Life, Liberty, and the Over Adjusted to 38.5 Parlayed with the Money-Line

And more from this week...

America’s disastrously dumb decision to legalize sports gambling is already causing enormous harm nationwide. Sports gambling “does not displace other gambling or consumption but significantly reduces savings, as risky bets crowd out positive expected value investments. These effects concentrate among financially constrained households, as credit card debt increases, available credit decreases, and overdraft frequency rises.”

Sports gambling leads to “a substantial increase in average bankruptcy rates, debt sent to collections, use of debt consolidation loans, and auto loan delinquencies. We also find that financial institutions respond to the reduced creditworthiness of consumers by restricting access to credit.”

“When sports gambling is legalized, the effect of NFL home team upset losses on [intimate partner violence] increases by around 10 percentage points. Heterogeneity analyses reveal that these effects are larger: (i) in states where mobile betting is legalized, (ii) in locations where higher bets were placed, (iii) around paydays, and (iv) for teams who were on a winning streak.”

But I’m interested here in a slightly different question, which is what the trend says about the badly broken analytical models and habits of mind that have led our technocratic elite to the point where they would sign off on such immiseration. And where better to look than The Economist, where your one thing to read this week is, “America’s gambling boom should be celebrated, not feared.”

We could spend this entire discussion on just the subhed: “The gambling frenzy is mostly about people being free to enjoy themselves.” Pause for a moment and think of the most recent frenzyin which you found yourself involved . Would you say it was an instance where people were mostly enjoying themselves?

The word’s first definitions in Merriam-Webster are “a temporary madness” (“in a rage amounting to a frenzy”) and “a violent or emotional agitation” (“almost weeping in a frenzy of anxiety”). Or, if you prefer, “intense usually wild and often disorderly compulsive or agitated activity.”

Careful readers, like all of you, will surely have noted that The Economist asserts not that the gambling frenzy is about people enjoying themselves, merely that it is about their being free to enjoy themselves. And in the distance between those two concepts is the gaping maw into which our society has plunged itself with this and many similar missteps.

Wonderful though the unfettered freedom to enjoy oneself may sound, millennia of civilization and even rudimentary familiarity with human nature teach that most people will struggle to live fulfilling lives without the benefit of constraint and the opportunity to fulfill obligations; for some, the absence of guardrails leads to great suffering. And for all, the communities in which we live together are impoverished as a result.

It would be unfair to pick on a poorly worded headline if the story that followed could make the case that gambling was in fact going well. Alas, the writers do not even try. The closest they come is an argument that while “it is true that, for some, gambling is a ruinous addiction,” there are also things worse:

Considering gambling’s seedy, unsavoury reputation, it is tempting to write all this off as unhealthy and dangerous. And it is true that, for some, gambling is a ruinous addiction. However, whereas state lotteries are disproportionally played by the poor, the new forms of gambling are less regressive.

They assert that, unlike feeding quarters into a slot machine, sports-betting “is often a communal activity,” though they offer no evidence of this and, on balance, betting via one’s phone seems rather more likely to be an isolated activity than going to a casino. They note that “other vices that America enjoys and taxes, like alcohol, are responsible for more catastrophic harms.” One need not retain the logical powers of a Greek philosopher to notice that none of these are arguments in favor the activity or its legalization.

But what’s wildest in the gambling discourse is the instinctive libertarian prediction that restriction surely will not work, though even a goldfish could remember we successfully banned sports betting until, like, yesterday. “Government can’t be trusted with the power to decide what you can gamble on,” says Richard Hanania. The Economist warns:

However, trying to shut gambling down again would probably leave America worse off. In China the Communist Party has long waged war on all forms of gambling outside Macau and Hong Kong, but today it is struggling more than ever to suppress the industry. Criminalising gambling would deprive tens of millions of people of entertainment and drive the most compulsive bettors underground, where they would be more vulnerable to abuse.

This speculation is unnecessary. Shutting down sports gambling would not “probably leave America worse off”… we know from a few years ago that America was not worse off. Can government be “trusted with the power to decide what you gamble on”? It did so without difficulty for centuries.

“The boom is a consequence of people’s enjoyment,” The Economist concludes. Its evidence? “In surveys 40% of Americans say they bet on sports.” That’s… not evidence of people’s enjoyment. Rather, what we have is an assemblage of truisms that generically declare whatever people might do as optimal and any action by government as futile:

1. Many Americans do [X], proving its growth “is a consequence of people’s enjoyment.”

2. Admittedly, [X] ruins many lives, but it’s not the worst thing in the world.

3. Restrictions on [X] are doomed to fail, even when we know restrictions on [X] work fine.

This is not analysis, or even argument, so much as incantation, calibrated precisely to maximize the welfare of a narrow and affluent segment of society that most enjoys the benefits of such liberty while largely avoiding its costs, at the expense of everyone else. Call it government of, by, and for The Economist’s readers.

BONUS LINK: The Economist accompanies its editorial with a reported deep-dive, which cites much of the negative research and forthrightly classifies a wide-range of financial market derivatives and cryptocurrency transactions as forms of gambling. The folks responsible for actually reporting on the phenomenon seem somewhat at odds, pardon the pun, with those responsible only for opining about freedom.

BONUS COMPLAINT: One argument coming into fashion holds that restoring the status quo ante is simply implausible, at least in the short-term, so instead we should tax sports gambling heavily. We could even use the revenue to help cover the increased social costs of the harm. Who knew that true liberty was legalizing vice, then raising taxes and expanding the safety net to cope with the lives ruined?

This is your brain on neoliberalism—a tragic and much too real echo of the old joke that, if libraries didn’t already exist, economists would never suggest them, opting instead for a book-buying tax credit. The lure of tax revenue is the key appeal to many states in legalizing the activity in the first place; making it more fiscally lucrative would entrench the commitment to it further, while also shifting a greater share of the cost onto those making the least economically rational decisions to participate. What a thoughtful, pragmatic approach… or we could, you know, ban it, like we always had.

BONUS BONUS LINK: Still my favorite Onion article of all time, with bonus industrial policy hook… According To The Economist, NASA Is An Industrial Subsidy In Disguise vs. Oooh, Look At Me, I Read The Economist!

THIS WEEK AT AMERICAN COMPASS

How the Decline of Evangelicalism Helped Elect Donald Trump: “The public wants abortion to be legal. It’s the same for gay marriage, gambling, porn, and pot,” observes Aaron Renn. “But rather than create a permissive, progressive utopia, this change in public sentiment instead ushered in the age of Trump.”

The Program That Provides Health Care, Not Insurance Subsidies: “Expanding this national health center program and making the public aware of it may be the best possible pre-emptive defense against the allure of single payer,” proposes health policy advisor Chris Emper. “It could also be the issue that finally allows Republicans to move beyond the political dead end of repeal and replace.”

And, on the American Compass Podcast this week, the Institute for Progress’s Santi Ruiz joins me to talk about government efficiency, state capacity, and what the DOGE can do for you.

WHAT ELSE SHOULD YOU BE READING?

If We Can Do It In Baltimore… | Aidan Mackenzie, New Atlantis

America’s inability to build infrastructure is a political choice, which is made obvious whenever disaster strikes or another, higher political priority enters the equation. In response to the collapse of Baltimore’s Francis Scott Key Bridge, environmental requirements are being waived and the public is demanding speed. We may get it. With the success of the CHIPS Act’s semiconductor fabs on the line, environmental requirements are being waived. When the Obama administration discovered it had no “shovel ready” projects for its stimulus, environmental requirements were quickly waived. What would it take to reset the political equation permanently?

Bonus Link: A modest proposal from me to skip “permitting reform” and just eliminate NEPA altogether.

The Human Doom Loop | Diana Lind, Slate

Our society has entered a vicious cycle in which the more we stay online rather than showing up in person, “the less likely our physical realm will offer experiences that can compete” with those online, and on and on. I think most people are far too nonchalant about the state and rate of social decay over the past few years. The dynamic here is not one of natural regression to the mean but of runaway erosion absent costly and aggressive efforts at shoring up foundations.

A Resilience Paradigm for Trade | Fred Bauer, Compact

Notwithstanding the fury of economists scorned when their decimal-point-precise (and wholly inaccurate) estimates of trade policy’s effects go ignored, trade policy has always been first and foremost a question of political economy. Viewed through that lens, the tradeoffs become much clearer and the choices made much easier to understand.

Bonus Link: Free Trade’s Origin Myth… American elites accepted the economic theory of "comparative advantage" mainly because it justified their geopolitical agenda.

Trump Can Restore Honor to American Art | John Burtka, Wall Street Journal

Government funding of the arts has gone off the rails—both in its proactive support for garbage and its failure to promote beauty that inspires and encourages civic virtue. But while “personnel is policy” may often be a cliché (the policy does a lot of the work!), in a field as subjective as the arts there is no substitute for appointing leaders whose own sensibilities can affirm and constructively shape the nation’s. These positions don’t get much coverage in a presidential transition, but getting them right could accomplish a lot.

Enjoy the weekend!