This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

How the Government Is Hurting the Economy

Stocks in this article: GOOG F KO FB

Older enterprises such as Ford and younger ones such as Google that form the manufacturing and technology economy of the 21st century need more tech-savvy workers than universities and community colleges provide.

However, even if enough liberal arts and business programs could retool to produce all the science, math, technology and engineering graduates needed, the remaining programs would still produce many more non-STEM graduates than the economy could absorb.

Similarly innovators often don't need a lot of money to create valuable new enterprises or expand established businesses.

Consider that many young people create profitable apps and marketing platforms on their laptops, and major corporations are flush with billions in cash and too few opportunities to deploy it.

Consequently, established companies and individual investors bid up prices for young enterprises, whose owners wish to cash in on their initial success, and pay astronomical sums for the IPOs of companies such as Facebook (FB).

They bid up prices for stocks and bonds, and drive down yields on dividend-paying stocks and interest rates on bonds and CDs.

To generate enough jobs, the economy must create lots of service businesses beyond the ecosystems of manufacturing and technology -- everything from restaurants to retirement homes, but government regulations dictating wages, sick leave and health benefits drive many services offshore.

That's why credit-card call centers and even some back office legal services are in Asia. Those centers throw millions of less-skilled Americans out of work, slow economic growth and further reduce college graduates' wages and returns on savings and investments.

Too many subsidized loans to send 60% of high school graduates to college merely drives up tuition and worsens the glut of graduates and leave young people saddled with debt.

Since 2008, the Federal Reserve has pumped more than $3 trillion into the economy with too few good results. It's not responding to a shortage of capital, but it is further driving up asset prices and pushing down the returns on saving and investing.

What most Americans won't accept -- and politicians lack courage to admit -- is the government can't broadly raise wages or spur growth by regulating prices, mandating health care benefits, over-subsidizing education and printing money, but it can make most folks a lot worse off by trying.

At the time of publication, the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs