If it wasn't already clear that Donald Trump has qualms about free markets, his comments today about defense companies and the housing market should end any debate.
U.S. markets have long been an envy of the world. Our federal government regulates them to protect retail investors, yet allows them to flourish. It's no accident that most of the world's biggest companies are American.
In his second term, Trump has repeatedly intervened in industries or threatened to do so. The Wall Street Journal reported Wednesday that President Trump is set to sign an executive order that will "punish defense companies that repurchase stocks, pay dividends and reward executives with high salaries if they have Pentagon contracts that are over budget or behind schedule."
Trump wrote on his social-media website Truth Social: "All United State Defense Contractors, and the Defense Industry as a whole, BEWARE: While we make the best Military Equipment in the World (No other Country is even close!), Defense Contractors are currently issuing massive Dividends to their Shareholders and massive Stock Buybacks, at the expense and detriment of investing in Plants and Equipment. This situation will no longer be allowed or tolerated!"
Also Wednesday, Trump weighed in on the housing sector on social media, saying he wanted to ban institutional investor purchases of single-family homes.
"I am immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it," the president posted on his social-media website Truth Social. "People live in homes, not corporations. I will discuss this topic, including further Housing and Affordability proposals, and more, at my speech in Davos in two weeks."
It isn't clear that Trump has the legal power to do this, but no matter. Shares of companies in the business of renting or investing in single-family homes like Invitation Homes and American Homes 4 Rent and Blackstone were all down on the news.
For executives and employees, customers and competitors and, yes, shareholders, the consequences here are substantial. The U.S stock market now accounts for some 64% of all global market capitalization according to MSCI ACWI ( Morgan Stanley Capital International All Country World Index.) This, even though the U.S. only has some 25% share of global gross domestic product.
There's a number of reasons for that, and for why the dollar is the global reserve currency. They include the rule of law and a lack of regulatory capriciousness in the U.S.
Republicans have long accused Democrats of using governmental influence and regulation to further political or ideological goals at the expense of free markets, calling it picking winners and losers. Now arguably Trump is doing just that.
His actions Wednesday match previous interventionist moves he has made, such as directing the federal government to buy nearly 10% of chipmaker Intel and invest in rare metals companies like MP Materials, Lithium Trilogy Metals. Then there's the 'golden share' in U.S. Steel, a single preferred share, which gives him voting rights and a say in U.S. Steel's closing factories, investing capital and relocating jobs outside, which the government received in exchange for approving that company's purchase by Nippon Steel.
And of course, Trump's biggest intervention of all has been his use of heavy tariffs to curb imports and punish certain nations. That is intended to boost manufacturing employment in the U.S., though so far it hasn't had that effect.
All this makes it less credible for Trump and the GOP to say they are the party of unfettered free markets. Instead, like the Democrats, Republicans for now have to acknowledge they believe there is a role for the giant hand of the government to manipulate the levers of capitalism. And right now the biggest hand belongs to President Trump.