Thursday, January 14, 2016

Powerball Humbug - Another Reflection On Winner Take All Society

The Powerball mania that's swept the nation the past few weeks now appears to be at an end, with the lucky (unlucky?) winners from Chino Hills, California, Melbourne, FLA and Tennessee. At least this time around one geographic locus for the win has moved west - as opposed to being in Penn., NJ, VA or one of the other eastern states. But the spectacle of so many millions just lining up for the chance to toss money away is a psychological study in itself. WHY in the hell act so irrationally when the odds are only 1 in 292 million to win? You have better odds of walking down your street one night and being abducted by an alien.

The answer lies in the brain's temporal lobes which appear to be geared to convert reality into fantasy and phantasmagorias.

"But it only takes one ticket to win!"

Yeah, right! Keep repeating that mantra to yourself - but also recognize it will happen for real only if you manage to buy all the possible number combinations in play. Given the Powerball now has 69 numbers  (up from 45 in 1992, with ten extra balls added to the main selection drum) that means all the possible permutations will translate into a total of $584 million that you'd have to spend to strike a sure win. But the wining jackpot (total $1.5b before taxes and cash payout) only becomes about $430 m after. That means you'd end up losing $154m just trying to ensure the winning ticket ends up in your hands.

According to Dawn Nettles of the whole idea is "to keep people buying and buying while reducing the chances of winning".

Of course, someone HAS to win, but the odds are it just won't be YOU.

Incredibly, Americans spent $70 billion on lottery tickets in 2014, which works out to an average of $285 for every adult in the country. For perspective, that is enough money to fund an entire Mars space landing - by humans. You could also set up a colony on the Moon, or fund 50 Space telescopes. And we won't even get into how much all that could do for enhancing our educational system .

But take a second look at that average. It turns out it is very deceptive. Nearly half of Americans never play the lottery, and for those who do, around 70 percent of the tickets are bought by 20 percent of the players. This latter group, which comprises about one out of every eight American adults, spends an average of approximately $1,800 per year on lottery tickets. By way of comparison, the average American spends $40 per year on movie tickets, and $50 on books. In other words, too many are content to piss their hard earned dollars away on a dream that will never materialize as opposed to actually getting something for their money.

This is absolutely nuts! So why do people do it? In fact, WHO are the most likely people to fall for this gambit as soon as the jackpot grows to gigantic magnitudes?

As it happens, a startling number of genuinely poor people spend an astonishing percentage of their scarce discretionary income on the lottery. A recent study here in Colorado found that people with a maximum household income of $15,000 – which means these households had an average income far lower than that – were almost as likely to play the lottery as the population as whole.

To some people such statistics are something to celebrate, since it means states have found a way to get people to “voluntarily” pay what is in effect a tax, which raises billions of dollars per year for government services of various kinds.

What this overlooks is that what drives much of the spending on lottery tickets, and especially the spending by poor people, is not some lighthearted search for a cheap thrill, but genuine despair.

Recent WSJ articles (e.g.June 4, 2105, "America Still Searches For Its Pay Raise", p. A1) show millions of our fellow citizens are stuck pretty much permanently in various kinds of low-wage, no-benefit, dead-end employment. This has to do with corporations and their fatcat CEOs still sitting on well over a trillion dollars of capital as opposed to plowing it into wage increases. Oh, they also use it for share buybacks. Meanwhile, pay in many major cities, has plummeted for those at the bottom 20 percent, (according to a Brooking Institution report issued Wednesday)

The result is a 'winner take all' system where the best paying jobs with the best benefits only go to the few - say like at Google, Apple, Facebook or Microsoft. The remaining jobs barely pay a wage large enough to cover food, housing and utilities. So no wonder so many of the folks at the lowest end see the Powerball as their only way out. The tragedy is that they are the ones most hurt by tossing money they can't afford to lose at a infinitesimal chance of winning.

Nevertheless, that infinitesimal chance of winning  provides the only hope they have of changing their economic circumstances in a meaningful way. Oh, politicos on the left and right will promise things can be better -- but what do you expect them to say? The truth is that our system is structurally rigged to be unresponsive to people's economic welfare and needs. So, the only out is - in their minds  - to try to win the Powerball.

How many poor citizens spent all their grocery money this past week on the hope they'd make their wretched lives better? That's a question for which you'd probably not want to know the answer. The saddest thing is that it's likely to continue as the widespread despair plays a key role in creating the next billion-dollar jackpot..

Meanwhile, state governments exploit the desperation of its most hopeless citizens in a continuing  national disgrace. They can also justify their cynical system by saying (correctly) : "Well, we're not raising taxes on the people! They are willingly paying for those lottery tickets!".  True enough, but at least with paying taxes they'd be getting something for their money - like paved highways (no potholes), better equipped schools and decent health care options.

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