What Happens to Free Speech When Uncle Sam Gets a Seat on the Board of Directors?

​The U.S. Supreme Court in 1952 slapped down President Harry S. Truman’s Executive Order 10340, which nationalized America’s steel factories to stabilize production during the Korean War. Justice Hugo Black wrote for the majority that “we cannot with faithfulness to our constitutional system hold that the Commander-in-Chief of the Armed Forces has the ultimate power as such to take possession of private property...”
 
Washington, D.C., today has a workaround to control business in a way that no Court opinion will likely overturn. Its approach is very simple – invest taxpayer money in a targeted company. This may be perfectly legal, but it is certainly dangerous. How free can a company remain when the most powerful monopolist of them all – Uncle Sam – sits on its board?
 
Make no mistake, Washington is making huge inroads into private businesses, and the list is growing. To cite one example, the White House has made deals with Nvidia and AMD to take a 15 percent cut from their revenues from computer chip sales in China. This is not regulatory oversight. It is revenue-sharing with the government.
 
Government also invests by leveraging its regulatory permission. The Trump administration took a “golden share” in U.S. Steel as a precondition for allowing Nippon Steel of Japan to acquire the company. The government’s golden share now gives Washington veto power over plant closures, factory idling, offshoring, moving the company’s headquarters from Pittsburgh, or even changing the company’s name.
 
With U.S. Steel, shares were “bought” in exchange for settling the administration’s claim against the company. Only the 800-pound gorilla of government could get away with threatening an acquisition, and then remove the threat and watch the value of its investment rise. This is not a market exchange. It is nationalization by another name.
 
Such government ownership of the means of production (sound familiar?) guarantees that business decisions will be politicized.
 
Would a defense contractor reliant on Washington’s goodwill feel pressured to purchase components from a company partially owned by the federal government? Would a company feel free to announce layoffs in a swing state, or subsidize an inefficient investment for political protection? Would a company that is partly government-owned turn to Washington to approve its business strategy?
 
Washington is not exactly shy about directing business strategies.
 
President Biden lectured snack companies about producing too few potato chips per bag and pressured social media companies to deplatform dissenting voices he accused of “killing people.” President Trump, meanwhile, personally lobbied Coca-Cola to replace high fructose corn syrup with cane sugar. When President Trump read media reports that Amazon was considering posting the added costs of tariffs to some of its products sold online, the president called Amazon CEO Jeff Bezos to complain. “Jeff Bezos was very nice,” President Trump told reporters. “He solved the problem very quickly.” As Washington continues mixing public power and private enterprise, expect more heavily regulated companies to be “very nice” in not speaking out about the price impact of tariffs.
 
As the state’s power increases, the ability of companies to speak freely will also shrink. Witness the whipsawing of General Motors CEO Mary Barra, who supported the first Trump administration’s legal actions in favor of fossil fuels, then endorsed President Biden’s mandate for an all-electric future, only to later donate $1 million and provide vehicles for the Trump Inauguration. Last week, GM announced a $1.6 billion write-off for its electric vehicle business as it switches back to gasoline-powered vehicles.
 
Whatever Mary Barra really thinks, she has an obligation to her company to parrot the currently approved line from whichever party is in power.
 
This marks a departure from historic norms. J.P. Morgan, Bernard Baruch, and Lee Iacocca gave presidents unvarnished technical and economic advice. But as Washington increases its ownership of business – amplified by regulatory gamesmanship like the whiplash inflicted on car companies – expect executives to sound less like independent business leaders and more like government mouthpieces.
 
A government that owns a business will not tolerate disagreement from it. Every share Washington buys comes with a little less freedom for everyone else. Perhaps Congress should consider passing a First Amendment Is Not for Sale Act.

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