President Donald Trump woke up Wednesday morning thinking the market needed some management.
In just 24 hours, the president unveiled three massive state interventions in different markets that once looked (and sounded likely) to be unacceptable levels of socialist regulation to Republicans. The speed and breadth of these actions reflect a defining feature of Trump’s second term: a growing willingness to abandon the Republican Party’s traditional laissez-faire posture and impose direct control over private economic activity.
“He’s taking a far-left position that looks like state capitalism,” said Jeffrey Sonnenfeld, a longtime scholar of corporate governance and founding director of the Yale CEO Leadership Institute. “MAGA is going Maoist. So it’s taking away the discretion of individual managers – the control that stakeholders, owners and decision-makers have over the ownership of businesses. And it’s disrupting the wisdom of the market.”
Sonnenfeld, who said he has known Trump for decades, better than any current Cabinet member and is preparing to publish a book examining what he calls Trump’s “Ten Commandments,” argued the shift has nothing to do with ideology.
“He came up with something new, which was the iron fist of a dictator,” Sonnenfeld told wealth. “That’s not common in capitalism.”
According to Sonnenfeld, the president’s recent moves replace market outcomes with executive discretion, leaving managers and shareholders no longer operating within a free market but at the whim of the White House.
housing
Just after noon on Wednesday, Trump Announce On the Society of Truth he is banning “Large institutional investors” — including Wall Street conglomerates such as private equity firms and real estate trusts — stopped buying single-family homes and called on Congress to enact the law.
“People live in homes, not businesses,” Trump wrote.
The stocks of these institutional investors were hit by the news. black stoneShares of Notorious Corporate Home Buyers fell 6% on Wednesday. Invitation Homes, known as the largest institutional homebuyer, also fell 6%, while American Homes 4 Rent (AMH) briefly halted trading due to volatility after its shares hit a three-year low.
According to statistics, large institutional investors currently own only 2% of the housing stock CNBCbut their ownership is concentrated in southeastern cities such as Atlanta and Jacksonville, Florida.
“I think (a ban) is a very tempting narrative that people on the left and right will gravitate to,” said Skanda Amarnath, co-founder of the macroeconomic policy group Hire America. wealth. “I don’t think it takes into account how much institutional investors are really buying, or what the real impact is on affordability.”
Take over the military-industrial complex
Hours after the housing policy was announced, Trump turned his attention to the defense sector, arguably one of the most politically protected areas of corporate America.
President frustrated with speed of weapons production and delivery explain Around 2 p.m. Tuesday, he will move to cap executive pay at major defense contractors at $5 million a year until production is “in place.” For context, CEOs of companies such as Lockheed Martin, Raytheonand Northrop Grumman Corporation Typical annual revenue is between $18 million and $25 million.
“Executive compensation in the defense industry is excessive and unjustified given how slowly these companies are delivering vital equipment to our military and allies,” Trump wrote. “Salaries, stock options and all other forms of compensation are too high for these executives.”
This isn’t just truth social talk, either. Trump formalized the policy across the board executive order The agreement signed Wednesday significantly limits how defense contractors can use profits and compensate executives. The order bans stock buybacks and dividends from companies the war secretary deems underperforming on government contracts, allows the Pentagon to cap executive base salaries during a remediation period, and directs future defense contracts to tie incentive pay to production speed and quality. Enforcement will be through tools under the Defense Production Act.
Sonnenfeld viewed the move as a direct attack on the legal foundations of American business. He specifically cited the Fifth Amendment’s “takings clause,” which prohibits the government from seizing private property for public use without just compensation.
“There is a provision in the Fifth Amendment regarding unlawful seizures,” Sonnenfeld said. “The way they are now demanding these shares… without compensating shareholders to the government is completely unreasonable.” In his view, the government is actually taking away the decision-making power of the owners and handing it over to the state.
The move triggered a wave of anxiety among the “military-industrial complex” — a term coined by former President Dwight Eisenhower to refer to the relationship between the government and private defense contractors — that has traditionally been a cornerstone of Republican support. Although previous administrations have experimented with salary caps, most notably under former President Barack Obama proposal Limit contractor salaries to $400,000 – No one is trying to use their platform to unilaterally determine a private company’s internal dividend and buyback policies. This use of state power has led those in the industry to question the government’s true economic end goals.
An anonymous defense industry official said of former Venezuelan President Nicolás Maduro: “I think we’re capturing Maduro to stop socialism in the Americas, not to turn Washington into Caracas on the Potomac.” Politico.
Venezuela
Speaking of Maduro: Follow Dramatic arrest and extradition Over the weekend, Trump announced in a speech to the Venezuelan president that the United States would take control of approximately 50 million barrels of Venezuelan crude oil. By Wednesday, the White House disclose The deal will be conducted under tightly controlled terms set directly by the president.
Under the arrangement, oil proceeds would be deposited into an account that Trump described as “controlled by me,” and Venezuela would have to use the funds exclusively to buy U.S.-made goods. By controlling 50 million barrels of crude oil worth approximately $3.5 billion and dictating the exact flow of the resulting capital, the government effectively turns another country’s energy supply into a direct stimulus to U.S. manufacturing, a “closed-loop” system.
Rather than selecting partners based on price or quality, Venezuela creates a captive customer. Although this “closed-loop” arrangement Reflects the Voluntary Export Restrictions (VER) of the 1980s Venezuela’s new authorization marks a more direct evolution of “managed trade” that the Reagan administration used to protect Detroit from Japanese auto imports. Technically, Reagan’s VER was a negotiated concession designed to preserve at least the ideals of the free market while yielding to domestic protectionist pressures. Trump’s deal, by contrast, explicitly subjects market demand to a state-controlled barter system.
Instead of letting markets allocate capital and determine winners, governments increasingly determine outcomes: who can buy homes, how executives are paid, and how trade itself is conducted. The cumulative effect, Sonnenfeld sees it, is not just policy fluctuations but tectonic shifts in how American capitalism works and how we subjectively experience it.
“It’s hard to keep up with the shiny new objects or walls of sound and distractions that President Trump keeps doing to distract from the last fiasco,” Sonnefeld said. “He’s always creating a new one.”