This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The State of the Union's Human Capital

NEW YORK (TheStreet) -- When the President talks about "income inequality" during his State of the Union speech on Tuesday, investors will flash back to childhood, to the sound of fingers being scraped on a blackboard, the sound of a cockroach being squashed underfoot or maybe the taste of broccoli being forced down by a loving parent at dinner.

What they will hear will be a call to take their money and give it to someone else. The economic pie is only so large. Giving others' a bigger piece means less pie for me.

It's a natural feeling, but it's not always right.

Over a century ago, when America's infrastructure was being built, capitalists felt the same way about regulation. The idea of government telling them how they could charge for use of their property sounded like socialism, and they resisted it.

But before that infrastructure could be deployed for mass manufacturing, creating the auto industry, the appliance industry, and so many others, the rates for industrial inputs -- rail rates, kerosene rates, electricity rates, communication rates -- had to be straightforward and fair.

As Ron Chernow wrote in his biography of John D. Rockefeller, Titan, Ohio Republicans enforced this principle, sending Rockefeller fleeing their writs out of Cleveland and into New York.

As Doris Kearns Goodwin wrote in her book on the succeeding era, The Bully Pulpit, President Theodore Roosevelt, pushed the same principle on the federal level, even getting the support of J.P. Morgan to end a coal miners' strike on terms favorable to the miners.

What the Ohio Republicans started, what the Roosevelt Administration finished, and what men like Morgan eventually accepted, was the idea that rates would be regulated, and regularized, in exchange for having some group given monopoly control over the resource.

Without uniform, dependable rates, the pie baked by the trusts wouldn't grow.

Government power had become necessary for economic growth. Electric and telephone utilities agreed to allow government regulation in exchange for monopoly power, to maximize what was then scarce financial capital and make the U.S. into one market.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs