SEA ISLE, N.J. — How many pretzels does it take to build a
castle in the sand? How many cans of jalapeño dip does it take to
build a $30 million mansion on the ocean so huge that it makes the
neighboring $10 million beach houses look somewhat run-of-the-mill,
even puny?
Well, the lawsuits are over and the 14,000-square-foot
beachfront mansion built by Utz potato chip and pretzel magnate
Michael Rice and his wife Jane is up and running on top of the
dunes in Avalon, the tony beach town to the south of us in South
Jersey.
The anti-mansion demonstrators are gone — some way gone, having
moved out of town in disgust after failing to stop the building of
a mansion on top of Avalon’s High Dunes, a unique two-mile stretch
of undeveloped maritime forests and sandy grasslands along the
ocean, one of the few such pristine areas remaining along the East
Coast.
Last June, I interviewed one the organizers of the lawsuits and
protests against Rice. “No one needs a house that big,” she said.
“He already has a vacation house here that’s big enough.”
She was right about Rice’s former home in Avalon being “big.” A
snazzy beachfront manor with a library, elevator, spa, seven baths,
and seven bedrooms, it was on the market last year for $12
million.
The new house reportedly has 10 master bedrooms, 13 bathrooms, a
pool, and a maid’s quarters. And a better view — from the top of
the dunes, you can see both the ocean and the bay.
On the “needs” part of her comment, however, the anti-mansion
community organizer sounded too much like Obama when he said we
shouldn’t be reducing federal deficits by cutting programs while
simultaneously allowing others to keep money that they’ve earned
but “don’t need.”
Who will be the judge of who needs what? Which agency or
bureaucrat will decide if anyone needs a $1 million Ferrari Enzo or
a $10 million yacht? Who will decide that the workers building the
new mansions, yachts, and Ferraris should be out of work?
As France’s new Socialist president, François Hollande famously
said, “I don’t like the rich.” His idea of “fairness” is to raise
the top tax rate in France to a confiscatory 75 percent on incomes
over 1 million euros ($1.27 million), and that’s on top of France’s
real estate taxes, a value added tax on consumption that tops out
at 19.6 percent, a gasoline tax of $4.50 a gallon, and other
assorted levies.
Also on the agenda of the French redistributionists are new and
higher taxes on wealth, second homes, and inheritances.
On February 27, two months prior to his election victory,
Hollande declared, “What I don’t accept is indecent wealth,
compensation that has no relation to talent, intelligence or
effort.”
It’s not clear which members of France’s newly empowered
Socialist Party or committee of levelers will be authorized to
determine what is an “indecent” amount of compensation for the
innumerable types and levels of “talent, intelligence or
effort.”
Two weeks after Hollande’s election, Bloomberg News reported on
the initial and predictable response of “the rich” in France:
“‘It’s open hunting season on wealthy people in France,’ said
François Micheloud, a partner at Lausanne, Switzerland-based
Micheloud & Cie., which helps foreigners relocate to the Alpine
nation. ‘The number of French asking for assistance has tripled in
the last 18 months.’”
A headline in Der Spiegel tells the same story:
“Wealthy French Take Their Assets To London.”
In 1990, employing the same rhetoric we’re now hearing in France
and from the White House about getting “the rich” to pay their
“fair share,” Congress passed a 10 percent “luxury tax” on high-end
jewelry, aircraft, and yachts.
“Within eight months after the change in the law took effect,
Viking Yachts, the largest U.S. yacht manufacturer, laid off 1,140
of its 1,400 employees,” reports George Mason University economics
professor Walter E. Williams.
By the time the law was rescinded in 1993, Viking Yachts was
down to 68 employees.
Not far from where we are in Sea Isle, Egg Harbor Yacht, one of
the oldest boatyards in South Jersey, filed for bankruptcy and laid
off its 250 workers in 1991, a year after the yacht tax was
enacted.
“When it was all over, 25,000 workers had lost their jobs
building yachts, and 75,000 more jobs were lost in companies that
supplied yacht parts and materials,” states Williams. “The Joint
Economic Committee concluded that the value of jobs lost in just
the first six months of the luxury tax was $159.6 million.”
And the impact of the luxury tax hike on deficit reduction?
Instead of adding the projected $31 million to federal coffers in
1991, the net effect of the luxury tax was $7.6 million more in
federal red ink in fiscal 1991.
The impact of the luxury tax on “fairness” and equality? Workers
lost their jobs and “the rich” still had their preexisting yachts.
The redistributionists aimed at the wealthy and hit the middle
class.
That’s not unlike the scenario at the Utz house. If the
protesters had been successful in stopping the construction, the
Rices would still have their preexisting $12 million beach house
and the carpenters, roofers, landscapers, etc., would have paid the
price with higher levels of joblessness.
Rather than judging what the Rice family “needs” and carping
about the home’s number of master bedrooms, the picketers should
have been counting the number of contractors’ trucks lined up in
front of the house during the three years of construction.
In addition to those on-site jobs, add the number of jobs in
manufacturing, marketing, and shipping for all the sinks, beds,
tables, cabinets, chairs, roofing, stone, appliances, doors,
windows, landscaping, etc., and new home was a one-man stimulus
package.
The protesters may sneer at “the rich” and “unfair” advantages
but Utz Foods began as a family business in 1921 when William and
Salie Utz began making potato chips in their home in Hanover, Pa.,
producing 50 pounds of potato chips per hour in their kitchen.
Now in its third generation as a family business and still in
Hanover, not China, Utz currently employs 2,200 people and is the
largest independent privately held snack brand in the United
States, producing a million pounds of potato chips and 900,000
pounds of pretzels per week.
That’s not unlike the Heinz story in my hometown of Pittsburgh.
Now a Fortune 500 company, Heinz got its start when 8-year-old
Henry John Heinz began selling vegetables to neighbors from his
family’s garden. At the age of 12, Heinz was growing horseradish
root on several acres and selling his homemade horseradish
door-to-door in a wagon.
It is precisely that spirit of entrepreneurship, new ideas, risk
taking, investing, productivity, and ambition that we have to
commend and incentivize, not demonize, if we want a society with
more growth, more employment, less joblessness, and less
poverty.
As Milton Friedman put it, succinctly and accurately, “So that
the record is absolutely crystal clear, that there is no
alternative way so far discovered of improving the lot of the
ordinary people that can hold a candle to the productive activities
that are unleashed by a free enterprise system.”
