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7 April 2025

The Economic Consequences of State Capture

Elizabeth David-Barrett

Since returning to office, U.S. President Donald Trump and his benefactor, the tech billionaire Elon Musk, have taken a chainsaw to the government. In just over three months, Musk has purged agencies of staff, replaced fired workers with loyalists, and canceled existing public contracts—including for completed work. Trump, meanwhile, has fired inspectors general and removed the head of the Office of Government and Ethics. Together, the two men have taken resources that Congress had appropriated, abusing the power of the purse to redirect funds toward themselves and away from their perceived opponents. The Trump administration has ordered more Musk-made Starlink satellite dishes and put Musk’s companies, already some of the government’s biggest clients, in the running for billions more in contracts. At the same time, Trump has canceled government funding for universities and law firms that don’t support his agenda.

To most Americans, this kind of corruption will seem unfamiliar. Never in modern U.S. history has a businessman president partnered with the world’s wealthiest man to seize control of the federal government. But globally, it is part of a worrying pattern. In struggling democracies around the world, small cliques of politicians, business elites, and politicians with business interests—what political scientists call “poligarchs”—have warped the state to serve their interests. Together, these unholy alliances change rules, fire bureaucrats, silence critics, and then eat up the country’s resources. The politicians commandeer banks, rewrite regulations, and take control of procurement contracts. Their friends in the private sector, meanwhile, provide kickbacks, donations, and favorable media coverage.

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