The week of January 19, 2026: Trump’s ‘left’ turn, Javier Milei and free enterprise, Mark Carney and technocracy, Gavin Newsom and ambulances, and much more.
The week of January 19, 2026: Trump’s ‘left’ turn, Javier Milei and free enterprise, Mark Carney and technocracy, Gavin Newsom and ambulances, and much more.
The turn by the Trump administration toward even greater economic interventionism is, quite rightly, drawing fire. David Bahnsen, writing and talking on Capital Matters, looked at an unappetizing collection of initiatives or proposals emanating out of the White House (restrictions on major institutional buying of single-family homes, intervention in the management of businesses active in the defense sector, mortgage rate manipulation, and a cap on credit card interest rates) and reached for his microphone and keyboard.
As Bahnsen explained, these ideas were wrong in principle and would fail to achieve their stated objectives. In fact, in most instances, they would work against them.
Thus, to the extent that it would make any difference at all, the ban on institutional buying of residential real estate (a phenomenon that has been hugely exaggerated) would reduce the supply of capital available for new home construction. The problem with housing prices is surprise, surprise not too little government, but too much, including the way the price of money was manipulated for years. This led to ultra-low interest rates and high asset prices, including housing, a mistake that the administration may make (for now) on a more modest scale, by ordering Fannie Mae and Freddie Mac to purchase $200 billion of mortgage-backed securities. This effect will be seen on a far wider scale if the president succeeds in his efforts to bully the Federal Reserve into drastic interest rate cuts.
Among those pointing out that policies such as a credit card cap would be counterproductive, as Charlie Cooke noted, was (or would have been) the JD Vance of Hillbilly Elegy, the Vance who, when discussing a proposed ban on payday lending, warned that “powerful people sometimes do things to help people like me without really understanding people like me.”
That earlier Vance continued:
The senators and policy staff debating the bill had little appreciation for the role of payday lenders in the shadow economy that people like me occupied. To them, payday lenders were predatory sharks, charging high interest rates on loans and exorbitant fees for cashed checks. The sooner they were snuffed out, the better.
Writing for Civitas Outlook, Samuel Gregg looked at where things might go from here, examining what he dubbed Vanceonomics, the thinking of a later Vance:
There are few areas in which Vance has departed more from the core commitments of post-1980s American conservatism than in economic policy. A closer look at Vance’s economic preferences is thus merited, partly because of what they suggest about the American Right’s trajectory, but also because of what they might mean for the US economy. And, unfortunately, the news about Vanceonomics is not good. Taken as a whole, it amounts to a recipe for even more state capitalism, embraced across the American political spectrum, thereby increasing the long-term likelihood of a less prosperous America.
Gregg conceded that “Vanceonomics does not represent a complete break with American conservatism’s once-favorable disposition towards free markets.” Thus he favors light-touch regulation in areas such as AI, crypto, and energy.
On the other hand, Vance appeared to take a disturbingly favorable view of the expansive notion of antitrust advanced by Lina Khan at Biden’s FTC, someone who he described as doing “a pretty good job.” In reality, as is so often the case with central planners, she combined malice, incompetence, and fanaticism.
For instance, under Khan, the FTC backed the efforts by the EU’s antitrust authorities, who have rarely miss an opportunity to damage U.S. tech companies, to stop Amazon buying Roomba for $1.7 billion. After Amazon pulled out, the FTC commented that it was good:
[T]hat Amazon and iRobot have abandoned their proposed transaction. The Commission’s probe focused on Amazon’s ability and incentive to favor its own products and disfavor rivals’, and associated effects on innovation, entry barriers, and consumer privacy. The Commission’s investigation revealed significant concerns about the transaction’s potential competitive effects.
Please keep in mind that comment about privacy.
After Amazon left the picture, Roomba transferred much of its production to low-cost manufacturers in Malaysia and Vietnam. Then came another big government intervention, tariffs. Roomba filed for bankruptcy and is now Chinese owned.
And privacy?
Sunny Cheung, writing in Capital Matters:
The potential transfer to China of the data, software, and intelligence embedded in millions of connected devices inside U.S. homes poses a major security risk.
Back to Gregg:
Past and present advocates of expansive applications of antitrust insist that such measures ensure that large corporations don’t destroy market competition by leveraging their greater resources to establish monopolies by crushing medium- and small-sized businesses that might become potential rivals. In the past, Vance’s opposition to what Justice William O. Douglas once “The Curse of Bigness” was particularly directed against big tech companies. In February 2024, for example, Vance called for the breakup of Google.
Brussels and Beijing would have been thrilled. So much for America First.
Gregg:
Vance’s antitrust views directly clash with long-standing critiques of expansive antitrust advanced by scholars such as Milton Friedman, Robert Bork and Richard Posner. They pointed out that U.S. antitrust laws have been characterized by vaguely worded statutes and complex case law that introduce excessive uncertainty into the economy by making standard business practices, such as exclusive contracting, potentially unlawful. The subsequent shift towards the consumer welfare standard in court decisions from the late-1970s onwards simplified matters by focusing attention upon what really matters: the principle of consumer sovereignty, thereby limiting the type of government interventions that actually undermine competition in the name, perversely enough, of preventing monopolies.
By contrast, Vance’s antitrust views downplay the extent to which more expansive understandings of such laws have been weaponized by companies to undermine existing competitors, but also by government officials seeking to punish businesses that refuse to cooperate with whoever is in the White House. Presidents ranging from Nixon to Kennedy have gone down that path.
Big government gives too much power to those at the helm to make big mistakes. It also fuels cronyism. The bigger the state, the bigger the swamp.
Gregg also criticizes Vance’s willingness to use tax policy to “influence people’s purchases,” which, of course, is what tariffs are designed to do. Gregg cites Vance’s (admirable) support for removing tax credits for electric vehicles (EVs), and (not at all admirably) handing tax credits to buyers of American-made cars. He goes on to argue that tax policy “should not be about economic or social engineering — period.” That is fair enough in principle. But almost any government will tweak (or more) the tax code for economic or social ends, with the consequences that Gregg sets out:
[It] opens the door to endless tinkering with tax law as different administrations and legislators seek to promote their preferred groups at the expense of others. The resulting ever-changing, complicated, and hyper-politicized tax code generates undue uncertainty, incentivizes cronyism, tends to shift capital investment away from its most economically optimal destinations, and makes compliance more difficult for small- and medium-sized businesses.
Still, the less that this happens the better.
Gregg’s comments apply the Trump administration’s tariffs, of which he is no supporter. I’d argue that there is a decent case for some tariffs to help ensure that the U.S. can defend itself economically and militarily in an era of growing geopolitical competition. But, as the proposed imposition of tariffs on European members of NATO stepping up against the President’s Greenland policy reminded us, that notion can be abused.
Gregg links to an article by David Hebert in Law & Liberty in which Hebert demonstrates that the claim that the tariffs would not operate as a tax on Americans is not holding up. According to Goldman Sachs and the Council on Foreign Relations:
In June, US businesses absorbed about 64 percent of the tariff costs, American consumers about 22 percent, and foreign exporters about 14 percent in the form of reduced profits. Just four months later, American businesses absorbed just 27 percent, while American consumers absorbed 55 percent and exporters absorbed 18 percent. Projections for 2026 continue the trend…
So, costs are rising for consumers, the same constituency that, as Trump is well aware, is furious about “affordability.” Of course, when American businesses “absorb” the cost, that is a de facto tax on them too. The reason for the increasingly heavy bills, as Hebert explains, is that pre-tariff inventories have been run down — along with expectations that they will be temporary.
The authors of a more recent report by the Kiel Institute for the World Economy, a well-known German think tank, suggested that the news for people or businesses based in the U.S. is even worse.
By analyzing $4 trillion of shipments between January 2024 and November 2025, the Kiel Institute researchers found that foreign exporters absorbed only about 4% of the burden of last year’s U.S. tariff increases by lowering their prices, while American consumers and importers absorbed 96%.
Over time there will be opportunities to switch to made-in-America products, but there is no guarantee they will be as cheap (production of such goods moved overseas for a reason). Far from it. And the tariff-induced increase in prices of imported goods, means that current or future producers of their American substitutes may well (depending on the evolution of domestic competition) have little reason to cut their prices below the prices charged by tariff-burdened importers. “No amount of economic nationalist rhetoric,” writes Gregg, “can hide the fact that, in the long term, protectionism will make the US economy less competitive.”
In all probability, it will mean that U.S. buyers will pay more for inferior quality.
Another feature of the Trump administration’s big government turn has been direct, uh, participation in the private sector. This has included buying stakes in Intel, Korea Zinc (smelting), Lithium Americas, L3Harris’s Missile Solutions business, MP Materials (rare earths), ReElement Technologies (rare earths), Trilogy Metals (critical minerals), Vulcan Elements (rare earth magnets), XLight (semiconductor sector), receiving an option to take an 8 percent stake in Westinghouse (nuclear), and being granted a “golden share” in U.S. Steel.
These deals, except U.S. Steel, can be justified on our current geopolitical moment, although that can be a stretch. Referring to the L3Harris deal, Michael Duffey, Undersecretary of Defense for Acquisition and Sustainment, maintained that “by investing directly in suppliers we are building the resilient industrial base needed for the Arsenal of Freedom.” That sounds more like a collection of buzz words than an argument.
The Cato Institute’s Tad DeHaven is (rightly) not convinced:
The DOD’s “direct-to-supplier” approach primarily involves contracting with and investing in sub-tier suppliers rather than routing everything through prime contractors. However, the Pentagon already has multiple non-equity tools (multi-year contracting, Defense Production Act Title III purchase agreements/grants/loans/loan guarantees, and contract financing) to create demand certainty and boost capacity expansion…
Efforts by the Pentagon to spend taxpayers’ money more efficiently are thus welcome. But the “return” to taxpayers should be protection from foreign adversaries, not a dividend check they’ll never see that spendthrift politicians will fritter away anyhow. The federal budget isn’t a mutual fund, and it shouldn’t be.
The equity deal puts the Pentagon in the undesirable position of owning part of a contractor that will compete for—and seek to win—large federal procurement awards, raising obvious conflict-of-interest and neutrality concerns. L3Harris’s CEO says the deal is “purely an economic investment” and that the DOD “will not be on the board of directors or involved with managing this company.”
It doesn’t have to be…
When looking at the Intel deal for the Capital Letter last year, I wondered whether this administration would extend its buying:
[I]nto sectors where the motive for intervention is rooted not in genuine geopolitical necessity but an equally genuine, if thoroughly undesirable, conviction that Washington knows best or, for that matter, a belief that the business of America’s government is business. For the state to take a stake in a private company is questionable enough, but for this to become regular practice on the grounds that it is (supposedly) a “good deal” would, for political, economic, and institutional reasons, take the government into territory where it should not go.
Interventionists on the left will appreciate the precedent, however.
In this respect, Trump’s plans to establish a sovereign wealth fund is an ominous sign. In May, Bloomberg reported that:
When he ordered his administration in February to come up with detailed plans, Trump said he wanted “one of the biggest” such funds in the world, suggesting it could be backed by monetizing vast government assets and used to back strategic projects in areas like critical minerals or take stakes in companies like TikTok. He also said it could earn enough to help reduce the national debt. At the time, Treasury Secretary Scott Bessent said the fund could be up and running in 12 months.
But the ambitions to create a fund that would rival the trillion-dollar ones of big oil-producing countries ran into legal, financial and political realities and the plan has now been shifted to lower priority, the people said, asking not to be identified to discuss matters than aren’t public. Instead, the administration is looking at a simpler, more limited investment vehicle using existing agencies that can be set up without separate congressional approval, the people said.
“Without congressional approval,” but of course.
And:
In their conversations with other agencies and experts, Treasury and Commerce officials asked for ways to design governance of the fund to ensure it’s insulated from political influence. That, however, could have undercut White House ability to use the fund for Trump policy priorities, according to the people.
Ah.
Meanwhile, in a recent development, the Trump administration has proposed preventing certain defense contractors from paying dividends or arranging share buybacks if those contractors are failing to meet its expectations (if that sounds vague, it’s because it is). Pay restrictions are thrown in too. This is not, to say the least, an encouragement to devote resources to the sector.
Bahnsen:
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.
Writing in Civitas Outlook, law professor Richard Epstein highlighted the complexity of military contracts and, in particular, that “a delay in performance by one party produces backlogs up and down the chain of production. But a priori, there is no way to determine where and why the loss of momentum occurs.” Indeed, the government may be responsible as a result of “not preparing a proper specification of what must be done or delays the performance of some key step that must be done correctly for the work to proceed.”
And there’s more:
The sheer conceit of Trump is that he has made a massive condemnation of an entire industry, which is business madness when sequential performance is a pervasive feature in these complex contracts. Thus, the only way to deal with these situations is through a dispute resolution process that involves standard contract provisions — think of payment and performance bonds, liquidated damages, exceptions, and arbitration — that must be tailored both by industry and by project. Trump’s blanket condemnation is thus utterly unsupportable.
His supposed remedy is, if anything, worse than the supposed industry misdeeds. There is no way any outsider can have information about the optimal capital structure for a given firm. Thus, his proposal could lead to the departure of key executives necessary to control a given deal, and it will make recruiting first-class talent harder because of the wage controls he wants to put in place. Similarly, it is just ignorant to insist that distributions are not possible. The apparent rationale is that distributions will lead to some form of lazy consumption, detracting from sensible investment. But in most cases the distribution of funds from one venture is put to use by savvy investors in some other deal that promises a higher rate of return than the previous deal, so that the ideal response would shield this deal from taxation so long as the gains are reinvested in a similar venture. Trump shows his utter lack of deal sophistication with his heavy-handed approach…
Ouch.
The Capital Record: Sound & Vision
We released the latest of our series of podcasts, the Capital Record. Follow the link to see how to subscribe (it’s free!). The Capital Record, which is hosted by financier David L. Bahnsen, makes use of another two formats to deliver Capital Matters’ defense of free markets. The original podcast continues, but if you want to watch David talk, please click on the YouTube link.
The 281st episode: Market Discipline, Greenland, and President Trump (Podcast/YouTube)
We all got a lesson this week in one of the most powerful forces in world history. It is maybe the most important political dynamic on the globe today — even more powerful than the separation of powers found in the Constitution. Indeed, unlike the latter, market discipline cannot be willed away.
The Capital Matters week that was . . .
Tariffs
Either way, the purported free lunch of Trump’s tariffs is a farce. Of the nearly $200 billion in federal revenue they raked in last year, almost all was paid by U.S. businesses and consumers.
The tariffs imposed in 2025 didn’t just interrupt these vital supply chains. Many of the tariffs, such as those on metals and auto parts, specifically targeted critical elements of our own industry. Since liberation day, thousands of autoworkers have lost their jobs and car sales have declined by 13 percent.
Property Tax
The late Senator Barry Goldwater echoed this understanding, noting that an individual’s earnings are as much their property as their land or home. “Property and freedom are inseparable: to the extent government takes the one in the form of taxes, it intrudes on the other,” Goldwater wrote.
It is in this spirit and in response to the growing frustration from taxpayers across Iowa that Governor Kim Reynolds is proposing a comprehensive property tax reform measure.
Credit Card Cap
Over two dozen conservative organizations — ranging from old stalwarts like Americans for Prosperity to new shops like Mike Pence’s Advancing American Freedom — have co-signed a letter to Congress urging members to reject price controls and other regulatory dictates on credit cards. On both parts of the issue, these groups are commendably breaking with President Trump.
Automation
Another strategy is to improve caregiving efficiency through technology. I previously said that most people don’t want futuristic tech too close to their loved ones, and I therefore suggested that immigration was the better route. However, our politics continue to harden against pathways for lower-paid foreign workers. To stop the cost ratchet from turning inexorably against families that are seeking affordable options for kids and the elderly, we will thus need to get more comfortable with technology — including robots…
Affordability
For City Journal, Manhattan Institute senior fellow Judge Glock reviewed Governor Spanberger’s suite of “affordability” pledges and found that every one of her policies would not reduce, but increase costs for most Virginia households. Her guiding principle seems to be cross-subsidization, or driving up “expenses for one group of consumers in order to benefit another group deemed more deserving.
Mark Carney and Technocracy
Canadian Prime Minister Mark Carney’s speech at Davos has been applauded by the same sort of people who once hailed Angela Merkel as the anti-Trump, the leader of the free world.
That’s not a good sign…
Javier Milei and Free Enterprise
Javier Milei’s recent address at Davos is impressive. It’s also a very timely reminder of many important lessons that are often forgotten.
The Argentinian president presents free enterprise not merely as an efficient economic system, but as a moral and institutional order rooted in Western ethical traditions. Rejecting the supposed tradeoff between justice and efficiency, Milei explains that true economic efficiency emerges only from institutions grounded in private property, voluntary exchange, and the non-aggression principle…
Art
Remington soon tackled sunsets, too. Coming to the Call, a gorgeous moose-hunt drama also from around 1905, sold for $13.2 million on a $6 million–$8 million estimate. Hunter and prey, life and death, beauty and menace — all combine to leave us breathless. The Western art in the sale belonged to Bill Koch, yes, one of the Koch brothers but best known as an investor, collector of art, wine, and maritime art, and an America’s Cup winner. His Christie’s haul — 25 objects — made $69,424,000, well over the sale’s aggregate high estimate. Minutes after Town Marshall busted a record, Coming to the Call beat it, setting another new worldwide Remington auction high. Good for Christie’s. It’s a great start to the celebrations of America’s 250th…
Gavin Newsom’s Ambulances
While blue-state governors and legislators have echoed congressional Democrats’ calls for the repeal of Medicaid spending reductions enacted by Congress last year, those demands are now being undercut — not only by the Minnesota fraud scandal, but also by the way in which officials across the country are gaming Medicaid in order to draw down more federal tax dollars. Consider the way in which some state and local governments, particularly in California, are inflating ambulance service reimbursements to take in more federal taxpayer dollars…
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