Economic conservatives find themselves increasingly isolated in today’s politics as the reality of horseshoe theory plays out in the current populist moment. This past week, President Donald Trump explicitly suggested all four of the following policy ideas, some taken verbatim from the policy portfolio of Bernie Sanders or Elizabeth Warren:

1. An outright ban on institutional buying (if those investors own more than one hundred properties) of single-family residential real estate
2. Government control of executive compensation at defense and aerospace companies, along with, under loosely defined circumstances, a ban on such companies’ returning capital (whether by share buybacks or dividends) to investors
3. The implementation of quantitative easing by ordering the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to purchase $200 billion of mortgage-backed securities
4. A federally imposed limit of 10 percent on the interest rates that credit cards can charge borrowers

Of that list, only No. 3 is arguably allowed within the powers of the presidency (and even that only because the federal government has foolishly maintained the conservatorship of Fannie and Freddie 17 years past their demise). To the president’s credit, his Truth Social announcement regarding No. 1 (a ban on institutional ownership of residential real estate) acknowledged a need to get the codification of Congress. But even if all of these ideas go the way of his 50-year-mortgage idea of not that long ago (it has already been abandoned), even mere ideation on social media carries consequences. Not only do these proposals stroke the emotions of his populist base that demands that the government “do something,” but they offer credibility and support to future endeavors to do the same thing that may prove more serious and substantive.

Even if there were proof that these four policy ideas would work toward their desired aims (cheaper housing, better quality, more rapidly produced military equipment, and a lower cost of credit), significant arguments exist against their implementation. On principle, one should object (as I do) to the federal government’s telling sellers whom they can sell their homes to and telling buyers where they can and cannot put their capital to work. One should object to the concept of quasi-nationalization of our defense and aerospace industry. One should object to the distortive interference of the heavy hand of government in the supply and terms of mortgage financing. And one should object to the statist imposition of price controls in the highly complex (and risky) world of unsecured consumer credit.

However, I would be perfectly willing to forgo the objections of the preceding paragraph and to engage these four policy issues only along the lines of whether they are likely to work and achieve their stated aims. Indeed, these policy prescriptions not only do not work, but they actively hurt the very people they are intended to benefit.

In economics, we refer to the idea that some policies deserve legitimacy because of their intentions as the “piety myth.” It was Thomas Sowell who most lambasted the idea that left-wing ideas or general collectivist intentions warrant more grace as long as the policies “mean well.” With each of his proclamations, I believe the president finds political value in a midterm election year and, to some degree, believes that they would benefit, at least superficially or marginally, the people for whom they are intended. The opposite is true.

1. An outright ban on major institutional buying of single-family residential real estate. Despite the fact that the very premise of the idea is deeply flawed (that institutional ownership of real estate is driving home prices higher), the solution proposed is even more problematic. The existence of more buyers in the market produces more incentive to build and develop, and if there is any viable solution to the supply–demand imbalance that has driven prices higher, it is an increase in building and development. Taking out an entire class of capital contributors to the space would put downward pressure on production. It not only takes away a category of buyers, but it limits optionality for sellers — that is, it stunts total transaction volume. More activity promotes more supply. It fosters capital formation and brings fluidity to a sector that has been hobbled by regulation and risk–reward headwinds since the financial crisis. Pricing is a by-product of supply and demand, and whether the buyers are institutions looking to add rental stock or individuals looking to enjoy a primary residence, eliminating entire actors from the marketplace pushes the supply curve the wrong way.
2. Government control of executive compensation at defense and aerospace companies, along with a complete ban on such companies’ returning capital to investors. The president may have missed the ironic undermining of his own argument in his social media post. He claimed that our military equipment and defense innovations are the greatest in the world but went on to bemoan the return of capital to investors via dividends and stock buybacks, claiming that these companies ought to produce the greatest defense products in the world only because doing so is great for America. He is correct that the technology, innovation, and precision of our defense industry are the greatest in the world, and I can think of no greater way to undermine that than to treat the capital that undergirds it poorly. It is not an accident that our defense sector shines — it is well capitalized and well incentivized to perform. Nationalized defense companies in other countries trail by leaps and bounds. The investors (in both private and public companies) put forth capital that drives these innovations and continue doing so when they find the return on their investment worthwhile. Government intervention in that process would be destructive, and the wholesale elimination of capital return would stultify the sector, quasi-nationalize the space, ensure mediocrity for a generation in the ability to hire and retain talent, and freeze companies’ ability to attract capital.
3. The implementation of GSE quantitative easing by ordering Fannie Mae and Freddie Mac to purchase $200 billion of mortgage-backed securities. This endeavor can succeed in bringing down long-term yields as non-price-sensitive buyers overwhelm the market with mortgage bond purchases that drive prices up and yields down, but if the goal is to create greater affordability for home purchasers, this would only exacerbate the problem. Those on the right already know the talking points, having just (accurately) used them barely a year ago against then–presidential candidate Kamala Harris in the 2024 election, when she naïvely suggested subsidizing down payments for first-time homebuyers. The rebuttal, valid then as it is now, was that such a step would merely be priced into the market, fueling demand but doing nothing to address the supply side of the market’s disconnect. Much like Harris’s proposal, using the purse of government-sponsored enterprises to manipulate the mortgage market with quantitative easing fuels the demand side but does nothing to address the deficit of supply. Any action in housing policy that increases the demand curve yet ignores the supply curve would make housing more expensive, no matter how much those who might be first to benefit from lower rates would enjoy the idea.
4. A federally imposed limit of 10 percent on the interest rates credit cards can charge borrowers. As was the case in Bernie Sanders’s bill from a year ago to do exactly this, this plan for federally sanctioned price-fixing ignores the obvious consequence when banks are told they cannot price the risk of this unsecured lending themselves: the wholesale removal of credit from riskier borrowers. Those with lower incomes or troubled credit histories will not enjoy 10 percent credit card interest but rather no credit card interest, because millions of borrowers will lose access to credit. Their need for borrowing will not subside, though, so they will pivot to payday lenders, pawn shops, loan sharks, or otherwise less reputable outlets at a cost far greater than they incur now. If 10 percent were the right number to meet the risk–reward trade-off of unsecured consumer lending, some bank would have already priced it right there, knowing that it is far less than what competitors currently charge, and it would soon dominate the market. JPMorgan wrote down $7 billion of charge-offs in its consumer-credit business last year, an indication of the high risk that exists in this space. That risk finds remuneration in higher interest rates, and attempts by Washington to “fix” that price would result in a huge percentage of the population’s being cut off from access to credit, an access they enjoy now as they seek to rebuild credit and financial standing.

Economic populism is a dangerous thing, even when its stated policies may work for a period. Being untethered to first principles leads to a slippery slope of abuse, distortion, malinvestment, and even corruption that undermines optimal conditions for human flourishing. But economic populism, as embodied in the aforementioned four policies, becomes a double whammy when it not only violates the principles of our American experiment but also woefully fails to deliver on its very own terms.