Big government can be thought of as a toll collector. Through regulation, taxes, or outright government ownership, politicians limit the ability of individuals and businesses to do the stuff they want to do. To get free from these government-imposed restrictions, businesses and individuals typically have to pay tribute to the politicians.
Throughout history and across the world, governments have functioned as shakedown artists. President Donald Trump is more blatant than any recent U.S. president in this regard, and closer to a third-world strongman than to the American norm.
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One case in point: The Ambler Road in Alaska.
In October, the White House announced it had approved construction of a road to a mining site in Alaska. The Biden administration, heeding the cries of environmentalists, banned the road. Trump last year approved it.
“The permits for the road have been held for years due to protracted litigation,” the White House states, “and the President has finally allowed this project to go forward to support the Administration’s energy dominance agenda.”
Bloomberg News this week told the full story of this approval, though. Trump approved it in exchange for a 10% federal stake in the mining company.
Trump’s project of building up federal stakes in dozens of companies deserves plenty of scrutiny. I call it “venture socialism,” and it will have unforeseen (mostly bad) consequences down the line.
But it’s worth considering why these companies end up playing ball with Trump: Because they feel they have to.
Why do they feel they have to? Because the federal government has so much control over their industries.
Consider one anecdote from the Ambler Road story in Alaska: One tribal chief, Harding Sam, opposed the road project after the mining company refused to give his tribe an equity share in the company. Surely, the company wanted his endorsement, but they didn’t need it.
Trump has a lot more leverage, and Trump never gives up leverage without getting something in return. The mining company needed Trump’s approval because it crosses federal land.
Here’s how Bloomberg tells the story:
“The administration’s ask for some kind of equity stake, one person says, was met with surprise by both Trilogy and South32, which said they would have to consult their respective boards. Ultimately, the government said it would be willing to authorize the permit for 10% of Trilogy.
Backed into a corner, the person says, Trilogy took the deal.”
A YEAR OF CRONYISM AND SELF-ENRICHMENT
The Federal government owns much of the American West, including much of Alaska. Environmentalists see this as a way to check private interests. Donald Trump sees it as a way to extract what he wants from private interests.
The “quid pro quo president” has so many quids to give because the federal government has so much power.
