THE INSOUCIANT IMMORALITY OF GOVERNMENT A bunch of Australians corners the Virginia state lottery. So the public and the bureaucrats call for siccing the law on 'em, and all that. This wild reaction is good reason to put the whole government lottery business in a long-run perspective. Marty and Sam were bookies in the Weequaic area of Newark in the 1930's and early 1940's. They also were the uncles of my long-ago girlfriend Rocky (aka Rachel aka Ruckel). The "boys" lived with their mother -- Rocky's grandmother -- who also brought Rocky up after her mother died. As was natural for bookies, Sam and Marty taught Rocky to read on the Daily Telegraph racing results. They also taught her what to say when the neighbors asked what Marty and Sam did for a living -- as was natural for the neighbors to ask, because the boys wore nice clothes during the depression, and did not leave the house until eleven or twelve in the morning. Rocky learned to say that they were necktie salesmen. The names in the paragraph above are changed, because half a century later it would still be scandalous were the real Marty and Sam to have this written about them in the papers, and Rocky would still be embarrassed. Being a bookie was illegal then. And even if the bookies were simply independent small businessmen providing a service the community wanted, they sometimes had to do business with some scummy, dangerous people in the trade. This entire setup was not a good thing for the society. When she went to graduate school, Rocky swapped stories about her childhood with Carmen, whose father had a tiny stationery store which earned so little that he always was on the brink of closing down and taking a job as a laborer. The difference between closing down and staying open was the occasional lottery "number" that Carmen's father sold illegally from under the counter. Carmen's family always lived in fear that a reform movement would cause Carmen's father to be arrested. And Carmen's father hated himself for paying off the cop on the beat every week to keep his protection. Carmen himself grew up hating the father he also loved dearly because the other kids teased him about his father's "racket". The theory of the law which made lotteries illegal was that betting is bad for people, and sinful. Now in 1992, betting on government-run lotteries is legal. Nothing has changed about whether or not betting is bad, and sinful. What has changed is that the government gets the revenue instead of small businesspeople. Moreover, the District of Columbia and various states do not simply offer their product to the public. They run advertisements for their lotteries that are beguilingly seductive, and misleading to boot. Our governments shamelessly pander to our dreams, suggesting to people -- many of them poor - - that the lottery is a good way to get money. Something is terribly wrong. The issue is not whether betting should be legal. I happen to think it should be, if only because many people will gamble one way or another. If the gambling will take place, it is better that it be done with the protection of the law rather than in circumstances where hoodlums and lawlessness will proliferate. But this does not imply that the activity should be conducted by government rather than by private individuals. The theory that underlies having government run the lottery is that a lottery is a painless way to obtain revenues. There is something to be said for that. But the same revenues could be obtained by a tax on gambling. This procedure probably would be more efficient because it would forestall the inefficient and corrupt management that a government monopoly always breeds. Also of public interest is the matter of the government advertising the lottery. Government nowadays is not only willing to profit from people's betting, but also to promote it. This is extraordinarily sinful practice, in my view. What the government formerly would hunt down with the police and courts when done privately, it now not just tolerates, but actively promotes -- just because government and government officials benefit. Moreover, the advertising typically uses the most diabolical of devices -- appealing to the fantasies of have-nots by holding out the hope of huge hits. If there ever was a get-rich-quick scam, this is it. All in the "public interest", of course. Perhaps even worse, the promotion is a dishonest come-on for a dishonestly-run con game. The odds are horrendous, far worse than in any other form of gambling. Writing in Consumers' Research, Amy Bayer reports these average odds for a single play of legal gambling: Craps, 98%. Roulette, 95%. Slot machines, 75-95%. Jai Alai, 85-87%. Horse racing, 83-87%. Lotteries, 49%. And in New York State, the lottery payout is only 39%. Such a low payout presents an excellent opportunity to private individuals who will sell you the same number for a lower price. But this is illegal, of course. The state does not want competition that would steal its business even if the consumer gets a better deal thereby. This must mean that consumers are not really "the public" somehow. Or maybe "the public" is only us when the government gets to take care of us, and not when we take care of ourselves without the ministrations of government. It all makes one wonder: If drugs are legalized -- which I am convinced would be better than the present situation if the activity were conducted privately -- will government conduct the business for its own benefit, and run ads actually promoting the wonders of pot and crack? Will the ads promise you that pot will not only enhance your sex life but also improve your golf score and your Scholastic Aptitude Test results, and make you the life of the party to boot? It is time for us to get shut of the idea that because government conducts an activity, and there is no private profit - - except for the private benefits that bureaucrats obtain, and the private graft that is funneled to political supporters -- the activity is acceptable, even though the same activity would not be acceptable if done by private businesspeople. This is a lesson that people in Eastern Europe have learned well in recent decades. Let's start by privatising lotteries. lotteries article0 0-200 3-10-2 Julian L. Simon teaches business at the University of Mary- land and is an adjunct scholar at the Cato Institute. His most recent book is Population Matters: People, Resources, Environ- ment, and Immigration. /page 1/article0 lotterie/March 12, 1992