Project Syndicate
United States, Inc.
Sep 26, 2025
From “transactional” trade deals and “efficiency” drives to pay-to-play immigration policies, Donald Trump appears determined to govern the United States like a business. But a profit-seeking government will never provide an adequate supply of public goods, and the lawless version pursued by Trump, a serial bankrupt, is poorly suited to anything other than self-enrichment.
Featured in this Big Picture
PS editors
Katharina Pistor
Mariana Mazzucato
Rainer Kattel
Richard K. Sherwin
PS editors
The Big Picture
PS editors
Katharina Pistor
When Governments Put a Price on Everything
Katharina Pistor
Mariana Mazzucato
Governments Are Not Startups
Mariana Mazzucato, et al.
Richard K. Sherwin
No, Trump Is Not “Transactional”
Richard K. Sherwin
The Big Picture
Sep 26, 2025
PS editors
US President Donald Trump just signed an executive order that will add a $100,000 fee to applications for the H-1B visa program for skilled foreign workers, and unveiled a “Trump Gold Card,” holders of which can obtain US residency for $1 million. And these are just the latest examples of Trump’s “pay-to-play” approach to governance: he has also exchanged US market access for huge investment commitments from America’s trading partners, made companies pay for export licenses with a cut of their revenues, and much more.1
As Columbia Law School’s Katharina Pistor explains, turning “government actions” into “transactions with a price tag” is the “logical result of seeing the state as a business enterprise” – an approach that emerged under Ronald Reagan in the 1980s. History shows that this is “not a good idea,” with “company states” proving to be “even more ruthless than traditional states.” Only by tying the “purpose of government to the interests of the people” can state power be prevented from “subsuming society.”
Rainer Kattel and Mariana Mazzucato of the UCL Institute for Innovation and Public Purpose issue a similar warning: governments and businesses “serve vastly different purposes, answer to different constituencies, and operate on entirely different timelines.” Rather than “chasing a Silicon Valley mirage,” governments seeking to “deliver better outcomes” should pursue reforms that are “rooted in a deep understanding of public-sector dynamics.”
For the Trump administration, however, delivering better outcomes is not the point. And as New York Law School’s Richard Sherwin notes, those who believe that that striking corporate-style deals is the best way to advance their interests under Trump 2.0 are sorely mistaken. Without the rule of law to “stabilize content and secure future expectations,” dealmaking is “self-deception masquerading as self-interest.” In the “theater of naked power” where Trump operates, it does not “pay to play.”
pistor43_AndrewHarnikGettyImages_trumpvisa
When Governments Put a Price on Everything
Sep 25, 2025
Katharina Pistor
By charging for visas, market access, and many other services and privileges, the Trump administration has raised the question of whether government actions should be allocated by price mechanisms at all. If the logic of public institutions breaks down, so does the basis of constitutional democracy.
FRANKFURT – US President Donald Trump recently announced that professional work visas (H-1Bs) for the United States will now cost sponsoring institutions $100,000. This is not a fee; it is the price that any company or university that wants to hire a foreigner must pay. Visas have become transactions, and so, too, has naturalization: the White House is selling “Trump gold cards” that grant a quick path to permanent residency, and eventual citizenship, for $1 million.
Much else is now for sale. The ability to sell goods in the US is itself now for sale, subject to a price that varies by country and depends on Trump’s judgment about how deserving or unworthy that country is. Everywhere you look, government actions are becoming transactions with a price tag. Columbia University, where I work, had to pay $200 million just to reinstate already approved government research funding.
Similarly, the Trump administration denied big US law firms access to government buildings and clients unless they offered hundreds of millions dollars’ worth of legal services for causes that Trump cares about. Running a research university is no longer a question of competing for government funding on the merits, and operating law firms is no longer a matter of offering independent professional services. Instead, these activities are subject to presidential approval and one’s ability to pay the price he demands.
Pricing everything is not unique to the Trump administration. It is the logical result of seeing the state as a business enterprise. In a February 1981 executive order, President Ronald Reagan required all major regulations to undergo an impact assessment. “Major” was defined as any regulation that would cost the economy $100 million or more annually; significantly “increase costs or prices for consumers, individual industries, Federal, state, or local government agencies, or geographic regions”; or might adversely affect “competition, employment, investment, productivity, innovation, or the ability of US-based enterprises to compete with foreign-based enterprises in domestic or export markets.” In other words, the government would no longer govern for the people, but for business.
True, it is one thing to assess the cost of government regulation largely in monetary terms, and quite another matter to sell government services for a price. Still, the underlying logic is similar. In both cases, the state subordinates its own policies to the price mechanism; or, as Karl Polanyi famously put it, the entire society is subjected to the market principle.
What’s the problem, though? Isn’t business supposed to be more efficient than government?
One obvious problem is that paying for a government action is awfully close to corruption. Those who study the issue argue that in cases where government services are need- or merit-based, paying money to a government official amounts to a bribe. This problem can easily be avoided, however, if payment is sanctioned by law and goes into designated state coffers – not into bureaucrats’ pockets.
But this description is too simple. Governments could simply declare that officials may charge money for their services, and “corruption” would go away. The deeper question is whether government services should be allocated by price mechanisms at all. Does this practice not violate some fundamental principles of state-citizen relations?
Constitutional democracies, born of the Enlightenment, were founded on the idea of a social contract, whereby “the people” bestow certain limited powers on the state in exchange for, at a minimum, protection against external and internal threats, or, more expansively, advancing their prosperity. But how much security or prosperity citizens are entitled to – in what form and under what conditions – is a question of political contestation. If successful, such debates inevitably result in compromise. The state, so conceived, embodies the norms and ideas that determine the ends of government, not just its means.
If history is any guide, running the state as if it were the “ultimate corporation,” as Elon Musk put it while he still enjoyed Trump’s favor, is not a good idea. During the age of colonialism, corporations were empowered to govern colonized people, as in the infamous cases of Britain’s East India Company, which conquered and ruled much of India, and Belgian King Leopold II’s Compagnie du Congo Belge. These “company states” were even more ruthless than traditional states in exploiting local people, disregarding their cultural and religious preferences, and pushing profitability beyond the limits of what people could bear. In India, this resulted in a rebellion that prompted the British Crown to take control over the subcontinent in 1857.
The enduring lesson is that there is no limit to greed. What has kept state power from subsuming society are checks and balances and bills of rights that tie the purpose of government to the interests of the people. This is the logic of public institutions, not private entities. If it breaks down, the ultimate corporation will dictate all.
Governments Are Not Startups
Apr 10, 2025
Mariana Mazzucato, Rainer Kattel
By trying to running the state like a private business, Elon Musk and other anti-government types are creating a mess that someone else will have to clean up. Governments and businesses serve vastly different purposes, answer to different constituencies, and operate on entirely different timelines.
LONDON – Around the world, governments are trying to reinvent themselves in the image of business. Elon Musk’s DOGE crusade in the United States is quite explicit on this point, as is Argentina’s chainsaw-wielding president, Javier Milei. But one also hears similar rhetoric in the United Kingdom, where Cabinet Office Minister Pat McFadden wants the government to foster a “test-and-learn” culture and move toward performance-based management.
The problem is that governments and businesses serve vastly different purposes. If public policymakers start mimicking business founders, they will undermine their own ability to address complex societal challenges.
For startups, the highest priority is rapid iteration, technology-driven disruption, and financial returns for investors. Their success often hinges on solving a narrowly defined problem with a single product, or within a single organization. Governments, by contrast, must tackle complex, interconnected issues like poverty, public health, and national security. Each challenge calls for collaboration across multiple sectors, and careful long-term planning. The idea of securing short-term gains in any of these areas doesn’t even make sense.
Unlike startups, governments are supposed to uphold legal mandates, ensure the provision of essential services, and enforce equal treatment under the law – more important today than ever. Metrics like market share are irrelevant, because the government has no competitors. Rather than trying to “win,” it should focus on expanding opportunities and promoting the diffusion of best practices. It must be long-term minded, while achieving nimble and flexible structures that can adapt.
Introducing a new digital health app within a weak health-care system may offer incremental improvements, but it will not address underlying systemic issues, like a shortage of medical workers or geographic challenges. Worse, if startup logic is applied to public services, it could lead to piecemeal solutions that exacerbate existing inefficiencies. For example, a city might create an app to report potholes, gaining quick wins in citizen engagement. However, this doesn’t help the city to consider more sustainable transportation systems and lower carbon emissions that impact citizens’ health.
The process by which governments learn to deliver better outcomes is profoundly different from that of a startup. Rather than blindly embracing startup culture, governments should examine past efforts to modernize and reform public services. There are several lessons to be learned.
First, the public sector needs a new foundation in economics. The prevailing model’s emphasis on “efficiency” too often confuses outputs (how many school meals were subsidized?) with outcomes (how nutritious and sustainably or locally sourced were the meals?), and it rests on an overly simplified public-private dichotomy. The result is an overreliance on superficial heuristics like cost-benefit analysis, which does not necessarily measure progress toward desired systemic outcomes.
Governments also need to improve how they account for the long-term value of public investment. For example, UK Chancellor of the Exchequer Rachel Reeves is right to shift the focus from the public sector’s net debt to its net financial liabilities, which better recognizes the return on public investments by including illiquid assets (government loans) and other financial liabilities (monetary gold). But Reeves’ scheme still does not reflect the value of non-financial assets (like government ownership of infrastructure and housing), and its short-term horizon prevents it from creating an incentive structure for longer-term investments.
A second lesson is that diversity is an asset, not an exercise in political correctness. Over the past century, the public sector strived for universality and uniformity: services should be as good and as accessible in small towns as they are in wealthier cities. But how those services are delivered also matters. Creating an adaptive, outcomes-focused public sector requires a more diverse workforce, ongoing training, multiple analytical perspectives, and a portfolio of interventions (since there are no silver bullets).
Third, the public sector needs to strike a balance between its political, policymaking, and implementation capabilities. Governments are more than administrative machines; they require political leadership, a sense of purpose, and the ability to adjust policies. Too often, public-sector reform focuses on technocratic efficiency, while neglecting the need to articulate and execute on a vision that will win public support.
Some municipal leaders have been pioneering new models. Rather than focusing on the politics of grievance, for example, mayors from Barcelona to Bogotá have been elected on platforms of urban transformation. Their success underscores the importance of balancing political vision with feasible implementation.
More broadly, to equip the public sector with the capacity it needs to address contemporary challenges, governments – and what one of us has called “entrepreneurial states” – must cultivate six capabilities that will enable them to learn, adapt, and adjust. The first is strategic awareness: an ability to identify emerging challenges and opportunities proactively. The second is agenda adaptability, so that priorities can be balanced while responding to crises. The third is coalition-building and partnerships, so that the public sector can foster collaboration across sectors and with communities.
The fourth capability is self-transformation: the continual updating of public agencies’ skill sets, organizational structures, and operational models. This presupposes a fifth capability: experimentation and iterative problem-solving in public-service delivery. And, lastly, the public sector needs outcomes-oriented tools and institutions.
Building such capabilities across the public sector requires rethinking public-service training, competency frameworks, and organizational models. Above all, however, it means rethinking how we measure and assess the public sector’s work. That is why we at the UCL Institute for Innovation and Public Purpose (IIPP) are creating a Public Sector Capabilities Index, to evaluate government capabilities at the city level. Such tools can identify gaps in skills or resources, while linking capability development to better outcomes.
Governments should not be run like startups, because they serve vastly different purposes, answer to different constituencies, and operate on entirely different timelines. Rather than chasing a Silicon Valley mirage, policymakers should focus on building the structures and capabilities that enable governments to be responsive, resilient, and effective. (Alongside our work at the IIPP, others, like Jennifer Pahlka and Andrew Greenway at the Niskanen Center, have offered further visions of what this could look like.)
Reform must be rooted in a deep understanding of public-sector dynamics, rather than in the desire to mimic unicorns chasing the next big disruption – too little too late. And yes, we are learning in real time that disruption alone is a recipe for disaster.
No, Trump Is Not “Transactional”
Aug 4, 2025
Richard K. Sherwin
Many of America’s trade partners, universities, law firms, and media outlets have cut deals with the US administration in the face of coercive threats, and many more are considering doing so. But without an impartial rule of law to stabilize expectations, these agreements are self-deception masquerading as self-interest.
NEW YORK – European Union trade commissioner Maroš Šefčovič described the recent US-EU trade agreement in unvarnished terms. Agreeing to a 15% tariff on most exports to the United States and promising to purchase $750 billion worth of American energy over three years and to invest another $600 billion in the US (not including an unspecified amount in additional orders of US-made military hardware) was “clearly the best deal we could get.”
But was it? Since Donald Trump’s return to the White House, not only America’s trade partners, but also its universities, law firms, and major media have had to ask: Does it pay to play in the theater of naked power, or does transacting with Trump simply normalize pervasive lawlessness?
The question is fundamental, because it makes no sense to speak of “optimal” transactions – or of operative markets – in a state of lawlessness. Markets cannot function without the stability and predictability which the rule of law provides. In its absence, only spectacle and coercion remain.
Reliable dealmaking depends on two essential conditions: good faith and a stable set of rules, backed by reliable enforcement mechanisms, that protect against capricious interpretation or unilateral revision of the pact’s terms.
Motivation is easily disguised. But if one has a long enough history of saying one thing and doing another, an inference of bad faith is reasonable. In Trump’s case, we need only recall his record of bad-faith dealing, going as far back as the construction of his Taj Mahal Casino in Atlantic City, where his failure to pay $69.5 million owed to 253 subcontractors bankrupted many small businesses. Similar accounts have plagued many of his enterprises, including the Trump International Hotel, Trump Tower, Trump National Doral Miami, Trump University, Trump Shuttle, Trump Steaks, Trump Vodka, and Trump Ice.
While Trump’s reputation for bad-faith dealing precedes him, since returning to power he has broken free of the rule-based constraints intended to rein in such behavior. Consider his recent “dealmaking” with some of America’s largest and richest law firms. To date, nine firms, facing a range of punitive measures – from revocation of security clearances to barring from government contracts and even government buildings (including federal courtrooms) – have agreed to provide a total of $940 million in pro bono legal services for pro-Trump causes. Others have chosen to challenge Trump’s coercive executive orders in court, with four securing rulings that block or nullify them.
So why did nine firms, staffed by America’s best and brightest lawyers, capitulate without a fight? Their likely rationale reflects an uncomfortable truth: being on the right side of the law is no longer enough. Many of America’s top lawyers acceded to naked coercion because they concluded that the Trump administration, having thoroughly subordinated federal law enforcement to the president’s will, could always find a way to punish them. In short, they realized they no longer enjoyed the safeguards ordinarily provided by the rule of law.
And that is the core of the problem that they and others face in putative dealmaking with Trump: actual and wannabe strongmen impulsively defy whatever constrains them. We already have seen Trump attempt to overturn the 2020 election after losing the popular vote. He later called for “termination” of the Constitution so that he could return to the White House without a new election.
Trump’s second administration picked up where his first left off. Soon after his inauguration, he resorted to claims of a national emergency as a basis for exercising extraordinary power. This includes invoking the Alien Enemies Act, a 1798 law that can be used only in the event of war, “invasion,” or a “predatory incursion” by a foreign government. Trump deployed the AEA to round up alleged members of the Venezuelan drug gang Tren de Aragua. But similar reasoning could be used to target just about anyone from a country that is a source of illegal drugs or undocumented immigrants.
Likewise, Trump’s executive order ending automatic citizenship for those born on US territory contradicts the first sentence of the 14th Amendment of the US Constitution: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside.”
Plainly, Trump does not feel constrained even by the supreme law of the land. How can one expect a “deal” to remain stable or be enforceable when it is based on naked power rather than the rule of law?
Many of America’s top universities are facing coercive and dubiously lawful threats – including freezing billions of dollars in federal grants and contracts and revoking the universities’ longstanding tax-exempt status. In deciding whether to enter into deals to avoid Trump’s wrath they are confronting the same challenge as America’s trade partners. Is it better to pay the ransom now and ignore the long-term implications, particularly the likelihood of further coercion? Or should they stand together and refuse to transact under conditions that mock the very principles of good faith and enforceability upon which any duly negotiated agreement depends?
Transactions that are subject to capricious revision and lack credible enforcement mechanisms are worthless. Dealmaking without the rule of law to stabilize content and secure future expectations is self-deception masquerading as self-interest.
But even if we were to accept such agreements at face value, are they really “the best deal we could get?” An affirmative answer assumes that academic, professional, national, and individual freedom and integrity are chips to be bargained away as a hedge against short-term financial loss. In that case, our willingness to make the deal may already signify that we have given up on the fundamental principles that sustain and justify markets in the first place.
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Writing for PS since 2011
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Katharina Pistor
Writing for PS since 2000
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Katharina Pistor, Professor of Comparative Law at Columbia Law School, is the author of The Code of Capital: How the Law Creates Wealth and Inequality (Princeton University Press, 2019).
Mariana Mazzucato
Writing for PS since 2015
89 Commentaries
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Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, is Founding Director of the UCL Institute for Innovation and Public Purpose, Co-Chair of the Global Commission on the Economics of Water, and Co-Chair of the Group of Experts to the G20 Taskforce for a Global Mobilization Against Climate Change. She was Chair of the World Health Organization’s Council on the Economics of Health For All. She is the author of The Value of Everything: Making and Taking in the Global Economy (Penguin Books, 2019), Mission Economy: A Moonshot Guide to Changing Capitalism (Penguin Books, 2022), and, most recently, The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments and Warps Our Economies (Penguin Press, 2023). A tenth anniversary edition of her book The Entrepreneurial State: Debunking Public vs. Private Sector Myths was published by Penguin in September.
Rainer Kattel
Writing for PS since 2021
5 Commentaries
Rainer Kattel is Deputy Director and Professor of Innovation and Public Governance at the UCL Institute for Innovation and Public Purpose.
Richard K. Sherwin
Writing for PS since 2011
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Richard K. Sherwin, Professor Emeritus of Law at New York Law School, is a co-editor (with Danielle Celermajer) of A Cultural History of Law in the Modern Age (Bloomsbury, 2021).
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