Trump vs. Free Markets

Whatever debilitating brain parasite burrowed into the gray matter of American politics over the last decade-plus has resulted in some astonishing transformations. One of the biggest has been the reshaping of the once nominally pro-capitalist Republican party into a populist party hostile to free markets. Under President Donald Trump, the GOP increasingly favors the whims of the president and his cronies over the results of voluntary interactions among millions of buyers, producers, and sellers. Most recently, we see this in the form of Trump’s announced intentions to ban some real estate investors from purchasing single-family homes and his proposed cap on credit card interest rates.

“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 last week on Truth Social.

Two days later, he announced that “effective January 20, 2026, I, as President of the United States, am calling for a one year cap on Credit Card Interest Rates of 10%.”

It’s unlikely even at this late stage in the erosion of the legislative branch that the White House can enact either policy on its own. But the president can expect congressional support not just from loyalists, but from Democratic lawmakers. Like his supposed opponents, Trump defends planned interventions in the economy in the name of “affordability.” For those of us who favor being left alone to make our own decisions in our personal and economic lives, there’s nowhere near as much as we’d like to distinguish the current Republican administration from its progressive Democratic predecessor.

“I told him that Congress can pass legislation to cap credit card rates if he will actually fight for it,” Sen. Elizabeth Warren (D–Mass.) commented after Trump called her to discuss the issue. “I said, great—I had been proposing that for years. Let’s do it!”

Likewise, Trump’s dislike for investor-owned housing resonates with similar sentiments among his nominal political opposition, reflected in the HOPE (Humans over Private Equity) for Homeownership Act introduced last year in the Senate by three Democrats and two independents, including socialist Bernie Sanders (I–Vt.). That bill would impose excise taxes on “hedge funds owning excess single-family residences.”

As you’d expect of any economic proposal that unites progressive Democrats and populist Republicans, these ideas aren’t just interventionist, they’re potentially very harmful.

While about a third of home sales in the second quarter of 2025 were to investors, “owners of just one to five properties account for 87% of all investor-owned homes,” National Mortgage Professional reported last September. “Another 4% belong to those with six to ten properties. By contrast, large institutional players with portfolios exceeding 1,000 homes control only 2% of the market.”

In other words, investment in single-family homes is mostly a mom-and-pop business activity by people who make money by renting out just a few homes. And even the small-scale investment by big players makes housing for renters more affordable.

A September 2025 paper examined the welfare consequences of institutional ownership of single-family housing. “Overall, we find that institutional acquisitions decrease rents and increase rental transactions, leading to large welfare gains for renters,” wrote the authors, Felix Barbieri, of the Tuck School of Business at Dartmouth, and Gregory Dobbels, a U.S. Department of Justice economist. “While higher concentration raises rents, higher rental supply lowers rents enough to more than offset the effect of concentration, pushing rents down overall. These renter gains come at the expense of homebuyers, whose welfare falls.”

So, the simplistic argument that investor ownership of homes hurts affordability strongly depends on who you’re talking about. Banning investors wouldn’t improve affordability; it would, at best, change who benefits from renters to buyers (if it didn’t just screw everybody, as market interventions often do).

On the same note, capping credit card interest rates by government decree might be popular with people contemplating hefty monthly bills, but it’s likely to have unforeseen consequences.

“Consider what happens if the government caps rates,” warned economic historian Phillip W. Magness. “Higher risk/lower credit individuals will no longer face 20% interest rates for failing to pay their credit card balances. They won’t even qualify for a credit card anymore, because no credit card provider will even accept them. So what do they do instead if they need money to cover a purchase? They take out payday loans and similar risky short term instruments with even higher interest rates and penalties.”

Government officials could also restrict or even ban (as is the case in some states) payday lenders to further their crusade for “affordability.” But if people want credit they’ll find it, even if that means going to loan sharks. Those underground lenders are more expensive than credit cards or payday loans and their collection tactics can be much less pleasant.

Trump’s latest policy balloons aren’t the first time he’s proposed interference in voluntary transactions. Since beginning his second term, he’s imposed high tariffs to (among other things) encourage domestic manufacturing, extracted government stakes in private businesses, and meddled in corporate executive compensation. Repeatedly, he has elevated government preferences over private decisions.

“Our electoral choices are coalescing into right-wing socialism vs. left-wing socialism,” Jared Dillian cautioned in Reason earlier this month. “Unless Zombie Calvin Coolidge gets elected in 2028, the United States is headed toward financial ruin.”

That convergence was explicitly expressed when Trump palled around at the White House with New York’s new socialist Mayor Zohran Mamdani in November.

“Trump and Mamdani answered questions from reporters, both striking a remarkably cordial tone, with the president indicating he agreed with many of the mayor-elect’s ideas,” The Hill reported at the time.

As vitriolic as Americans politics are, and as many points of disagreement spark fiery clashes, economics isn’t really a point of contention between the dominant factions of the two main parties. Trump’s Republicans agree with the “opposition” progressive Democrats that the government should be running the economy. May we all successfully weather the consequences.