I think it may be time to update the dictionary definition of irony.
George Soros, the billionaire who finances statist organizations and causes in order to promote more government, has decided that he doesn’t want to deal with some of the new regulatory burdens resulting from the Dodd-Frank bailout legislation.
Consider this blurb from the Financial Times.
Quantum, which will continue to manage about $24.5bn of Soros family money, blamed the decision on new financial regulations requiring hedge funds to register with the Securities and Exchange Commission. “An unfortunate consequence of these new circumstances is that we will no longer be able to manage assets for anyone other than a family client as defined under the regulations”, Jonathan and Robert Soros, Mr Soros’ sons and Quantum’s co-deputy chairmen, wrote in a letter to investors on Tuesday. New regulations require hedge funds with more than $150m under management to report details about investments, employees and investors, and also makes them subject to possible inspections by the SEC. Mr Soros’ decision contrasts with his own reputation as an advocate for both government and corporate transparency.
The Wall Street Journal’s editorial page has some fun with this news.
Like many a rich political liberal, George Soros made his fortune in some of the least regulated corners of the capital markets. So it’s no great surprise that the left-wing financier announced yesterday that his hedge fund will cease investing on behalf of others in order to avoid Dodd-Frank’s new registration mandate. …This is one more example of Dodd-Frank’s 2,300-pages of unintended consequences. The 81-year-old Mr. Soros will no doubt still make a handsome living, but the trade-off is bad for the country. Better to have the billionaire preoccupied with decisions about allocating capital to maximize profit than spending his time donating to groups and politicians who want government to allocate capital for political purposes.
Poking fun at Soros and exposing left-wing hypocrisy is a noble endeavor, to be sure, but there’s a very serious side to this issue. The growing regulatory burden and increased level of intervention is both discouraging investment in the American economy and undermining the efficient allocation of capital that does get invested. The Dodd-Frank bailout bill is an obvious example, as is the IRS’s horrible interest-reporting regulation.
This translates into less growth, less vitality, and lower living standards (compared to what they would be in the absence of bad policy). The chart in this blog post is a good example of the cost of bad policy and the benefits of good policy.
