How MAGA's whataboutism defends Trump’s troubling Intel deal - Ivo Vegter

Key topics: MAGA supporters defend Trump with loyalty, not policy consistency Intel deal shows Trump’s shift away from free-market principles Whataboutism replaces principled debate in partisan politics.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Ivo Vegter*.MAGA fans have traded substantive defences of Trump’s policies on, for example, Intel, for blind loyalty and whataboutism.At the risk of speaking for others, most of us here at the Daily Friend (and the Institute of Race Relations more broadly) are not loyal to individual leaders or single political parties.If it seems some political party adopts policy positions that are broadly consistent with those promoted in these pages, it is merely because those parties have read our arguments and find them compelling. There are no secret deals in smoky back rooms. Nobody gives anyone instructions. There is no behind-the-scenes coordination.Many of us are willing to express electoral preferences, and have strong opinions about which political parties are and are not good for South Africa’s future. None of us, however, would be willing to defend every action, policy or utterance of the party we prefer. Nor would we condemn every action, policy or utterance of the parties we broadly oppose.That’s because we stand for principles. We measure every policy, every action, and every statement against our classically liberal principles of non-racialism, free markets, civil liberties and limited government under the rule of law.When we disagree, it’s sure to be a disagreement on whether or not a policy is consistent with classical liberal principles, or whether a concession can be tolerated in pursuit of the greater good. It is never about whether classical liberal principles are to be pursued in the first place..Rare trait.Supporting principles, rather than people or parties is, unfortunately, a fairly rare trait in the broader electorate, and even among our more vocal readers. To most people, politics is a contact sport, in which one’s own side must be defended at all costs and one’s political opponents cannot be given an inch.On the international stage, it pits country against country. Domestically, it pits party against party, or sect against sect, or race against race. Partisanship is part and parcel of modern politics, and especially of populist politics.Thanks to social media algorithms that amplify confirmation bias by feeding people what they want to hear, people become cocooned in the echo-chamber of their tribe, and are spoon-fed ever more extreme affirmations and talking points that defend their own kind and denigrate their opponents.It is in this partisan atmosphere that people seem to feel they must either be for Donald Trump and against the socialist left, or against Donald Trump and for the socialist left.It doesn’t seem to occur to people who once proclaimed their commitment to free markets and individual liberty that there is a third choice: to criticise both, and support neither.This leads to really strange incidents of whataboutism..10% stake in Intel.Trump recently cut a “deal” with Lip-Bu Tan, the new CEO of chip maker Intel, under which the US government will take a 10% stake in the company.It will not pay Intel anything for this stake. It is expropriation without compensation.The assumption seems to be that subsidies paid to Intel under the Biden-era CHIPS Act, which it received in return for committing to investments in domestic chip-fabrication plants, are the payment that Trump believes merits the government taking a stake in the company.This is a really odd deal.For those who don’t follow the company, Intel finds itself in a terrible position, vis-á-vis its rivals. It is both a product designer and a chip manufacturer. This sets it apart from companies like the high-flying Nvidia – which designs chips, but outsources its manufacture to leading contract fabs such as Taiwan’s TSMC – and AMD – which spun off its manufacturing division as Global Foundries in 2009 in order to focus on chip and product design.Despite Intel’s vertical integration (or more likely because of it), it has fallen behind the market leaders in both chip manufacturing and product design. Its CPUs have suffered multiple serious vulnerabilities in recent years, and have been outclassed by AMD’s excellent Ryzen processors. Intel isn’t even trying to compete with Nvidia for cards used in gaming and AI datacentres.It is coasting on its historic market dominance, much like IBM did 30 years ago.Meanwhile, its planned investment into leading-edge fabrication facilities, which would have rivalled the best that TSMC and Samsung can offer, are on the chopping block. To continue with its investment in high-end silicon chip fabrication in the US, it needs a major client to sign up; to sign up a major client, it needs high-end fabrication facilities. Rock, hard place. Chicken, egg.Unlike Tan’s predecessor, Pat Gelsinger, who was trying to bulldoze a way back into the lead by betting heavily on advanced fabrication plants, Tan is more of a cost-cutting type, and is sharply paring back Intel’s capital investment programme.Without advanced manufacturing, and being at the back of the queue with contract fabs like TSMC, the question is whether Intel still offers anything to rival its biggest competitors. If advanced manufacturing isn’t going to save Intel, what will?.Highly conflicted, but never mind.Three weeks ago, Trump declared that Tan is highly conflicted, due to his investments in Chinese companies. He said there is no other solution than Tan’s immediate resignation.Then he had a meeting with Tan, and emerged quite charmed, extolling his “success and rise”. At that meeting, it seems Tan offered him 10% of Intel’s shares, for free.Much like with Nvidia and AMD, who mysteriously received Chinese export licences for advanced AI chips that Trump once said threatened US national security, simply by offering the US government 15% of the export revenues, Tan’s bribe seems to have mollified Trump.How this benefits anyone, however, is a mystery. Under the deal, Intel doesn’t get any additional capital to invest in building out its new high-end fabs. It doesn’t get a customer for those fabs, although Trump was certainly in a position to declare, say, that the US Department of Defence would be the anchor tenant for Intel’s advanced fabs.All Intel gets is diluted shareholding, a Department of Commerce bureaucrat on its board, and to keep its CEO.As for the US government, it gets a 10% stake in a sinking ship, trading about 60% below its 2021 high.When I expressed this view online, one of the responses was: “I seem to remember another administration taking a percentage of GM without so much as a peep.”The reference is to former US president Obama, and the 2009 bailout of General Motors..Plenty peeps.But there were plenty peeps on that occasion. Just as Trump was criticised for the socialist act of taking a stake in a private company, Obama was widely criticised by free-market advocates for the US government’s role in bailing out General Motors back in 2009.It stumped up $50 billion to back GM’s bankruptcy proceedings, and received a 61% stake in the company in return.Here’s Jacob Sullum, Matt Welch, and Ronald Bailey, writing in Reason magazine at the time: “Not only will this White House seize any company it deems to pose a ‘systemic risk’ to the economy, but it will do so without regard to restraint, to the law, or to basic economic principles. All while dissembling enough to keep its most loyal political supporters distracted from the fact that robbing taxpayers to pay failed corporate executives is almost the definition of economic unfairness.“Now that the U.S. government is indeed running G.M., … it’s worth stepping back and taking measure of this almost unthinkable chain of events. After decades of Europe and most of the West enjoying the fruits of selling off state ownership in private industry, the U.S. is going on a nationalization bender. An inventory of the steps that led us here leads to three inescapable conclusions: This bailout is illegal, illiberal, and ill-fated.”That strikes me as a very loud peep. For years, GM was referred to as “Government Motors”, and the media widely criticised the deal, both as a matter of economic principle, and as a matter of prudent business.Shortly after Obama’s re-election in 2012, the government sold its stake in GM, at a loss of $11.2 billion.It was protectionism at taxpayer expense, and nobody – other than the auto unions – liked that very much.So, not only have free market advocates been entirely consistent in their opposition to the US government seizing the means of production, but Trump’s ardent defenders seem content to justify his actions by saying “but Obama did it too”.Wasn’t the point of electing Trump to not be like Obama?.Trade war.The same has happened on other occasions. In response to my criticism of Trump’s protectionism and his global trade war, quite a few MAGA cultists shot back not with a principled defence of import tariffs and protectionism, but with the argument that tariffs are normal and South Africa levies them too.Yes, this is true. Import tariffs have a long and storied tradition. They go back to the mercantilist era, when great powers had to construct empires to satisfy rising domestic demand, and vied against each other by force of arms for commercial dominance.That was not a prosperous era. The prosperity of the West only really took off when free market advocates campaigned successfully against protectionist tariffs and other barriers to free global trade.And yes, South Africa also levies import tariffs. I have frequently (and vehemently) written against import tariffs on steel, cars, chicken, and every other import.Is it wrong of me to find it hilarious that the best defence of Trump’s tariffs that MAGA cultists can come up with is, “But the ANC does it, too”?The ANC is socialist. It favours “state-led growth” of a “developmental state”. At best, it seeks a “mixed economy”, which mixes free market capitalism with socialist central planning.The South African state has stakes in lots of companies, and owns many outright. It is running all of them into the ground, which is what governments do when they own companies.The ANC has, to put it kindly, a fairly dismal record when it comes to economic policy.FT: The return of ‘tariff man’, with Bill done and dusted Trump revives global trade war.Hearty condemnation.It isn’t a defence of Trump’s import (and export) tariffs to say that South Africa does it too. It is a hearty condemnation.The same goes for many other Trump policies. If you have to explain that other countries do it too, but those countries are stagnant, authoritarian, socialist, China, or South Africa, then you’re not defending your MAGA hero.You’re admitting that he does not have any principles consistent with free markets, individual liberty, or constitutional democracy.You’re admitting that he’s a clown who makes it up as he goes along. And you would not be wrong..*Ivo Vegter is a freelance journalist..*This article was originally published by Daily Friend and has been republished with permission.

How MAGA's whataboutism defends Trump’s troubling Intel deal - Ivo Vegter

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