I admit to having a weakness for ESPN’s TMQ (Tuesday Morning Quarterback). I enjoy his unique football perspective, but also his educated comments on non-football issues. Here are the highlights of this week’s column:
“Your Odds of Winning the Jackpot 1 in 175,223,510” — Actual Powerball Statement: Two weeks ago a Powerball winner was said in news reports to take a prize of “$337 million,” though the actual value of the ticket was $241 million — heady enough. Last winter the biggest Mega Millions prize ever, “$656 million,” was split among three ticket holders. Actually, $656 million was the annuity value; the cash prize was $462 million, heady enough. Any sum of money can be increased by expressing it as a long-term annuity. If your employer offered you either $100,000 this year, or $5,460 annually for 26 years — the same ratios as the Mega Millions jackpot — you would not say you’d been offered $142,000. You would say you’d been offered $100,000.
So why do media accounts use the inflated annuity value of lotto prizes, rather than the realistic current-dollar value? In order to make the drawings seem more exciting, causing viewers to watch the news and buyers to waste more money on tickets. About $1.5 billion was spent on tickets for the “$656 million” game, meaning $1 billion lost for the $462 million actually won.
Gamblers know the house always wins. But when media exaggeration and government-sponsored promotion urge people to throw their money out the window on Powerball tickets, most of the losers are the poor and the working class, who buy a disproportionate share of lotto entries. More on how lotteries prey on the working class is here.
Mega Millions is one of many lottos run by the Multi-State Lottery Association, which has 33 member states. Governors and lawmakers of those states say they want to help average people. Yet they sponsor lottos that pick the pockets of average people. In 2010, Americans spent $58 billion on Powerball games run by state governments. Did the states extend that much in in aid to average people? When state and local income taxes, sales taxes, energy taxes and property taxes are combined with billions wasted to buy state lottery tickets, it may well be that on balance, the poor and working class are harmed financially, rather than helped, by state and local governments.
Because government-sponsored lotteries are major advertisers in newspapers and on local television, most media outlets present lottos as tremendously exciting, never mentioning the harm they do. What games like Mega Millions are all about is transferring money from the poor and working class to the much-better-off employees and officials of state governments, so they can lavish the money upon themselves.
Here, the Freakonomics crew touts a lotto alternative that takes into account the human-nature desire to gamble, but does not exist solely to fleece the players — Prize-Linked Savings . People would put money into a new class of savings accounts. Each month, the interest earned by all deposit holders would be distributed as prizes to whichever deposit holders’ names were drawn. As with lottos, most people never would get a prize. But their principal would remain, and still belong to them.
If state governments stopped running Powerballs and instead sponsored Prize-Linked Savings accounts, the average person would be better off financially. But state governments would get less funny money to squander.
Privately run Prize-Linked Savings accounts seem an ideal solution, but most states have laws against them. Supposedly this is to protect consumers. Actually the purpose is to screw consumers, ensuring that government holds a monopoly on duping average people into losing their money in lottos. The plans are legal in Michigan.
All Talk, No Action: Welcome to Washington: Last week a federal court tossed out the EPA’s most recent attempt to restrict interstate air pollution — the kind that drifts to the East Coast from the coal-fired power plants of Texas and the Ohio Valley. Your columnist, in his 1995 book about environmental policy, “A Moment on the Earth,” explained how legislation to reduce air pollution — the original 1970 Clean Air Act has worked wonders against smog, the 1990 Clean Air Act amendments reduced acid rain — functions well, while litigation aimed at lowering air pollution has failed. In courts, environmentalists and industry always neutralize each other. The preference for legislation over litigation is well-known to anyone who studies clean-air policy.
This said, here is the backstory of last week’s ruling:
Taking office in 2001, in the serene months before 9-11, George W. Bush proposed legislation to reduce interstate air pollution and also to regulate mercury emissions from power plants and oil refineries. Pundits were surprised W. did this, assuming he would be anti-environment. But W.’s father backed the 1990 clean air amendments, while W. had, as governor of Texas, strengthened that state’s laws against air pollution. Say what you will about the Bushes: They vacation in Maine, and clean air has always been a Bush family cause.
So were Democrats happy when, in 2001, George W. Bush proposed stricter regulations against air pollution? They were furious! Their preferred narrative was that W. was an oil-soaked despoiler of the earth. Enviros preferred that narrative too — devil figures are essential to fundraising. The left thought it imperative that George W. Bush not win a victory for the environment.
So they fought his 2001 legislation with fury, among other things by claiming the bill would not regulate mercury emissions rapidly enough. Sen. James Jeffords of Vermont, a classic New England Republican — once, “New England Republican” meant a pro-conservation moderate — even switched from the Republican Party to independent status in order to change the Senate from 50-50 (meaning vice president Dick Cheney would cast deciding votes) to 49-50-1 (meaning Democrats plus Jeffords could block the bill). Jeffords said one reason he made this switch was because it was super-ultra important to stop Bush’s clean-air legislation and substitute something that imposed faster strictures.
That was 11 years ago. In those 11 years, nothing at all has been done to regulate interstate air pollution or mercury emissions.
Despairing of getting a clean-air bill through Congress, in 2005 President Bush issue executive orders to reduce interstate air pollution and regulate mercury. Environmental lobbyists told courts the rules were too lax; industry told courts the rules were too strict. Since the result was litigation rather than legislation, year after year passed with nothing happening.
In 2011, Barack Obama issued executive orders to restrict interstate air pollution. Again the result was lawsuits rather than action. In 2011 — a full decade after mercury from power plants was said to be an emergency — Obama’s EPA proposed mercury restrictions. Now it’s 2012. The mercury restrictions have yet to take effect, and Obama’s interstate clean-air rule was just tossed into the trash by a federal court.
Air pollution has declined since 2001 anyway, allowing to state laws and advances in technology. The decline would be faster, especially on mercury, if George W. Bush’s 2001 legislation had passed.
Isn’t this everything offensive about institutional Washington in a nutshell? Preventing the opposition from recording a victory often is more important than improving the country. The Democrats did it to George W. Bush over clean air; the Republicans are now trying to return the favor to Barack Obama on several fronts.
Once again, interesting thoughts. You can read the whole piece here. He has a rather interesting suggestion that punting should rarely (if ever) be employed if you want a better chance to win.