plan
--:-- Noelle King: Where do you stand on the tariffs?
--:-- Bhaskar Sankara: I have a lot of the same concerns. You know, I 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.
--:-- Bhaskar Sankara: I really appreciate that Trump in his first term actually put on the table the toolkit of tariffs and talking about industrial policy I didn 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.
--:-- Bhaskar Sankara: 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. So I think there's definitely a place for it. But in this particular case, I just can't see the long-term plan behind Trump's use of tariffs.
--:-- Bhaskar Sankara: And I really worry that it will make the U.S. in the long run a poorer country. And that won't be good for any sort of egalitarian politics.
--:-- Noelle King: The thing Joe Biden was never willing to do was to call companies and say, don't you dare raise prices on Americans. 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. It's appealing. It's a little strong man, but it's appealing, right?
--:-- Bhaskar Sankara: I'm not impressed because I don't think it's sustainable. Huh? 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, at least initially.
--:-- Bhaskar Sankara: He delivered huge tax cuts for them, for the wealthy at least. And capital, at least until recently, I think trusted him. I don't think the markets would have been nearly as tolerant if it was President Bernie Sanders trying the same thing.
--:-- Bhaskar Sankara: You know, it's very clear to people that he's trying to rig the game to reward friends and punish enemies. And because of that, you know, CEOs like Apple's Tim Cook, you know, feel like they have to play along and stay on his good side. And that's behind the very, like, awkward and kind of embarrassing and somewhat like gauche, like gift giving of, you know, you go visit the sovereigns. You better come with this kind of big, gaudy gift.
--:-- Noelle King: Your side of things, socialism has found a very shiny new avatar in Zohran Mamdani in New York. And you'll be aware that some people who like to maybe think too much have said Trump and Mamdani have more in common than we realize. They want a strong state. 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 Mamdani, he's been pretty consistent.
--:-- Bhaskar Sankara: I love Zohan 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. I think that at a more fundamental level, what they're doing just seems to me to be polar opposites.
--:-- Bhaskar Sankara: So Trump is redistributing wealth from the bottom to the top of the economy. 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.
--:-- Bhaskar Sankara: 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. I don't think that we should have billionaires. He wants to invest more in public goods. 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.
--:-- Noelle King: So we know, I imagine you have rubbed your hands in glee looking at the polling that shows us that Americans are frustrated with capitalism, 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 uncapitalism. Zohran Mamdani would like to do in uncapitalism. Do you think we're at a point where the left and the right are converging on America with socialist characteristics?
--:-- Bhaskar Sankara: I love being contrarian. I would love to tell you, love to tell you that Trump's action is bringing us closer to being a socialist country. I'm a socialist. Democratic socialism. My wife is more of a mainstream liberal. Come on. also a Zoran fan. And she will occasionally, maybe two, three months after the fact, listen to my podcast appearances and get very angry at my contrarianism.
--:-- Bhaskar Sankara: 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.
--:-- Bhaskar Sankara: 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.
--:-- Noelle King: You sound like a depressive more than a contrarian, but you made your point and I appreciate it. Thank you so much, Moscar.
--:-- Bhaskar Sankara: Thanks so much for having me.
--:-- Noelle King: Thanks to The Wall Street Journal's Greg Ip, who wrote America with Socialist Characteristics. Miles Bryan produced today's episode. Jolie Myers edited. Patrick Boyd and Howe, Andrea Kristen's daughter too. Laura Bullard is both. I'm Noelle King. It's Today Explained. Thank you.
