“Many of America's worst policy mistakes have been bipartisan mind melds. A new example comes this week from Bernie Sanders, who wants the feds to take ownership stakes in AI companies. Hmmm. Which Republican might have inspired this statist brainstorm?
Mr. Sanders teased his forthcoming legislation in a New York Times op-ed that pitched a U.S. AI sovereign wealth fund. "Even President Trump, in an executive order, has proposed establishing an American sovereign wealth fund," Mr. Sanders writes.
Yes, and we blasted the President's idea last year. Sovereign wealth funds typically enrich a country's rulers and friends far more than its citizens. Democrats criticize the Trump family businesses for profiting from the Presidency with crypto deals. Imagine the temptation for corruption if government owns stakes in America's wealthiest companies.
Most countries with sovereign wealth funds finance them with royalties on energy production. Mr. Sanders wants to force companies to hand over half of their equity to the government. He calls this a "one-time 50% tax" on company shares, but it isn't a tax as most economists would define the term, and certainly not how America's founders did.
For all intents and purposes, this would be a government expropriation. It would violate the Fifth Amendment's prohibition on government taking property without just compensation. To pay this tax, companies would have to issue new shares to the government diluting current shareholders. Or they could buy back half their shares from private investors and hand them to the government. Most AI companies couldn't afford to do this at their current ethereal market valuations.
Mr. Sanders doesn't conceal his aim for the government to use its ownership stake to boss around AI companies and redistribute the "investment" gains (if there are any) to voters. Progressives call this "universal basic capital" since citizens would supposedly get an indirect stake in companies, but it's socialism with a capitalist false front.
"The federal government would have the power, through its voting shares and an equal representation on each company's board, to block decisions that hurt our citizens and to push for policies that help them," the Senator writes. This means the federal government could direct how AI companies invest and whom they hire and fire.
One model is China's state-owned enterprises, which are an albatross on its economy. Political favoritism and government interventions have led to economic inefficiencies. Hence China's partially state-owned Semiconductor Manufacturing International trails TSMC and Samsung in chip fabrication.
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The unhappy truth is that President Trump helped pave Mr. Sanders's road to AI socialism with his industrial policy. In return for approving Nippon Steel's acquisition of U.S. Steel, Mr. Trump demanded a "golden share" that gives the government veto power over major business decisions. He has already blocked the closure of an unproductive Illinois plant.
The U.S. took a 9.9% equity stake in Intel last summer as it floundered. Mr. Trump claims credit for the subsequent 300% surge in Intel's share price. He should really thank the business decisions of CEO Lip-Bu Tan -- whom he had earlier called to resign -- and insatiable demand for chips by AI hyperscalers.
The Administration has also taken equity stakes in critical mineral developers MP Materials, Lithium Americas, Vulcan Elements, Trilogy Metals and USA Rare Earth. There may be some cases when the feds need to invest for security or defense needs, but Mr. Trump is doing it with little restraint. This week he invested in coal plants, of all things.
Mr. Trump has even leveraged his regulatory power to extort companies. The White House let Nvidia and AMD export high-power computer chips to China on condition that they give the government a 15% cut of the revenue. And the Journal reports this week that Trump officials are also considering taking a Bernie-like stake in AI firms.
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AI has so many implications for national security that government will inevitably be involved. But the U.S. has dealt with defense contractors for decades without taking ownership stakes.
The U.S. leads the world in AI because entrepreneurs and investors have combined to innovate and compete. Political control would stifle that growth and cede leadership to China. It would be a tragedy for the ages if AI became the road to American socialism.” [1]
1. The Road to AI State Socialism. Wall Street Journal, Eastern edition; New York, N.Y.. 06 June 2026: A14.
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