Thursday, January 17, 2013

The Cliche, 'A Bad Bet'; The Reality, Worse

Long before Mitt Romney's "47 percent" video came to light, supporters of Barack Obama recognized the Achilles heel of the presumptive GOP presidential nominee and turned their attention to the role of private equity in destroying jobs, families, and communities.

Some Democratic politicos balked, however, with former Philadelphia mayor, Pennsylvania governor, and DNC chairman Ed Rendell arguing "I think they're very disappointing.  I think Bain is fair game, because Romney has made it fair game.  But I think how you examine it, the tone, what you say, is important as well."   More recently, Fast Eddie has become the charismatic face of Fix the Debt, one of the Village groups shilling for private equity and the rest of the big money guys with a self-serving interest in obsessing over the deficit.  Advocating a de facto reduction of Social Security benefits by adoption of chained CPI or increase in eligibility age, Rendell has remained one of the nation's highest-profile Democrats.

Amid news that Pennsylvania in 2012 replaced New Jersey as the state with the greatest gambling revenue, The Philadelphia Inquirer reports he now is boasting

When I said gambling would produce $1 billion in tax revenue, they (the media and Republicans) really mocked me.  I knew we would succeed. I had read all the studies that said Pennsylvanians were... gambling in other states and we were not getting any benefit at all.

The tens of thousands of jobs... translating to direct and indirect development throughout our casinos and racetracks, is vindication for me. And the 150,000 seniors who have had their school property taxes zeroed out by gaming tax revenue, and another 200,000 seniors who had them cut by 50 percent.

No one can blame Rendell for being wise enough not to mention the increase in divorce, suicide, and gambling which come with legalized gambling.  Nor should he have been expected to explain that most of those entertainment dollars, procured largely from Pennsylvania residents, would have in the absence of legalized gambling been spent elsewhere in the state.   Pennsylvania's residents would have benefited from increased spending on movies, dining, consumer goods, and other purchases.

Politicians and gambling advocates ignore those net costs while touting the short-term, gross economic benefits which Rendell outlined.  But in a development likely to increase the social costs of legalized gambling while decreasing the revenues it generates for the Commonwealth, the right-wing Repub governor, Tom Corbett, has embarked on an effort to privatize the state lottery. The Keystone Research Center maintains

A plan to privatize the operation of the Pennsylvania Lottery would be a good deal for the private bidder but carries significant risk for the Pennsylvania seniors who benefit from lottery proceeds, according to a new report from the Keystone Research Center.

“Only one bidder has come forward, promising 30-year profits that barely match inflation despite plans to introduce new games like Keno,” said Stephen Herzenberg, author of the report and executive director of the Keystone Research Center. “The Corbett administration should slow down and thoroughly examine whether this is a good deal for Pennsylvania...

Camelot Global Services is the sole company to bid on the privatization contract, which should be a major concern for the commonwealth, the report states. Illinois and Indiana are the only other states to privatize lottery operations, and in both cases the states got more than one bid.

“How does Pennsylvania know it is getting a good deal with only one bidder?” Herzenberg asked. “And is it wise, with such limited experience in other states, to lock the commonwealth into a privatized lottery for a generation?

“Just as for a home-owner seeking a roofing contractor, getting a single bid should be a red flag, a warning sign of a possible fleecing,” he added.

The (Lancaster, Pa.) Intelligencer Journal, which supports privatization of the liquor business, asks a more fundamental question.  Concerned not only about the Governor's process but also the concept of turning the business over to the private sector, the editors explain

The Pennsylvania Lottery, which is considered to be one of the more effective state lotteries, has basically one mission: to sell lottery tickets, the proceeds of which benefit senior citizen programs. Maybe an outside vendor can do a better job of that.

But do we want a vastly better job?

What Gov. Corbett proposes to do, at heart, is to expand gambling in Pennsylvania, yet again. We expected that of his predecessor, Democratic Gov. Ed Rendell. We had higher hopes for Gov. Corbett.

The gambling beast always wants more, more, more. Since the Lottery was created in 1972, it has metastasized. The same is true of casinos since the Legislature's dead-of-night action to legalize slot machines in 2004. Now we don't just have slots — we have table games.

Apparently, whether Gov. Corbett decides to privatize or not, we're going to have Keno as part of the lottery.

And where does the money come from? Studies show that, disproportionately, lottery revenue comes from low-income people — from those least able to afford to lose.

Privatizing the lottery will mean more aggressive promotion, more sales outlets, more pitches to buy, buy, buy — selling false hope to those in desperate need of hope.

If Harrisburg wants to pay for senior citizen programs, Harrisburg should fund those programs with taxes that share the burden across economic classes, rather than forcing the bottom 50 percent of society to pick up the tab.

So which is it, Gov. Corbett? Do you want to feed the needy — or prey on them?

Twenty-three years ago, before George F. Will descended into extreme conservatism and "lottery" was synonymous with "government-run lottery," the columnist wrote (link unavailable)

By blurring the distinction between well-earned and "ill-gotten" gains- a distinction blurred enough by Michael Milken, LBO's and other phenomena- government-run gambling repudiates an idea once important to this republic's sense of virtue. The idea is that citizens are distinguished more by the moral worth of the way they make money than by how much money they make.

In his current ideological incarnation, Will might not admit that lotteries turned over, or leased, to private interests blur the line even more effectively than government because they are more aggressive in rounding up customers and in selling the concept of risk for risk's sake.   But that is how it works, and it provides more reason for resisting state governments which care only about the quick buck.

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