Environmental Ethics
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Ernest Partridge, Ph.D
www.igc.org/gadfly

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Classical Guitar:
"The Other Profession
"

 

 


The Gadfly Bytes -- November, 1999


SUCKER ECONOMICS

By Ernest Partridge
University of California, Riverside
www.igc.org/gadfly // gadfly@igc.org

 

 

"There's a Fool Born Every Minute."

P. T. Barnum


"Never Give a Sucker an Even Break."

W. C. Fields


Would you like to hear of a sure-fire way to win the State Lottery?

It's really quite simple: just don't play!

Seriously! Don't play, and you will gain real dollars in your pocket: it is the cash that you don't have to pay in state taxes, thanks to all the suckers that are throwing their money at the lottery.

State lotteries, to put it bluntly, are regressive taxes on the poor and the foolish. And they are a tax break to anyone with a rudimentary understanding of the calculus of probability, and hence with the good sense to abstain. In addition, the fortunate abstainers also gain a considerable tax relief as a result of the state taxes on commercial gambling operations.

The amounts of cash involved in state lotteries are considerable. Gross receipts are reported at about $40 billion, and the total net income to the states is reported from between $14 billion and $26 billion. (Salt Lake Tribune, Aug. 11, 1998, Slate, September, 1996)

Twenty-one years ago, only Nevada had casinos. Now they are in 26 states. And lotteries are to be found in 37 states and the District of Columbia. Only Utah, Tennessee and Hawaii are completely free of legalized gambling.

As state employees from throughout the realm well know, the promises of public windfalls from lottery earnings are about as reliable as private expectations of lottery winnings. Payments to state institutions are generally offset by reductions from tax revenues. This has been the case with the higher education budgets in California.

And those who feel they just must flirt with Lady Luck simply could not make a worse choice than the state lotteries, which return in winnings about half of what they take in. In contrast, the gaming tables and slot machines in Nevada pay out well over 90% of the amounts wagered. So if you feel you must throw away your money, by all means go to Vegas where at least you can get a cheap meal and hotel room and enjoy the floor show while you and your money are soon parted.

Its quite bad enough that the states utilize lotteries to raise public revenues. But it is far worse that the states promote their lotteries. Thus the state governments, established to "serve and protect" their citizens, become instead their exploiters the state as public bookie, and a monopoly bookie at that. There are myriad good reasons not to play the state lotteries, as we noted above, but don't expect that as much as a dime of the lottery earnings will ever be used to warn the citizens that they are being "taken." It is the objective of lottery commissions to raise as much revenue as possible, and not to look after the welfare of the citizens. During our residence in the Midwest and California we have seen hundreds of promotional ads for the state lotteries, and not, to our recollection, a single "counter-commercial."

And so, at a time when citizen distrust of government is reaching crisis proportions, state governments are engaged in activities that were regarded as criminal just a generation ago. If "Big Government" has any legitimate role in our personal finances (and the libertarians, of course, insist that it has none), then surely it should be to encourage us to use our personal asserts prudently. The very last thing it should be doing is administering and encouraging us to engage in the least prudent use thereof.

Do many citizens believe the state-sponsored lottery promotions? Apparently they do. According to a report from the Consumer Federation of America, over a quarter of Americans see lotteries as their best bet for a secure retirement. Moreover, the Federation reports, "those who are spending the highest proportion of their incomes on lotteries tend to be low and moderate income households." And forty percent of those with incomes less than $35,000 see the lottery as their best chance for having $500,000 for their retirement.   (Sources: CNN.com).

The social costs, a few decades hence, when this horde of luckless gamblers reach retirement age stone broke, is horrible to contemplate.


Copyright 1999 by Ernest Partridge

 


Dr. Ernest Partridge is a consultant, writer and lecturer in the field of Environmental Ethics and Public Policy. He has taught Philosophy at the University of California, and in Utah, Colorado and Wisconsin. He publishes the website, "The Online Gadfly" (www.igc.org/gadfly) and co-edits the progressive website, "The Crisis Papers" (www.crisispapers.org).  Dr. Partridge can be contacted at: gadfly@igc.org .