All Commentary
Saturday, June 1, 1963

The World’s Largest Lottery


Citizens of the United States, like compulsive gamblers, are follow­ing the illusive lure of something for nothing into what is unques­tionably the world’s largest lot­tery.

The recently proposed “Urban Mass Transportation Act of 1963” illustrates the nature of this lot­tery. That there is a serious and growing transportation problem in most metropolitan areas is ob­vious. It is equally obvious that no one caught in a rush-hour traf­fic jam knows how to avoid it, else he would do so. Thus, the prob­lem is ripe for turning over to the government, because, it is said, “private enterprise has failed.” This also seems obvious to many persons. And they are ready to be­lieve that if the costs of new and improved transit facilities exceed passenger revenues, the logical solution is: let the federal gov­ernment absorb two-thirds of the deficit while the local community is taxed for the balance.

Before climbing aboard this gravy train, however, give thought to the number of persons who are not where they’d rather be, at any given moment — not to mention all the days and weeks and years of their lives. Imagine the traveling we’d do if someone else were obliged to cover any costs in ex­cess of the fare the rider himself would gladly pay. There are per­sons willing to go to the moon on that basis! And certainly there is no limit to the number who would shuttle to somewhere and back, perhaps several times a day, were the fare low enough and the service convenient and fast enough. There is, after all, a limit to the transportation government can provide! But where and how is that line to be drawn?

If we review the history of ca­nals, highways, railroads, airlines, the merchant marine, bridges, subways, ferries, tunnels, and other facilities of transport, we find no lack of government ex­perience in the business. Facilities not subsidized directly are often subject to rate regulation and con­trols that eat away capital and force investors to subsidize users. There seems to be nothing in the record of transportation in the United States to rule out further government intervention and sub­sidy on principle; it’s an old American custom!

But tarry a moment longer be­fore enjoying the “free” ride. Look again at the record. Does it really show, anywhere, at any time, that government successfully solved a transportation problem where private enterprise had failed? And is it really private en­terprise and a free market that have failed now and created the current problems of urban trans­portation? Or, is it rather a case of too much compulsory govern­ment intervention, too many sub­sidies, too lavishly extended, for too long?

Is private enterprise responsi­ble for the below-cost commuter fares on the passenger trains still serving Metropole? Is private en­terprise responsible for the toll-free superhighways that lure more motorists to Metropole than can find free parking space on the streets? Are subway tokens that represent but a fraction of the full cost of a ride the responsibility of private enterprise? Are subsidized housing and recreation and similar attractions of Metropole properly chargeable as failures of private enterprise?

Results of Intervention

We know very well, when we think about it, that the above-men­tioned trains, highways, subways, and housing are products of per­sonal savings and individual hu­man effort, although it was taxa­tion that diverted energies into these particular channels. But we also know that the persisting mis­appropriation, malinvestment, and mismanagement of these resources — the subsidies that create rather than relieve congestion — are acts of governmental coercion; they are not free market manifestations of competitive private enterprise.

Now, we are being urged to be­lieve that the problems created by too much intervention and subsidy can be resolved only by more inter­vention and subsidy — that govern­ment planners at last have per­fected a perpetual motion machine whereby each of us, with no effort or responsibility on his own part, can survive and prosper at one an-other’s expense!

Congestion Multiplied

The proposed “Mass Urban Transportation Act,” to whatever extent it authorizes federal or even local tax funds to pay for all or part of the costs of transportation, will simply and inevitably lead to more demand for transportation facilities and services than would prevail were each rider obliged to pay his own fare. The consequence must be to aggravate rather than to relieve the current congestion of traffic. The present failure is that of intervention and subsidy; and more of the same means further failure. The more hopeful alterna­tive is to turn the problem back to the free market and let compet­itive private enterprise solve it. This would afford precisely the amount and kind of transportation customers are willing to pay for; and the result could well be a far greater community attraction to individual residents and to indus­tries than all the various subsidies combined. At least, the resultant community would stand solidly on its own true merits, rather than balance precariously on artificial props ready to be toppled with every shift in the balance of po­litical power.

Previously mentioned were many of the transportation serv­ices in the United States that have been drawn under the “national lottery” in one way or another. Ina closely related and partially over­lapping field of communications lies the postal service. The national government has monopolized mail delivery, which reveals the direc­tion and the extreme toward which the lottery idea leads. American taxpayers are obliged, in effect, to haul the mail for one another, through taxes to cover the post office deficits that have approached a billion dollars annually in recent years.¹ Every taxpayer thus is forced to buy tickets in the postal lottery; favored individuals and groups are in positions to reap the “advantages” of the subsidy. Whether anyone actually reaps an advantage in the long run from the coercive practice of taking from some to give to others is doubtful from an economic point of view. And by all recognized measures of morality, the practice is dead wrong.

Subsidized Housing

Housing subsidies include pub­lic housing projects, slum clear­ance, urban renewal, rent control, mortgage loans at below market rates of interest, and various other devices whereby all taxpayers are forced to buy tickets in order that some may be lucky winners in the housing lottery.

With respect to food and farm products generally, the lottery col­lects from all taxpayers, in order to hold farm supplies off the market, in order to allow a favored minor­ity to reap benefits. Portions of the stockpiled produce also are doled out to other favored classes in pro­portion to their lack of creative ef­fort. In addition to food, the non-creative may draw unemployment compensation at everyone else’s ex­pense.

Another aspect of the lottery is entitled Social Security under which the lucky winners are drawn primarily according to age.

Various recreational and cul­tural facilities are now financed in whole or in part by way of the lottery.

Many business entrepreneurs owe their profits to one branch or another of the lottery, some by way of tariffs and quotas, some through tax exemption, some through spe­cial franchises or exclusive grants of monopoly power, some through government contracts, and perhaps some through pure chance—some loophole unplugged—all at every­one’s expense.

Organized labor participates in the lottery prizes, at the expense of laborers from whom union cards are withheld, and consumers from whom goods and services are with­held, and others from whom values are withheld as strike-threatened inflation taxes savings.

The trend in education clearly illustrates the working of the lot­tery. The first departures in the United States from the concept of education as a parental responsi­bility were in the shift to local school districts—the lottery being confined to the community level. But with something for nothing in prospect, why play it small? Why not state aid and state control of the prizes? And if state aid is good, why not federal aid, and a federal lottery for education—everyone paying for the education of everyone else?

One intervention leads to an­other, and this is why more and more of the everyday affairs of ordinary citizens are being collec­tivized and tax-supported, first at the community level, then the state, and finally on a national scale. Beyond that, we have foreign aid programs; we cover the earth.

With Most To Lose

It may be argued in connection with any one of these socialistic programs that it is not like a lot­tery, because the winners are planned and designated in advance rather than chosen by lot or chance. And there is no doubt that many of the participants have some well-calculated schemes to beat the game and win something for noth­ing. But what they often fail to consider is that other schemers will devise other plausible schemes for inclusion in this major na­tional pastime. And now that the lottery tickets are taking a third or more of the earnings of the typical American citizen, who is to say with any real conviction that he’s still a sure winner?

Gambling can be a relatively harmless recreation for those who can afford to lose. But compulsive gambling can be a terrible disease of those who are not independently wealthy. There is nothing creative or productive about gambling. Someone always has to lose. And the ones most certain to lose are those who can least afford it. An advanced welfare state, such as prevails in the United States to­day, is little more than a gigantic national lottery, a wasteful gam­ble. As in any national lottery, the ignorant and the poor are the ones most tempted by this lure of some­thing for nothing. Why not tax the rich and divide the proceeds?

There is a very good reason why this is not a good bet: once the creative and productive members of a society are taxed out of busi­ness, there will be none left to help those who couldn’t help themselves.

Compulsive gambling is sad and serious enough when confined to the self-injury one can inflict with his own resources. But to promote the lure of something for nothing into compulsory socialism—an all-out welfare state—is to return to the intolerable tyranny of the Dark Ages.

Footnotes

1 For the author’s discussion of the parcel post aspect of the postal service see “The Government’s Freight Busi­ness,” The Freeman, February, 1955. See also Leonard E. Read’s “Let Anyone Deliver Mail,” The Freeman, July, 1957. Both reprints available on request.


  • Paul L. Poirot was a long-time member of the staff of the Foundation for Economic Education and editor of its journal, The Freeman, from 1956 to 1987.