How does the first guy damage the economy? You are still confusing the single impact with the aggregate. If he spends all his money, it ends up in the pockets of others...no damage there.
a house foreclosure is unfortunate for that guy but great for the guy who gets a cheaper house by buying the foreclosure. Cheap houses are good for the economy. Reducing education levels is bad and slows an economy, but that's not really an effect of gambling.

I'm not saying it would be the same, I'm just saying it isn't necessarily worse. Your peep example suffers. Again from getting confused about aggregates. People in peep related industry would be rich but we wouldn't be worse off if we bought more Peeps. Your argument is one that can be applied to every industry...they can't all be bad. Productivity creates wealth...everything else is a values judgement.

Obviously destructive behavior results in economic harm and that includes self destructive behavior like gambling away the rent or mortgage money.

 

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If we all went out and spent 100% of our income on peeps that would be productivity destroying. That was sorta the point. Foreclosure is a textbook example of a transaction that destroys value. So is gambling away your kid's lunch money. Not all transactions are equal in the aggregate.

I thought this was going to be about banks.

 

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What if you get social security but dont need it? Then why not spend it gambling?

If we all spent 100% of our income and wracked up massive debt on cars or houses or food it would destroy productivity. Those are the bedrocks of the economy...but if we use this ridiculous example, they are all horrible for economic growth.


But in the aggregate you cant ever go out and 'spend all your money'. The Peep industry will be flush with cash. Peep executives and shareholders will have to decide what to do with all that money. As wages for delivery drivers and peep factory workers go up the Peep execs will look to automate driving up productivity. Maybe you hate Peeps and you are sad that the rest of the food industry shrunk in response to Peep demand but the economy isnt any worse.


The economy cant go out and spend 100% of its money on anything (b/c my Peep debt is the income for everyone in the Peep industry, there is no aggregate increase in debt) unless you have a massive trade imbalance. So this isnt about Peeps or casino's, you are worried about the damage done by trade imbalances and capital flows. You are making a values argument against casino's...and thats fine.


Its the capital flows that determine if the casino is good for the city. A new casino is good for Pittsburgh if it pulls new money into Pittsburgh that would have otherwise been spent in Florida or Nevada. If it just redirects money that would have been spent in Pittsburgh anyway, there is no real gain to the city.

Actually when money funnels from many to a select few then the money goes into a black hole of sorts. At that point this is very bad for the economy. The best situation for the economy s for money to be evenly distributed.

It all relates back to productivity. Too much debt can hurt productivity. Not having a place to live in hurts your productivity. Hugely unequal wealth distribution, for that matter, hurts productivity.


I am not so much making an argument against casinos as against gambling away all your money. I did not think it was particularly controversial to say it hurts the economy when people gamble themselves into homelessness.

Treat gambling like a service that happens to be addictive. You can get addicted to having a new hairstyle every day and end up having to give up your house.


It is the harm of the addiction that is the loss, not the gambling itself as a form of entertainment. To the extent hairstylists and casinos play a part in this destructive behavior the industry is destructive. I think it is rather obvious that casinos encourage this destructive and compulsive behavior to the detriment of their consumer and therefor the economy as a whole.

 

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I am not sure they really encourage it. It isn't in the casinos best interest for people to gamble away their mortgage money. The people casinos like most are old rich people who can come every couple months, don't create problems, and can blow 10k without it really affecting their ability to blow 10k next time around.


But it is definitely true that gambling is more likely to result in that sort of economic damage than most other consumption. I'm sure someone somewhere bought so much orange juice they had their house foreclosed on but it isn't terribly common.