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December 20, 2014

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DAILY MEMO::

Government doesn’t do much for Wynn … or does it?

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STEVE MARCUS / LAS VEGAS SUN FILE

Casino developer and owner Steve Wynn says that at least for now, government policies should focus on fostering economic growth and job creation. He favors tax cuts over additional government spending.

Steve Wynn on Fox News

Steve Wynn, Part I

Uncertain Futures, seg. 2

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  • Steve Wynn, Part I

Steve Wynn, Part II

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  • Steve Wynn, Part II

Las Vegas casino magnate Steve Wynn has lately been sounding a bit like his arch rival, Sheldon Adelson, the tough-talking owner of Las Vegas Sands who doubles as Republican fundraiser and conservative ideologue.

First on “Face to Face With Jon Ralston” in April, and then again Oct. 10 on “Fox News Sunday,” Wynn launched a series of tough attacks on the policies of President Barack Obama.

He says the Obama administration has turned to government intervention to get the economy going when it should have been cutting taxes. Wynn then summed up his political philosophy: “Government has never increased the standard of living of one single human being in civilization’s history.”

A provocative statement, and one that no doubt brought a smile to the face of the Fox producers for the buzz it generated among the press, the public and politicos.

But is it true?

Wynn refines his position

To test Wynn’s broad assertion, the Sun interviewed economists and asked a more specific question: How has government increased the standard of living of Steve Wynn personally?

After just a few of their examples were cited to Wynn last week, he refined his position some: Government, he acknowledges, does good and important things, but is fueled entirely by industry, commerce and a productive citizenry, and that’s where the focus of government policy should be.

Wynn’s backpedaling was triggered after the economists interviewed by the Sun examined government’s role in Wynn’s prosperity.

Let’s start at the beginning: Many of Wynn’s tourists book their rooms on the Internet.

Where does the Internet come from?

No, not Al Gore. It comes from the Pentagon.

The Internet as we know it is derived from 1970s-era computer science of the Defense Advanced Research Projects Agency, which was launched to do research after the Sputnik scare.

(Government often funds research like this, through universities and institutions such as DARPA and the National Institutes of Health, because there’s no incentive for the free market to finance it — it’s too expensive, and there’s no guaranteed revenue even if the research is successful.)

Once those Internet denizens make a reservation at Wynn’s resorts, many will get in their cars in Southern California and travel on Interstate 15 to get here.

University of Nevada, Reno, economist Elliott Parker notes that the Interstate Highway System was an idea hatched by the administration of former President Dwight D. Eisenhower and is owned, operated and maintained by the government. (Also worth noting: Eisenhower was on the government dole when he saved civilization from the Nazis.)

More government help

The tourists get here safely thanks to the highway patrol officers of Nevada and California. The motorists buy gas that is brought here from foreign lands in giant tankers that have the implicit protection of the United States Navy.

Tourists who arrive by airplane use Clark County government’s McCarran International Airport; air traffic controllers, security personnel and air marshals are employees of the federal government.

Government has also propped up aerospace companies such as Boeing with big military contracts.

Once the tourists are here, government helps Wynn serve them in all kinds of ways.

“He doesn’t have to teach his employees to make change,” says Bill Robinson, a UNLV economist.

Or count to 21.

Parker explains that slot machines are the result of sophisticated engineering. International Game Technology engineers arrive for the first day of work with thousands of dollars of public education. If the company had to educate its engineers itself, it would have to charge more for its machines — money right out of Wynn’s pocket.

The Strip couldn’t serve its expensive, socially lubricating cocktails without the valley’s sophisticated water and sewer system. In fact, “Would Las Vegas exist without Hoover Dam?” Parker says.

What’s certain is that our main water source is Lake Mead, which is there only because of the Hoover Dam, that giant project of the federal government.

Slot machine users are often seniors spending their Social Security checks in Wynn’s resorts. Many of them are alive only because of medication whose origins were a molecule reacting against another in a government-financed lab.

Police, courts aid casinos

Metro police are certainly helpful to Wynn. How long, after all, would it be before a mob started looting Wynn’s casinos if there were no government agents — police officers — to stop them?

“Probably not very long,” Robinson says dryly.

Perhaps that’s why Wynn bundled at least $40,000 in contributions for Sheriff Doug Gillespie’s 2006 campaign.

Clark County District Attorney David Roger is also helpful to Wynn. Nevada has a law that allows district attorneys such as Roger to investigate unpaid gambling markers as if they were bad checks. So when former NBA star Charles Barkley owed Wynn $400,000, Wynn was able to turn up the heat by persuading Roger to open a criminal investigation. Wynn got paid.

This goes to a larger point, Robinson says: “When he signs a contract, it exists and can be enforced because of the court system.”

Robinson refers to the godfather of capitalism: “That’s one of Adam Smith’s big points — you need government to enforce contracts and protect property rights.”

Nevada’s sophisticated gambling regulatory regime might feel intrusive to Wynn, but it actually helps him — the strict licensing requirements restrict Wynn’s competition. Not any old Joe can set up a poker table on the sidewalk outside Encore.

How Wynn says he sees it

In a spirited telephone interview about the economists’ arguments, Wynn proffered: “The government’s ability to fund anything is based on its collection of revenue from citizens who earn an income. The only way government got a dime — and there are constructive and appropriate activities of government — is from the productive activities of people and business.”

No economy, no government, Wynn says.

“My point is that in the larger economic sense, government produces nothing. It gets revenue from citizens and companies ... The wealth of the nation comes from the citizens and the productivity of citizens and business. That is the engine of the standard of living.”

But would there be any free market, any productive economy, without government and civil society? After all, he’s not about to open a casino in Somalia.

There seems to be a chicken and egg problem here.

“No, the egg came first,” he says excitedly.

The egg, in Wynn’s view, is this: Productive people want some law and order, and have the means to pay for it, so they form a government. In any case, as for now, all government policies, Wynn says, should be directed toward fostering economic growth and job growth.

Wynn says the Obama administration’s policies have failed in this effort miserably, and he plans on being active in next year’s election to reverse course.

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