State Lotteries

Economics Economics Questions
1

Esteemed Assembly,

What is all your take on State sponsored lotteries from a classical liberal viewpoint?

2

This q has several parts.

  1. About lotteries in general as economic activities. Since they are voluntary [and assuming no fraud] then they are legitimate economic activities. On other words, since the buyer is willing to pay, then obviously the purchase of the ticket is giving him some satisfaction. Of course if a person feels good about taking all his wealth and creating a big bonfire from it, that is also his legitimate right. What’s his is his to do with as he pleases. But it’s stupid. As is buying lottery tickets, which is very close to just burning up his money.

  2. About the State having the right to do anything. After they return their ill gotten gains they can do what they please with what’s left over, including running a lottery. Unfortunately, all their gains are ill gotten, so they should give it all back, leaving them with a balance of zero, and so no money to start a lottery with. In other words, why are you running a lottery instead of returning my money, you thieves.

That said, running a lottery is no better or worse than anything else they do.

  1. About their creating a monopoly for themselves in running the only game in town. This is of course an outrage, just like all the other monopolies they create for themselves and their pals.

  2. About the State corrupting the morals of society by encouraging gambling, and also making the poor poorer by seducing them into throwing it away on gambling.

Morals are best cared for by moralists who have only the power of persuasion at their disposal. Any attempts at prescribing morals by law creates much much worse problems than it solves. The classic example is Prohibition, which gave us the Mafia as a little gift to this very day, as well as other horrors at the time it was in effect.

The point of the above paragraph is that it would be a huge mistake to make gambling illegal. Given that gambling should be legal, then SOMEONE is going to be encouraging gambling and making the poor poorer, because there is a buck to be made. So it might as well be the state.

However, as I write this, it occurs to me that since the state has a huge propaganda machine spewing out that whatever they do is noble and good, then if they engage in selling lottery tickets, they are actively going to be teaching the young that its a good healthy wise thing to buy the tickets. Which is a bad thing, it seems to me.

So bottom line: From an economic view, it’s like any other state activity, no better or worse. From a moral view, it seems wrong to me for them to encourage people to throw their money away.

3

Napoleon sent his step-son, Eugene de Beauharnais, to rule over Italy as a viceroy. Eugene was a young man with very high moral standards and he set about his job very seriously. Among the reforms he submitted to his step-father, the Emperor, for approval was the abolition of the State lottery. Eugene saw this as immoral and a way to lull people into believing that they could make money simply by picking the right numbers instead that through hard work.

The Emperor, always strapped for cash, commented succintly: “That’s bad. We make over a million pounds a year thanks to lottery just in the Kingdom of Italy”.

Personally I believe that State lotteries are probably the less evil form of taxation. While Eugene’s point can be easily shared from a strictly moral point of view, who are we to judge how people spend their own money? As long as lotteries are not compulsory I have no problem with them. Of course there’s a catch. If you win at a lottery you also have to pay taxes on top of that: in Italy we go from a measly 2% for the traditional Lotto to a whooping 40% for the hugely popular Super Lotto. That means the State wins twice. But again it’s not my business what people do with their own money.

4

Seeing how state lotteries are launched using the money received from conventional taxation that means the taxpayers are shareholders. So where are our profit dividends and how can I sell my share?

5

Its hard to really say what is malinvestment until the market prices are established, the price controls lifted. And that hasnt happened in the banking sector.

6

The Lottery Tax - Mark Thornton

The Lottery Racket

7

Participation is voluntary. They raise revenue. The only problem is if they are granted monopoly.

8

thanks for the links, Conza