They Looted Companies — Now They're Looting the Government

There’s a familiar myth in American politics: that of the no-nonsense business leader who cuts through red tape and gets results. It fuels the belief that running a country is just like running a company — and that executives, with their boardroom instincts and bottom-line mindset, are exactly what government needs.

But that myth collapses under the weight of what corporate leadership has actually become — and what happens when it migrates into public office.

Economist William Lazonick has spent decades analyzing that transformation. He argues that corporate America has abandoned its commitment to innovation and productive investment, replacing it with a laser focus on cost-cutting, price gouging, and tax dodging to boost profits so they can do more stock buybacks—all in the name of maximizing shareholder value. Most executives are no longer rewarded for building durable businesses or contributing to the real economy—they’re rewarded for how efficiently they extract value from the companies that they control.

Lazonick calls this model a “scourge,” blaming it for weakening U.S. technological leadership, driving massive inequality, and destabilizing the broader economy. Now, he warns, this same extractive logic is infiltrating the federal government.

The ongoing 2025 budget debates are a case in point. Under the guise of “efficiency” and “fiscal responsibility,” the Trump administration has proposed slashing $163 billion from federal spending — cuts that would gut education, housing, and medical research—all of which are essential for value creation. The language mirrors what executives have long used to justify layoffs, offshoring, and disinvestment. But in this case, it’s not a corporation being hollowed out. It’s the state itself.

Lazonick argues that this shouldn’t surprise anyone. “Because these people have gotten away with looting corporations, they’ve come to believe it’s their right to loot the state,” he says. Even among tech figures who’ve built or have led the building of real products—like Elon Musk, Jeff Bezos, and Mark Zuckerberg—Lazonick notes a mindset of entitlement: “They treat the resulting wealth as entirely their own, as if they alone earned it.” That thinking now shapes public policy, where deregulation and budget cuts benefit the wealthy while dismantling protections for workers and consumers.

Take Musk, for example. As head of the Department of Government Efficiency (DOGE), he’s worked to weaken regulatory agencies like the Consumer Financial Protection Bureau and the National Labor Relations Board—both of which would typically oversee parts of his business empire. At the same time, his companies continue securing massive federal contracts, including a potential $2 billion FAA deal, raising serious concerns about conflicts of interest. As Lazonick and colleague Matt Hopkins argue in a recent piece for the Institute for New Economic Thinking, Musk has advanced through a “perilous system of corporate governance” driven by shareholder primacy—fueling inequality and eroding America’s technological leadership. His tenure at DOGE is simply more of the same: dismantling oversight, channeling public resources into private ventures, and treating government as just another asset to extract.

Musk’s corporate empire—Tesla, SpaceX, and Neuralink—owes much of its success to taxpayer-funded research and government support. Tesla was launched with the help of federal loans and electric vehicle subsidies. SpaceX builds on decades of NASA-funded R&D and now depends on billion-dollar public contracts. Even Neuralink draws heavily on publicly funded neuroscience work. Despite the mythology of private-sector genius, these companies are deeply rooted in public investment. Yet the public sees little return.

And the mindset isn’t limited to Musk. President Trump and his family are taking the corporate model Lazonick describes to new heights, using government as a platform for private enrichment. Eric Trump recently promoted the family’s latest crypto venture, making the president a major crypto player while shaping federal policy toward that very industry. The Trump family’s 60% stake in World Liberty Financial, now attracting major investment, has intensified concerns over conflicts of interest. Meanwhile, under Eric’s leadership, the Trump Organization has struck a controversial $5.5 billion deal with a Qatari state firm to build a luxury golf resort—despite Trump’s previous pledge to avoid foreign deals while in office.

Trump has also issued executive orders to “streamline” federal procurement and contract reviews. While marketed as anti-waste measures, critics see them as a backdoor for directing government business to favored contractors, including those with family ties. The line between public service and private gain has rarely been thinner.

Lazonick warns that the stakes are high. When corporations prioritize shareholder payouts over real investment, society loses—but when governments adopt the same model, the consequences are compounded. We’re not just talking about fragile companies. We’re talking about the erosion of public institutions, rising inequality, and a democracy that serves fewer and fewer people.

To reverse course, Lazonick argues we need deep structural reform in how corporations—and by extension, governments—operate. That means banning stock buybacks, reining in executive compensation tied to manipulated stock performance, and reinvesting profits in innovation, workers, and communities. It means embracing a stakeholder model of governance that sees corporations not just as wealth machines, but as stewards of social value.

Because if we don’t fix these systemic flaws, the looting won’t stop. It’ll only deepen—and spread.