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Two brief thoughts on this fine morning (for the record I did not buy a Powerball ticket).

  1. Someone please explain to me what would happen to the probability of anyone playing the Powerball lottery if the top tax rate on income were raised to 90% or more (In some places I have seen proposals higher). Do you wish to argue that then that the rich will not respond to changes in tax rates?
  2. The fact that governments operate lotteries should have them stripped immediately of any claims to moral legitimacy. Lotteries are overwhelmingly played by the poor. So much for concern about regressive redistribution. The poor probably spend too much of their income playing the lottery especially when it is actuarily rigged against them. So much for the behavior insights hoping to “Nudge” people to make better decisions. It’s in fact more than a little creepy to have the Nudgers influencing elections while “letting” the poor waste their time and money on an exploitive system. Winnings end up making someone arbitrarily rich. So much for the insights of folks who lament the time when industry and thrift were once rewarded and that today’s modern riches are merely a result of luck. The government aggressively and massively advertises for the lottery (“a dollar and a dream!”). So much for the moral legitimacy of complaints against corporate advertising (never mind the billions politicians spend advertising themselves). The lottery is really no different than some of the high flying Wall Street products, including the fact that I am sure some states securitize future income streams from lottery sales. So much for the legitimacy of shutting down InTrade. And so on.The existence of a lottery is a big giant F&CK YOU from your lords and masters in the statehouses and in DC telling you that your perception of the emperor being naked is simply a function of your altered mental state and having nothing to do with reason and reality. As long as I see state sanctioned lotteries side-by-side with the moral (and economic) posturing of the political class, I will not only regard them as hypocritical, but as dangerous and worthy of not one shred of respect. None.

Have a lovely day.

4 Responses to “The Powerball Lottery, the Fiscal Cliff and More”

  1. Harry says:

    It sure changes the odds, doesn’t it?

    Even where the odds are better, what if you had to log into a slot machine with your social security number and the machine spit out a 1099 along with a big pile of quarters?

    But then, savers and investors do not think about after-tax returns, right?

  2. jb says:

    On the other hand…wasn’t it Jefferson who suggested the lottery was an ideal tax in the sense that it was a voluntary means of generating revenue for the government, as opposed to one that was compelled? Besides, if that which we tax is that which is discouraged, what’s wrong with taxing stupidity?

    • wintercow20 says:

      Fantastic point! And it is without the distortionary impacts of “regular” taxes, which by my estimates are something on the order of a trillion dollars per year. So, how large a lottery would we have to run every year (or every month) to voluntarily fund the government? We “need” $6.5 trillion to spend every year, so with a payout of 50% we’d need an annual lottery that equals the size of our GDP (roughly) …

  3. jb says:

    I hasten to add; WC your point regarding the HYPOCRISY of a goverment lottery (it is regressive, etc) is entirely on the mark.

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