The Lottery and Capitalism – Striking Similarities

I was having a discussion with one of my friends, who happens to be a banker, and he mentioned that, when you think of it, there are not many differences between playing the lottery and capitalism. In fact, he pointed out, they are both very similar. It struck me as an odd statement but when I thought about it I realized he was spot on.

Incentives

Playing the lottery offers the incentive of winning a lot of money. At the heart of capitalism is the same incentive to make a lot of money. It’s the American Dream, after all, to become rich in America.

Risk-Reward

Both result in winners and losers. The risk of losing your money when you play the lottery is high, but the reward is also high. According to the Powerball website, the odds of winning the Powerball are 195,249,054 to 1. Capitalism also requires that you take a risk. The reward is that if you win, you get to keep the profit, or wealth, you created. The risk is that if you lose, you lose all of your time and money invested.

Unfairness

The lottery is unfair. Only a few win, whereas millions lose. Capitalism is also unfair because only a few win and become wealthy while the majority don’t win and many become poor in the process.

Success

During fiscal year 2012 lottery sales totaled $78 billion in the U.S., or $1.5 billion in ticket sales a week. Clearly the lottery is a very successful system because millions choose to play the lottery regularly.  Capitalism is also very successful. The U.S is considered the most capitalist of the free market economies in the world and it has the largest economy the world has ever known.

Final Thoughts

It seems so unfair that only a few win at the lottery. What would happen if the winnings were diverted back into the hands of those who played and didn’t win, in order to bring more fairness to the lottery? The lottery would no doubt collapse. When you take away the incentive to become wealthy, the lottery losses its appeal.

That’s another thing the lottery and capitalism have in common. What would happen if you decided to redistribute all the wealth of the few who became wealthy under a capitalist economy? It would die. No one would invest their time and money if you removed the incentive for profit by redistributing those profits, out of fairness, to others who did not win. Redistribution of profits earned under capitalism is particularly egregious because it takes more skill than luck to create wealth via capitalism. The American Dream and America’s continued dominance in the world economy, depends upon capitalism. It is dependent on its major driver, incentive. Anything that takes away this incentive, even just a little, negatively affects capitalism and negatively affects the whole of the U.S. economy.

So obviously, taking 100% of the winnings from the winners of the lottery and 100% of the profits from the winners in a capitalist economy would kill both. But what if, instead of taking all of the winnings and profit, you redistributed only some of it, in order to make it less unfair?  What should that percentage be before those willing to take the risks begin to pull back from their investment? 30%, 50%, 70%? Logic dictates that if too much is taken, we should see fewer people taking risks in both systems. That would hurt the lottery industry overall and would negatively affect those who depend on the lottery for a living or who derive some benefit from the lottery. Taking too much of the profits from the winners in a capitalist economy would hurt the economy overall because there would be fewer willing to risk their time and money on new or existing businesses. It would also negatively affect those who depend upon businesses for their living, such as employees and other businesses. That means fewer jobs, more unemployment and a stagnant economy.

Sound familiar?

 

 

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Thomas C. Corley About Thomas C. Corley

Tom Corley understands the difference between being rich and poor: at age nine, his family went from being multi-millionaires to broke in just one night, due to a catastrophic fire that destroyed his Dad's thriving business. For fourteen years they struggled with poverty. There were eleven in Tom's family, and they lived in constant fear of losing their home.

Driven by the desire to unlock the secrets to success and failure, Tom spent five years studying the daily activities of 233 rich people and 128 poor people. He discovered there was an immense difference between the habits of the rich and the poor. During his research he identified over 300 daily activities that separated the “haves” from the “have nots.” Tom decided to write a book to share what he learned. That book, Rich Habits: The Daily Success Habits of Wealthy Individuals (1st Edition), went on to become an Amazon Bestseller in the United States forty times over a three year period. To give you some perspective, in order to be a true Amazon Bestseller in the United States, where you actually receive a specific Bestseller designation from Amazon, you need to be in the top 100 of all books sold by Amazon in the United States in a given day. Rich Habits did that for nearly thirty straight days, rising as high as #7, eclipsing such Bestselling authors such as Stephen Covey, Robert Kiyosaki and J.K. Rowlings. Imagine that - an unknown, first-time, self-published author selling more books than J.K. Rowlings!

Tom now travels the world, sharing his Rich Habits and motivating audiences at industry conferences, corporate events, universities, multi-level marketing group events, and global sales organizations’ presentations and finance conferences. He has even spoken on the same stage with famous entrepreneurs and personal development experts, such as Sir Richard Branson, Robin Sharma, Dr. Daniel Amen, and many others.

Tom has shared his insights on various national and international network, cable, and Internet television programs such as CBS Evening News, NBC News, Yahoo Financially Fit, Money.com, India TV, News.com Australia, and a host of others. He has been interviewed on many prestigious nationally syndicated radio shows, including the Dave Ramsey Show, Marketplace Money, and WABC.

Tom has been featured in numerous print magazines—such as Money magazine, Inc. Magazine, SUCCESS Magazine, Entrepreneur magazine, Fast Company magazine, More magazine, Epoca Magazine (Brazil’s largest weekly) and Kiplinger’s Personal Finance magazine—and various online publications, including USA Today, CNN, MSN Money, SUCCESS.com, Inc.com, and the Huffington Post. Tom is a frequent contributor to Business Insider, Credit.com, Bankrate.com and a few other media outlets.

National publicity has garnered international media attention for Tom and his Rich Habits research spanning 23 countries. Broadcast media, online publications, and television throughout Asia, the South Pacific, Europe, the United Kingdom, and Central and South America have shared his powerful message.

In an effort to help parents, grandparents, teachers and adults become success mentors to the younger generation, Tom released his second book, Rich Kids: How to Raise Our Children to be Happy and Successful in Life in 2014. This book was the self-help category winner of the 2015 New York Book Festival and Runner-up in the prestigious 2015 Writer’s Digest Self-Published Book Awards Contest. In 2016 Tom released his third book, Change Your Habits, Change Your Life. This book provides the latest science on habit change as well as more of Tom's unique research on the specific habits that helped transform 177 ordinary individuals into self-made millionaires.

Besides being an author, Tom is also a CPA, CFP, and hold a master’s degree in taxation. As president of Cerefice and Company, CPAs, Tom heads one of the premier financial firms in New Jersey.
 
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