Economist Joel Naroff compares Trump’s economic approach to modern Chinese pseudo-capitalism.

In recent years, the dynamics of the U.S. economy have shifted significantly, prompting discussions about the nature of capitalism in the country. This evolving landscape suggests a model that may be characterized as “pseudo-capitalism,” where executive authority plays a dominant role in determining economic outcomes. With a focus on executive orders, President Donald Trump’s administration has adopted a strategy that many observers find reminiscent of centralized economic planning.

At the heart of this economic transformation is the president’s use of executive orders to exert influence over federal spending. Traditionally, the budgeting process involved rigorous hearings and agreements among Congressional committees, followed by votes to pass budget bills. This established system ensured that appropriations were allocated according to structured guidelines set by Congress. However, recent developments have indicated a significant departure from these foundational practices.

Rather than adhering to a budget as a strict framework, the current administration has effectively reshaped the process, allowing the president to wield considerable discretion in the disbursement of funds. Through executive actions, the administration has been able to cut spending, eliminate departments, and rescind contracts, often bypassing the legislative branch’s oversight. This method of governance has implications for various sectors, as some industries, particularly manufacturing and energy, have been explicitly favored by government backing and protection.

The implications of such a centralized economic policy raise questions about the constitutionality of the president’s actions. While the Supreme Court has previously ruled that a president cannot selectively veto parts of appropriations bills, the current administration’s approach has straddled legal gray areas. The instinct to assert executive authority may have shifted the balance of control over economic resources away from Congress, which has largely remained passive in this scenario.

The historical roots of such economic strategies can be traced back to the 1970s, when policymakers debated the merits of industrial policy to shield certain sectors from global competition. Although Congress has the constitutional power of the purse, the current lack of proactive involvement has transformed it into an ineffective body concerning fiscal decision-making.

Meanwhile, parallel systems of economic control can be observed in other countries, particularly China. The Chinese economic model, often described as “pseudo-capitalism,” exhibits a blend of socialism and capitalism, allowing the government to dictate economic priorities while still maintaining market mechanisms. In echoing this system, the Trump administration appears to be steering the U.S. economy in a similar direction, harnessing government power to regulate and direct economic resources.

As these changes unfold, the impact is likely to polarize opinions based on individual perspectives regarding economic prosperity. Those who benefit from government support may view this approach favorably, while others may see it as a detrimental shift away from traditional free-market principles. The future of the U.S. economy may depend considerably on how these policies are received and whether they endure in the face of legal scrutiny and evolving political dynamics.