A leading international economist is warning that President Donald Trump’s aggressive push to invest federal money directly into America’s largest technology companies could destabilize the U.S. economy, damage innovation, and accelerate the decline of America’s global technological dominance.
Earlier this year, Trump ordered the federal government to purchase $8.9 billion in Intel stock, marking one of the largest direct equity investments the U.S. government has ever made in a single private company. The administration is also considering similar deals involving quantum-computing firms, which are currently receiving substantial federal grants and incentives as part of Trump’s effort to accelerate breakthroughs in next-generation computing.
Critics Say Trump’s Strategy Is Dangerous and Unprecedented
According to an in-depth report from Politico, the decision has alarmed economists, industrial strategists, and former government officials who argue that Trump’s approach breaks sharply from decades of U.S. economic policy.
Italian economist Mariana Mazzucato, one of the world’s most influential thinkers on industrial strategy and state-led innovation, warns that Trump’s approach resembles neither free-market capitalism nor strategic public investment—but crony capitalism.
“I think the kind of capitalism Trump has is crony capitalism,” she told Politico. “Mafia-like. You’re showing your upper hand and handing out favors, while dividing and conquering. You’re picking and choosing winners without a strategy.”
Her bottom line:
“He’s actually weakening the economy.”
Why the Intel Deal Is a Red Flag
Mazzucato’s main concern is that the Intel deal came with no strings attached—no requirements that Intel invest in new research, develop specific technologies, produce new manufacturing capacity, or meet innovation benchmarks. Instead, the government acts as a simple investor, hoping Intel’s success will benefit the country.
She argues this is not how effective industrial policy works.
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Normally, governments attach conditions:
✔ innovation requirements
✔ hiring or manufacturing mandates
✔ infrastructure or R&D expansions
✔ long-term technology goals -
Trump’s deal has none of these.
“This is not how you foster next-generation technology,” Mazzucato says.
She contrasts Trump’s approach with successful government-led technology initiatives in the past, such as the Defense Advanced Research Projects Agency (DARPA), which supported the foundational research behind the internet, GPS, and microchips.
Corporate Welfare and the Risk of Monopolies
Economists worry Trump’s approach could accelerate the rise of monopolies, especially in the semiconductor and emerging quantum-computing industries.
Corporate welfare, Mazzucato argues, creates a dangerous dynamic:
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Companies receive massive government assistance
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Without being required to innovate or compete
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Leading to stagnation rather than breakthroughs
If the U.S. fails to innovate, its competitors—China, South Korea, Japan, and the European Union—will move fast to fill the gap.
A Lack of Strategy Behind Trump’s Tech Policy
Mazzucato describes Trump’s economic agenda as reactive, fragmented, and politically driven.
Instead of identifying long-term national challenges—like supply-chain weakness, climate technology, or advanced manufacturing—and investing strategically, she says Trump is simply throwing money at companies he favors or sees as critical to national prestige.
“Trump is not asking, ‘What problems need to be solved?’” she argues.
“He’s just throwing money around, imposing tariffs, taking equity stakes, and dismantling institutions.”
Gutting Federal Agencies Could Make the Crisis Worse
Perhaps most alarming, Mazzucato warns that Trump’s severe budget cuts and restructuring of key science and research agencies—such as:
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National Institutes of Health (NIH)
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NASA
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National Science Foundation (NSF)
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Department of Energy research programs
—are undermining the very ecosystem that enabled America to dominate global technology for half a century.
These agencies played essential roles in:
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early microchip development
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space technology
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battery and energy advancements
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biotech breakthroughs
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artificial intelligence
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medical innovation
“He is dismantling the backbone of U.S. competitiveness,” she says.
Scientists Are Already Leaving the U.S.
Due to fear of budget cuts, instability, and uncertainty about long-term funding:
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Top researchers
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Graduate students
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Postdoctoral fellows
are increasingly moving to Europe, Canada, and Asia, where long-term funding for science is more stable.
This kind of “brain drain” is a historical red flag in countries that lose innovation leadership.
The Tech Market Is Also in a Dangerous Moment
These concerns are unfolding at the same time that economists warn the AI boom may be a bubble. Stock valuations of major AI companies have soared to historic highs, and a sudden correction could send shockwaves through:
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tech markets
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retirement funds
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small businesses
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the broader U.S. economy
If the AI bubble bursts while Trump’s experimental investment strategy is underway, it could magnify the economic damage.
A Potential Recipe for Economic Crisis
Experts fear that the combination of:
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poorly designed government investments
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erosion of scientific institutions
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rising monopolies
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falling innovation rates
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investor anxiety around AI
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and global competition from China and allies
could destabilize the U.S. economy for years.
The long-term consequences of Trump’s Intel deal—and any future federal stock-buying programs—won’t be fully visible for years. But critics believe the early warning signs are already here.