(H/t Taking Down Words) The privatization fetish continues, apparently. The Daniels administration seems to be floating an idea to privatize the operations of the Indiana lottery to fund higher education.
Senate Tax and Fiscal Policy Committee Chairman Luke Kenley said Tuesday that he was not aware of the nature of the governor’s announcement.
However, he said the Daniels administration had approached some legislative fiscal leaders a month ago about leasing the operations of the Hoosier Lottery to a private company to raise cash for the state’s universities.
Kenley said the administration’s proposal would have earmarked money for student financial aid and for professors’ salaries to keep the state’s universities competitive with their peers.
“We weren’t particularly encouraging about it,†Kenley said. “We questioned the long-term relinquishment of an asset in exchange for money that might be used upfront in a non-capital way. We didn’t encourage the administration to pursue that.â€
With gambling, I’d go the other way. I’d just go ahead and make the state the only gambling operation in town. Back in June, I put it this way:
I think if the State is in for a penny, it should go in for a pound. Why be content to merely take a rake off the casino profits — why not have the State run the casinos directly and take the whole pie, reducing taxes accordingly? Normally you don’t want state run businesses — you want the private sector to be as innovative and efficient as possible. But I don’t think those policy goals really apply to gambling. I don’t think, as a State, we ought to be particularly enthusiastic about a booming gambling business that draws in more and more customers and convinces them to spend more and more of their money. So, I don’t think the normal free-market concerns about state-run businessess apply to gambling even though I’ll concede that private businesses would almost certainly deliver a better product more efficiently.
As for the moral concern, I’m reminded of the joke that ends with the punchline, “We’ve established what you are, ma’am; now we’re just haggling over the price.†We’re not somehow morally superior because the State doesn’t run the casinos and other gambling concerns directly. We’re just suckers for letting private business keep the lion’s share of the profit on this particular enterprise.
I do agree that privatization is not always the answer. Each situation has to be analyzed individually. Services should be privatized when the level of service stays the same or improves AND the service is provided for the same price or for a cheaper price.
I think that gambling is a recreational activity no different then golf and dining out.
I do not think the State should be in the gambling business; instead, I think we should legalize gambling statewide and tax it.
Nevada has had great success and I am sure Indiana would as well. Nevada has a very favorable tax structure and Nevada DOES NOT have a crime problem…
Mike Sylvester
I’ll admit, my public control of gambling rationale only works if you think that gambling is behavior that ought to be discouraged. If it’s behavior that’s more or less indifferent, like golf or dining, then it should be treated similarly.
Well, in its compulsive forms, it’s a behavior that is linked to brain dysfunction, the very antithesis of the rational actor presumed in laissez-faire capitalist economic theory (the sort promulgated by the Libertarian Party).
An adherent of Ayn Rand’s Objectivism, for example, would refuse to engage in such activity with a person who had a psychological gambling problem, as such interaction would be in violation of the Trader Principle.
However, such qualms — if they exist in the first place — are easily set aside by those who indulge in rent-seeking. They’ll build as many casinos as they can (or better yet, build it with taxpayer money and call it an “economic development initiative”).
It is disappointing that the Libertarian Party has failed to take a stand against practices that parasitize the free market — but not surprising, given that the few members of the LP commentariat who have broken into the “big leagues” of mainstream media are absorbed into plutocratic conservative outfits like the Club for Growth and the American Enterprise Institute. Such organizations, which had (and still have) much to gain via access to the corridors of power in Washington, D.C., are all too happy to let the sophistication of libertarian critique get no farther than, “GOVERNMENT BAD — PRIVATIZATION *GOOD*!” It’s one of the Orwellian ironies of our age that the institutions that produce such slack-jawed non-analysis are referred to as “think tanks”.
Non-ideologues have little trouble acknowledging market problems like rent-seeking or asymmetric information (once examples are pointed out). Even without such fancy buzzwords, the typical citizen is more prone to ask hard-nosed, commonsensical questions about proposals like privatizing the lottery: “What will the consequnces be?” They couldn’t give two hoots about whether doing so is consistent with some ideological plank that neoconservatives and the Libertarian Party happen to share.
Like some have said of state socialism, laissez-faire capitalism is a nice-sounding idea — it’s a shame we have all these laissez-faire capitalists screwing it up.
I continue to be unimpressed with the depth of critique of Mitch Daniels and the Indiana GOP offered by LP libertarians on this blog. Maybe they save it for a different site I’m not aware of?
Gosh, Branden. Don’t you think the deepest well of critique for Mitch Daniels and the GOP should come from the *Democrats*? Libertarians have areas of agreement with Republicans, just as we do with Democrats. Moreover, todays’ Libertarian Party has far less to do with Ayn Rand than it did in 1971.
Now, I’m not sure why a lengthy comment I posted on privatization disappeared, but I’ll restate just two small important points:
Privatization of lottery is my second choice. I do not believe that socialized gambling is a proper function of government. But, if the thing isn’t going away, best to privatize it.
Why best to privatize? I cited Milton Friedman (since you had mentioned the Chicago School economists) and his commentary, “The Four Ways To Spend Money”. In sum, in government, people are spending other people’s money on those other than themselves, which is where people become least careful about their expenditures.
Mainly, private employers risk their own capital. Government employers risk the taxpayers’ capital. If some are careless and loose with their own money, how much worse is that when they have access to others’ money?
Interestingly, David Orentlichter, the Democratic representative of District 86, was on WXNT 1430-am in Indy this morning. There he said two very interesting things:
1. The Lottery isn’t a core function of government. My goodness, that was refreshing!
2. Because this isn’t a core function, it is an appropriate place to consider privatization.
Couldn’t agree more on both counts.