Lesson from the Lucky Dragon
The dynamism of capitalism at work
In the world of business, there are no sure things. The fall of the Lucky Dragon, an off-strip hotel and casino, is proof of that. The Lucky Dragon opened just 14 months ago and aimed to attract a base of Chinese customers, both internationally and locally. It did neither. It “closed its doors Jan. 4 and faces a foreclosure auction on Feb. 6,” reported the Review-journal’s Rick Velotta.
The management team had 435 years of combined experience. Las Vegas’ connection to China looked strong when the casino opened, and yet the business venture didn’t work out.
“It’s hard to imagine that someone as smart as William Weidner, former president and chief operating officer of Las Vegas Sands and one of the backers of the Lucky Dragon, could have been so wrong about positioning the off-strip casino,” writes Mr. Velotta.
The Lucky Dragon is a reminder that — in a free market — every business venture is a risk. Without the backing of government subsidies or mandates, no company has a guarantee of success. You can earn a profit only by meeting the needs of your customers and doing it better than your competitors. Fail in that task, and backers can lose tens of millions of dollars — like they did with the Lucky Dragon. Why would anyone take such a chance?
Investors risk their money in order to earn more money. It’s vital for the Las Vegas economy that such investments be encouraged. Capital investments are an essential source of jobs. An increase in the demand for jobs boosts the overall labor market and keeps wages strong. This increases how much is spent in other areas, such as groceries and entertainment. A growing economy boosts home values and even the taxes collected by government.
Everyone claims to want a thriving economy. So why do so many denigrate what sparked the chain reaction — investors risking their money to make more money?
Then-president Barack Obama infamously attacked business owners by saying, “You didn’t build that.” Numerous Democrats have attacked tax reform as primarily benefiting “the rich.”
The idea that individuals shouldn’t be able keep their own money once their income surpasses a certain point is unjust. You don’t lose your property rights because you acquire more property. It’s also counterproductive.
The announced redevelopment of the long-stalled Fontainebleau resort offers a tangible example of why. Tax reform led investors to announce that they’ll spend $3 billion finishing the project. That will create 5,000 construction jobs and 6,000 permanent jobs.
This pursuit of profit is the driver of economic growth, wages and jobs. Those who risk their own money to seek profit through private investments — not government cronyism — deserve our appreciation, not our derision.
The views expressed above are those of the Las Vegas Review-journal. All other opinions expressed on the Opinion and Commentary pages are those of the individual artist or author indicated.