Submission to the Coalition's working group on gambling reform
24 Nov 11
Gambling represents one activity that interacts with the economy to a significant degree. Its very nature means there are losers and winners, and by and large government policies focus on the losers. While this submission does not dispute the negative side of gambling nor gild the role of winners, there are factors which relate to the social engineering aspect of such policies. Examples are presented from the lower to the higher end of societal scales to demonstrate the destructive side effects of well-meant intent. The issue of gambling is placed within the overall context of human activity systems, finite entities that in the end obey the principles of supply and demand as well as those of sustainability.
Regardless of a society's culture or its governance, gambling is and has been sufficiently attractive to find adherents who avail themselves of the means their environment has provided for them. How intensively these activities are pursued depends on their general acceptance and therefore their regulatory acquiescence. In Australia forms of racing and sporting events are usually supervised in accordance with accepted practices. The current issues surrounding gambling reform were triggered by a particular part of the gambling industry that has grown around the use of poker machines. The machines themselves are syndicated to some extent, attract fees but also make profits for the businesses that install them, and of course have money spent on them by the gamblers themselves. The fundamental argument is not about the technology, nor the profits, but about the role of gamblers in terms of the latter's financial sustainability.
Human activity systems, like any system for that matter, are finite entities. In other words, they draw on resources, products emerge and their benefits or otherwise flow back into the system. How well that overall balance is maintained determines the fate of the whole. While resources can be supplied from the outside (relatively speaking), the essential definition of what constitutes a system still holds, although its scope will have been extended. No matter how far the system can extend its influence, it can never be infinite - a lesson being learned right now in relation to the entire planet.
Human activity systems are also self-adjusting. Their members possess a mind, therefore are capable of making decisions, which means they respond to a changing environment. Government policies, being part of our environment, are no exception. Since everything has a cost that has to be borne by the system at large, the response by citizens to laws and regulations is a factor that plays its part within the entire economic spectrum.
What follows is based on a model of the mind , detailing its cognitive dynamics from the scale of an individual to society and culture. The model allowed predictions to be made about trends in society and their results. From the riots in Cronulla, Sydney, to those in France and the UK, to the implosion of several Pacific Island states, to the situation in Iraq and Afghanistan and terrorism in general, by now there are well over 240 examples  that have proven the model's validity.
Suppose there is a person A who is asked for advice by some person B. B asks A because A has the answer, whereas B does not. A provides the advice, and B follows it. So far so good, but what happens next?
If B had understood the situation no advice would have been necessary in the first place. Furthermore, if B responds to the advice the situation has changed and will present itself once again to B. This would be no problem for A, but for B the task is now to evaluate the new conditions. If B's insight had been insufficient already the results from the advice do not represent a satisfactory solution from then on but more likely will require an ongoing input from A or whoever happens to be adequately informed (which clearly, B is not).
Rather than providing a safer environment, the advice from A can turn into a continuous issue. Whether the ultimate outcome for B can be seen as positive is debatable, but it certainly created a form of dependency. Dependency means more people need to be involved and more resources need to be used.
Another possibility is that B did not ask for advice to begin with. Unrequited advice is hardly ever followed, and often is actively resisted. In such a case more resources need to be spent in order to enforce compliance with an overall positive outcome ever more unlikely.
That little story is more than a metaphor. In principle it is played out across groups of individuals, across society and even groups of nations, as will be shown.
The small scale: gambling
As the Coalition's policy discussion on problem gambling mentions with reference to the Labor Government's initiative, "all gamblers are supposed to join a mandatory scheme before they can play poker machines in a licensed venue" . In addition the limit on the money they are allowed to spend is set for them in accordance with a certain time period.
Translated, this means a bureaucratic machinery that must be capable of capturing a not insubstantial number of citizens, a certification process which connects them with venues that are licensed, as well as the inclusion of some regulatory means to ascertain the time spent in such a venue or possibly the time spent inside a venue and actually using the machines. Since the limit is apparently up to the individual, what checks would have to be put in place to ensure the limits are not set in relation to the venue, or the date, or a combination thereof? The Coalition's paper already mentions that machines can be swapped and the type of gambling can be changed anyway. As the Productivity Commission has pointed out, less than one percent of the population are problem gamblers and only a further 1.7% are at moderate risk .
Not only would the effort required to install such a scheme be considerable, the actual number of individuals it needs to target is minimal compared to its reach.
In addition the proposal includes that many separate entities (ie, human activity systems in their own right), from the venues to the businesses running them together with the gamblers themselves and possibly extending to the manufacturers of poker machines and licensing authorities, that the potential for some response by any one of them in order to by-pass the inconvenience should not be underestimated. A reaction of this kind would evoke further adjustments from the government with even more responses to follow and very quickly the scenario resembles the sequence of events described in the previous section.
Although problem gamblers do exist, the definition itself is problematic because it relies first and foremost on the particular group providing it - other agendas may well come into play. Apart from larger venues such as casinos etc there are clubs supplying a market that exists because of the services offered as well as the venues' sociability. Traditionally, social difficulties have been dealt with on the level of small groups where the effectiveness of the checks and balances on that small scale of human interaction proves usually more effective than the impersonal intervention from the top down.
The adjustment process in society has also created a symbiotic relationship between clubs and their clientele together with the wider business community such that the economic role of poker machines has situated itself within the general spectrum of society. Not every society features poker machines, but when it does they have become part of overall business. To interfere would be an intrusion with its own consequences.
Nor do these types of regulation change the psychological characteristics of gamblers. The choice of placing one's fate at the mercy of an apparatus that is constructed to make a profit for the owner is the outcome of a certain disposition which disconnects a sense of personal responsibility from the set of opportunities life provides. Removing poker machines as an option will not have changed the gambler's psychological makeup.
To believe otherwise draws on the currently popular assumption that everybody is equal and all it takes is a superficial change of circumstances for the 'proper' human being to emerge. This idea has already proven itself to be fallacious as the next sections will demonstrate.
The medium scale: health, welfare
According to a paper presented by the Budget Policy Division, Australian Treasury, in the 2007-08 budget 41% of the entire budget was spent on health and 18% on social security and welfare . The authors note that since 1972-73 spending on social security in real terms has grown substantially faster than other expenditure . As the graphs illustrate, spending on health has also grown, although not as fast as the former.
At the same time, the Anika Foundation presents depression as a "major social issue" , and in terms of suicide (a directly-linked outcome of depression) Australia is placed in the third-highest position among G7 and a number of other countries . As to the causes, the suggested reasons seem to be conflicting . Whatever theory may be favoured, it can be said that an inability to address one's personal problems occurs against the background of ever-increasing government expenditure in the very areas that would suggest an amelioration of such a dysfunction.
In another area figures from the Australian Bureau of Statistics reveal that the total cost of obesity in 2008 was $58 billion . The proportion of adults rated as obese increased from 56% in 1995 to 61% in 2007-08. In the case of children - our future adults - the rate went from 5.2% in 1995 to 7.5% in 2007-08.
Again, although government resources had increased substantially the expected outcome did not materialise; on the contrary, matters have become steadily worse. In other words, a system that deployed more and more resources in the form of assistance according to its own high-level interpretation created a form of dependency which in the end resulted in a heightened degree of dysfunction.
The large scale: European Union, Middle East, Africa
The principle of diminishing returns is haunting the financial markets of the world at this very moment. The unwillingness - or inability for that matter - of the European Union to discriminate against unsustainable practices in Greece and similar member states has created a black hole into which billions of euros have disappeared over the past years. The situation has reached a point which forced the president of the European Commission, Jose Manuel Barroso, to declare, "'Europe must either transform itself or decline. We are in a defining moment where we either unite or face irrelevance". The call to unite may seem somewhat quaint to a nation like China which had been approached by the head of the International Monetary Fund, Christine Lagarde, in the faint hope it may want to contribute . Note that China is not one of those members of the international community who jump at every opportunity to 'help'. This just may be one of the reasons for its increasing strength.
The call for help coming from dissatisfied Libyans caused the West to respond in the form of large-scale military expenditure without any thought given as to who exactly might be aided there. While the dictator Gaddafi has been removed (the manner of which should be cause for concern in itself), the world now faces the spectacle of armed gangs fighting it out in Tripoli and providing a fertile ground for radical interests to make a stab for power . Resources have been spent but there is hardly any assurance the situation has become better for those who provided them.
Despite hundreds of billions of dollars being poured into Africa, the continent faces one calamity after another. The influx of aid made it possible for its population numbers to increase but the effect was not heightened productivity but ever-bigger numbers of people being subjected to the effects of natural disasters and civil unrest . And yet, such is our perception of aid and its motives that none of the contributors would be accused of mass genocide. However, the numbers tell a different story.
The hoped-for results were not forthcoming because in each of the above cases the innate disposition of the recipients did not undergo the necessary transformation and therefore made matters worse on both fronts - donors loose their money and their targets have become more dysfunctional than ever.
If we continue to chase our phantasies the world in the not too distant future may well resemble the scenario depicted in 2050: Age of the Silverback .
Of course, there is no direct link between Australian gamblers feeding their poker machines and famine in Africa. Nevertheless, cognitive dynamics and their societal equivalents on the large scale determine the behaviour of human activity systems that receive input, process, and provide output.
The above examples are meant to demonstrate the common denominator underpinning the ultimate futility of trying to change the identity of a system's members through coercion, whatever form it may take.
The current obsession with 'helping' at any cost attracts comment by people like sociologist Frank Furedi. His articles on lack of leadership in the face of self-indulgent demands  or on the attempts to stymie a child's development through bureaucratic interference  are well worth reading.
Also of interest would be the views of the late economist Friedrich Hayek , who advocated a minimal role of government yet also acknowledged its role in providing basic services. Note his remarks on the above referenced page, headlined Social and political philosophy, philosophy of science, and psychology, "there is no reason why...the state should not help to organize (sic) a comprehensive system of social insurance". As for the attempts by governments to redistribute income, "the principle of distributive justice, once introduced, would not be fulfilled until the whole of society was organized (sic) in accordance with it. This would produce a kind of society which in all essential respects would be the opposite of a free society". Considering what regulatory frameworks mean when it comes to the feedback cycle of policy > response > policy > response etc as mentioned above, his views proved rather prescient.
The results of globalisation, the increasing density of the world's population and therefore a heightened competition for resources, make for an environment which demands the ability to face the real. The trends are already well in place and the first priority of government should be to allow its constituents to train up for what is to come.
1. Wurzinger, M., On the origin of Mind, 2003.
2. Wurzinger, M., Parallels, 2005 and onwards.
3. Coalition's policy discussion on problem gambling, p. 3, November 2011.
4. ibid, p. 2.
5. Laurie, K., McDonald, J., A perspective on trends in Australian Government spending, Budget policy Division, the Australian Treasury, p. 36, accessed 18 November 2011.
6. ibid, p. 37.
7. Depression as a Major Social Issue, The Anika Foundation, 2008.
8. ibid, Australian and International Trends in Depression, Suicide and Self Harm, , 2008.
9. ibid, Explaining The Rise In Youth Suicide, 2008.
10. Obesity, Australian Bureau of Statistics, 2010.
11. Knight, E., Europe's growing crisis could force global economy into 'lost decade', The Sydney Morning Herald, 11 November 2011.
12. IMF chief calls for 'political clarity', news.com.au, 10 November 2011.
13. Libyan militias clash, The Courier Mail, 15 November 2011.
14. Wurzinger, M., Aiding the catastrophe, July 2011.
15. Wurzinger, M., 2050: Age of the Silverback, 30 December 2007.
16. Furedi, F., Leadership, liberty and the crisis of authority, 16 November 2011.
17. Furedi, F., Nanny state has no business muscling mums and dads out of the way, 5 November 2011.
18. Friedrich Hayek, Wikipedia, 16 November 2011.