"I think the kind of capitalism Trump has is crony capitalism,"
"I would describe crony capitalism as Mafia-like. You're showing your upper hand. You're handing out favors to some. But then divide and conquer. Picking and choosing without a particular strategy."
"Mazzucato, a University College London economics professor and adviser to governments, argues that the Intel deal is poorly designed because it doesn't have any conditions to incentivize the company to be build new products, while the government simply acts as a passive investor. That kind of posture isn't going to foster next-generation technology, Mazzucato said. A smarter approach, she says, would see a government put together a portfolio of companies in a sector, encourage them with subsidies and other incentives, and wait for a company or product to rise to the top via competition in the marketplace."
The government directed a purchase of $8.9 billion of Intel stock and may pursue similar investments in quantum-computing companies receiving federal funding. Critics warn that such direct equity purchases lack performance conditions, leaving the government as a passive investor and failing to incentivize new product development. The approach is characterized as crony capitalism that favors select firms, undermines competition, and distributes government favors without a coherent strategy. A recommended alternative involves active industrial policy: creating government-backed portfolios, pairing equity stakes with subsidies and incentives, and allowing market competition to determine leading companies and products.
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