State politicians have already made a mess of Atlantic City

State politicians have already made a mess of Atlantic City

By Seth Grossman, Political Columnist

(Reprinted from December 1, 2010 Current-Gazette Newspapers of Atlantic and Cape May Counties,…ntic-city.html)

“In the long run, the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government, and certainly the harm is likely to be counteracted faster.”

? Sir John Cowperthwaite, financial secretary of British colony of Hong Kong 1961-1971

In those 10 years, Cowperthwaite made Hong Kong the most economically free economy in the world. Cowperthwaite even refused to collect economic statistics. He didn?t want politicians to use them as an excuse to try to ?fix? the economy. Hong Kong?s income tax never got higher than a flat 15 percent for everyone. Government never offered special permits or tax breaks for ?economic development.? Everybody followed the same rules and paid the same taxes. When business leaders lobbied for a government-built tunnel across Hong Kong Harbor, Cowperthwaite refused. He said if there were a real need for the project, private business owners would build it with their own money and make a profit ? which they soon did.

Cowperthwaite?s libertarian policies made Hong Kong so wealthy and successful that the Chinese communists still use them, long after they kicked out the British in 1997.

Hong Kong applied New Jersey?s motto, ?Liberty and Prosperity.? Government did nothing itself to create prosperity. Instead, it set up a system of liberty where each citizen was equally free to work, save and invest ? and keep and enjoy most of what he or she earned. This liberty created prosperity.

Here in Atlantic City, we did the opposite. Billions of dollars of casino money poured in after New Jersey voters amended our state constitution and gave people the liberty to legally gamble here.

But for the next 34 years, state government strangled that liberty. In so doing, it killed Atlantic City?s prosperity as well.

The original Casino Act of 1978 was written by Democrats ? Gov. Brendan Byrne, Sen. Joe McGahn (brother of lawyer/power-broker Pat McGahn) and Assemblyman Steve Perskie. Their 1978 law forced every casino to have a hotel with at least 500 rooms. Why not 10 small casinos with 50 rooms each? McGahn?s client, Resorts International, owned the only hotel in town with 500 rooms ? and got a one-year monopoly.

And so they made Atlantic City a big corporation, big government, big union town where independent local business owners were shut out. A handful of mega-corporations own every casino in town ? and every hotel, restaurant, showroom and store in every casino.

In 1925, Atlantic City had 1,200 hotels and boarding houses. There were enough rooms to house 400,000 guests at a time. There were hundreds of taverns, restaurants and shops (many with gambling tables and slots in the back), 21 theaters and five amusement piers. Almost all were individually owned. Many were owned by the kids and grandkids of newly freed black slaves from the South.

Back then, political bosses like Nucky Johnson never controlled the economy like politicians today. Only a handful of those local business owners needed or asked for favors from politicians to succeed.

The Casino Act of 1978 also stripped all casino owners, executives and employees of their unalienable rights to seek election to public office, contribute money to political candidates, or even speak out on public issues.

This put a multibillion dollar industry with a handful of big corporate owners completely under the thumbs of New Jersey?s state and local pay-to-play politicians. Casinos hire the right overpriced law firms, professionals and construction firms ? and ?agree? to give $20 million a year to prop up race tracks and horse farms (whose owners were not stripped of their political rights). If not, they can get whacked like the Tropicana at any time.

In the 1980s, Republicans including Gov. Tom Kean and Sen. Bill Gormley forced the casinos to build thousands of units of low-income housing in Atlantic City. This guaranteed high crime around the casinos, and too many voters with no skin in the tourism game who pay no local taxes.

Republicans changed the law to force all Casino Reinvestment Development Authority projects to only use union companies. They spent billions of CRDA dollars on vote- buying boondoggles around the state ? but nothing on Route 40, key to the Baltimore and D.C. markets. That ?Harding Highway? still has the same two lanes that President Warren Harding built for Nucky Johnson in the 1920s.

State politicians, not local officials, made a mess of Atlantic City. The proposed state takeover will make things even worse.

Somers Point attorney Seth Grossman appears on 1400AM talk radio 3-4 p.m. Mondays and Tuesdays and on 92.1FM 9-10 a.m. Saturdays. For information see, email or call (609) 927-7333. Breakfast discussions are held 9:30-10:30 a.m. every Saturday at the Shore Diner on Fire and Tilton roads in Egg Harbor Township.

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