01/1/13

The Hidden Costs of Gambling


Casino gamblingLet’s start 2013 with a sober consideration of the social and economic costs of gambling. Back n 2006, the Canadian Medical Association noted that,

“Provincial governments may be glossing over the societal and health costs of problem gambling, including depression and suicide, because of the significant income they gain from gambling, claim several public advocacy and mental health organizations.”

Glossing over is a polite way of saying “deceiving.” They’re hiding the facts from the public. The CMA called for a thorough and scientific study of the “relevance of depression and suicide among problem gamblers.”

“The normal system that provides checks and balances around this area is compromised because government in every province is responsible for alcohol and gaming regulation of the industry — and the welfare of those with gambling problems,” says Neasa Martin, a researcher at the Mood Disorders Society of Canada. “Their revenues are closely tied to the gambling industry, putting a pall on normal advocacy around the issue.”

This article has a parallel piece in the CMAJ that lists the three “elephants in the room” that have to be part of any discussion about gambling. These, the author states, are:

  1. …the inequitable distribution of the risks and benefits of gambling in our society;
  2. …treatment of problem gambling cannot undo the damage caused by lost wealth;
  3. …health promotion. It is time for governments and public health advocates to stop being seduced by the promise of anti-gambling campaigns and education that place the onus of self-control on the shoulders of the very individuals who have a serious disorder of impulse control.

New Zealand Mental Health
Gambling is, of course, voluntary taxation.* I have no moral issue over gambling; however, if people wish to gift the government their wages, they could just as easily mail the Minister of Finance a cheque every few weeks, and save us the contentious debate over gambling in our municipality. I do, however, believe that government dependence on gambling revenue is a fool’s economy. Any government – municipal and higher.

Back to the numbers

Let’s take a moment and consider some numbers before we continue. The Ontario Lottery Gaming Corporation (OLG)** has accepted the studies that show roughly 3.4% of the population as “moderate to serious” gambling problems. The Problem Gambling Association (PGIC) suggests a range between 1.2% and 3.4%, depending on which study you read and how you define “problem.” There are other studies that show the percentage in Ontario is as high as 4.8%.

The population of Ontario in 2011 was 12,851,821. At the low end of that range, there are 154,222 Ontarians with severe gambling problems. At the upper end, there are 436,962. A London Free Press article on gambling ups this to “almost 500,000″ without a source reference.

In other studies, the national average of problem gamblers (moderate is not mentioned) was estimated to be 2%. At 2%, there are still more than 257,000 problem gamblers in Ontario; but that media figure is lower than most experts estimate. In young gamblers aged 15 to 24 years, the percentage is much higher as this study found:

 “…the national prevalence of moderate-risk or problem gambling was 2.22% (3.30% in male respondents and 1.10% in female respondents). …Regional prevalence estimates of youth moderate-risk or problem gambling were… 2.75% in Ontario….”

This article repeats another warning from CAMH that, “Young people are twice as likely as their adult counterparts to develop serious gambling problems.”

 Younger Ontarians are also more likely to gamble online, as the Centre for Addiction and Mental Health (CAMH) reported in 2005: “…aged 18-34 were most likely to gamble money over the Internet compared to the older age groups.” And to capture more of that market, the OLG is launching a whole new internet gambling initiative in 2013.
Until recently, it was illegal for Ontarians to gamble online, but because the OLG now wants a slice of that pie, the laws got changed to accommodate them. Seems the MOH’s recommendations in 2005 were overlooked: “Prior to the adoption of any new technological innovations proposed by the gaming industry, consideration should be given to their potential impact on problem gambling…”.

This 2007 study suggests online gambling will create even more problem gamblers:

“…the inherent nature of Internet gambling would seem to make it conducive to increasing the rates of problem gambling. …The increasing patronage of online gambling sites will also increase the actual numbers of problem gamblers in the general population.”

The OLG contributes about $40 million a year to problem gambling treatment and services throughout the province, but it’s a small figure compared to its revenue:

“The OLG’s current contribution to education, prevention and treatment is less than 1% of its total revenues of $6.5 billion. There’s no indication this tokenism will be replaced with a serious investment in curbing the social and economic impacts of gambling.”

Based on the accepted number of problem gamblers in Ontario, that divides out to between a high of $259 each person per year, to a low of $91.54 each. There are 52 agencies treating gambling in the province right now. Dividing $40 million by 52 and you get less than $750,000 a year per centre.

If people wish to gift the government their wages, they could just as easily mail the Minister of Finance a cheque every few weeks.

So how much does problem gambling cost, and is $40 million sufficient to counter the social and economic costs?  Does the profit from gambling offset its cost? This is hugely complex and difficult to adequately measure, because are so many factors to take into account – medical, economic, social, legal, many of which are difficult to quantify, or may be intrinsically linked with other issues like substance abuse.

This PDF is a 24-page chapter of a larger US report on gambling, and it reviews numerous state studies. One such study that estimates that, in Wisconsin, there is a net benefit from gambling: “social costs represent about 42 percent of the economic gain…

The OLG net benefit to the Province of Ontario is approximately $2 billion. In its strategic plan (pgs 3-4), the OLG has stated it wants to increase that contribution by $1.3 billion, to more than $3 billion a year by “modernizing” gambling (making it more “accessible” by increasing the opportunities and locations so more Ontarians gamble). For all their high and mighty words about social responsibility, to me, it looks like simply an outline of a plan to grab more money from our pockets.

If our social costs are roughly the same as Wisconsin’s, then 42% of $2 billion is $840 million. Subtracting the $40 million currently paid to problem gambling issues, problem gambling costs the province $800 million every year. At $3.1 billion, it will cost us $1.26 billion, assuming the OLG does not increase its contribution to problem gambling programs. Gambling is, if the situations are similar, profitable for the province in this comparison, but not nearly as much as we are led to believe: there are high social and economic costs not being disclosed.

In response to this plan to expand gambling, in its Winter 202 newsletter, the PGIC wrote,

Without question, this will increase the incidence of gambling problems and associated negative impacts, including harm to families and the community.
The OLG plan means that, more than ever, Ontario needs an accessible, skilled, comprehensive and well-resourced problem gambling (PG) treatment system.

However, nothing in the OLG strategic plan indicates to me a significant increase either in funding or treatment system. At the very least that a 50% increase in revenue should be matched by a 50% increase in funding. Or is the net income the only measure of success? The Toronto Star  noted,

“…there is no indication that funding for education, addiction counselling and Trillium Foundation grants will be increased proportionately to the gambling universe that’s being created. It’s already inadequate.”

Back in 2005, a report to the Ministry of Health on gambling in Ontario noted (emphasis added):

“…if a culture of responsibility is fostered in the decision making process, then decisions will be made taking into account the impact of any proposal on the treatment of problem gamblers, the provision of information to gamblers and the public on problem gambling and responsible gaming,the research that should precede the decision and whether an element of consumer protection is involved. Those involved in each component of the Strategy should have a role to play in contributing to initiatives that are designed to advance the minimization of potential harm from gambling activities. A culture of responsibility reaches out to other Ministries as well whose programs impact on problem-gambling issues.”

The OLG and the rest of the Ontario government seems to have overlooked that in the new strategic plan. They just want the money. Responsibility? No our job.

A study in Florida, described in that US report, used costs-per-problem-gambler “…calculated by Volberg (1994) of $13,600 on average per pathological or problem gambler.” That study looked into collateral costs such as prisons and increased pressure on the justice system to arrive at that figure. If Ontario is similar per-capita, the cost of problem gambling ranges between $2.1 and $5.9 billion a year. In this model, there is no net benefit from gambling revenues, just losses.

This 2007 study showed that the number of people with moderate to severe gambling problems is much higher than previously estimated. This is based on a sample size of 6,654 Ontarians. It found,

“…3.74% were moderate problem gamblers (CPGI = 3-7); and .99% were severe problem gamblers (CPGI = 8+), with an overall of prevalence of 4.73% for moderate and severe problem gamblers combined… this adjusted Ontario prevalence rate of 4.76% is significantly higher than two

previous Ontario prevalence studies: 3.8% obtained by Wiebe, Single, & Falkowski-Ham in 2001 and 2.0% obtained by the Canadian Community Household Survey (CCHS 1.2) for Ontario in 2002 (Statistics Canada, 2002).”

Sources of Revenue

The study also concluded that the OLG gets more than a third of its revenue from problem gamblers, but also that gambling machines (slots) take a higher proportion of that:

“Both the winsorized and losses-only data suggest that this proportion is approximately 36%… This evidence indicates that gambling machines and horse racing derive a much larger portion of their revenue from problem gamblers, in comparison to other forms of gambling. In rank order, the rough proportions are: 61% gambling machines; 45% horse racing; 32% casino table games; 22% bingo and raffles; and 18% lotteries, instant win, and Sports Select.”

Similar studies in the USA have reported this as well. Salon noted in a recent article:

“A significant portion of gambling revenues — one-third to one-half — is derived from problem gamblers, says Grinols, who, in a 2006 Review of Economics and Statistics article concluded that 8 percent of crime in casino counties can be attributed to the presence of legal gambling.”

The Canadian study recognizes that estimates of income are problematic because in their survey, only a small number of people who identified themselves as “severe” gamblers responded to the questions about gambling expenditures:

“Expenditures from the prospective diaries of 364 individuals tentatively indicates that about 36% of Ontario gambling revenue is derived from moderate and severe problem gamblers.”***

What I found most compelling about this figure is in the policy implications section near the end of the report (emphasis added):

“Thirty-six percent would be a problematic figure for private industry, but is especially problematic for a government-run operation, when the purpose of government is to serve the people, not to exploit the people.

Ontario spends 13 times more money advertising and promoting gambling as they do on prevention and treatment (Williams, 2006). Furthermore, the $36 million put into gambling prevention, treatment and research in 2003/2004 only represents 2.6% of the $1.41 billion dollars estimated to have derived from problem gamblers in that time period. It is also far from clear whether gambling revenues represent true economic gain. Gambling revenues largely come from a transfer of wealth,rather than creation of wealth (e.g., Grinols, 2004). Furthermore, this is not an innocuous transfer, as it harms a significant minority of people (problem gamblers) in the process, and it tends to generate its revenue through the cannibalization or crowding-out of other (privately owned) 15 entertainment industries (e.g., Grinols, 2004).

There is another factor to consider when trying to estimate the economic impact of gambling: productivity loss. An Australian study found gambling was, overall, economically positive (for the government) but it recognized that it cost the Australian economy. Based on the loss of one hour per week per problem gambler:

“The study was able to “cost out” a number of factors associated with problem gambling. The effects of gambling on employment, consisting of job change costs, unemployment, and productivity loss, were estimated at A$27.8 million annually. The largest component of this estimate was productivity loss, accounting for almost A$20 million, followed by A$5.2 million for job change and A$2.7 million for unemployment.”

I’m not sure how they measure the economic value of lost productivity in this study. One simplistic way is to simply multiply the average hourly wage times the number of problem gamblers for the losses per week, then times 50 (allowing a two-week holiday per person) for the annual impact. If one hour per week is lost in Ontario, then based on 257,000 problem gamblers working at minimum wage ($10.25/hour), the resulting loss in productivity is about $132 million per year. If we use the upper end estimate (437,000 problem gamblers), and an average $15 an hour wage, the resulting loss is almost $328 million.

And what about suicide? The CMAJ article notes that, “problem gambling as a contributor to suicide is difficult to measure,” however, it does report an Alberta study that indicated gambling is a key factor in roughly 10% of suicides:

“In Alberta, gambling was listed “in the files” of suicides about 10% of the time; 46 out of a total of 482 suicides in 2001, and 54 out of 430 suicides in 2000.”

Can we quantify the impact of suicide? Not really. The emotional impact, however, is devastating to family and friends. Ontario has been been tracking gambling-related suicides since 1998 – there are on average five a year. The number may be higher because the method of identifying them is solely through a note left behind. The Globe & Mail reported 13 in 2007 and noted the number was rising, in part encouraged by casino tactics:

“A Globe and Mail investigation last fall revealed government-owned casinos are spending hundreds of millions of dollars on freebies – trips, dinners, theatre tickets – that keep gamblers coming back. Gambling debts have led to bankruptcies and even suicides.

Although there are no countrywide statistics, Canada Safety Council estimates 200 problem gamblers kill themselves every year. The Globe and Mail contacted each province to track the numbers of gambling-related suicides, finding only 50 such deaths were recorded in 2007 among the seven provinces reporting.”

Problem Gambling Institute of Ontario has a short FAQ on the potential impact of expanded gambling with many links to studies on gambling. In one called the Social and Economic Impact of Gambling, which tallies an objective view of both positive and negative effects, the authors write,

“One of the main negative impacts of gambling introduction is an increase in problem gambling and its related indices (e.g., bankruptcy, divorce, suicide, treatment numbers). The bulk of the impacts tend to be social/nonmonetary in nature because only the minority of problem gamblers seek or receive treatment, and only a minority typically have police/child welfare/employment involvement. Most of the increase in problem gambling occurs after the initial introduction of gambling, with progressively less impacts on problem gambling occurring with extended exposure… Research confirms that lower income people consistently contribute proportionally more of their income to gambling than do middle and high income groups (‘socioeconomic inequality’)…”

The report concludes that, gambling’s impact is a mix of good and bad, but that overall the good is limited, and not enough to fully offset the bad:

“…in most jurisdictions, in most time periods, the impacts of gambling tend to be mixed, with a range of mild positive economic impacts offset by a range of mild to moderate negative social impacts.”

My point here in this rambling (and incomplete) survey of the literature, is twofold:

  1. The true costs of gambling are not being disclosed by the government or the OLG, while the benefits are being exaggerated;
  2. Problem gamblers are contributing a significantly large portion to the OLG revenue, but also to the economic and social expenses caused by their gambling.

I’ll have more to post in the future, as we approach the debate at the council table (again). In a future post, I want to tackle the question of pork-barrel politics: what turns politicians into shills advocates for gambling? (It’s a story well, but partially, documented in the book, Betting the House, by Brian Hutchinson; it needs to be brought up to date). Does all the support for gambling and OLG’s planned expansion pass the smell test?


* The Fraser Institute, a right-wing think tank, framed the debate in 2002, ideologically: as one of “Individual freedom versus government paternalism.” It concludes as one might expect of conservatives, that social and economic impacts on individuals, families, or even communities, are not the concern of government:

“…the small number of people who are unable to control their gambling does not merit heavy-handed government intervention. Although there are socially harmful activities that require government intervention, gambling should not be considered one of those activities. Furthermore, those who become addicted to gambling rarely threaten the overall harmony of the community …”

The report concludes with a bit of Old Testament thunder:

“…intruding on gamblers’ liberties, prohibition makes a mockery of individual responsibility, which is hardly the best way to sustain the nation’s moral health.”

Ayn Rand must be smiling in her grave at that line.

** Gambling advocates like the OLG often use carefully chosen words to present gambling as entertainment. They call slot warehouses “gaming facilities” as if they were on a par with sports facilities. They don’t call them “gambling facilities.” Terms like “slot barns” annoy them. The Toronto Star calls them “…those windowless structures on the outskirts of cities, surrounded by huge parking lots.

*** The full disclaimer and explanation of the tentative results reads (emphasis added):
Limitations of these Findings
Regular gamblers occasionally have very large wins and losses. These statistical outliers have a major influence on the averages, making it very difficult with small sample sizes to establish what the “true” average expenditures are, so as to compare them with actual revenues.
Gambling is glamourousRealistically, there would have to be thousands of people completing prospective diaries from each of the four categories of gamblers to offset the impact of these outliers. The present study compensated for this by using winsorized data and data sets that eliminated winners. This is a reasonable but not perfect solution to this problem.
The proportion of revenue from severe problem gamblers is very tentative because of the small number of severe problem gamblers completing prospective diaries (n = 32). There is more certainty in the proportion derived from moderate and severe problem gamblers combined (n = 92). Similarly, the proportion of revenue derived from problem gamblers for particular forms of gambling is also tentative; not all problem gamblers participate in all forms of gambling and so some of these estimates are based on small sample sizes. It seems certain that gambling machines derive more revenue from problem gamblers then other forms of gambling. However, the actual portion for each form of gambling is less certain.
There is not a perfect match between reported expenditure and actual revenue for the prospective diaries. The total winsorized expenditures are 36% below actual revenues, and the losses-only total is 37% higher than actual revenues. This makes some sense considering that the largest expenditures have been winsorized in the former and all wins have been eliminated in the latter. On the other hand, it is also important to realize that the present study found gambling expenditure exaggeration and minimization to be equally common for all four types of gamblers, as evidenced by the uniformly low correlations between retrospective estimates and subsequent prospective diary amounts.
The implication here is that if there is an over or underestimate of expenditures relative to revenues, it probably does not affect the proportion derived from problem gamblers because of equivalent exaggeration/minimization in each group.

A separate, Canada-wide, 2004 study on the percentage of revenue from problem gamblers is here. It notes:

“… the most meaningful figure is the proportion of revenue derived from problem gamblers averaged across all jurisdictions: 23.1%. …problem gamblers report a proportion of expenditure that is more than five times their proportion among the Canadian population.”

Another study on Ontario demographics for gambling found:

“…converging lines of evidence indicating that a substantial portion of gaming revenue derives from people who are negatively impacted by their involvement in this activity.”

12/18/12

Gambling and the local economy part 2


MoneySeventy three dollars. It’s not a large amount if you’re middle class, certainly not if you’re Conrad Black. But for others it can be significant. If you’re on minimum wage, it’s a full day’s wage, before taxes. If you’re a senior on a fixed income, it’s a week’s groceries.

It’s also the average amount a typical gambler spends at one time in a gaming facility in Ontario, according to the answers I got from my questions sent months ago to the OLG. The clerk gave me their answers last night, only after the discussion about extending the OLG deadline.

Seventy three dollars. It will get spent in 1.75 hours; the average length of a visit to a casino. That’s about $41 an hour.

When multiplied by 12.8, it totals $934.40. Twelve-point-eight is the average number of times a typical gambler visits a gaming facility in a year. The average gambler will spend almost $1,000 every year in a gaming facility.

Again, it’s not a stunning amount. If you have some discretionary income, it’s equivalent to a mid-level laptop computer, an iPad maxed out with all the accessories, a good, flat-screen TV, a good custom-made ukulele, a case of premium scotch or tequila. An air flight to Mexico or Cuba. Or for others, it’s a month’s rent. Three months’ car payments. Groceries for a family for two months, maybe longer. 

Problem gamblingConsider the potential problem gamblers here in Collingwood. I estimated them to be about 700 people in my last blog post on gambling, based on the percentages OLG provides.

Multiply 700 by $934.40 and you get more than $654,000.

Assuming these 700 people attend a local gaming facility (a windowless warehouse with up to 300 slot machines – the OLG gets prickly if you refer to them as “slot barns”), and spend the same amount as average gamblers, Collingwood’s problem gamblers could spend $654,080 a year in a gaming facility. But of course, they will probably spend more, because they’re problem gamblers. I’ll come back to that.

And what about those others who are  not problem gamblers yet, but are “at risk” from becoming problem gamblers? That’s about 1,200 more local people. If they are also “average” gamblers, they will spend about $1.2 million annually in the facility.

Add these two groups together – the smallest percentage of gamblers but the most problematic - and they will collectively spend almost $2 million a year in a local gaming facility. That’s money not going into the local economy.

Well, okay, five percent of it will come back to us: the town will get about $93,000 from our problem gamblers. For every ‘average” person who attends a potential gaming facility, the town will get $49. Win or lose, we tax you for playing.

Let’s say our problem gamblers spend the same amount per hour ($41), but stay three hours per visit, instead of the average 1.75. That means they could spend about $125 per visit, or $1,600 a year – about $1.12 million a year for those 700 people. And then there are those “potential problem gamblers…” If they spend 3 hours per stay, we get more than $3.1 million spent by 2,000 Collingwood residents.

You can endlessly speculate on these figures, guessing how much people will spend versus how much intervention a gaming facility will use to keep them out. There’s no concrete number we can use, no absolute figures. Just realize that the potential exists for local residents to spend a lot of money gambling.

Personally, I would rather see that money spent at local stores, eating at local restaurants, buying food, furniture, books, musical instruments, cameras, clothing, pet supplies… but with the OLG launching online gambling n 2013, the money may be spent outside local businesses even without a slot warehouse in town.

You can use these numbers to work out a few possible numbers about attendance. If, as the OLG suggests, the town might get $1 to $2 million a year, a gaming facility would need to bring in between $19 and $38 million a year for us to get our rake-off.*

To get $19 million, at the average $934 a year, you need more than 20,000 people gambling there every year. You need more than 40,000 to get $38 million. To get the unsupported-by-OLG-but-often-quoted-locally figure of $3 million per year to the town, you need to have 60,000 “average” gamblers annually.

That’s a lot of wear and tear on our infrastructure. Twenty thousand more cars a year on the highway and on local roads. Or forty, even sixty thousand. And more…

Twenty thousand people at a year-round slot barn averages to 55 people a day. Not very many, especially for 300 slot machines. Forty thousand means 110 gamblers a day. But of course the visits will not be homogenized, but bunched at holidays and weekends (yes, these facilities are open Christmas and Easter…).

And of course averages are just snapshots of the middle ground. there will be people who spend less, other who will spend more. Some will come for a couple of hours of entertainment and spend $25. Others will spend a full day in front of a machine pumping quarters into its ever-hungry mouth.

A municipality needs to plan for the days when the slot warehouse will be full, with people coming and going 24 hours a day. We’ll need every penny of that revenue to upgrade and widen roads, install traffic lights, hire more police and bylaw officers to control parking and speeding…

I have yet to be convinced by any argument that a “gaming facility” offers any significant benefits to the town aside from a handful of hospitality-sector jobs.

Gambling cycle
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* According to the OLG, it already takes approx. $6 million a year in Collingwood from net sales of lottery tickets at the 22 locations that sell them here. This would be on top of that.

 

12/9/12

Tax the Rich – a video



You really should watch this video. It explains in clear, simple terms the argument of the billionaires and the rest of us. I like it because – while it’s simplistic – it is succinct and presents its argument in a powerful story. It also clearly underscores the very polarized US arguments about both taxation and wealth.

This was commented on the Daily Kos as well. Amusingly, it was immediately pounced upon by the rightists as “socialist” propaganda. Sean Hannity, talking head for the uber-right Fox News, was apparently “outraged.” It was titled “Villifying $uccess.”

That they would associate success with money (the $ sign) identifies the basic flaw in their argument. Money, in their simple minds, is merely a measure of itself. Unless that money has contributed beyond mere accumulation – created jobs, built economies, served a greater good such as education – it’s merely a measure of greed. So the video vilifies greed, not success. A person can be successful without accumulating millions or even billions of dollars.

That’s a typical conservative canard – the idea that any challenge to unrestrained (laissez faire) capitalism or suggestion of taxing the wealthy is a socialist plot to enslave America. The real villain here is not money per se, but how a series of US governments has failed in its responsibilities to oversee and manage capitalism. They have allowed the money to shift from productivity, manufacturing, creativity and jobs to the gambling system called Wall Street. They have allowed shareholder profits and executive salaries and benefits to become more important than jobs, local economies, businesses and overall wellbeing. It’s a sad condition when the CEO of Wal-Mart, Mike Duke, makes more in one hour ($16,827) than his typical employee makes in a whole year (average annual wage in the US for a Wal-Mart employee: $13,650).

For the ultra-conservatives, any attempt to rein in the excesses of capitalism is to raise the spectre of that political Cthulhu - socialism, a truly misunderstood word for most Americans. There is an irony here, since the US oligarchs are mostly living in states of entitlement not unlike that of Stalin’s and Khrushchev’s and Brezhnev’s politburos under Communism. Communism may have fallen as an economic system, but its class system still thrives in modern America.*

These conservatives believe the market – that is, the economy – will best regulate itself, much the same way your cat will choose the best vet for its care, or your children will choose the healthy, steamed and unsalted broccoli over the sugar-saturated, heavily advertised junk food for dinner. But if you associate success with mere wealth (as, it seems, many conservatives do), then the greedier the person, the greater his or her success. And thus you get the mess the US economy is in, with jobs going overseas in order for CEOs to be able to afford another yacht, with home foreclosures for the the recently-unemployed middle class while billionaires thrive after having gutted the factories and sold off the assets (Mitt Romney for president, anyone?).

Okay, that’s another simplification, but one only needs to look at the economic figures to see how crazy this has become. Capitalism is a wondrous system for growth, but it needs the government’s hands on its rudder to keep it off the shoals of madness. And it’s been without a captain for many decades now, at least in the USA. In most other Western nations, at least a modicum of control has been provided (Canada, for example, avoided the worst of the recession not by being smarter than Americans, but because we have more stringent controls on our banking and financial sectors).

So government intervention helps capitalism, helps strengthen it, helps build economies, by preventing the excesses it is capable of, from happening.

The Young Turks throw in this comment about the difference between cutting services and social support versus taxing the rich, with some counterpoint:

And James Galbraith, of the LBJ School of Public Affairs, makes some cogent points about the US economy in this video:

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* The other irony is that many of these conservatives claim – rather loudly – to be Christian, yet they act in a very un-Christian, even anti-Christian manner, towards their fellow Americans – again like the politburo.

11/28/12

Mayors Under Siege: Why Laws Must Change


Toronto Mayor Rob Ford is planning to appeal the recent judicial decision that ousted him from office for failing to obey one of the basic rules of municipal governance. In fact, during the hearing, he admitted never having read the Municipal Conflict of Interest Act, one of the key pieces of legislation that govern municipal politicians, even once during his decade on council.

Superior Court Justice Charles Hackland wrote a 24-page decision that called Ford’s  “wilful blindness” inexcusable, and said:

“It is difficult to accept an error-in-judgment defence based essentially on a stubborn sense of entitlement (concerning his football foundation) and a dismissive and confrontational attitude to the integrity commissioner and the ‘code of conduct’.”

Ford, of course, blames the “lefties” for his own failings. Coming out of court, Ford said:

“This comes down to left-wing politics. The left wing wants me out of here, and they’ll do anything in their power to (do that).”

Ford’s charge is merely a tawdry attempt to dissociate himself from his own responsibilities (and failings), and to attack his political opponents on the basis of party platforms. Partisan politics easily obscure truth and reality through such tactics. Party followers are more willing to believe the platform than the facts (as in the recent US presidential election where the Democrat candidate was labelled a “socialist” by the Republicans).

Ford’s churlish comment also became a much-repeated joke in the Twitter-verse, but on CBC radio, I also heard people interviewed on the street repeating the same inanity, as if the judicial system was hostage to left-wing politics because they found Ford guilty.

Ford timeline

Ford also commented,

“I’m going to fight for the taxpayers of this city like I always have. The calls are coming in fast and furious, telling me to fight it, telling me to run. I’ll never give up fighting for the taxpayers.”

No: Ford is fighting for his reputation and his political career. That is not a fight for the taxpayers (ask yourself which taxes are at risk by Ford’s absence). It is disingenuous to try to associate a personal battle with something for the greater good. The electorate is not fooled by it.

London Mayor Joe Fontana has been charged by the RCMP with fraud, breach of trust by a public officer, and uttering forged documents. He has refused to step down while the charges are investigated, despite attempts by London council to ask him to do so. A non-confidence vote – more symbolic than effectual – was passed by a committee and comes to the council table soon.

Fontana is innocent until proven guilty, of course. Unlike Ford, he didn’t try to blame others for his problems, and declared his innocence. And we should not automatically assume any guilt while the investigation continues. He did, however, refuse to step down until the legal process is completed:

“I’ve been given a mandate by the people of London. People call me every day saying they like the work I’m doing as mayor.”

The mandate given by an electorate is to serve the people, not serve personal or even party agendas. Every mayor has to live up to a higher standard than the electorate, and treat the office with respect and honour. The job comes with some serious responsibilities to act in a manner that reflects those expectations and upholds those standards. The mandate is not simply about taxes or promises: it is about leadership.

When the public feels that the mayor sullies the office, the mayor is seen as rejecting that mandate. Ford and Fontana are treating it like it is their right to stay on and continue, not a privilege granted by the electorate. They are separating themselves from those they are expected to lead and guide.

Ford was removed from the mayor’s chair by a judge because there is no mechanism in the Municipal Act for either a council, integrity commissioner, or the public to remove an elected politician from office outside the courts. Fontana cannot be removed, regardless of council’s vote (and council is only asking him to step aside (with pay) during the investigation, not resign) and the motion is simply symbolic. Fontana can legally ignore it.

These tales of mayoral woe pale in comparison with the ongoing revelations of kickbacks and corruption in Quebec that caused  Montreal Mayor Gerald Tremblay and Laval Mayor Gilles Vaillancourt to resign in the face of public outrage and police investigation. And today I heard that Winnipeg’s mayor, Sam Katz, faces his own conflict of interest challenge. Mayors are always in the spotlight and cannot hid from the media’s attention.

All of these are examples of poor judgment, arrogance, ignorance and often a misplaced sense of entitlement, these mayors act as if they were both above the law and above public expectations. What they fail to acknowledge by denying wrongdoing and blustering their own defence is that, although mayors only have one vote at the council table, they fill a role that is far more important than a simple councillor.

Mayors have symbolic power as the figurehead at the head of the table; they speak for the municipality. It’s not simply a ceremonial role; they are perceived in the public eye as being both the spokesperson and the role model for the entire community. And a mayor who loses the respect of the community can also polarize the community against the entire political and bureaucratic structure (as we discovered here, last term). The electorate loses confidence in the very process of governance when it loses confidence in its mayor.

What the Municipal Act lacks is any mechanism to either unseat or recall a municipal politician. Not even an integrity commissioner can do that – as in Ford’s case. Nor is there any method for a council to express non-confidence in a mayor or hold a mayor accountable for his or her acts. Voters cannot recall a municipal politician and only have the election to make a statement of displeasure. That’s a problem that can only be resolved by the provincial government putting some enforceable accountability into the act.

10/30/12

Pondering the US election from a Canadian perspective


US editorial cartoonCanadians often find US politics mystifying, no more so than during presidential elections. It’s not just their byzantine electoral college system (which truly baffles us – even when explained concisely as in the video below).

It’s not just the differences between America’s republican governance system and our parliamentary system (although they do contribute mightily to the confusion since they are so dissimilar). These are process issues that can be sorted out through reading and study.




What baffles us – or at least me – is the increasingly vituperative language of the candidates, their advertising, and even of the post-debate analysts (not the whinging idiots like Ann Coulter and her foul-mouthed Fox media co-conspirators, but rather the real political pundits).
Political cartoon
Canadians watch the debates, we read, and we listen to your candidates with perhaps as much excitement as Americans. After all, this is high drama. But we don’t understand why the far right labels the less-than-far-right as “left” or even “socialist” – as if that was a bad thing.

From our perspective, the Democrats are only a hair left of the Republicans, not enough to make a difference. They’re both right-wing. It’s a bit like the difference between our “red” and “blue” Tories – two shades of the same party. Both major US parties are right wing – both support big military spending over education and medical care, both support wacky gun laws and NRA extremism, both parties have propped up a variety of international dictators when in power, both maintain an ideological position on the Middle East as opposed to a rational one, both have failed to actively intervene when fundamentalist dunces get superstition and myth inserted into state school curricula in place of science and reason. And both have helped ruin the environment and kill the space program. Those are right-wing policies.

We have real left parties in Canada and we’re rather fond of them (the NDP, a mid-left socialist party, is our Official Opposition and stands a fair chance of winning a government sometime soon; the Bloc Quebecois was the opposition from 1993-97, and is very left as well as being separatist). We know what the word “socialist” actually means – and it has nothing to do with the Democrats.*

Many Canadians are proud to be called socialist – it’s a compliment, not an insult. To call a Democrat a socialist is, from our perspective, like calling a fish a bicycle: nonsensical.

The US has both Communist and socialist parties that run candidates in at least some elections. Although they are almost unknown to Americans outside their own circle, they actually stand for the left-leaning things Communists and Socialists stand for, not what the Democrats stand for (sorry, Ann Coulter, for all your rabid hectoring, you are again wrong about the Democrats, but that’s hardly news).

We do, too (we have five major political parties and oodles of fringe parties including Communists and Trotskyists – as well as some uber-right fundamentalist parties). Many run candidates in federal elections. They usually only get a couple of hundred votes, not enough to be more than a minor note in the electoral process. Mostly they provide comic relief at election time.

But if you want to talk leftist, talk the REAL left, not the Democrats. Talk to me about Marxism, Communism, Leninism, Maoism. Talk to me about state-run economies and state-run industries, central planning and single-party systems. Don’t try to spin medicare as a leftist policy.

US elections are more about money than Canadian elections. I was astounded to hear the report on the BILLIONS of dollars raised to fuel the US election. That’s for advertising, media relations, campaigning and, of course, spin. Billions for EACH party. It’s like watching a battle between two giant, hostile corporations, rather than two people or even two parties. Six billion – $2.5 of that on the presidential race alone – will be spent in 2012 alone, as explained in this infographic on Creditseason.com.
Tea party cartoon
We do have one thing in common, however. The ideological change that has transformed the Republicans into the Tea Party has also transformed our own Conservative party into its Canadian equivalent. Both parties have polarized their federal politics and demonized any and everything that opposes them. The age of mature, civil debate ended under their attack-style politics. It’s very sad because they have destroyed any viable space for moderate conservatives. If you’re not a radical rightist, a bigot, xenophobe and fundamentalist, you must be the enemy. Facts give way to ideology. Reminds me a lot of the 1930s… (disinformation overriding facts even happened here, on the local level recently, but that was about rec facilities, not party politics).

From my Canadian perspective, the US election is about three things: race, gender and entitlement. One side has lined up a pro-white, keep-em-in-the-kitchen-no-abortion-even-if-raped, give-rich-people-a-break, my-god-is-a-jealous-god platform. The other is more inclusive of races, support’s women’s rights, fair taxation, religious tolerance and a minimal (NOT socialist) health care system that is merely 100 or so years behind European and Canadian models. But neither are in any way, shape or form, socialist. One is just somewhat more democratic and a little more equitable about taxes and medical care.

To me, the choice is pretty self-evident, but I’m not an American, so I don’t see things as Americans do. Maybe my perception of the lesser of two evils isn’t matched by yours.

Here are some links to information about the differences between Canadian and American elections:
CITY TV
Canada.com (2008 piece)
Helium.com (2009 piece)
Cracked.com (comedic piece)
Phys.org
e-How.com

And here are some interesting comparisons of Canadian and American demographics: unitednorthamerica.org. Note that this is the site of a group, “dedicated to the democratic unification of Canada and the United States of America into one nation, under the protections, freedoms and privileges of the United States Constitution.” I don’t support that sentiment, but would consider bring the US states in as provinces under our Charter of Rights and Freedoms. Then we could really teach Americans about socialism.
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* There is no one definition of socialism that fits all ideologies and the term is used for everything from Marxism to medicare. But in fairness, Canadians misunderstand the term less than Americans are we are less prone to use it to describe anything we don’t agree with or comprehend. Americans often call those they don’t like “liberals,” as if that was also an insult (the harridan Ann Coulter infamously wrote, “Liberals hate America, they hate flag-wavers, they hate abortion opponents, they hate all religions except Islam, post 9/11. Even Islamic terrorists don’t hate America like liberals do. They don’t have the energy. If they had that much energy, they’d have indoor plumbing by now.”). Outside the USA, or at least outside of Coulter’s delusional tea-party-pea-brained politics, being a “liberal” means being a centrist, not a left-winger.

10/19/12

Gambling: money and statistics


gambling cartoonNo, I’m not going to write about the morality of gambling.* I’ll save that for another post. This is about money. And numbers.

I attended the OLG four-community presentation in Wasaga Beach, Tuesday, and it got me thinking about what gambling means to the economy, what it means to the government, what effect it might have on things like growth and recession. It also made me wonder how governments became addicted to gambling revenue, but that, too, is for another post.

I also found some of the statistics presented interesting enough to do some extrapolation, which I’ll get to at the end.

What does gambling contribute to our economy? Well, the OLG and the province always like to tout the benefits: the OLG paid more than $2 billion profits into provincial coffers, in 2011. They’ve given more than $34 billion since 1975. That’s an average contribution of $149 per person in the province per year. OLG’s plans are to build that payment to the province up to $3.3 billion by introducing more and newer forms of gambling.

On a very basic level, that looks good. After all, at least some of that money would have had to come from taxes instead, so it can be seen as a user-pay system, or a self-tax system. Of that $2 billion last year, $120 million went to the Trillium Foundation, $10 million for Ontario Amateur Sport, and $41 towards problem gambling programs.

That’s an interesting ratio: four times the amount given to develop sports is given to treating the problems created by gambling. A point not missed by the audience.

The OLG made that profit from revenue of $6.685 billion. That’s a far more intriguing number. It’s just over one percent of Ontario’s GDP in 2011. As a former business owner, seeing a 33% profit margin is impressive. Extrapolating, it suggests OLG plans to increase net gambling revenues to almost $10 billion if the ratio remains the same. It will do this by expanding gaming sites, adding internet gambling, allowing bingo halls to run more games – making more gambling available to more people more often.

That doesn’t sit too well with me. The same people who won’t let grocery and convenience stores sell wine and beer because it might corrupt someone, will make gambling so ubiquitous it will be hard to avoid tripping over a slot machine (real or virtual). Online gambling will offer easy access, 24/7 from your home. Play in your jammies until the early hours. All you need is a credit card. Makes me wonder if the goal is to make gambling mandatory some day in the future, like taxes…

What happened to the rest of the money the OLG took in?

Online gamblingAccording to the OLG’s annual report, operating expenses were $4.975 billion. Of that, $1.835 billion went to payouts to lottery and bingo winners. Commissions ($648 million – this, I assume, was paid to operators ), marketing ($300 million – the amount paid for advertising is 7.5 times the amount paid to help problem gamblers), interest ($32 million), payments to the federal government ($228 million) and amortization ($226 million) gobbled up another 1.43 billion. Paying for the OLG and its 18,000 employees is one of those expenses. Six thousand of those employees got bonuses, too – $11.6 million worth. Not a large slice of $4.7 billion. Horse racing got $345 million; host municipalities got $92 million and First Nations got $117 million.

It almost looks like the OLG is on a drunken giveaway spree, handing out the bucks to everyone except, of course, the gamblers. Nice of them to give us back some of our money, though.

Who doesn’t want to get free money? That’s the attractiveness of hosting a casino: all you need to do is nod your head, zone some land, then sit back and watch the money roll in. Suddenly flush with cash, the town’s taxes plummet, everything gets rebuilt, new sports facilities sprout, downtown gets renewed, sidewalks rebuilt, streets paved with gold and the local politicians get halos.

Well, maybe not.

As an aside, based on media stories, all three seem worried that their slot machines will be removed from the tracks when the agreement ends, sometime in the next year.

The OLG presented the audience with examples from Hanover, Central Huron and Chatham-Kent: all three communities have an OLG money machine in a racetrack. Hanover has 130 slots; Clinton (Central Huron) has 123, and Hanover (Chatham-Kent) 130. All three are currently questioning whether the slots will remain in their raceways with the OLG’s new strategic plan. In 2011, Hanover received about $800,000; Central Huron $641,000 and Chatham-Kent about $700,000. Exuberant endorsements from their mayors, we were told.

Assume we could get, say, $1 million per year as a host community. That translates to just over 2% of our annual municipal budget. Minus, of course, what we would pay to our neighbours as per the memorandum of agreement we signed. We might end up with 1% of our budget as “free” cash. Does this mean your taxes won’t go up? Nope. The extra money would likely end up going to infrastructure improvements and maintenance required by the extra traffic, maybe to extra policing costs too.

Gambling and drinking cartoon
Even if we kept it all for ourselves (as one councillor has suggested), and damn the rest of the region, is that money enough to make us want a casino? If I’m going to sell our municipal soul, I think I want a bigger slice of that pie for the town. As Faustian agreements go, we’re not getting much from our side of the bargain.

Besides, we might think we’re agreeing for “just” 300 slots, but the OLG said it could expand the site’s licence to other games anytime in the future. The demographics change when you have other types of gambling, but I didn’t hear anything to suggest the town will have a say in that expansion.

If the cash doesn’t move me, the opportunity to create 80 to 90 jobs in the area is more attractive. Any job creation is welcome, but I get an uneasy feeling these aren’t the “quality” jobs some folks are expecting.

From what I understand, many of these jobs would be similar to what the hospitality industry already offers – janitorial, serving, cooking,security, valet parking, landscaping, counting cash. Whether these (non-union?) jobs would pay better than the hospitality sector or offer any benefits would be up to the private operator. They aren’t government jobs: the OLG won’t be running these new casinos.

Will a private operator pay more than $10-$12 an hour for someone to sweep the floor and polish the slot buttons? I wouldn’t expect so. Any new jobs are better than no jobs, but my passion to create more McJobs is somewhat less. Would you like fries with those casino tokens?

Back to the money. According to the OLG, the net revenue from adults to the gaming industry in Ontario is $459 per year. Doesn’t seem like a lot, but that’s money that doesn’t go directly into the economy – it doesn’t create jobs outside the gambling sector. It doesn’t buy anything from local merchants or restaurants. It goes directly to the government. Well, okay, two thirds goes to the OLG and its minions, and the remaining third gets into public coffers.

Most economists measure consumer spending as a yardstick to whether we are in or out of a recession – it’s called the consumer confidence index. See here for the Canadian index. It’s a simple measure of consumption – consumers who are confident in the state of the economy buy more stuff. Recessions happen when that confidence falls to a point where we stop buying and start hoarding (okay, it’s one reason; there are others, but it’s a big part of it).

A strong consumer confidence report, especially at a time when the economy is lagging behind prevailing estimates, can move the currency markets quickly. The idea behind consumer confidence is that a happy consumer – one who feels that his or her standard of living is increasing – is more likely to spend more and make bigger purchases, like a new car or home, leading to a stronger domestic economy and consequently a stronger currency.
Source: www.investopedia.com/walkthrough/forex/advanced/level8/consumer-confidence-index.aspx#axzz29kZLXgcV

Gambling cartoonIs gambling measured as consumption? Does the money pushed into slots contribute to the level of confidence? Is gambling measured in the index? I can’t find anything online to suggest that it is. So rather than spending that $459 on, say, a new TV, a shelf of books, a library of DVDs, new skates, skis or a bicycle, a purebred puppy, teeth whitening or any other goods and services – this money is spent on gambling. It bypasses the usual consumer channels. Gambling doesn’t add to the consumer confidence, even though the money is still flowing out of consumers’ pockets.

Yes, there is trickle down and spin-off - some of the money goes to suppliers, some to wages – and thus some gets back into the general economy. But how much? How much just ends up fattening the bank accounts of the operators? I don’t know, but clearly it’s not as beneficial as if it were all spent in a retail store.

Would $6.7 billion have a positive effect if it was spent in retail instead of gambling? Of course, but overall not as much as you might imagine. It’s about 4% of Ontario’s total retail sales (2011 figures). So it would help, but wouldn’t change the world. A few hundred people spending an extra $459 each every year in a local business could make a real difference to the local economy.

As a personal choice, I’d rather buy that shelf of books from local bookstores than pump quarters into a noisy metal machine and walk away with nothing. At the end of the day, I will have something to show for my money, not to mention many more months, even years, of enjoyment from the books.

It strikes me that putting the money directly into the economy helps buoy consumer confidence (thus the economy) better than spending it on gambling, and it might help keep us on the farther side of a recession. The OLG’s own statistics show that Ontario’s gambling revenue didn’t seem significantly affected by the last recession, so gamblers apparently don’t seem to feel the need to hoard as much as consumers when the economy tanks.**

Let me wind up with some thought on statistics. According to the OLG’s own estimates. 3.4% of Ontario residents have a “severe or moderate” gambling problem. In Problem Gambling in Canada (see footnote), the authors quote a 2005 study of Ontario residents by Wibe, Mun and Kauffman, that has a higher number: 5.8% are “at risk of gambling problems,” 2.6% have “moderate problems” and 0.8% have “severe problems” (the latter two combine to make the 3.4% OLG mentions).

We have around 21,000 people in Collingwood. At 3.4%, we expect to have more than 700 people here with “severe or moderate” gambling problems. Another 1,218 (5.8%) are “at risk”. That’s about 2,000 local adults for whom gambling is or may be a problem. These are your friends, relatives, neighbours. That concerns me. These are the people most likely to be found in a casino that’s in our back yard – especially during the week when there are fewer visitors.

We have about 16,000 adults 18 and older here. That means about one in every eight adults who may have or who have a problem with gambling. If the government was to allocate funds to problem gambler programs by that percentage, they would have to spend more than $250,000,000!

Add in about the same number of people from Wasaga Beach, and more from Clearview, Springwater and Town of the Blue Mountains, and we have more than 5,000 people in our immediate vicinity who either have or are at risk from gambling problems. That’s a lot of people in our region who may find a casino an irresistible place to spend their money.

I just don’t see 5,000 people lining up at the problem gambling office to voluntarily disbar themselves from the irresistible urge to push quarters into that hungry metal mouth, while others shove past them to get at the seats they vacated. I guess they’ll still be able to enjoy the province’s online gambling sites, when they are launched. The government may not want you in the casino with your bad habits, but it still wants your money, and won’t even mind if you play in your jammies.

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As you might gather from the above, I am less than enthusiastic about having a casino here. I’m still open to debate and to having my mind changed, but it has to be a lot more compelling an argument than what I’ve heard to date.

Worth reading: Public Affairs 101 on gambling
The Walrus: story on Alberta’s gambling
Stats Canada report on gambling, 2011
The Social Effects of Gambling

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* In the book, Problem Gambling in Canada (Tepperman and Wanner, Oxford University Press, 2012), gambling is identified as a learned behaviour; like smoking, like watching TV, playing sports or reading. Adults often become gamblers because of how it is portrayed in family or social situations. Because gambling is legal, it gets advertised in mass media, making it appear on the same level as consumer goods and entertainment, banks, and music concerts. From buying lottery tickets to trips to Las Vegas, how gambling is perceived in the home affects how children will develop as adult gamblers; just as children brought up by smoking parents are very likely to become smokers themselves.
** While this was also noted in the UK, in the USA, the pattern seems different. Overall the US gaming industry lost about 5.5% revenue during the recession, with New Jersey reporting a 13% drop from casino revenue. How much of that was caused by an increase in online gaming or in the general increase in gambling opportunities as more and more states legalize it, is unknown. Also, the US was hurt more by the recession than was Canada.