I recognize that young people have come of age during some troubled economic times. I suspect this contributes to their discontent and their misguided belief that government interference is the answer. In truth, government meddling is a large part of the problem. The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in 2010, has made it harder for firms to lend money and for small and mid-cap companies in particular to access the capital markets. The 2012 JOBS Act tried to make it easier for smaller companies to issue equity in the public markets, but it is not enough. My father, Jack Stephens, used to say, “A great idea never fails for lack of capital, because capital will always find it.” Sadly, I’m not sure that’s true today.
For proof, we need look no further than the growth of private equity, a direct result of the limitations placed on the public markets. Yes, private equity should be an option both for those seeking money and for those who wish to invest it. But we cannot ignore that private equity is a vehicle that excludes most investors. The result: Access to capital and the benefits of capitalism have been concentrated among too small a group, restricting opportunity on both sides. The very individuals and businesses the government purports to help have virtually no chance to participate in and benefit from the creation of great companies.