NOTE: This entry has been cross-posted at Kyle Sisk’s blog, www.kylesisk.typepad.com. You’ll also find his blog listed in my blogroll sidebar under the State of Ohio Blogger Alliance heading. This is not my first post about how gambling hurts the economy, as I’ve written about the lost opportunity cost and diminished multiplier effect during last year’s Issue 6 campaign. I’ve previously posted 4 other blog entries about this year’s casino ballot issue, which you can read by clicking here, here, here, and here.
The casino backers who seek an amendment to the Ohio Constitution to let out-of-state entities operate 4 casinos on Ohio soil have chosen to call themselves “Ohio Jobs and Growth Plan.” From the name of it, you’d think it was an advocacy group that would lobby state government with a comprehensive plan for bringing jobs to Ohio and lowering our unemployment rate. But if you think that, you’d be wrong. “Ohio Jobs and Growth Plan” exists solely for the purpose of introducing casino gambling, nothing else. The only connection between “Ohio Jobs and Growth Plan” and real Ohio jobs is that the casinos plan to hire a few individuals if the constitution is amended. They don’t plan to hire 34,000 employees, however, no matter how much they repeat that ridiculously bloated figure. I don’t think they even plan to hire one-tenth of that amount for 4 casinos.
Do casinos grow an economy and grow jobs? Think about it. Then think about these questions:
Does piracy grow the economy and jobs in Somalia?
Thinking? Ready for the next question?
Do internet scams grow the economy and jobs in Nigeria?
Ready for the next question?
Do intellectual property thieves (who infringe on copyrights, trademarks, and patents) grow the economy and jobs in China?
What do casinos, Somali pirates, Nigerian internet scammers, and Chinese intellectual property thieves have in common?
Let’s answer the last question first. What these entities have in common is that they create nothing. They produce nothing. Any wealth these entities have was plundered from someone else. The Somali pirates seize aquatic vessels by force. Nigerian internet scammers acquire funds through trickery and deceit. Chinese intellectual property thieves copy work done by others, and sell the knock-offs. Casinos have their own bag of dirty tricks for plundering gamblers, but they are not unlike Nigerian internet scammers.
So, does piracy create jobs and economic growth for Somalia? Yes. Somalia is a failed state that has no education system, thus Somalis are not equipped to produce anything of value to trade in the global marketplace. Therefore, they confiscate the property of those who did produce something of value, ransom it, and the proceeds can provide an influx of wealth to Somalia that wouldn’t be realized otherwise.
But what does Somali piracy do to the global economy? It introduces inefficiencies into the global marketplace. Costs rise as ransoms are paid, as security is beefed up, as time is lost, as vessels, cargo, and crew are forfeited. If the higher costs make the producer’s enterprise unprofitable, they shut down. If the producer doesn’t wish to increase investment to cover the higher costs, they drop out of the marketplace. Inefficiencies cause the economy to contract. Commerce shrinks. Jobs are lost.
About one-fifth of Nigeria’s economy comes from scamming. Yes, there is a boost to Nigeria’s economy, but what does it do to the global economy? Like Somali piracy, it causes it to shrink.
Chinese intellectual property pirates? Companies that actually do the creating of products have to compete against the knockoffs. Some can’t. Companies that continue to compete against the knockoffs have higher costs as they sue in court for infringement, or they tighten security against industrial espionage, or they add features to the product to make it easy to detect the counterfeits. Some people in China make money off these knockoffs, but globally, knockoffs kill jobs, which is why the U.S.A. and its investors have lobbied China hard to go after these intellectual property pirates.
Somali pirates are not enriched from plundering Somali sources of wealth.
Nigerian scammers are not enriched by plundering Nigerian sources of wealth.
Chinese intellectual property pirates are not enriched by plundering Chinese sources of wealth.
That’s why the economy shrinkage they cause is compartmentalized so that it isn’t experienced domestically.
Casinos, however, plunder victims in close proximity. Nevada, with the most casinos in the USA, has a higher unemployment rate than Ohio. It has a higher home foreclosure rate, too. In fact, Nevada leads the nation in foreclosures.
Of course, sub-prime mortgage scams played a huge role in the rising foreclosure rate and the rising unemployment rate. The difference between sub-prime mortgage scammers and casino operators is that the sub-prime mortgage scammers produce a paper trail that shows us exactly how the wealth they plundered has evaporated. The casinos don’t produce such a paper trail. They are much less transparent. Casinos are every bit as much of a scam, plundering wealth that they didn’t create, and making our economy less efficient, thereby causing economic shrinkage.
So the jobs that casinos create come at the expense of jobs lost elsewhere in the economy. Thus, the moniker of “Ohio Jobs and Growth Plan” is an attempt to deceive. The 34,000 jobs? That’s an attempt to deceive, too. Nigerian internet scammers like to lure victims with numbers so big, like, “We have identified you as the next of kin to inherit $20,000,000,” in order to coax people into divulging bank account information. The rule of thumb? Invent a number so big that it causes you to take a risk. All of the numbers provided by “Ohio Jobs and Growth Plan” follow this rule of thumb, and they parade those numbers every chance they get. Even Donald Trump, gambling tycoon, admits to using this trick in his personal life, as he’s admitted to exaggerating his net wealth to obtain a myriad of objectives.
Overall, the economy of Nevada suffers because of gambling. Overall, the economy of Detroit suffers because of gambling. Overall, the economy of West Virginia suffers because of gambling. I could go on and on. The opulence of the casinos are meant to deceive you into thinking that wealth is being created, when it’s really just being plundered.
August 13, 2009 at 10:14 pm
Great points. I hadn’t heard the argument against gambling in Ohio put quite the way you did. I may steal some of these arguments and use them when debating my friends. Don’t worry, I’ll cite your post 🙂
I guess the debate against gambling is something a conservative and a progressive can agree on.
Of course the biggest gambling scam currently going on in Ohio is the Lottery. I wrote a research paper on the lottery when I was in College and basically it’s just taxing people at a higher rate. Most lotteries only pay out 58% of the money collected in winnings. That means people who play the lottery are being taxed at a 42% rate!
Furthermore, the big lie is that the money goes to education. Not so. The General Assembly just takes the money collected from the lottery and reduces the money spent on education from the General Fund by the same amount.
Our Ohio politicians aren’t statesman, they’re bookies.
August 13, 2009 at 10:23 pm
Thanks. I agree wholeheartedly with your views on the lottery. I oppose the lottery, too.
I’m not worried about my assertions being stolen. I’m not the first person in the world to make these observations, and I won’t be the last. I’d much rather the message get shared, whether attributed to me, or not. Borrow any of these arguments that you choose, and make them your own. You’ll have my blessing.
August 17, 2009 at 10:45 pm
I’m linking this to my FB page. To Madrigal, not all politicians are bookies. There are many that are fighting it. Ohio House member Ron Amstutz (R-Wooster) is a leading voice of the opposition.
I’ve blogged on the Ohio Lottery in the face of the slot machine proposal as well. http://rememberthepromise.net/?p=316
August 18, 2009 at 12:04 am
Paul Vance: Thanks for commenting and leaving a link to your lottery article. My readers would do well to check it out.
August 26, 2009 at 9:42 pm
Paul, sorry I’m just replying now. I guess I forgot to check the box to get follow ups by email.
I know there are politicians who are against the casinos, but are there any who are fighting to repeal the lottery? If there are please let me know.
August 17, 2009 at 12:47 am
Hi!I just learned from your site in FS that you have this Blog & decided to visit you here.I don’t gamble ‘though I traveled in a lot of countries in Asia & seen Casinos specially in Macau Hongkong.Gamble wont do nothing in our lives speally Casino & I don’t think t’will do good for the country for I do believe it has nothing to do but to ruin thousands of peoples lives,’m sayin’ this because I’ve seen a lot of people in my country who hooked into this gambling & ended up nothing…
August 18, 2009 at 12:09 am
Thanks for your observations. I think they are quite correct.
August 26, 2009 at 7:59 am
buckeyerino, even as a person that believes Ohio should have gambling, I share a lot of your views on this issue. I have been watching the racetrack slot machine issue, and it doesn’t appear that the track owners have any problem paying a 50% tax rate on their revenues. Is there any reason a full casino with those same slot machines, plus table games, can only pay 30%? I’m sure there are casino companies out there that would be willing to pay 50%, so why should we give Penn and Dan Gilbert the extra 20%? By their own projections, their revenue will be $2 billion a year. The lower tax would mean these two get to take home $400 million more a year than if they were paying the same as the race tracks and many other states’ casinos. There is no way I could ever support giving away the business like this. I hope this issue goes down.
August 26, 2009 at 6:19 pm
Thanks for reading up on the issue. I hope other Ohio voters are doing the same. Of course, the less taxes and licensing fees they have to pay, the bigger the profits that Penn and Dan Gilbert are able to rack up, which means more $$$ will leave Ohio, as the potential casino owners are out-of-staters. Besides extracting more bucks from these casino tycoons, shouldn’t we also allow real Ohioans, actual Ohio residents, to be casino owners, instead of amending the state constitution for Ohioans to be fleeced by out-of-stater casino tycoons?
August 26, 2009 at 8:31 pm
If we had the right tax rate and license fees, I would vote for an issue that says all owners and employees of the casinos have to be Ohio residents. That way even if someone makes a bunch of money on it, they are more likely to invest it in one of our communities. As you said, I hope Ohio voters really understand the tax rate and how much money it means to the state.
August 26, 2009 at 10:48 pm
Of course, as this blog entry illustrates, I continue to believe that whichever way we configure casinos, they still hurt the economy.
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