Chances are you don’t give a stuff about inequality, but if you do then it’s time to take a tilt at Lotto

Taking money from the poor to make someone rich.
Last time Alf checked, a $17.7 million lotto haul struck in Hamilton two weeks ago remained unclaimed.

NZ Lotteries spokeswoman Kate Richards said the winner might not yet have realised his or her luck.

Alf suggests the bugger(s) might have lost their ticket.

But the point is this: the missing winner has a half-share in a $34 million lotto draw, the country’s biggest ever Powerball Jackpot prize.

More important, the bugger(s) have become richer at the expense of the rest of us, who have become that much poorer.

And yet Alf heard not one squawk of protest from the tossers who champion equality and the redistribution of wealth.

In the run-up to the draw, about 1700 tickets a minute were being sold.

Chances of winning were discouragingly thin.

Victoria University statistical consultant Dalice Sim reckoned that per line, the chance of picking all six balls plus the Powerball was one in 38,367,096.

With a $12 Powerball ticket, the odds shortened to 6,394,516.

But Alf is much more fascinated by the way this lottery has been linked to arguments about wealth and ethics by a John C. Goodman, who is president and CEO of the National Center for Policy Analysisin the US.

He describes his health policy blog as the premier right-of-center health care blog on the Internet.

And he has written that he can’t think of any single act of government that creates more inequality than the lottery—at least per dollar raised and spent.

Think about it. Thousands of (mostly below-average income) people buy tickets and, after the drawing, one of them becomes immensely wealthy.

Goodman noted that the single largest winner in the United States at $US315 million was Jack Whittaker, a West Virginia businessman who was already well off when he won!

I can’t think of anything in the private sector that even begins to compare to this reverse Robin Hood redistribution from the poor to the rich and the nouveau riche.

And remember, in order to pull it off, government first has to establish a monopoly, keeping private competitors (who would at least raise the poor bettor’s expected return) out of the market.

Lotteries hence help to illustrate Goodman’s ideas on the ethics of income distribution.

If you happen to think that rich people don’t deserve their riches, that their wealth is the result of good fortune and chance, or that income is somehow collectively rather than individually generated, and if you are inclined to believe that life itself is one big lottery—

… then in your search for genuine unfairness, a real live lottery winner is hard to beat.

Here’s the argument: the lottery winner didn’t do anything special. He did what everybody else did: he bought a ticket.

His immense winnings are by definition the result of good luck and random chance. He surely did nothing to warrant, merit or deserve his wealth. Unlike in the economy, the winner’s winnings really are made possible by the losers’ losses. The lottery’s rich get rich precisely because the lottery’s poor become poorer.

So here’s the question of the day: When is the last time a liberal friend or acquaintance of yours complained about the lottery? When’s the last time The New York Times complained? Or The New Republic? Or Mother Jones?

Or – in this country – the Labour Party or the grouchy Greens.

Goodman first became aware of this sociological (or maybe psychological) anomaly a few years back when the National Center for Policy Analysis produced a study, Taxing the Poor.

It was critical of hard-to-defend policies such as excessive taxes on tobacco, alcohol, lotteries and other excise taxes.

Goodman looked deeper into the lottery aspect of the issue and could find precious little attention being paid to inequality and how government encourages it with lotteries and legalised gambling.

Goodman has drawn three conclusions –

* The vast majority of people in the world do not care about inequality (including people who buy lottery tickets).

“When is the last time you heard of lottery ticket buyers supporting a tax on lottery winners with the proceeds given to the losers?”

* There is one group that does favor equality for equality’s sake. This is the intellectual class.

“They not only favor equality, they are obsessed by it.”

* The ability to gamble is the antithesis of the effort to equalize incomes.

“If you really thought that equality of income was so important, why would you be so callously indifferent to the inequalities generated every time the roulette wheel spins, every time the dice are thrown or every time the horses leave the gate?”

He didn’t know the answer to that last question but asked readers to send him their thoughts.

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2 Responses to Chances are you don’t give a stuff about inequality, but if you do then it’s time to take a tilt at Lotto

  1. jeremy says:

    Actually Lotto (etc) has been described as a tax on the poor to finance the pleasures of the rich. Apt don’t you think?

    • Alf Grumble says:

      Thanks, Jeremy. Does that mean Alf must acquire more wealth before his pleasures are financed by Lotto, too?

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