Do Only Puritans and Prigs

Do Only Puritans and Prigs Disapprove of Gambling? According to Ralph Waldo Emerson,

“A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.”

There may be hope for me yet. I spend a fair share of my waking hours arguing against encroachment by the state on the domain of choice of the sovereign individual. Yet my primaeval self undoubtedly cheered when Gordon Brown effectively canned plans for a super-casino in Manchester. I just don’t like gambling, betting, games of pure chance, lotteries and anything else that smacks of a discretionary roll of the dice or turn of the roulette wheel. Games of chance, involving elements of strategic or exogenous uncertainty, or both, become less attractive to me the greater the role of luck relative to that of skill in determining the winner or the distribution of gains and losses. So lotteries are rock bottom in my list of entertainments while bridge is right up there with chess. Why is that? Probably a Puritan legacy overlaid on a priggish personality, but there are a few further rationalisations for a dislike for and disapproval of gambling. Gambling (now taken generically to include all man-made ‘lotteries’ that add to the net uncertainty in the world) is a regressive activity – it increases inequality without any efficiency gains other than the sheer fun and enjoyment gamblers derive from the activity – the thrills derived from the possibility of loss and the anticipation of possibly vast gain. Games of chance between small numbers of individuals are zero-sum games. Organised gambling, which requires real resources to organise and manage, is a negative-sum game (again ignoring the thrills, kicks and anticipation or imagination of otherwise unobtainable life styles). In the UK, instead of taxing the earnings from gambling the way all other profits are taxed (and allowing gambling losses to be offset against other income), both gambling winnings and losses escape the tax net altogether. Obviously, net tax revenues from including gambling winnings and losses in taxable income would be negative, but this piece of social engineering would reduce inequality without any deleterious side-effect on incentives. In addition, the financial sector in the UK has managed to structure many risky financial investments as activities that legally qualify as bets, so the profits from these activities also escape income tax. Formally, any risky investment can be restructured as a complex lottery or collection of bets, so the tax exemption of gambling winnings may well have serious implications for the asset income tax base. My very few trips to casinos have been of anthropological interest only. I have never gambled a dime or bet on anything. The sight of rows and rows of pathetic blue-haired wretches pulling one-armed bandits in some Las Vegas gambling den was enough to make me leave that soulless dump in a hurry and never come back. Whenever I see some dandruff-ridden drunk in a pub putting coins or tokens in a slot machine or fruit machine, I know that humanity is an evolutionary dead-end. Betting shops, the losers slouching in and out of them and the sleazy bookies – known as ‘turf accountants’ in the UK – put me in a time-warp to the 1930s. The posher the gambling or gaming venues, the more louche the clientele. In the most upmarket casinos, a disconcertingly large fraction of the male customers have the appearance and manners of prancing pimps and the majority of the (generally much younger) female customers tend to occupy the spectrum between posh totty and expensive tart. For reasons that I don’t understand, organised gambling, even when it is legal, frequently attracts the attention of criminals – in the management of the establishments, in extortion rackets living off the business and as providers of illegal goods and services demanded by customers with more money than taste or sense. Gambling is addictive. It has ruined many lives. As a vice it is more like smoking – which really has no redeeming value – than like imbibing alcohol, which in moderation is both healthy and pleasant. I would not want to ban gambling, but like alcohol and tobacco, gambling should be taxed, possibly quite heavily. It should not be banned because vices should not be banned, even if they involve stupid, offensive and ugly behaviour, unless (1) they cause material harm to others and (2) a ban can be enforced at a reasonable cost with a reasonable degree of success. Gambling is not quite a victimless crime – the dependents of gambling addicts are indeed harmed by the addict’s gambling, but the harm does not seem sufficient to warrant another intrusive intervention by an already over-bearing nanny state in our everyday lives. Making gambling illegal is also bound to be ineffective. It would no doubt lead to further criminalisation of the gambling and betting industry, similar to what we see in the USA. Still, Manchester can praise itself lucky not to be lumbered with the Titanic of British gambling. In all but the short run, the quality of life will be better in the area where this carbuncle would have been oozing its pus, had the gambling godfathers had their way.

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Maverecon: Willem Buiter

Willem Buiter's blog ran until December 2009. This blog is no longer active but it remains open as an archive.

Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions.

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