Wednesday, November 30, 2022

New York City's Economic Recovery Plan: Gambling and Weed

From City-Journal Magazine, Autumn 2022 edition:

In August, New York mayor Eric Adams stood before a banner festooned with cannabis-leaf emblems, making what he billed as a major announcement. “Today, we light up our economy,” enthused the mayor. Referring to recreational pot sales, he continued: “The regulated adult-use cannabis industry is a once-in-a-generation opportunity. . . . Cannabis NYC will plant the seeds for the economy of tomorrow.” Standing with Adams, John Durso of the Retail, Wholesale and Department Store Union promised “good, union jobs.” Jeffrey Garcia of the Latino Cannabis Association predicted “one of the largest generators of wealth in New York at least for the next two decades.” Bertha Lewis of the Black Institute affirmed that “cannabis is an industry and not just a nickel bag.” Deputy mayor for economic development Maria Torres-Springer promised “hundreds of millions in revenue” for the city.

Welcome to New York’s post-pandemic economic-development policy: the promotion of vice. In this New York, vice isn’t something to tolerate, operating on the edges of the law, in a black market in a dense, wealthy city; it’s a premier growth industry.

And pot isn’t the only vice that New York is encouraging. Gotham is also eagerly courting multiple full-service casinos. It’s a path that struggling and far weaker American cities—including Atlantic City, New Orleans, and Detroit—took out of sheer economic desperation, born of policy failure. Adams is unabashedly cheering the expansion of “gaming,” as he calls it, to “create at least 16,000 good-paying jobs.”

New York’s new emphasis on pot and poker—even as the city ignores the day-to-day quality-of-life concerns of its core high-paying industries in finance and business and its highest-earning individual taxpayers—comes despite decades’ worth of evidence that vice-oriented cities don’t thrive.

The public sector’s embrace of vice as a moneymaker started more than 50 years ago. In 1963, New Hampshire faced a problem: government spending was rising, as war veterans sent their baby-boomer kids to public school, but voters were stubbornly tax-averse. Democratic lawmaker Laurence Pickett proposed an alternative: a state lottery. Residents and visitors could buy tickets for a regular, state-run sweepstakes, tied to a horse race. Religious groups were aghast. As one bishop put it: “Just think what it will do to the minds of young people when they realize their parents would rather indulge in gambling than meet their obligations in an honorable way.”

Arguments backing New Hampshire’s first-in-the-nation state lottery, though, will sound familiar to anyone following today’s push for marijuana and gambling expansions. People were already playing illegal, local “numbers games,” and the profits were going to the underworld, lottery proponents observed. Since people would engage in this activity anyway, why not eliminate corruption, via state administration? And the states could put the profits toward a good cause: education. Despite religious opposition, New Hampshire residents approved the effort, by four to one.

New Hampshire’s idea gained national traction, as many other state governments sought to defray the cost of more spending without driving taxes up too high. Just a few years later, New York became the second lottery state. In 1967, supporters promised half a billion dollars a year for education, through the proceeds of a once-a-month lottery drawing. Again, opponents fretted about the moral implications. “We are confessing we have reached a point in this state where we cannot provide for our needs by legitimate methods,” said State Senator Samuel Greenberg of Brooklyn. “It means we are bankrupt.” Across the aisle, Republican senator Thomas Laverne, representing Rochester, charged lottery backers with cynically “beclouding” the issue by tying it to education, “something everyone cares about.” The beclouding worked. Voters approved the necessary amendment to create the lottery as an exception to the state’s constitutional prohibition against gambling.

The lottery performed as advertised. It raised money for schools, without, apparently, debasing the populace, as opponents feared. The streets were not suddenly filled with broke gamblers. Demand bred supply, and vice versa. By the early 1980s, New York’s lottery system, far from a once-a-month contest, offered a choice of different weekly games, all heavily marketed to working-class and middle-class players with the promise of life-changing sudden riches: “All you need is a dollar and a dream.”

The lotteries did lure a small percentage of people into compulsive gambling; stories emerged of players who spent their life savings, or their families’ savings, on tens of thousands of dollars’ worth of tickets. But these aberrations could be chalked up to personal failings—they were the exception, not the rule.

Even fierce critics overlooked how quickly and deeply the lottery would entrench itself into everyday culture. The lottery didn’t instantly turn New York into a betting-mad mecca, but over time, it normalized low-grade, habitual gambling as respectable—even something good to do, in support of a good cause. Kids helped their grandparents pick out numbers and eagerly watched televised drawings. New York’s example spurred on neighboring states, and the concept spread nationwide. If a state didn’t create a government lottery, it would lose the tax revenue to its neighbors....