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Two Mentalities Are Fighting for the Soul of the United States and Its Government

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Erik Devereux
July 20, 2018

This is the first of two columns I am devoting to the future role of the Federal Government in managing the competing demands on public policy from business and labor. This column goes in a direction that may seem unexpected given that introduction. Bear with me, and you will see where all of this going. My September column will pull it all together, I promise!

The mystery I explore in this column is the opposition among “blue collar” or “working class” Americans—the majority of voters—to public policies such as progressive taxation which, at face value, impact the minority of the population that is wealthy. I acknowledge up front there is a racial dimension to this mystery per the findings of a widely disseminated study out of Stanford University and the University of California, Berkeley. But there is more going on here: a competition among two mentalities among Americans with powerful consequences for politics and public policy.

The first mentality is the classic, “American Dream:” If you work hard and play by “the rules” you will get ahead. Those rules include learning a trade, starting at the bottom and working up the ladder through decades of consistent, hard work and living within your means. It’s all about “nose to the grindstone.”

The second mentality I call the “Lottery Mentality” and it is pervasive in the U.S. Here are the main features of the Lottery Mentality:

  • Success through “hard work” is a mirage. Those who focus on “doing their job” and “being a reliable worker” essentially are “dupes,” destined never to get ahead, never to become “rich.” Those who buy into the American Dream are spending their lives making other people wealthy.
  • The goal of economic activity is not to achieve self-sufficiency and security but to seek a pathway to huge wealth even if the chances of success are vanishingly small.
  • People from any socioeconomic background have equal odds at success when diverting their resources into lotteries, defined as simply as the state-run lotteries or state-sanctioned gambling, or more complicatedly as participating in various dubious schemes legal, semi-legal or outright illegal.

Americans who buy into the Lottery Mentality are convinced it is better to play the lottery than it is to budget carefully and use savings for purposes such as additional education and training. These same American strenuously oppose any public policies that seem to close off their access to lotteries. Overestimating the odds of winning, and failing to recognize that not all players are on an equal footing, they believe any restrictions on various lotteries will harm their chances of becoming wealthy. Experts in the rapidly maturing field of behavioral economics are producing excellent research of all of this.

At the practical level, it means, rather than supporting higher taxes on the wealthy, and using the resulting revenue to support the social safety net, many “blue collar” Americans support tax cuts for the wealthy (or at least the politicians who openly advocate for such cuts). Why? Because these voters are thinking about how tax policy might affect them once they “hit it big” and join the ranks of the wealthy. Of course, that is not going to happen. (For more on other aspects of this, I highly recommend Larry Bartel’s 2004 paper, “Homer Gets a Tax Cut.”)

The truth is that the only guaranteed winner in a lottery is the owner of the lottery. About 99 percent of those who play the lottery will lose everything they spend on it, most right away and a few a bit later on. This is why lotteries exist in the first place — to transfer resources voluntarily from the many to the few based on biased perceptions of the odds of winning.

The Lottery Mentality is so pervasive and seductive across society that it merits much more scrutiny from governments. To take one significant example, the Lottery Mentality factors in so many people lacking savings and plans for retirement, and remaining highly exposed to unexpected but predictable financial crises. One way or the other, governments will bear the resulting burdens. But behind all of that are today’s children who are growing up in a cultural and media context in which the Lottery Mentality is thriving. All around them what they see are casinos being built, news coverage of PowerBall and professional sports, and persons seemingly becoming fabulously wealthy without working much for it. (Aren’t we all trying to keep up with the Kardashians?)

Here is the segue for my next column. The balance within public policy between the demands of business and the need for some economic equity for low income workers is systematically tilted in the wrong direction. There is too little equity in the U.S., and our political system is in the midst of a profound crisis because of it. But this is a democracy and voting matters. As long as a broad swath of Americans subscribe to the Lottery Mentality, it is going to be very difficult to shift that balance.

Author: Erik Devereux has worked for 25 years in the public policy and management field. Erik currently is an independent consultant to nonprofit organizations and to higher education and teaches applied policy analysis at Georgetown University. He has a B.S. from the Massachusetts Institute of Technology (Political Science, 1985) and a Ph.D. from the University of Texas at Austin (Government, 1993). Contact Erik at [email protected].

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