Feeling lucky?
I've resisted blogging on this topic as I figure I'll have to go off on a nuclear rant on it before next November, but I saw a piece in today's Christian Science Monitor (one of my favorite newspapers if for no other reason than the anachronistic name they cling to) that got my juices flowing. What is this topic that has the capacity to get me so incensed? THE LOTTERY!
As you may know, AL is one of the few states left without a lottery. Former governor Don Siegelman ran, and was elected, on a lottery platform, yet the voters then paradoxically voted down his lottery referendum. What was Don's response? He basically took his ball and went home. No lottery? Well screw you Alabama citizens! Now, Don has decided he needs to run again (if he can get rid of that nasty little federal indictment that's pestering him right now). Now IS the time for a lottery, says Don. I'll comment on my reasons for opposing a state lottery in a few minutes, but let me just say Don's campaign is one of the few things the Huntsville Times' editorial board and I agree on.
Anyway, today's CSM has an op-ed piece by Steve Coronella, a freelance writer living in Ireland. Mr. Coronella has a novel, almost foolproof, system for playing the lottery -- he doesn't!
What's my secret? Every Wednesday and Saturday, the two days on which the winning numbers are drawn here in Ireland, I walk right past my local lottery outlet and pocket the nearly five euros it would take to play a basic combo ticket. Over the past 10 years I reckon I've "won" more than five thousand euros as a result of my strategic penny-pinching.
Mr. Coronella admits he used to play the lottery. He had his regular set of numbers and even today he knows them by heart. Doesn't he miss the old rush of excitement he'd get from checking his numbers to see if his ship had come in? No. Instead:
These days I no longer play, but still - twice a week - I match those numbers against the winning lines generated by the National Lottery here. Then I breathe a massive sigh of relief when - invariably - my numbers don't come up.
The thrill is the same as if I'd actually played (only in reverse, of course), but the odds are considerably greater in my favor.
All-in-all I thought it was a quite clever piece on the silliness of state lotteries. It did not, though, address my specific reasons for opposing such enterprises. What are my complaints? If you've paid any attention to the lottery movement, you've heard these before, but in brief:
1. A lottery is an EXTREMELY regressive form of taxation. I know many (most) taxes are regressive, but this is one of the worst. Who do you think spends a bigger share of his income on Lotto, Bill Gates or Joe SixPack? Besides the basic regressivity of the lottery, I am amazed that politicians have the gall to claim that if we only had a lottery, we could remove the regressive sales tax on food. WHAT?!?! How can a politician make that claim with a straight face? That's like the doctor saying if I could amputate your right hand, then I could give you a replacement for your left. [Full disclosure: I don't have an actual link to Siegelman making this claim, but I swear I've heard it before and it seems to be a subtext in all the lottery discussions.]
2. It's an inefficient form of taxation. Not only do you have to collect more than the required amount of revenue (so you can "rebate" some of it to the winners), but you actually have to pay part of the proceeds to some company to run your lottery. That's idiotic. We've got tax collectors, why pay an outside body to come collect taxes for us?
3. It puts the state in an awkward position. The state gets tax money from booze, smokes, and speeding tickets, yet you don't see it running commercials encouraging drinking, smoking, and fast driving. With lotteries, though, states routinely run advertising campaigns designed to pump up sales, especially after the initial glow wears off. I'm enough of a libertarian that I wouldn't really care if someone were running a private lottery and the government simply taxed it. I'd still think it was an immoral enterprise (and I don't want to impose morality on others), but at least the government wouldn't be in the position of "pushing" the behavior.
4. What about the "good" aspects -- education funds, someone does "win", etc.? Well, most states (sorry, don't have a study right at hand) end up diverting an almost equal number of dollars AWAY from education. As for the "winners", how would you feel if the state said it was going to double property taxes, but then give a third of that money to some random homeowner? I think most people would find that rather capricious and a tad unfair. That's what a lottery does, except that it exempts (most of) the wealthy.
5. The only compelling argument I see for the lottery is if you can "steal" tax revenue from next door. TN is doing that with AL right now, but most of the states surrounding us already have a lottery (MS being the exception) so that doesn't really work. Yes, we might keep some of those lottery dollars at home, but I figure the marginal impact of that would not outweigh the above points.
Anyway, those are my feelings. Again, I don't care to try to tell anyone what he or she SHOULD do, but I don't like the state encouraging this behavior. In the vein of What's Wrong With Kansas?, though, I should embrace a lottery. It would be a way for the state to collect more tax revenue and I wouldn't have to pay a penny of it. Still not going to bite though. Don's going to have to come up with something else before he gets my vote!
posted by St. Caffeine @ 11:50 AM
7 Comments:
I play the lottery when the expected value = 1.
Which isn't often (big rollovers)
My husband really gives me a hard time about it even so. He says "Why don't you just take your pound and flush it down the toilet?"
I cannot argue about the economics of the lottery with you but I disagree that the lottery should be summarily dismissed. As long as Joe Sixpack is not a Bill Gates s/he will ALWAYS plunck down money in a get rich quick scheme. That being understood it is foolish for a state to continue to watch revenue flow from the state and not do anything about it. I would not oppose the lottery if the right bill came along. The right bill would include an ear-marked percentage for education that CANNOT be diverted out of the educational fund. To my knowledge Alabama does not have any such clause in regards to any funds not being diverted from education. This is a greivous error on the part of the legislators of this state. I think it is Colorado or Navada who has this type of clause regarding lottery revenues and they have one of the best education systems in the US. I honestly don't remember which state (that has a lottery) that does this but in my opinion it's the best way to handle this situation.
Yes, Crystal, I agree you CAN design a lottery so that the revenue will not be diverted from educ, but it's still a horrible way to fund education! Who pays the lottery tax -- the low income. Who benefits most from the lottery scholarships -- the middle class. Not only do the poor attend college in smaller numbers than the middle class, most lottery scholarships first factor in Pell grants and such before awarding money. Hence, the "education lottery" ends up as a transfer payment from the poor to the middle class!
We could fund universal scholarships by taxing everyone with a last name starting with A or B or W, but that doesn't make it a "good" or "fair" way to fund government programs. Sorry, this is a pet peeve issue of mine -- right up there with farm subsidies.
Oh, and Vol, I like your use of expected value, but doesn't the huge payout attract even more players so that the expected value might fall below 1 again? Of course if you're talking about a gazillion dollar/pound/euro payout I guess the expected value still could top 1. Then, of course, you should play -- tell Vol-in-Law to zip it.
Umm, well you have to assume that you'll be the single winner to make it work out. Except when it's one of those really, really big ones.
Oh yeah, and on the policy matter. Even if you set up primary legislation which says that you have to keep base spending , even with inflation protection, what might tend to happen is that NEW funding isn't appropriated.
And Caff is right - any NEW funding (income tax, property tax) would be paid by the people who benefit most from the ed system as it currently works- the rich, the middle classes.
I agree that lottery funding is mug's game. In the UK - any lottery money has to go toward something that wouldn't ordinarily be publicly funded so tends to go on arts or stupid building projects - or the London Olympics.
I come from a lower income family not a middle-class and the issue isn't only that there is no money for a college education but that there is no encouragement either. Not from the families who may not know what more there is nor from the school system that looks at these kids as down trodden! I was talking about public education not college scholarships. I think we need those as well but until we encourage inter-city or low income families to desire a basic education we have no hope in getting them to even fill out paper work for anything else. I'm Native American and my tribe sets up scholarships in which only tribe members are eligiable and STILL they have a trouble GIVING money away for school. There are opportunities for African American people too: United Negro Fund, NAACP ect...the only ones that may not have as many are white/Asian lower income people. A lottery set up to help K-12 schools who need it the most 1st then college would work. You cannot tell me that they don't have demographics for this!
Okay, Crystal, I think we're just to have to "agree to disagree" on this one. Of course I'd like to see more resources devoted to education, but I don't want to see those resources raised through a scheme such as the lottery -- one that unfairly, in my opinion, puts the onus of the funding on those least able to afford it. Would I voluntarily vote for higher taxes on myself? I did 2 years ago when Gov. Riley's rather ambitious Amendment 1 was before the voters. Ironically, polls show that the plan failed in large part because the lower income voters rejected it. Go figure.
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