The Vice Spiral

 

shutterstock_139513784The beauty of Ricochet is how one thought spawns another, a true ricochet of thoughts bouncing from one member to the next. David Sussman‘s post on Las Vegas got me thinking about the spiraling effects of lawmakers preying on their constituents’ weaknesses in order to wring every last available dollar out of them for, you know, the children.

Nevada has always been the industry leader. When divorce was a complicated procedure in America, Nevada filled the gap. In 1931, the state simplified its divorce laws and reduced its residency requirement to six weeks. They essentially created divorce tourism. By 1940, almost 5% of the total number of divorces filed in the US were in Nevada.

Divorce resorts cropped up everywhere, but especially in Reno. The town’s name became synonymous with the “quickie divorce.” In The Awful Truth (1937), Cary Grant quips, “The road to Reno is paved with suspicions.”

But when other states followed California into the Soviet-style “no-fault” system of divorce, that all came to an end.

In the same year that they created the divorce tourist, they also legalized gambling. That, too, would come crashing down as other states got into the act. At first it was New Jersey’s attempt to build Las Vegas East out of the ruins of the Atlantic City boardwalk. Then, in 1988, President Reagan signed the Indian Gaming Regulatory Act that allowed states to “partner” with Indian tribes to open casinos across the country.

Now there are plenty of places to lose your money but they’re so numerous that none of them are what you’d call “destination” places.

Colorado has now created “marijuana tourism.” While the state is benefiting right now, the true costs won’t be known for some time.

We do know the societal problems created by the first two legalized “vices.” But what we may not appreciate is that they are also agitating the monster they were supposed to placate. Take these two paragraphs from an article on legalized gambling in Social Work Today:

Gambling and its associated problems have been around for a long time. However, what is new is the recent increased opportunities to gamble as cash-strapped states desperate for new revenue streams relax prohibitions against slot machines, table games, and other forms of gambling.

And then it’s followed by this:

“The cost of problem gambling is high, both for the problem gambler and for their families,” Vander Linden says. “In most states, there is absolutely not adequate funding to address the problem.”

The man quoted is Mark Vander Linden, president of the Association of Problem Gambling Service Administrators. See, now that the states have created a bevy of problem gamblers the states need to find new streams of revenues to treat the problems. So they look for another vice to “regulate” and tax. It seems the merry-go-round just never stops spinning.

There are 65 comments.

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  1. Misthiocracy grudgingly Member

    Many of the first public infrastructure projects in America were paid for via gambling. The first lottery drawing for the benefit of an American community was held in 1612 to support the settlement of Jamestown.

    Source: http://www.quinnipiac.edu/prebuilt/pdf/SchoolLaw/LawReviewLibrary/16_24QLR227%282005-2006%29.pdf

    Like most government revenue schemes, I see little problem with government-sponsored gambling in and of itself. My problem is when it’s a supplement to other funding schemes like the income tax and the sales tax.

    I’d prefer it if governments chose one method of funding themselves, rather than nickle-and-diming the people with multiple revenue schemes.

    It seems to me, if all taxation was replaced with gambling revenue, it would be far more equitable since gambling is voluntary.

    Of course, that’ll never happen, and it’s (arguably) easier to ban gambling than to ban taxation.

    • #1
    • May 22, 2015, at 9:36 AM PDT
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  2. Bryan G. Stephens Thatcher

    I thought that by legalizing a vice, all the problems would go away. Isn’t that how it works? That is what I have seen here. Make it legal and good times will follow.

    Or is the regulation the problem? It should be legal with no regulation?

    • #2
    • May 22, 2015, at 10:00 AM PDT
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  3. Misthiocracy grudgingly Member

    Bryan G. Stephens:

    Or is the regulation the problem? It should be legal with no regulation?

    You can’t deregulate it because it’s too easy to use gambling operations to launder money (as illustrated in the underrated Diamonds Are Forever novel).

    But then, people wouldn’t need to launder money if the income tax wasn’t a thing, and/or if the ways they make their money weren’t also illegal.

    • #3
    • May 22, 2015, at 10:08 AM PDT
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  4. EJHill Podcaster
    EJHill Post author

    Legalizing vices is never the answer to funding anything. When they “earmark” lottery funds for education, for example, all it did was free up money in the general fund for some other piece of stupidity. It’s the same lie about taxpayer funded abortion. Funding “counseling” frees up the donations for the real work.

    • #4
    • May 22, 2015, at 10:27 AM PDT
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  5. Profile Photo Member

    Well-said, EJ, unfortunately (sigh)

    • #5
    • May 22, 2015, at 10:43 AM PDT
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  6. Terry Mott Member

    Setting aside the social dysfunctions that may result, the best thing about raising revenue via lotteries, etc., is that it functions largely as a voluntary tax on many people who would otherwise pay little-to-no tax, and yet who vote regularly to raise taxes on those of us who do.

    Petty of me, I know, but there it is.

    • #6
    • May 22, 2015, at 11:38 AM PDT
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  7. Mike Rapkoch Member

    Here in Montana Gambling has exploded. You can’t swing a dead cat without entering a casino. One little discussed consequence is that virtually every family owned and family friendly restaurant has closed, only to be replaced with a gambling hall. The downtown area is gambling free, but the restaurants in those parts are high end and not where one would take his family. There are lots of chain restaurants, but it’s just not the same..

    The second phenomenon of gambling is the pawn shop. They are everywhere and all seem to be doing well.

    Casinos are a magnet for the lonely. They are filled with elderly widows who also, sadly, are drinking constantly over many hours.

    I’m not opposed to legalized gambling per se, but it is a stark example of unintended consequences.

    The State of Montana is cashing in on human weakness and misery.

    • #7
    • May 22, 2015, at 12:20 PM PDT
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  8. Dave Sussman Contributor

    Thanks for the hat tip EJ. I was going to mention the state run lotteries which amount to a tax on the poor, but you stated it quite well.

    • #8
    • May 22, 2015, at 12:27 PM PDT
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  9. Mendel Member

    Sin taxes pose a weird conundrum.

    On the one hand, one of the biggest problems with “normal” taxes is that they punish productivity, thereby inevitably leading to less of the productive behavior being taxed.

    So taxing unproductivity (such as gambling) should be very appealing to us. Yet when one actually sees it in action, it inevitably has an very unseemly stench to it – enriching the state by taking advantage of human weakness is neither honorable nor particularly sustainable.

    While I don’t mind legalized gambling, I’m quite indifferent to using it as a steady source of income for the state.

    • #9
    • May 22, 2015, at 12:51 PM PDT
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  10. Mendel Member

    Bryan G. Stephens:I thought that by legalizing a vice, all the problems would go away. Isn’t that how it works? That is what I have seen here. Make it legal and good times will follow.

    Different libertarians take different views on this, even if we are all generally in favor of legalized gambling.

    Some (guess who) claim/imply that if every vice were legalized, we would have no problems.

    I take a slightly different view: it’s about minimizing the harm caused by vices. A certain degree of self-destructive behavior is inevitable in any human population, and criminalizing that behavior – which will still occur anyway – only adds to the damage (through enforcement costs, criminalizing otherwise law-abiding citizens, encouraging gangs, etc.).

    It’s not a matter of everything becoming okay, it’s accepting that humans will always hurt themselves to a certain extent and that trying to fight that truism causes more harm than benefit.

    Certainly very open to debate.

    • #10
    • May 22, 2015, at 12:56 PM PDT
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  11. Misthiocracy grudgingly Member

    Mendel:Sin taxes pose a weird conundrum.

    On the one hand, one of the biggest problems with “normal” taxes is that they punish productivity, thereby inevitably leading to less of the productive behavior being taxed.

    So taxing unproductivity (such as gambling) should be very appealing to us. Yet when one actually sees it in action, it inevitably has an very unseemly stench to it – enriching the state by taking advantage of human weakness is neither honorable nor particularly sustainable.

    One can note that the early American government lotteries were intended to raise funds for very specific projects, like building a particular road, bridge, school or university. They were not intended to fund ongoing operations.

    IMHO, a lottery ticket is more akin to a bond than a tax, except that instead of a small amount of interest you get a chance at winning the big prize. Considering how little government bonds pay in interest, many find that a rational trade-off.

    Some other countries have had success encouraging personal savings by allowing banks to offer savings accounts that use a similar principle. Instead of a small amount of monthly interest, the depositor gets chances to win a large prize. In some cases, the chance at a big prize is a much better incentive to save than a guarantee of a small amount of interest.

    Of course, in that example the depositor doesn’t lose money (except via inflation), unlike with a lottery ticket. It’s a “no-lose lottery“.

    • #11
    • May 22, 2015, at 1:08 PM PDT
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  12. Done Contributor

    Bryan G. Stephens:I thought that by legalizing a vice, all the problems would go away. Isn’t that how it works? That is what I have seen here. Make it legal and good times will follow.

    This is not the argument made on Ricochet by anyone.

    The argument is that the benefits of deregulation out weigh the costs. That is different from claiming there are no costs. It is the prohibition side of the argument that seems to frequently forget that there are costs to their preferred solution.

    • #12
    • May 22, 2015, at 1:10 PM PDT
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  13. Misthiocracy grudgingly Member

    A certain degree of self-destructive behavior is inevitable in any human population, and criminalizing that behavior – which will still occur anyway – only adds to the damage (through enforcement costs, criminalizing otherwise law-abiding citizens, encouraging gangs, etc.).

    Seriously, governments do not regulate gambling because of the harm it can do to individuals. Governments regulate gambling because of the opportunities it presents for money laundering. No government, not even Nevada, will ever fully deregulate gambling for that simple reason, and I can’t really blame ’em.

    It is no coincidence that gambling really only came to be uniformly outlawed in the United States in the early 20th Century, particularly around the ratification of the 16th Amendment, as well as during Prohibition, which helps explain the modern link between gambling and organized crime.

    Before WWI (and the income tax), private gambling was perfectly legal in most of the United States. In many areas, gambling was considered a relatively honest profession.

    Like so many legal prohibitions in America, the prohibition of gambling can be traced back to the Progressive era.

    http://en.wikipedia.org/wiki/Gambling_in_the_United_States#History

    • #13
    • May 22, 2015, at 1:19 PM PDT
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  14. EJHill Podcaster
    EJHill Post author

    Frank – And the libertarian side of the argument seems to forget the same thing. At what point does the state have a compelling interest to keep you from your weaknesses?

    • #14
    • May 22, 2015, at 1:21 PM PDT
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  15. Mendel Member

    Misthiocracy:

    A certain degree of self-destructive behavior is inevitable in any human population, and criminalizing that behavior – which will still occur anyway – only adds to the damage (through enforcement costs, criminalizing otherwise law-abiding citizens, encouraging gangs, etc.).

    Seriously, governments do not regulate gambling because of the harm it can do to individuals. Governments regulate gambling because of the opportunities it presents for money laundering. No government, not even Nevada, will ever fully deregulate gambling for that simple reason, and I can’t really blame ‘em.

    Yes, but the reason why libertarians want to liberalize prohibitions against gambling (and other vices) will always be different from the reasons why governments want to liberalize (and regulate) those vices.

    Which makes sense, since the first principles and objectives of libertarian philosophy and of government are nearly diametrically opposed.

    • #15
    • May 22, 2015, at 1:22 PM PDT
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  16. Mendel Member

    EJHill:Frank – And the libertarian side of the argument seems to forget the same thing. At what point does the state have a compelling interest to keep you from your weaknesses?

    Actually, I think the core disagreement is slightly different – and something we rarely talk about.

    An unspoken premise of those who lean toward restricting gambling, drugs, etc., is that (nearly) everyone has the potential to become addicts if exposed to an addictive vice, but will remain healthy as long as that vice is prohibited.

    Those of us who lean toward liberalizing these vices take the view that most people have an innate strength to withstand addiction and can do so even with the legal option available, while the most of the rest are destined to become addicts no matter what, regardless of whether their addiction is legal. We feel that there are very few “marginal cases” who have the potential to be either hopeless addicts or very healthy, productive citizens.

    In the end, it’s a question of human psychology that everyone thinks they have an answer to, but none of us actually do.

    • #16
    • May 22, 2015, at 1:26 PM PDT
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  17. Midget Faded Rattlesnake Contributor

    Bryan G. Stephens:I thought that by legalizing a vice, all the problems would go away. Isn’t that how it works?

    Never how it works. As the blue-eyed fellow with the handsome bald scalp said, it’s always about when the costs of prohibition outweigh the benefits.

    An unspoken premise of those who lean toward restricting gambling, drugs, etc., is that (nearly) everyone has the potential to become addicts if exposed to an addictive vice, but will remain healthy as long as that vice is prohibited.

    Yes, this often strikes me as the unspoken premise behind prohibitionist arguments as well. To prohibitionists’ credit, though, I don’t think they really believe it, just argue as if they do.

    • #17
    • May 22, 2015, at 1:40 PM PDT
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  18. Titus Techera Contributor

    Midget Faded Rattlesnake:

    Bryan G. Stephens:I thought that by legalizing a vice, all the problems would go away. Isn’t that how it works?

    Never how it works. As the blue-eyed fellow with the handsome bald scalp said, it’s always about when the costs of prohibition outweigh the benefits.

    An unspoken premise of those who lean toward restricting gambling, drugs, etc., is that (nearly) everyone has the potential to become addicts if exposed to an addictive vice, but will remain healthy as long as that vice is prohibited.

    Yes, this often strikes me as the unspoken premise behind prohibitionist arguments as well. To prohibitionists’ credit, though, I don’t think they really believe it, just argue as if they do.

    Well, if prohibitionists are not going to say it, I could really believe people might do something stupid. I’ve heard of races going drunk through life…

    • #18
    • May 22, 2015, at 1:42 PM PDT
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  19. Misthiocracy grudgingly Member

    The history of private gambling in America aside, in actual fact gambling is one of the very few areas where I actually think it’s more appropriate for government than the private sector, precisely because it’s basically a voluntary tax (some would say, on stupidity).

    The libertarian in me likes the idea of voluntary taxation, and the conservative in me dislikes companies getting rich via what is basically legalized fraud

    (“You give me money, and I’ll give you nothing back in return, but I’ll make you think you might get something in return.” That business model is so close to fraud, really, if you think about it for more than two seconds).

    Therefore, as long as it means a reduction in (or better yet, the elimination of) coercive taxation, I tend to support government-owned-and-operated gambling operations (like the ones we have in Ontario, Quebec, and some other provinces), more than I support simply taxing and regulating private gambling operations.

    • #19
    • May 22, 2015, at 1:42 PM PDT
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  20. Midget Faded Rattlesnake Contributor

    Titus Techera:

    Well, if prohibitionists are not going to say it, I could really believe people might do something stupid. I’ve heard of races going drunk through life…

    And when races go fat through life (as the American people currently do), vice-hating social-conservatives tend to blame individuals’ lack of self-control rather than insufficient prohibitions on sedentary habits or fattening foods.

    • #20
    • May 22, 2015, at 1:47 PM PDT
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  21. DocJay Inactive

    There is an old divorce house nearby. It was a brothel before that.
    Regarding problem gambling, I’ve seen horrors. Really it’s devastating when there’s kids involved.

    • #21
    • May 22, 2015, at 1:49 PM PDT
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  22. Titus Techera Contributor

    Midget Faded Rattlesnake:

    Titus Techera:

    Well, if prohibitionists are not going to say it, I could really believe people might do something stupid. I’ve heard of races going drunk through life…

    And when races go fat through life (as the American people currently do), vice-hating social-conservatives tend to blame individuals’ lack of self-control rather than insufficient prohibitions on sedentary habits or fattening foods.

    Well, they might, I’m not sure. I can think of at least a number of vice-hating social conservatives who leave a man to his suck on his nail before hibernating with nary a peep. But sure, it makes sense that people who hate vice would look to the individual or his education for the cause…

    Of course, I love vice–I’m only here because of the misleading title, thanks a lot MR. EJHILL–so I do not have much to offer by way of complaint. I have considered all sorts of prohibitions of the kind you suggest, so maybe you & I should talk–unless you’ve already read my mind, in which case, for shame!

    Now, technology has made mankind live long & prosper, willy-nilly, & there is something to be said for the nilly. Alcohol is far cheaper than ever, not just fast food. If people are not really improvements of their grandads, simply the opportunity for fun might suffice to make the difference. Except, was not there much more drinking in America before the Prohibition?

    • #22
    • May 22, 2015, at 1:54 PM PDT
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  23. Misthiocracy grudgingly Member

    Titus Techera:

    Except, was not there much more drinking in America before the Prohibition?

    Correlation vs. causation.

    The early 20th century saw both Prohibition and a dramatic increase in the quality of drinking water, thanks to new water treatment technologies and infrastructure investment during the Depression and after World War II.

    The very first water chlorination facility in the United States, for example, was built in 1908 in New Jersey (12 years before the 18th Amendment), and the technology for using chlorine gas to purify water didn’t come online until 1913 in Philadelphia (seven years before the 18th Amendment).

    Therefore, there is a pretty strong argument to be made that the higher levels of alcohol consumption prior to Prohibition can be (at least partly) due to the fact that in many places alcohol was the safest drink available. Even tea or coffee made from boiled water isn’t as safe from pathogens if the water used is contaminated.

    http://en.wikipedia.org/wiki/Water_supply_and_sanitation_in_the_United_States#History

    • #23
    • May 22, 2015, at 2:03 PM PDT
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  24. Midget Faded Rattlesnake Contributor

    Titus Techera:Of course, I love vice–I’m only here because of the misleading title…

    Aha.

    …so maybe you & I should talk–unless you’ve already read my mind, in which case, for shame!

    A real lady would never tell…

    Except, was not there much more drinking in America before the Prohibition?

    There was more drinking before Prohibition, but perhaps the people were better people anyhow. A patchwork of organized crime, moonshine, and teetotalers isn’t obviously more virtuous than widespread, but mundane alcohol consumption. In the Czech Republic, beer is (or was until recently) cheaper than water, and consumed in astonishing quantities. I was not aware that the Czechs were exceptionally immoral people, though.

    • #24
    • May 22, 2015, at 2:07 PM PDT
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  25. Titus Techera Contributor

    Misthiocracy:

    Titus Techera:

    Except, was not there much more drinking in America before the Prohibition?

    Correlation vs. causation.

    The early 20th century saw both Prohibition and a dramatic increase in the quality of drinking water, thanks to new water treatment technologies and infrastructure investment during the Depression and after World War II.

    Therefore, there is a pretty strong argument to be made that the higher levels of alcohol consumption prior to Prohibition can be (at least partly) due to the fact that in many places alcohol was the safest drink available. Even tea or coffee made from boiled water isn’t as safe from pathogens if the water used is contaminated.

    http://en.wikipedia.org/wiki/Water_supply_and_sanitation_in_the_United_States#History

    I’m not sure there is any strong argument to be made, but I would like to hear it. You have reason to believe that sanitation mattered that much?

    • #25
    • May 22, 2015, at 2:15 PM PDT
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  26. Misthiocracy grudgingly Member

    Titus Techera:

    Misthiocracy:

    Therefore, there is a pretty strong argument to be made that the higher levels of alcohol consumption prior to Prohibition can be (at least partly) due to the fact that in many places alcohol was the safest drink available. Even tea or coffee made from boiled water isn’t as safe from pathogens if the water used is contaminated.

    I’m not sure there is any strong argument to be made, but I would like to hear it. You have reason to believe that sanitation mattered that much?

    I do not have statistics at hand, which is why I used the “at least partly” caveat.

    Most statistics used to illustrate that “Prohibition worked” compare metrics (cirrhosis of the liver, murder rates, admissions to mental hospitals, etc) immediately before prohibition vs. during prohibition.

    However, they do not tend to look at the long-term trends for those metrics, and they tend not to look at other factors that could account for the changes (e.g. if lots of asylums were built in the early 20th century, it would make sense that there would be an increase in admissions. There was also a little thing called WWI.).

    There were lots of technological, political, and social changes in the period between 1900 and 1930. To credit any one law for a particular outcome seems very foolish to me.

    I don’t know how strong the correlations are, but I wager that a history student could do well studying the subject.

    • #26
    • May 22, 2015, at 2:27 PM PDT
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  27. Titus Techera Contributor

    Misthiocracy:Most statistics used to illustrate that “Prohibition worked” compare metrics (like cirrhosis of the liver, or murder rates, or admissions to mental hospitals) immediately before prohibition vs. during prohibition.

    However, they do not tend to look at the long-term trends for those metrics, and they tend not to look at other factors that could account for the changes (e.g. if lots of asylums were built in the early 20th century, it would make sense that there would be an increase in admissions during that time).

    There were lots of technological, political, and social changes in the period between 1900 and 1930. To credit any one law for a particular outcome seems very foolish to me.

    I don’t know how strong the correlations are, but I wager that a history student could get some really good grades studying the subject.

    Sure. It might be. Dunno.

    • #27
    • May 22, 2015, at 2:31 PM PDT
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  28. Jerry Giordano (Arizona Patrio… Member

    Frank Soto:

    Bryan G. Stephens:I thought that by legalizing a vice, all the problems would go away. Isn’t that how it works? That is what I have seen here. Make it legal and good times will follow.

    This is not the argument made on Ricochet by anyone.

    The argument is that the benefits of deregulation out weigh the costs. That is different from claiming there are no costs. It is the prohibition side of the argument that seems to frequently forget that there are costs to their preferred solution.

    I’m pretty sure BGS was being tongue-in-cheek.

    • #28
    • May 22, 2015, at 2:45 PM PDT
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  29. Jerry Giordano (Arizona Patrio… Member

    Lotteries are essentially taxes on the mathematically inept. As my stochastic processes professor once said, “you can’t lose if you don’t play.” This was a clever twist on the ad campaign then in use by the Arizona lottery, “you can’t win if you don’t play.”

    And don’t ask me what a stochastic process is. I’ve literally forgotten more math than most people ever know.

    • #29
    • May 22, 2015, at 2:48 PM PDT
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  30. Misthiocracy grudgingly Member

    Arizona Patriot:Lotteries are essentially taxes on the mathematically inept. As my stochastic processes professor once said, “you can’t lose if you don’t play.” This was a clever twist on the ad campaign then in use by the Arizona lottery, “you can’t win if you don’t play.”

    The difference between a lottery and a tax: Nobody throws you in jail if you choose not to buy a lottery ticket.

    Didja ever ask the stochastic processes professor for his/her opinion on the rationality of other forms of taxation?

    • #30
    • May 22, 2015, at 2:58 PM PDT
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