In a basketball game, what do you expect of a referee? Except for tip-off and a few other contingencies, you expect the ref to keep his hands off the ball. Good referees do not act like point guards.

This analogy, supplied by my economics professor, perfectly sums up what should trouble Americans about the Obama administration.

As referees must regulate the court, government must regulate the marketplace. Regulators balance public and private interests.

Effective regulators don’t unduly obstruct business. They defend competition and business sovereignty.

With the choice of Kenneth Feinberg as “compensation czar” for bailed-out companies, it’s clear that this administration mistakes the role of referee for that of point guard.

Point guard-style regulation remains a source of U.S. financial troubles.

Cheap populism under the guise of regulation, but with the intention of safeguarding public monies, threatens American business.

Even amidst heightened emotions over outrages such as the bonuses of AIG executives, a “compensation czar” violates the spirit of American regulatory policy.

Vesting control of employee pay and retirement benefits in a government monarch undermines public interest, threatening the stability of companies indebted to taxpayers.

Executives capable of forging sustainable firms from ashes of bailed-out companies now have enormous disincentive to accept positions for fear of Feinberg.

No doubt, his authority will soon extend to businesses beyond those awarded money.

Companies are best suited to develop appropriate styles of corporate governance. The government’s role should extend no further than the referee’s.

Obama cites Britain’s say-on-pay legislation as an effective stakeholder model. Interestingly, Harvard Business School found just this year that it failed to curtail executive pay. Laws require companies to have boards of directors, representatives elected by shareholders. Say-on-pay threatens this principal-agent relationship. Under say-on-pay, shareholders can undermine board judgment. Shareholder distaste for executive salaries would often be misguided, lacking consideration of challenges corporate management entails. Qualified executives may be genuinely deserving of generous compensation packages.

Government must not be allowed to entrench itself in the functioning of companies, complicating their ability to reimburse Americans.

As it is, we now have the referee withdrawing to the bench to assume the position of head coach.

Baylor University student Alex Ivan is studying political science and economics.