This week, the Trump administration revealed that it is widening its ownership stake in the chipmaker GlobalFoundries. The latest disclosures place the federal investment at more than $2 billion, according to President Donald Trump, and the move marks one instance among roughly thirty-five companies in which this White House has acquired a share. For supporters of free enterprise, this trend is troubling because it signals government influence over the means by which goods are produced.
Although unwinding state involvement in the economy may not be imminent, in light of the current drift of the two major parties away from faith in the marketplace, the Cato Institute has launched a project to spark the discussion and begin charting a path back toward freer enterprise.
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Two-Billion-Dollar Government Position in One of Thirty-Five Formerly Private Companies
“The U.S. Department of Commerce will obtain equity in GF of roughly four percent, further enabling the public to participate in GF’s growth,” GlobalFoundries declared on Monday in a release tied to a U.S.–Japanese plan to inaugurate two new semiconductor manufacturing sites.
“This brings our total investments to 1.63 billion dollars, and now the U.S. government’s stake is worth more than 2 billion,” Trump confirmed on Truth Social.
Yet the tone of the announcement isn’t necessarily shared by those who wonder what a government ownership stake in a single company could mean for regulation and investment across the sector. Will pure private firms competing against a state-backed rival enjoy a level playing field?
In a CNBC survey from July of 1,000 American voters, 49 percent said it is “not appropriate for the federal government to own a portion of a U.S.-based company.” Nineteen percent judged it appropriate, and 32 percent had no opinion.
“Washington’s growing involvement in the businesses it oversees undermines the competition and innovation that underpin American prosperity,” warns Tad DeHaven of the Cato Institute as the Restoring Free Enterprise project launches. “Our effort will analyze the consequences of that involvement and map a route to removing Washington from the boardroom.”
Restoring Free Enterprise’s Government Ownership Dashboard catalogs the U.S. government as a shareholder in 35 firms. The latest arrangement with GlobalFoundries adds to an earlier stake, bringing government ownership of the company to about 7 percent. Other notable transactions include an 8.4 percent stake in Intel, a claim on 20 percent of distributions above $17.5 billion in Westinghouse, and an agreement granting the U.S. government the right to appoint a director at U.S. Steel and to veto decisions related to investments and production.
Why could this pose a problem?
When the Government Enters the Market, Competition Is Undermined and Decisions Become Politicized
In a briefing for the Center for Strategic and International Studies, Sujai Shivakumar, Charles Wessner, and Christina Tutino warned that direct government ownership could create “conflicts between the state’s role as a shareholder in a given company and its role as a regulator (for example, regarding export controls) of firms across the broader industry.” They added that preferential treatment for state-connected firms could “distort competition, dampen innovation, and potentially lead to monopolies or increased market concentration in strategic sectors.”
“Once the government crosses the line into equity ownership, the game changes,” noted economist Vance Ginn in a 2025 piece for the American Institute for Economic Research. “It’s no longer about establishing fair rules of the road—it becomes Washington entering the race as a participant. That undermines competition, politicizes corporate choices, and exposes taxpayers to risks they never consented to bear.”
In essence, whenever the government engages in any industry, it complicates matters for the companies in which stakes are held, for rivals who worry regulators might tilt the scales to aid favored firms, and for the market at large. Government interference of any kind in market exchanges generally does more harm than good, and direct ownership worsens the situation.
“Federal rate controls, excessive taxes, obstacles to restructuring, and rigid labor rules weakened private railroads in the mid-20th century, just as cars, buses, trucks, and airlines intensified competition,” notes Cato’s Chris Edwards in a case study for the Restoring Free Enterprise Project. Congress subsequently created Amtrak to preserve passenger rail service after regulations had strangled it, but although the railroad was supposed to become self-sustaining, “it has never earned a profit and has received tens of billions of dollars in subsidies.”
Reform Proposals, but Do People in Washington Truly Want Them?
The project acknowledges the Trump administration’s aim of boosting U.S. manufacturing and meeting strategic defense goals. Yet it emphasizes that private, profit-seeking enterprises are what built the United States’ wealth and global leadership in numerous sectors. To sustain that prosperity, the government should step back from market activities.
As alternative routes to state ownership, Restoring Free Enterprise suggests enabling and regulatory changes that “shorten reviews, remove unnecessary requirements, reform the Jones Act, and recognize out-of-state licenses” for workers. It also advocates for free-trade agreements that lower barriers to international commerce, the removal of export and procurement restrictions, tax policy reforms that encourage expensing, and immigration reforms that streamline processing and permit foreign graduates to stay in the United States more easily.
The obstacles to enacting these reforms are significant. The administration, while criticizing the Democratic Party’s growing affinity for socialism, itself embraces government ownership of firms, mercantilism, and extensive state control in economic decisions. The Democratic Party has long been less market-oriented than the Republicans, and despite the GOP’s evolution, a rising faction of Democrats advocates for a more active state-run economy.
“American political leaders on both the left and the right are pushing back against the market-first consensus that has guided Washington for four decades,” conclude Courtenay Brown and Neil Irwin of Axios in a July piece. “This is evident in everything from the administration’s embrace of government stakes in numerous private companies to socialist candidates winning Democratic primaries who promise a more interventionist role for the state in the economy.”
U.S. policymakers are embracing policies that undermine the country’s tradition of prosperity through free markets. The Restoring Free Enterprise project seeks to reverse that pattern, but it remains unclear how many in Washington are ready to join the effort.
