WHEN INCOME REDISTRIBUTION IS OK: THE LOTTERY, PART 1

Posted in Rants on April 16th, 2012 by Ed

Here in Georgia, many college students (especially, but not exclusively, at public schools) receive something called the HOPE scholarship. It was created in 1993 by then-Governor and eventual Senator Zell Miller, the Joe Lieberman of the South. The program is uncomplicated, being both entirely merit-based and entirely funded from the Georgia Lottery. High school students qualify by getting a GPA over 3.0 or scoring above the 85th percentile on the SAT or ACT. The program was sold to an enthusiastic voter base as a way to help those unfortunate kids who happen to be academically successful but poor. Predictably, it hasn't quite worked out that way.

We know two things. One is that higher income areas and families are the ones that can afford expensive ACT/SAT prep courses. This coincides with the de facto segregation of the public school system and the tax base. The other is that the Lottery is disproportionately played by the dirt poor, and especially poor blacks (see extensive analysis of the economics and demographics of lotteries here or here). In politics and public relations, the state never fails to trot out some examples of the kind of student the program ostensibly aims to help: poor, and usually black or Hispanic, with appropriately hardscrabble biographies. Hiding behind these anecdotes are the hard data, which reveal that the vast majority of HOPE recipients are students who would be in college anyway.

There are a few red flags here. First, if suburbanites with above-median incomes are big fans of a program aimed at helping minorities and the poor, it's a safe bet that it's not actually helping minorities and the poor. Second, when such programs are limited in geographic scope to Georgia, Kentucky, Tennessee, Florida, and South Carolina, it is a safe bet that a) it's a terrible idea and b) its primary beneficiaries are going to be upper-middle class homeowners and/or businesses.

The reward structure of the HOPE program is misguided enough on its own; funding it with lottery money is downright malicious. Look at where lottery programs advertise, and more importantly how. Georgia uses slogans like "Today Could Be the Day!" to sell hope at liquor stores and gas stations in run-down neighborhoods, and they're not unique in that regard. Michigan has used the slogan "The Rich: Join Them!" just in case its residents don't grasp subtlety. New Yorkers are told, "All You Need is a Dollar and a Dream!" while Chicago advertisements play on the geography of wealth and poverty ("How to get from Washington Blvd. to Easy Street!") and outright deception ("This could be your ticket out.") Several years ago our nation's capital scraped the bottom of the barrel by using a photo of Martin Luther King with the tagline: "His vision lives on. Honor the dream – play DC Lottery."

Even a casual familiarity with the statistics and the marketing of lotteries reveal that they are and always have been a lower class phenomenon. Not content to use the money extracted from the urban poor for "property tax relief", red states are leading the way in simply giving the money to the children of the wealthy and near-wealthy. Income redistribution is a hallmark of creeping socialism – that is, when the poor benefit from it. It turns out that using the government to move money from one person to another is A-OK when the money flows up the socioeconomic ladder.