Friday, July 31, 2009

Are Lotteries Just?

John Goodman asks readers to consider some facts about lotteries and asks a question:

* One person becomes extremely rich.
* The winner's riches come at the expense of everyone else - the vast majority of whom have below-average incomes and many (maybe most) are actually poor.
* The winner did nothing to deserve, merit or earn his reward - everything he has is the result of sheer luck.
* In one single drawing this lottery produced more inequality (among the participants) than any act of Congress or private sector venture ever could.

So why is the left so blithely acceptant not just of lotteries, but of state-created-monopoly-lotteries? Why do columnists who become apoplectic about the salaries of CEOs ignore those whose riches are the result of random chance?

To start, I see nothing inherently unjust with lotteries, but I also dismiss arguments about relative wealth (I think absolute wealth is far more important) so my speculation is probably wrong.

That notwithstanding, I think many on the left see wealth created through business as a zero sum game. As such, the winnings go to those who started in the best initial position (through family connections or natural intellect) and the poor are victims who started at a disadvantage. The initial position is based on luck, but that luck favors certain groups. The lottery, however, has little favoritism. Everyone's ticket has an equal chance of winning. And if there is a bias to certain groups, lottery winners tend to be those who started from weaker positions in the business game (as poor people are more likely to play the lottery). So because everyone has an equal start, and the lottery frequently rewards poor people, wealth generated by the lottery is acceptable. It doesn't hurt that a portion of lottery revenue goes to the state. That the lottery makes many other poor people worse off is excusable because "they don't loose that much, only a couple bucks a day".

That's my two cents. As lotteries do not create wealth, they merely redistribute it, I support high taxes on lotteries and lottery winnings, but maybe that's just because I don't play. Would a highly taxed free market in lotteries be better or worse than the current government monopoly?

1 comment:

Pete Abbate said...

I'm not sure how you define better or worse here. Are we talking about making lotteries better for the government? Better for the players? "Better" in the sense that the Left will approve of them?

I've played a few scratch-off tickets before but frankly I find the lottery boring (thankfully, I know enough statistics to entertain no delusions about winning). To me, it's just gambling that has received special status, and I don't get it, so I suppose my personal view is that a taxed, non-government lottery program would be fine.

Either way, I hope you're wrong in your belief that people on the Left see business as a zero-sum game.

Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant. ~Fredrich Hayek in The Constitution of Liberty