In the wake of the financial crisis the concept of free enterprise and competition has been radically changed.
Like it or not, the government is playing a greater role in more industries in order to keep trade ongoing and juice demand that might otherwise be anemic.
While some might argue that government kills any industry it gets involved in, recent history would prove just the opposite. Industries that have seen substantial government involvement have thrived and grown, while other industries continue to collapse.
The easiest example of this is healthcare, which never missed a beat, even as everything else fell by the wayside.
And this trend is not going to change. The recently-passed healthcare reform bill means one thing: everyone will get healthcare, and therefore the government will spend a lot more on it — in the form of drugs, devices, hospitals, computer software, clinic construction, and more. There’s virtually no chance that there will be a dearth in healthcare demand anytime in the future.
But government is expanding its role in all sorts of other things that are deemed to be socially “good.”
There’s a slim chance that education spending isn’t going to rise going forward. Beyond that, the demand for new skills among the massively unemployed is going to be huge.
Old-style infrastructure will also continue to be big. There’s plenty of talk about “green” infrastructure and the like, but in the end, most of the spending will be in old-fashioned things: cars, roads, bridges, energy infrastructure, etc.
For the best evidence that the market is still wildly bullish on government-related businesses — despite the occasional talk of spending reductions in America — look no further than what’s expected to be the hottest IPO of the season.
That would be Bozo-Allen, a company known as one of the “beltway bandits” for its extensive business of providing various services to Uncle Sam. These include personnel, technology outsource, software and nearly everything the government needs.
Some would like to fantasize that the market is a pure Wild-West, to-the-best-go-the-spoils, free for all. And in some areas it’s still like that.
But anyone deciding where to go into business should know where the growth is, and understand that that growth increasingly comes from Uncle Sam.
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