This is why we love blogging, and bloggers, so: I can unplug completely from Swedish media for the duration of the summer vacation, secure in the knowledge that should important investigative reporting surface, my favorite blogs will have it, prechewed into bite-sized morsels even.
And so it is with Gudmundson, who points us in the direction of a truly revelatory piece in Dagens Nyheter by Bernt Hermele about where the proceeds of Swedish lottery winnings go.
Sweden’s lotteries, like in the UK, are a government-controlled monopoly. In the UK, a neutral commission ensures that one selected operator, Camelot, complies with its license, and that all but the smallest profit margin funds “good causes.” Precisely which good causes are funded is a matter of careful public scrutiny. Some Brits I know even justify their buying of lottery tickets by saying they do it for a good cause.
That justification is, of course, mere self-deception. If it’s a good cause you’d like to fund, much better to give the entire amount, without middlemen to feed, and you’d get a tax deduction to boot. There is no way of getting around the fact that lotteries are a stupidity tax: You only play if you are completely incapable of grasping just how improbable winning is. The defence — that the ticket buyer is not calculating probabilities but paying to participate in a fantasy — turns lotteries into a state church of the here and now, requiring faith in rewards in this life. If anything, lotteries trump religion: they produce verifiable miracles like clockwork; somebody always winsCall me cynical, but what is religious belief other than placing high odds on there being a moral God and an afterlife?.
In the UK, precisely because the proceeds do go to transparently good causes, the lottery business is probably benign, with most likely a net positive utility for society (it’s hard to calculate, given opportunity costs and the rent-seeking activities of the lottery organizers)In comparison, it’s less certain that going to church is benign: Felix and Michelle and I had this argument in a church in Glasgow converted into an excellent restaurant. My argument went like this: While religious people are more likely than unbelievers to do charity work, thus increasing the utility of those in their immediate surroundings, there is still the problem that attending church is a vote for the dogma of the particular denomination one attends. Attend a Catholic church and you are voting with your presence for infallibly moronic positions on contraception, for example, and medieval attitudes to women, both of which lower society’s utility far more than can be counteracted by helping out in a Catholic soup kitchen.
It turns out that my reasoning is wrong, however: the current isssue of the Economist, in an article on philantropy, shows the atheist Dutch and Swedes actually contributing a far larger portion of their GDP — almost double — to doing good than do the markedly more religious Americans. That flies in the face of received wisdom, my own assumptions, and those who argue that high taxes are immoral because they stifle the incentive to behave charitably. The Economist got their data, below, from the Johns Hopkins Comparative Nonprofit Sector Project.
. In Sweden, however, it’s easier to reach a verdict: Only the state, horseracing organizations and “popular national movements” (folkrörelser) are allowed to run lotteries, according to DN. The two stated reasons: This monopoly limits “lottery abuse” (the same line of argument as the one justifying the existence of the state alcohol monopoly, Systembolaget); and it guarantees that lottery profits go to the “common good” or “public ends” (allmänna ändamål). “Common good” here is defined as, wait for it, the financing of a political party, specifically the ruling Social Democratic Party, SAP, and its youth wing, the SSU. In fact, 40% of their combined 2002 annnual revenues, 80 million kronor of 200 million, was from lottery proceeds. Neither the SAP nor the SSU is particularly keen to publicize this, obviously.
Other political parties have the right to run lotteries too if they want to (and the Center Party brings in a few million kroner this way, says DN). This doesn’t make it right, though. It is beyond me why political parties should have such a cushy funding option, especially when most Swedes buying lottery tickets seem to have no idea that many of these directly fund the ruling party machinery.
The solution: Abolish the monopoly; privatize lotteries, much like Sweden has already “privatized” the Church of Sweden. If you want to support the Social Democrats, by all means buy Social Democrat lottery tickets, as long as they are clearly labelled as such. Feel like supporting another party when you inevitably lose? Buy into their lottery offerings instead. Or buy Greenpeace lottery tickets. or Médecins Sans Frontières tickets. In any case, the internet is coming to the rescue, soon felling this particular Social Democratic money tree: There is nothing stopping Swedes from betting online with foreign companies.
I hate to deviate from the main topic of your post about Swedish lotteries (which as an interesting read by the way) but your sidebar comments demand attention.
The Economist article that you quoted explicitly stated that religious contributions were NOT included in that chart you displayed. This is significant, as the article later states that 62% of all giving by Americans is to religious organizations.
Additionally, the volunteering figures stated for Scandinavian countries has been called into question in comments at Daniel Drezner’s blog. (http://www.danieldrezner.com/archives/001523.html) The skeptisim is due to the fact that apparently private non-profit clubs (chess clubs, motorcycle clubs, sports clubs) have been grouped together with non-profit giving in terms of counting volunteering activities.
Indeed, looking at the John Hopkins site you link, and specifically at Sweden’s data, 52% of volunteering within non-profits is for Culture and Recreation. Not exactly what most would consider as ‘doing good’. The amount under philanthropy is strangly missing from Sweden’s data set. At the very least the figures in that chart deserve a much deeper look than they are being currently given.
Cynisk? Pascals argumentation har även kallats en klassiker inom beslutsteorin.
Förresten: din länk till DN funkar inte.
On lotteries: Basically, I can agree with what you are saying. It is amazing, however, that you should immediately fall into the old neo-liberal trap: privatize, privatize, privatize! Why would it be better for lotteries to serve the profit-seeking of a murky maffia than the interests of political parties? Both are bad, obviusly, but if I have to chose I would definitely chose the second. At least we can then read about it in Dagens Nyheter which would not be the case if it were in private hands.
The real problem is that as long as it is possible to make a profit on lotteries and the like, there is obviously no incentive to reduce the playing. The old dream of getting rich without having to work! I wonder if it is stronger anywhere than in this country.
We need a state monopoly but its aim should be to restrict playing as much as possible, not to serve the eceonomic interests of a political party or of private firms.
Spel och dobbel, modehus och kungahus
40 % av budgeten för Det Största Partiet kommer från spel och dobbel och Stefan Geens vill göra verksamheten mer…
I’m not so sure about the benignity of the lottery in the UK. Lotteries do not merely function as a “stupidity tax” but also as a “poor tax” since they generally remove a greater proportion of the income of the poor than of the rich. Such practices are not benign on the welfare of society.
The defence of “good causes” in the UK would be more believable had the lottery regulator given the monopoly to one of the non-profit bidders rather than to Camelot.
Lastly, you seem to approve of a state religion where at least somebody wins (or are we competing for silly comments? 🙂 ). I, for my part, cannot approve of a state religion where nearly everybody loses.
Of course, the unlikely in the case of state lotteries is not the same as the miraculous in religion!
Regards,
James.
Tack, Gustav.
Bengt, it’s not just privatization but also clarification. A liberal society should safguard the freedom of consenting adults to engage in irrational activities, whether that be attending church, smoking in private or buying a lottery ticket. I disapprove of the current system not because playing the lottery makes you poorer, but because consumers are not properly informed about the game before they play. You can’t say that about buying cigarettes, in comparison.
Privatization could also mean instituting a system like the UK’s. Ban political parties from running lotteries ouright, but let other non-profit charities apply for licenses. Or have one tightly regulated company administer one national lottery, but with lottery ticket buyers having to indicate to which non-profit their purchase money should go.
Stefan: Many of those irrational activities such as smoking, drinking, hazardous games, driving at irrational speeds etc. have considerable external effects, hence some kind of corrective mechanism is needed.
The system you describe in the second para of your comment makes a good deal of sense to me.But why should the system be run by “private” actors?
Bengt: Because in modern economies matters should always be run by prviate actors, unless there is a compelling reason for the government to monopolize the industry. Examples where monopolies are justified: the police; tax collection; the army. Running lotteries doesn’t cut it.
Regulating an activity, much like the US government regulates airlines, does not mean the industry is a monopoly. This is how lotteries could operate.
James: Not sure if a stupidity tax and a poor tax are the same thing. Poverty is not a prerequisite for playing the lottery; stupidity is. If a lottery ticket is less affordable to a poor person, the winnings are proportionally greater too. He just needs to buy fewer tickets than the rich person to get the same “rush”.
Dear Stefan,
it was a sociological observation. The poor tend to play the lottery more than the rich or at least spend a greater proportion of their income on it. Why that is I don’t claim to know definitely. One could speculate that it offers a “dream” to remove them from their poverty? Perhaps also the “rush” is greater the poorer you are.
Regards,
James.
Stefan: “Because in modern economies matters should always be run by private actors.” Ipse dixit! With all due respect: “It ain’t
necessarily so” just because you say it.
Well, Bengt, it’s a better starting point than “Because in modern economies matters should always be run by the government, unless there is a compelling reason for private companies to do it.” 🙂
Blogs as fast food?
I like the idea of blogs being bite-sized morsels as stefangeens says
One of the main reasons I rarely play the lottery is the simple fact that the odds of winning any substantial monies while buying a ticket yourself are so astronomical that factoring in “someone buys a ticket for you without your knowledge” doesn’t make it all *that* much more unlikely you’ll end up a millionaire come Saturday.