Thursday, September 20, 2007

The Great Hoax

Last year Americans spent $57 billion on lottery tickets, more than they spent on books and movies combined. If you frequent convenience stores almost daily like I do for gas, soft drinks or a newspaper, no doubt you have noticed how much longer the lines are on average due to people buying various kinds of tickets. I note with sadness how high a percentage of these people are day laborers, which is one reason I consider the lottery to be a de-facto tax on the poor. But hey, at least most of the revenues go to educate our children, right?

Think again, friend. A recent report on NBC news noted the following after a study of twenty-four states: lottery revenues fund only a fraction of states’ spending on education, ranging from 1-10% depending on the state. Furthermore, and more importantly, spending on education in these states increased 0% as a result of lottery revenues. That’s z-e-r-o percent. How can this be, you ask? Very simple. Let’s construct a hypothetical but realistic scenario: State A allots $400 million for education. Then the lottery comes to town and generates another $300 of revenue. The state legislators re-assign $300m of the funds originally allocated to education to other projects, and use the $300m of lottery funds for education. See? The lottery revenues do indeed fund education, but there is no increase in the spending on education. I am not saying state officials do this illegally or maliciously; this is simply how it all shakes out after fierce allocation battles have run their course and a budget is agreed upon. Still, I concur with the late Florida governor Lawton Chiles, who called the lotteries’ funding of education “a great hoax on the people.”

The siren song of the lottery and the associated dysfunction in state spending reminds me of the plight of many good folks who tap into credit card accounts, lines of credit, or easy loans to fund worthwhile things only to find themselves on a fast-moving treadmill of earn and spend exhaustion. In 2006, for the first time ever recorded, Americans owed more money than they made: in 1952 the average debt to disposable income ratio was less than 40%; in 2006 it was 126%. In some ways we are like the state legislators – we just can’t resist spending all the money available to us.

I have seen and personally experienced the stress, anxiety, and frustration an over-leveraged financial life brings. That is one of the reasons I am such an enthusiastic supporter and (and past participant) in ministries like Financial Peace University and Crown Financial Ministries, the latter of which is active at West Houston. There is something powerful about addressing the reality of our finances, examining our lifestyles, formulating a plan, and undertaking to get off the treadmill. On October 8-9 we will host Steve Diggs’ No Debt, No Sweat seminar at West Houston. He will speak Sunday morning and then continue the seminar on Sunday and Monday evenings. We have heard rave reviews of Steve’s presentation, which he subtitles: “A Life-Changing Seminar that Teaches God’s Way of Handling Money.” Being wise and prudent with our resources is life-changing. The satisfaction of simplifying our lives, living within our means, and planning for the future is exhilarating.

And that’s no hoax.


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