The week of April 2 was a milestone for the U.S. economy. For the first time since World War I, the value of European stocks overshadowed those in the U.S. Not only that, London has overtaken Wall Street as the preferred location for stock market IPOs and raising capital.

Why has there been such a profound shift?

In an article entitled "Why the U.S. No Longer Leads,” Jonathan Hoenig, managing member at Calitalistpig Hedge Fund LLC and markets editor for Smartmoney.com, cites two main causes.

First, federal legislation, specifically the Sarbanes-Oxley Act.

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"It’s no coincidence that the underperformance of U.S. markets began not long after the passage of Sarbanes-Oxley, a comprehensive suite of anti-business legislation cooked up in the wake of the Enron scandal,” he states.

"Instead of merely prosecuting the tiny minority of businessmen guilty of a crime, the government burdened all businesses with a slew of regulatory hurdles that have dramatically increased costs and undercut competitiveness. Not surprisingly, more corporations have decided to leave the public markets, or in many cases, the United States altogether.”

But it’s not just legislation that’s holding the U.S. economy back, Hoenig, opines, but the philosophy that spurred it.

"After all, America’s historical economic dominance hasn’t come fros vast natural resources, but the productive talents of profit-seeking individuals. Yet that’s exactly what Sarbanes-Oxley, along with so many other elements of today’s political environment, seeks to diminish,” he explains.

Hoenig cites by example the "income inequality” gap between the rich and the poor in the U.S.

"To varying degrees, both political parties support programs either to aid lower income workers or punish those who make more.

"This sort of class-warfare is diametrically opposed to the foundation of individual achievement on which this country was based,” he continues. "In a free nation, one is permitted to rise as high as his ability will allow. The fact of the matter is that some folks are simply more productive than others. It’s the free market, not the government, which should determine how much anybody gets paid...We permit the government to regularly redistribute lawfully earned profits in a more "fair” manner. Private earnings have become "public property to be passed out based on the prevailing political winds.”

According to Hoenig, the "honest” businessman has become the most obvious target.

"And until that’s changed, the economy and country at large will continue to be left far behind,” he concludes.

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