As I read through President Geingob’s State
of the Nation address, I remained in awe at what our president had accomplished
in such a short time, and at how well thought-out the Harambee Prosperity Plan
seemed to be. I remained in awe until I stumbled across a paragraph that made
me stare slack-jawed at the speech in confusion, as it seemed to be completely
at odds with the stated objective of the Harambee Prosperity Plan.
I refer, of course, to the following: “…and investigate the establishment of a
State Lottery. The objective of the State Lottery will be to supplement State
revenue and ring-fence income for poverty eradication and social developmental
programmes. Revenue collected through the State Lottery will therefore, like
the Solidarity Wealth Tax, be strictly directed to poverty eradication
activities under the supervision of a Special Tax Committee.”
After the initial jaw dropping moment, I
realised that the President was merely investigating the concept, much my
relief. Lotteries aren’t a new concept. The first mentions in history of
lotteries were from the Han dynasty in China, about 205 BCE, referencing a game
of chance called “the drawing of the wood” or as we now know it, drawling lots
– a lottery. The modern concept of a state-run lottery comes from England and
France during the 1500’s. These games were originally sold via tickets, with
the draw to be in a few years’ time – essentially granting the government an
interest-free loan. Over time, however, the payout ratio was reduced from 100%
in order to fund other projects from the proceeds – in South Africa, for
example, only 50% is paid out in prizes - and a lottery is more palatable to
the citizenry than a tax. After all, it is voluntary. Or is it?
Lotteries prey on several of the
deficiencies of the human psyche, most obviously our inability to properly
comprehend probability. In layman’s terms, it is often stated that lotteries
are a tax on those suffering from innumeracy – mathematical illiteracy. For
example, in South Africa, the odds to win the lottery is about 1 in 14 million
each week. With a population of 52 million, someone could win every week! Why
not you? Because the odds show that if you play every week, for 50 years, the
chance you’ll win the jackpot is 0.02%. So out of 10 000 people who buy
tickets every week for 50 years, only 2 will win. Thus, when you consider just
how counter-intuitive the results of probability can be, you realise that it
can even flummox mathematicians. But I contend lotteries are worse than a tax
on innumeracy – it is a tax on hope.
Lotteries have been around long enough that
statistical studies could be done on lottery players, and the results are
anything but a prosperity plan. In the United States, it was found that lottery
sales are the highest in the poorer areas of the states. Uneducated players
made up a disproportionate share of the players. Since lotteries are supposed
to be a game, people should play for fun, but 25% of the poor players were
playing for the money! Lotteries were more popular among blue collar workers
and least popular amongst professionals, and tickets were more likely to be
bought if a person was out of work than if a person was employed or retired. In
fact, unemployment correlated with higher lottery ticket sales. Only on rare,
‘Super’ jackpots were the rich found to swoop in to buy tickets.
Lotteries, in fact, are a regressive tax on
the poor – i.e. the poor bear the brunt of this tax, the exact opposite of what
the Harambee Prosperity Plan intends. When you think about it, it makes sense.
A N$10 ticket is 10% of the N$ 100 a poverty stricken person might have to live
on, whereas it’s a tenth of a percent of the salary of someone who earns N$
10 000 per month. For the poor, it might seem like the only way out, and
they might forego buying that bread their starving children so desperately
needs, just for the chance to be lifted out of poverty.
Lotteries are also a form of gambling – a
game with financial rewards. Burrhus Frederic Skinner, back in 1930, showed how
conditioning with unpredictable rewards for completing repetitive tasks affects
animals, when he showed how rats pushing a button to receive food repeated this
behaviour even more intensely when the food was delivered irregularly in his
operant conditioning chamber. BF Skinner’s work was shown to be effective as
well in humans, and his work is extensively used in the reward structures in
online video games. Unfortunately, it is also evident in our love for slot
machines which work in a similar manner. And, self-evidently, in lotteries,
which has us repeating a ritual of buying tickets, with small prizes to be won,
and repeating it while waiting for the big win. This is more commonly known as
gambling addiction.
But perhaps the tax on the poor does not
concern you, and you consider the rising spectre of gambling addiction among
the Namibian populace a non-issue, because, after all, the payout will raise
some lucky individuals out of poverty. Unfortunately, that does not seem to be
the effect among lottery winners. Statistics show that 70% of lottery winners
end up bankrupt after 5 years. After all, the poor have had to rely on the help
from others to survive for many years – those friends and family are now going to
demand that that help be repaid in kind. When you consider the extended
families that Namibians have, this can quickly become overwhelming.
And who among us have had to manage that
amount of money? For a person whose average monetary transactions were a
maximum of N$ 500 in a single transaction, the ability to distinguish between transactions
of N$ 20 000 and N$ 200 000 is difficult. Who of you can distinguish
between a home valued at N$5 million and one valued at N$ 7 million? If you’ve
never had to practise financial discipline, it is going to be difficult to
learn it while you feel like you’re on top of the world. And even then, only
55% of lottery winners report being happier two years after their winnings than
before.
The state lottery hides an even worse
consequence, though. And that is the message it sends to the people of Namibia.
A message that proclaims that you should not work hard to lift yourself from
poverty, just pay your lottery tax and the government will provide. Don’t try
to save and start your own business, just pay your savings to the state lottery
and you’ll win big. Don’t be entrepreneurial and try to do something else,
simply do the same thing over and over again, while expecting different
results. Some would say that is the definition of insanity.
A plan that involves taxing the poor while
addicting them to poverty and sapping their savings does not sound like a
Harambee Prosperity Plan to me. It sounds like a Harambee Poverty Plan. Perhaps
the government has a brilliant plan that circumvents the issues I’ve raised
above, then it could be considered, but as it stands now, let us hope that the
government investigation realises that this is an ill-advised idea, and instead
focuses on the rest of the Harambee Prosperity Plan, based on the excellent State
of the Nation address.
No comments:
Post a Comment