Last Friday, it was announced that the federal government had acquired a 10% stake in Intel, the microchip making company with a significant manufacturing presence in Hillsboro. As is often the case with decisions made by President Trump, reactions were wildly over the top and varied, with some on both the left and the right decrying the move.

We typically avoid weighing in on federal issues unless they have a direct tie to the rights of Oregon’s private property owners. This one just happens to impact one of the most populated counties in our state. 

Why Oregon Property Owners Should Care

The interest to Oregon property owners is direct and tangible. Intel is one of the few Fortune 500 companies with a major presence in Oregon.

Should Intel go out of business or close its manufacturing facilities here, thousands of Oregonians would be unemployed, and the entire state would suffer— particularly Washington County, where Intel’s manufacturing facilities are located. The loss would directly impact property owners and property values in the region.

In short, losing Intel would be a disaster for Oregon’s already teetering economy. That’s why having the President negotiate this deal to purchase a share of Intel is a major deal for Oregon. 

Despite our hopes that Intel will recover, we have lingering questions and mixed thoughts: is President Trump’s decision a good thing or a bad thing?

The answer isn’t entirely clear.

Why It Could Be Problematic: Intel As “Too Big to Fail”

As a bedrock principle, allowing the government to control the means of production is a remarkably bad idea. America’s recognition of private control over property and enterprise is what separates us from all other nations.

Countries around the world have tried for the last two centuries to assert control over markets and production— without fail, these efforts turn out badly. There’s no reason for America and American companies to march down that path.

In many ways, Friday’s bailout feels similar to the 2008 bank bailouts. Through consolidation and a lack of competition, a company gets so big and so important to American interests that it becomes “too big to fail.”

Given the importance of microchip production to America’s global position and race to maintain leadership in artificial intelligence, it appears that the Trump administration views Intel as being “too big to fail.”

But as legislators in both parties have noted for decades: if a company is too big to fail— it’s too big.

In my opinion, the answer shouldn’t be taxpayer bailouts (although in Intel’s case that may be the only solution); it’s fostering an environment where competition can occur, and where small companies with new ideas are allowed to grow. 

Why It Might Be Necessary: The Global Microchip Crisis

Unfortunately, in the case of Intel, allowing the market to determine the company’s fate may not be an option.

Currently, the world sources over 90% of its most advanced microchips from Taiwan. These chips are used for the most advanced electronic devices— from cell phones and personal computers to supercomputers, artificial intelligence, and military applications.

Sourcing critical microchips from one country is a bad idea in all circumstances, but it’s even worse when that country is Taiwan. Why? Because most nations do not recognize Taiwan as an independent nation, and China— America’s primary rival for global hegemony— claims Taiwan as part of China.

Not only that, but the Chinese government has made it clear that it will reunify Taiwan with the rest of China in the near future. For our part, American leaders have made it clear that they would defend Taiwan from Chinese invasion.

That makes Taiwan a likely flashpoint for World War III. And if WWIII happens, America (and China) will both desperately need a steady supply of advanced microchips to power their military capabilities.

In short, ensuring a supply of the world’s most advanced microchips is not only critical to Americans’ daily lives— it’s also a national security issue of the utmost importance. And Taiwan is the worst place to rely upon. Although Intel has fallen behind in the race for advanced microchip production, the investment by the federal government signals an intent to fix that problem.

In light of these considerations, bailing out Intel is understandable. Making sure we don’t get into this mess in the future is even more imperative.

Oregon’s Missed Opportunity

Regardless of whether the bailout is good or bad, local leaders haven’t seemed to figure out that attracting and keeping businesses like Intel and Nike are critical for the state’s economy. Imagine if Oregon adopted business-friendly policies that favored not just big businesses, but also encouraged small business, start-ups, and entrepreneurship? That’s a good way to insulate against situations like Intel.

Unfortunately, rather than adopting business-friendly policies, Oregon goes the other way. Remember when Intel was considering expanding and building a new production factory? Other states went out of their way to court Intel. But not Oregon.

Instead, NIMBYs trotted out our “unique” 1970s land use laws to argue that protecting a few hundred acres as farmland was more important than making that land available for a facility producing the nation’s most important product— employing thousands of Oregonians at significant wage levels and raising millions of dollars in revenue for state and local government services.

Couple boneheaded decisions like that, coupled with poor schools, high taxes, high costs of housing, and soft-on-crime attitudes from local government officials, and it’s no wonder why a major company is reluctant to invest billions in capital allocations on a project in Oregon.

The Irony of the Bailout: Trump Buoys Oregon Economy, but Local Leaders Miss the Lesson

The irony of Donald Trump bailing out Intel isn’t lost on any of us who closely follow Oregon economic development. By bailing out Intel, the President likely saved the company and much of Oregon’s economy— but state and local officials who played a significant role in establishing a terrible business climate in Oregon have clearly learned absolutely nothing.

And you can bet your last dollar that Washington County officials won’t be honoring the President with an award for basically saving their budgets.

Final Thoughts

In the end, Oregon property owners won as a result of the President’s decision. At some point, however, government at every level needs to take steps to get out of the way of private enterprise and the American entrepreneurial spirit. We’ll all be better off for it.

The opinions expressed in this post are those of the author and do not represent the opinions or positions of any party represented by the OPOA Legal Center on any particular matter.