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TheStreet Open House

The State of the Union and a Winning GOP Strategy

Stocks in this article: GM

NEW YORK (TheStreet) -- President Obama, dogged by the bungled rollout of the Affordable Care Act and a slow economic recovery, is declaring war on inequality. It's an age-old problem made worse by his policies. He offers more opiates -- like raising the minimum wage -- that fail to address the root causes of vanishing opportunities and falling incomes for most Americans.

Market capitalism has proven a superior system to anything Old World socialists and American liberals can contrive. To the misfortune of Utopians seeking both equality and prosperity, the system rewards intelligence and hard work and requires some inequality to accomplish prosperity.

Globalization, promoted through free trade agreements by presidents since Kennedy, has opened vast markets and increased the incomes of the most talented and industrious Americans, while subjecting more ordinary citizens to more intense competition from workers in Asia and elsewhere.

Sadly, foreign markets for what many Americans make remain largely closed. General Motors (GM) boasts some of the best selling cars in China, but high tariffs and regulations keep out U.S.-made vehicles. That denies ordinary workers good paying jobs.

In tandem, domestic policies encourage the monopolization of markets and big paydays for top executives and star performers. They also impose higher prices and lower living standards on ordinary Americans.

Dodd-Frank has not stopped reckless risk taking and some of the big paydays on Wall Street, but its regulatory costs have compelled many smaller banks to sell out to big banks. Having a tighter grip on markets, larger banks charge higher fees, pay less interest on savings and reward top executives.

The Federal Communications Commission does not classify cable television providers as utilities or permit regulation of their rates. Monthly fees rise with the rhythmic certainty of the onset of winter and permit huge payouts to the NFL. That makes Peyton Manning richer and subscribers poorer, regardless of whether or not they watch football.

Obamacare and the broader morass of federal and state health care regulations have encouraged the consolidation of hospitals around many major cities, and reduced the number of health insurance companies operating in regional markets. Less competition increases salaries for hospital administrators, insurance company executives and some medical specialties.

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