Steve Wynn Is Right

[Geee]

American Spectator:

Among the long string of bad economic news from the last few years, there is something to celebrate: The political consensus in Washington that government could keep on growing at no cost to the growing economy has finally broken down. The size and scope of government is now the defining issue of our time. It is a welcome debate. However, it has centered on spending, which is only part of what government does. Regulation and tax policy are equally important.

Legendary entrepreneur Steve Wynn (who usually supports Democrats) put it bluntly a few days ago, when he said: "[T]his administration is the greatest wet blanket to business, and progress and job creation in my lifetime. And I can prove it and I could spend the next three hours giving you examples of all of us in this marketplace that are frightened to death about all the new regulations, our health care costs escalate, regulations coming from left and right… And it makes you slow down and not invest your money."

Wynn is right. If we want Americans to get back to work, we must tackle overweening government now. A recent survey by the U.S. Chamber of Commerce found that 64 percent of small businesses will not hire anyone in the next year. The reasons given all concern government: taxation, regulation, and the threat of new legislation.

A sterling example of Wynn's point is the Dodd-Frank law that was supposed to solve the problems that led to the 2008 financial collapse. It empowered regulators to decide which firms are "systemically important" -- too big to fail, in other words. Enshrining this concept into law will only make huge financial losses more likely, as firms deemed too big to fail will have an incentive to take more risks, in the knowledge that the government will bail them out when they get into trouble.

That is bad enough. Even worse is not knowing which firms are "systemically important." Yet the Obama administration has yet to make that determination, which means that many large financial companies don't know whether they will be covered, and so don't know whether they will have to raise capital or reduce their leverage. That means that industries that rely on these companies for funding do not know what their cost of capital will be. As journalist Robert Tracinski points out, this is "the most basic piece of information in a functioning economy." The only thing worse than bad rules is not knowing what the rules are.