May 13, 2011

Debt Peonage

The concept of debt peonage (a.k.a., debt bondage or pawn slavery) is one that has largely disappeared from Americans' conceptual vocabulary in recent years, but it's time for a revival with changes in American society. Now we've got features like the proliferation of college loans that can't be discharged in bankruptcy. (Here's a brief Wikipedia page about how widespread debt peonage has been in human history.)

When I was a kid, poor Mexicans were often referred to as "peons," because debt peonage was a major feature of Mexican history, such as during the Porfirio Diaz era in the four decades leading up to the Mexican Revolution of 1910-1920. But that term was declared racist. So, the most vivid reminder of the concept of debt peonage disappeared from American thought. 

In Francis Fukuyama's new book The Origins of Political Order, which I've reviewed for the upcoming issue of The American Conservative, he talks about the "Law of Latifundia," or the tendency of the rich to get richer and poor to get poorer. 

It's basically a form of Gambler's Ruin. Casino gambling would not be a good idea for you or me even if the casino's games weren't rigged so the casinos tend to win (e.g., there are a couple of zeros on the roulette wheel). The problem is that the casino has more money than you or I do, and it's playing more games at once. Hence, even if the games paid back on average 100% of what you bet, you are more likely to have a ruinous streak of bad luck than the casino is and have to quit while you are behind or borrow at ruinous rates to keep playing.

Here's a 2003 article that illustrates how this works, which has implications for the increasing casinoization of American life in general:
ATLANTIC CITY, NJ—A beaming Donald Brant, general manager of Bally's Atlantic City, reported that the casino had "an unbelievable night" Monday, cleaning up at the blackjack table, on the slot machines, and elsewhere. 
"Man, we were on fire all night," Brant said. "It seemed like every time a casino patron pulled that slots lever, it came up a loser. Whenever somebody told the blackjack dealer to hit on 12, they drew a 10. We could do no wrong." 
By the end of the night, the casino walked away a major winner, up $515,274. 
"I had a sense that we were doing pretty well," Brant said. "So I checked around with the pit bosses, and it turned out that nearly all the dealers and croupiers were way, way ahead. It was amazing. A night like that only comes along five, six times a week, tops."

While most players are content to focus on one or two games, the casino participated in every available coin-operated machine and table game, including roulette, blackjack, craps, Spanish 21, pai gow, baccarat, and Let It Ride.

"We've got a system," Brant said. "Our strategy is to bet against all the customers who come in here. Then we spread our bets around to each and every table and machine in the casino and keep at it for the long haul. We were down about $200 at one of the roulette tables, but were up on everything else, so we came out pretty much ahead. Actually, more than half a million ahead."

Bally's even fared well at the slot machines, an area that traditionally yields the lowest rate of success.

"You know how they say your worst odds are on the slots?" Brant said. "Well, we made over $33,000 in slots last night. Can you believe it? We were unstoppable."

Brant attributed his casino's impressive showing to a combination of luck and old-fashioned horse sense.

"We try not to play stupid," Brant said. "We never gamble more than we can afford to lose. And we try to never lose our heads. We leave that to the customers. We set aside a certain amount to gamble—that's our kitty—and if we double our money, we only play with our winnings after that. Right now, the kitty stands at around $176,500,000."  
Bally's is in the midst of an impressive winning streak, coming out ahead an astonishing 6,753 nights in a row.  -- The Onion

60 comments:

Formerly.JP98 said...

Needless to say, you need government collusion for casinoization to work.

Anonymous said...

"The concept of debt peonage (a.k.a., debt bondage or pawn slavery) is one that has largely disappeared from Americans' conceptual vocabulary in recent years, but it's passed time for a revival with changes in American society like the proliferation of college loans that can't be discharged in bankruptcy."

You're usually a very clear writer but you should clarify your lead here so that readers don't get the wrong idea about whether it's past time for a revival of debt peonage itself or America's familiarity with the term. Just looking out for you in case the SPLC ever tries to scour your blog for hate quotes.

Anonymous said...

Due to the compounding of the national debt, now owed to foreign sovereign wealth funds, the US taxpayer is going into peonage. I don't know how the US government will finesse the acceptance of the validity of the income tax when it is going to a geopolitical competitor. I can't see any way out except for secession of states that have to rid themselves of dollar debt if they ever hope to remain prosperous. The driver for secessionist movements will more likely be purely economic than racial/ethnic/religious.

Anonymous said...

Ehh, I hate casinos, I hate the idea of them, I hate the glorification of them, I just hate them. I understand playing a few games with some friends, but I don't see the appeal in these big casinos.

David Davenport said...

Needless to say, you need government collusion for casinoization to work.

Wouldn't the result be the same in a Ron and Rand Paul Lib Lib Libertarian Utopia, in which gooberment shrinks to minimal size and everyone is free to go to Hell in their shopping cart or hand basket?

My sincere opinion is that America needs a righteous, paternalistic, neo-Christian ( and I don't mean R. C. ) government that will outlaw most forms of commerical gambling.

Most people can't handle too much freedom.

DR said...

Steve, I think you misunderstand the math behind gambler's ruin. The example you provided implies that casinos would still be profitable even if there was no edge, as long as the casinos have more capital than their gamers.

This is flat out wrong. Period.

Let's assume N people go into the casino each with some amount of capital, call it X. The casino also has some amount of capital, call it Y, where Y >> X. Let's assume the only game there is coin flipping (the classic example of a game without edge).

A gamer will go in and flip a coin for some number of times, each time betting $1. As soon as his wealth hits zero he stops playing. Now the first thing you have to model is whether the players stop after a fixed number of games (assuming they don't go bankrupt) or whether they'll play to infinity as long as they don't go bankrupt.

Let's assume the former (we'll come back to the latter). To make the example very simple, let's assume that the wealth of the players, X, is $1 exactly. And let's assume that the number of games played is 3. After the first game half of players will win, and half will lose. Thus 50% of players are now bankrupt and stop playing, the remaining 50% hold $2 of wealth now. The casino is even. The next game 25% will go back to $1, and 25% will go up to $3. The casino is still even, there are no new bankrupt players.

Finally after the last game, the final wealth tally (ex-ante expectation) is 62.5% of players are bankrupt, 25% of players hold $2 in wealth and 12.5% hold $4 in wealth. As you can clearly see gambler's ruin was in effect in this example. Yet the casino (unnaffected by gambler's ruin) still does not make any profit on games which it does not have edge. All it did was redistribute wealth among its players.

Ahh, well what about the example where players keep coming back to the casino forever until they're bankrupt. Surely then the casino must come out on top in this scenario. After all in expectation every player will go bankrupt, leaving the casino with all the wealth.

Well, if you believe that you've just committed the very fallacy that gambler's ruin was designed to expose. For the casino itself has a finite pile of wealth, Y. The scenario where they take everyone's money can only occur if every player goes bankrupt before the casino loses Y in its games. Otherwise if it loses Y before the players go bankrupt instead of the casino owning all the wealth, now the players do (although distributed unevenly between the winning and losing players).

In fact it is a mathematical fact that the odds of the casino going bankrupt first are exactly proportionate to the ratio of N*X (the player's total wealth) over Y. Thus in ex-ante expectation the casino makes zero profit.


So Steve, you are wrong to imply that in a "casino economy" that big players, even if they have no betting edge, somehow are expected to come out with more wealth. It contradicts basic tenets of probability.

Anonymous said...

"the increasing casinoization of American life in general"

What concrete changes does this statement refer to?

kejo said...

I wonder if a casino could flourish on this principle alone? You'd keep a low overhead of course, and heavily advertise your guaranteed 100% average payout. Good idea?

Anonymous said...

Is there a more droll user of The Onion than Steve? Great work, Steve, thank you.

Anonymous said...

you don't have anything against dehumanizing terms like "peon?"

you seem to be saying that it's ok or something. i don't think it is, whatever its origin.

beowulf said...

If by government collusion you mean low tax rates, yes. Otherwise, not so much.

The positive relationship between the top marginal tax rate and the growth in real GDP is very nearly bullet-proof. For instance, it extends all the way back to 1929, the first year for which the government computed GDP data. Additionally, higher marginal tax rates are not only correlated with faster increases in real GDP from one year to the next, but also with increases in real GDP over the subsequent two, three, or four years. This is as true going back to 1929 as it is for the period since Reagan became president...

Lower tax rates in any given year are associated with slower growth rates for each of these variables, whether those growth rates are measured over periods of one, two, three or four years.

http://www.presimetrics.com/blog/?p=253

beowulf said...

"Due to the compounding of the national debt, now owed to foreign sovereign wealth funds, the US taxpayer is going into peonage."

The national debt is a bigger scam than global warming. It was Rick Boettger who noted that which whatever party out of power uses the debt to attack the party that's in the WH, then they trade off.
http://www.kwtnblue.com/2010/03/rick-boettger-minority-treason/

Uncle Sam, like most countries, conducts foreign trade and borrows in US dollars. The difference is our government is the only one that has the monopoly right to create new dollars. We don't actually have to borrow, its done as a courtesy to bondholders (less than a third are foreignersS) seeking a risk-free investment

Anonymous said...

.What concrete changes does this statement refer to

i would say an economy based on speculation - like the real estate boom - vs creating industrial productive wealth.

When you have a predatory lenders in 'charge' of the economy the middle class vanishes and the poor become debt slaves- that's what happened with arenda system in east europe, and remarkably, their direct descendants are turning the US into a similar system.

gcochran said...

DR is correct. On the other hand, if a player has even a slight advantage and a few chips, he has a good chance of wiping out the casino, no matter how much money the it has. Only they kick you out first.

Charlie said...

DR said:

"Finally after the last game, the final wealth tally (ex-ante expectation) is 62.5% of players are bankrupt, 25% of players hold $2 in wealth and 12.5% hold $4 in wealth. As you can clearly see gambler's ruin was in effect in this example. Yet the casino (unnaffected by gambler's ruin) still does not make any profit on games which it does not have edge. All it did was redistribute wealth among its players."

This lengthy attempt to refute Steve's point is completely wrong. Banking on gambler's ruin would certainly be a poor way to run a casino, but your example doesn't show it. Your fallacy here is that you're assuming the most likely outcomes will happen (half the people win a coin flip with the casino) and, bizarrely, setting the size of the bet in absolute terms, rather than in proportion to the gambler's bankroll as is much more realistic. Billionaires don't play penny slots.

These assumptions allow you to keep the casino from coming out ahead for several iterations - but if you'd continued this thought-experiment to the end, here's what would happen:

As long as half the remaining gamblers keep on losing a dollar, while the other half win, this means the casino can't come out ahead by definition...but as gamblers keep going bankrupt, you'll eventually reach an odd number, and then either the casino or the gamblers will have to come out ahead. And as bankruptcies continue, you'll get down to one gambler, whose fortune will proceed in a drunken walk, going up 1 and down 1 randomly with each iteration, until it drunkenly walks to zero and the house wins everybody's money.

This process would take a very long time if you started with enough gamblers. But if you assume gambler's bets are somewhat proportional to the size of their bankrolls, and if you abandon the assumption that half will always win and half will always lose, and instead suppose a normal distribution of results, this will speed things along and bring about "gambler's ruin" for everyone much sooner.

Anonymous said...

"Steve, I think you misunderstand the math behind gambler's ruin."

No, you didn't understand Steve's point, even though you repeat it yourself in your explanation.

It would be a bad idea to gamble heavily even in a casino that, on average, returned 100% of wagers to the bettors. The chances are you would eventually go broke due to your shallow pockets. Your money is likely to end up in other players' pockets, not the casino's, but Steve never claimed it would go to the casino.

Cennbeorc

Anonymous said...

you don't have anything against dehumanizing terms like "peon?"

you seem to be saying that it's ok or something. i don't think it is, whatever its origin.

The term is dehumanizing because the thing is dehumanizing. So, yes, it's better to be clear-eyed about the situation, instead of using some euphemism.

Cennbeorc

Anonymous said...

Speaking of peonage, it looks like Steve's posts are back but our comments are gone for good. I guess that makes us the peons here.
He got it all back while we all lost our shirts.

Anonymous said...

"The problem is that the casino has more money than you or I do, and it's playing more games at once."

But if it weren't rigged, casinos would eventually go out of business because of the huge overhead--employees, benefits, security, taxes, bribes, theft(by employees)and cheating(by players).

Anonymous said...

Its amazing Steve. You write this smart blog about somewhat complicated subjects. You'd think the dummies would find you boring or way-over-their-heads and only smart people would comment.

Yet every time you don't s-p-e-l-l i-t o-u-t or try to be the least bit subtle, it seems like most commentators "just don't get it" misunderstand, or just state "What is steve writing about?"

Good lord. Its amazing how many people can't get sarcasm, irony, humor, or can't connect the dots without a set of signposts.

RKU said...

Well, blogger mulched my own "debt-peonage" comment from a couple of days ago, but to my surprise I discovered I still had it around, so here it is:

====

K(yle): So everyone who doesn't have tens of thousands of dollars can indenture themselves to the bank by borrowing it, except that the new master doesn't gaurantee you with the labor and associated wage with which to earn your freedom.

The whole student-loan system in America really is totally crazy. Combine it with the huge growth of worthless and corrupt "for-profit" colleges, and the result is double-crazy.

With the job market so bad and student loans exempt from bankruptcy discharge, I think the result will be to shift the bulk of the entire population into permanent "debt-peonage," basically the sort of thing that caused so many European peasants to flee to America back in the 19th century, and not too different from what caused the Southern slaves to follow the Underground Railroad to the North.

Maybe the next generation of young Americans will attempt to flee oversees to escape their unpayable debts, and the Washington Post (i.e. Kaplan Schools) will hire ruthless slave-catchers, er, "student-loan servicers" to track them down wherever they hide and return them back to bondage...

====

On a broader level, the top %1 of American households now apparently have more total wealth than the bottom 90+%, which really is quite astonishing.

Back a couple of months ago, the NYT's Nick Kristof mentioned in a column that he was worried wealth-inequality in America was approaching Argentinian levels...but then he checked, and discovered we'd recently surpassed them.

It seems to me that American society is very likely heading towards a period of severe "dynamic instability"...

Mike said...

I agree with DR; the math works out such that Casinos would not (on average) make money just by virtue of playing against people with limited bankrolls who can go broke. They need the house edge to make money.

Anonymous said...

I don't think the real problem of Mexico was debt peonage but genetic peonage. The white elites simply had more brains, skills, and talent than the masses of mestizos and especially pure-blooded Indians.
Indeed, I'll bet many Mexicans remained mired in debt cuz they were so bad at running, expanding, and innovating economies.
Of course, there is the history of white oppression of the natives, but this alone doesn't explain the miserable lot of most Mexicans. After all, Mongols oppressed the Chinese, but Chinese still did better economically. And Russians did better than Mongols too, in the long run(though Russians lived under Mongol yoke). And though Turks oppressed Greeks and Armenians for centuries, Greeks and Armenians were better middlemen and traders than Turks.

There was a time when most Germans and Swedes too were dirt poor farmers. And Japanese masses too. But with political emancipation, social progress, guarantee of legal equality, and other such things, masses of Germans, Swedes, and Japanese were able to improve their own lot by studying, working, and saving hard(and spending wisely). With their natural IQ and cultural values, they made the right choices as a people. Many observers credit Scandinavian success on social democracy, but I don't buy it. I think it owes most to blood and culture. If anything, social democracy and PC will be the ruin of Sweden, which is darkening at rapid rate.
As for Mexicans, even with freedoms, too many of them remained untalented in economic improvement and wise saving/spending of their wealth.

As for rich getting richer and poor getting poorer, this also owes more to genetic royalty and genetic peonage. Blacks in Detroit in the 60s had more freedom and opportunities than their ancestors, but how did they use their freedom? They attacked whites, drove out businesses, burned down their city, etc. And so Detroit became the hellhole that it became. Some say the motorcity went into decline cuz loss of manufacturing jobs, but a talented people are able to reinven themselves by adopting and attracting new talents and new technology. After all, the Bay area and Seattle weren't ALWAYS centers of hightech innovation. And would there have been Hollywood if LA had been populated mostly by Mexicans in the early 20th century? No, Hollywood was invented and expanded by the vision, talent, and skill of highly intelligent and committed individuals, many of whom were Jewish.

As for Jews, they've been on the up and up since Emancipation, despite the interruption of the Holocaust and Soviet Communism which turned out bad for Jews. Many Jews who left the Soviet Union left with almost nothing, but upon arriving in the US, they often do better than native Americans in several yrs--and their kids bcome millionaires.

The real problem for the American future isn't debt peonage but 'what kind of people are likely to fall into debt peonage?'. What kind of people are likely to suck in school, get poor jobs or no jobs, live on credit, save nothing, spend what they don't have, live only for the present than the future, etc.

Of course, smart people can choose not to exploit the vices and weaknesses of dumb people--whose numbers are swelling--but the crass liberal elites of Hollywood, banking, and government seem committed to culturally/spiritually rotting the souls of little people, encouraging loose sex(especially across races), sensationalizing drug use, legitimizing illegal immigration, handing out crazy loans, telling dumb poor people to take on ridiculous college loans, making them spend and spend money on credit they won't ever be able to pay back... and then seek their votes as poor poor victims of the system.

Anonymous said...

If anything, social democracy and PC will be the ruin of Sweden, which is darkening at rapid rate.


Somehow I don't think it's social democracy that's making Sweden darker.

Anonymous said...

"the increasing casinoization of American life in general"

What concrete changes does this statement refer to?



What came to my mind: college is becoming more expensive, yet at the same time it's becoming less of a guarantor of a decent job upon graduation. The risk/reward ratio is getting a lot worse.

Anonymous said...

Steve, the reason we have the "Law of Latifundia" is that wealth is subsidized by the government. The risk-free rate of return is the interest rate on Treasuries. That's the basic return on wealth - the wealthy can be effectively brainless to achieve that return. The cost of government and thus the cost of subsidizing this wealth is funded by taxes, but which taxes? Wealth i.e. net assets aren't taxed, while income is taxed. So people who engage in economic activity i.e. earn income get taxed to pay for those who hold net assets to protect and grow their net assets. Over time you get wealth concentration, and pauperization.

Anonymous said...

One of the problems with our financial system is that the ability to go into debt can, for many, make it seem a necessity. If you're a single man competing to impress women, you're often competing with men willing to max out their credit cards in order to attract them - nice clothes, fancy gadgets, fancy cars, expensive trips, etc. One hopes these women bother to pull a credit report and check the bank statements before tying the knot. Or perhaps their future insolvency is condign punishment for the fickle.

RKU said...

The real problem for the American future isn't debt peonage but 'what kind of people are likely to fall into debt peonage?'.

That's a good question. Let's think a bit about what the empirical evidence might give us for an answer.

Now the figures I've generally seen are that about 1/4 of American homeowners are "under-water," with their mortgages being larger than their home values. Since for the vast majority of ordinary Americans, their home equity represents most of their net worth, these people probably have negative net worth. And recent trends in housing prices seem likely to further increase this fraction.

And don't forget that homeowners are generally far more affluent than most Americans, who can't afford to buy a home. When we take into account massive rates of credit card debt, student loan debt, medical debt, and other debt, I'd guess that most of these people have negative net worth as well. Finally, also consider all the people who are actually classed as "poor"...

Add up all these groups, and I wouldn't be surprised if something like 60-65% of Americans today have zero to negative net worth. That might not automatically render them "debt peons," but I think it's fair to say they're pretty likely to fall into that situation one way or another, especially if the economy doesn't miraculously recover.

So: if we're asking "what kind of people are likely to fall into debt peonage?", I'd say the answer is "most Americans."

Another way of looking at things is to say that over the last couple of decades or so, the bulk of the entire American middle class has been destroyed...

Anonymous said...

"On a broader level, the top %1 of American households now apparently have more total wealth than the bottom 90+%, which really is quite astonishing."

The top 1% of all American households earned over 1.5 times the income of the bottom 50% - 20% vs. 12.8%. One NRO post actually used this as part of a graph claiming that the rich pay too much in taxes. Of the 45 or so countries with more inequality than the US, not one is a First World country - Japan, Western Europe. Those countries are well-represnted among the least unequal countries.

America is getting pillaged by the elite.

Dave said...

"I agree with DR; the math works out such that Casinos would not (on average) make money just by virtue of playing against people with limited bankrolls who can go broke. They need the house edge to make money."

An interesting point, too, is that the edge the casinos have is actually fairly small in absolute terms (it's often capped by law at some low, single percentage). What wipes out gamblers quickly is the compounding. For example, if you put $1k worth of quarters in a slot machine, and save whatever comes out of the machine, after you put your last quarter in, you'd probably have $970 left.

The reason it doesn't work out that way in reality is that that -3% return gets compounded when you put your partial winnings along the way back into the machine.

Anonymous said...

"Many Jews who left the Soviet Union left with almost nothing, but upon arriving in the US, they often do better than native Americans in several yrs--and their kids bcome millionaires."

Yes, of course, it kinda helps when you - a Jewish immigrant -have any number of Jewish "charity" organizations subsidizing your housing and education, giving you jobs with Jewish controlled businesses, helping you network with other established Jewish businessmen, and even ,as Steve has pointed, out helping you get AA government contracts. Jews,incredibly enough were beneficiaries of AA as "underprivileged" minorities!

Toss in the Jewish, lets be polite, and call it "attraction to wealth" and "flexible ethics" and no wonder so many of them become millionaires.

But I agree its mainly because they're just so great.

Mr. Anon said...

"David Davenport said...

My sincere opinion is that America needs a righteous, paternalistic, neo-Christian ( and I don't mean R. C. ) government that will outlaw most forms of commerical gambling."

Well said, Mr. Davenport. Paternalism has gotten a bad rap, but I believe it is necessary for the maintenance of a stable, healthy society.

Wandrin said...

"As for rich getting richer and poor getting poorer, this also owes more to genetic royalty and genetic peonage."

No, it owes more to dishonesty, deceit and corruption leading to regulatory capture as shown so dramatically with the banking bailout. Casino capitalism aka socialism for the rich:
- privatize the profits
- socialize the losses

or immigration
- drive wages down without mass conflict by making sure total income is topped up through the welfare system
- keep the profits private
- socialize the wage costs

.
"Soviet Communism which turned out bad for Jews"

Turned out pretty bad for the Russians too - especially the 30 million murdered by the Bolsheviks. Turned out pretty bad for the Weimar era Germans as well plus all that followed from that.

And now it's America's turn.

.

Eric Rasmusen said...

A couple of people talked about how Gambler's Ruin works, but I think they didn't get to its real point, which goes exactly against the point Mr. Sailer's post wants to make.

The post wanted to say, I think, that Gambler's Ruin implies that people with little capital will lose out to people with more capital.

Here is the remarkable thing about Gambler's Ruin, in my restatement:

"If Joe has finite capital, however large, and keeps gambling for long enough, *even at favorable odds*, then eventually he will go bankrupt with probability one."

The reason is that there is positive probability that even with favorable odds, Joe will have a long enough losing streak to lose any finite amount we might name.

The social implication is that eventually anybody who keeps taking risky investments with their money-- which means mainly the rich--- will lose it all. Eventually there will be a Russian Revolution, and they will go down to zero wealth.

Of course, that's not too realistic-- it also implies that every casino will in finite time go bankrupt, even with their favorable odds---- but that's the implication of the math, and why it is a fun math paradox.

Anonymous said...

"Well said, Mr. Davenport. Paternalism has gotten a bad rap, but I believe it is necessary for the maintenance of a stable, healthy society."

You have got to be channeling "The Onion." The USA is the most paternalistic institution I know of. Am ambitious 18 year old trying to earn money for college (and hence invest in his personal capital) is required to set aside 15% of his earnings in a compulsary retirement/disability program. Same for a person with no dependents and the dream of starting a business. Borrowing for approved purposes like education and housing is supported by special policies, but borrowing to start a business gets nearly no support. Mandatory health insurance for a young healthy male is a huge waste of money and transfer of wealth to older people (who consume most health care dollars). There are kids in the local private school that bring in and sell candybars at a good profit because the school is prohibited from offering the kids what they want. Now someone is going to lecture me that kids should eat much less candy, while keeping all their vices and unhealthy habits.

rob said...

Just looking out for you in case the SPLC ever tries to scour your blog for hate quotes.

Has the SPLC ever gone after Sailer? I'd be surprised. First, he's willing to call Dees a hate marketer, profiting from how much the Jews fear whites as much as any right wing group profits from white fears of nons. Second, unlike giving the psychotics and agents provocateur of most "hate groups" publicity, more people knowing of and reading Sailer would have more people agreeing with him. Not a good outcome from the SPLC perspective.

When you have a predatory lenders in 'charge' of the economy the middle class vanishes and the poor become debt slaves- that's what happened with arenda system in east europe...

To mention debt peonage is to invite a second Holocaust. I wonder if the influence of a particular group is why schools don't teach any Eastern European history. Kids have to study cartoon versions of the Inca, the Aztecs...but nary a word about more than half of Europe.

Kylie said...

I tried following the explanations given here of how gambling works but all I got was a headache.

I do know this, though. My husband bought several lottery cards over a period of weeks and won nothing. Then he won $5 on a $2 card and was so pleased. I pointed out that he'd spent $15 dollars to win that $5 because he had to count all the cards he'd bought as part of the gamble leading to his big pay-off, not just that last $2 card.

He still gambles, though. What a chump.

anony-mouse said...

Rent, don't buy.
Debit cards, not credit cards.
Save money to buy a used car instead of buying new (and drive it into the ground).
Work and go to school (in the same city) instead of going off to University.

There's a big difference between peonage and calling up 1-800-debt-now and begging for an opportunity to get that teaser rate, with the big balloon payment at the end.

Al said...

Casinos make money because they have positive expected value on all of their games. They win consistently (i.e. always turn a profit) because they put so much capital into their games and play several games.

It seems to me that a large casino has an edge in that it can play with a fairly small edge and still have safe earnings.

Dutch Boy said...

At least the casinos (aka the Gaming Industry) don't bother to call what they do gambling (THEY are not gambling - the fix is in and the house wins). That puts them ahead of Wall Street which pretends to be an institution for investment rather than a gigantic casino.

Svigor said...

you don't have anything against dehumanizing terms like "peon?"

Please stop using the words "villain," "churl," "boor," "sleazy," and their derivatives. They're all dehumanizing ethnic/class slurs.

Anonymous said...

Peonage has been a part of our history too. Three personal examples:

1.) My grandfather twenty three grands ago - Abraham Piersay - brought White indentured servants to Jamestown in 1609. Typically they were required to work for seven years to pay for their passage and keep. However poor White English rarely could survive more than a year in the Virginia fields. Piersay then brought over African Blacks who had superior disease resistance as chattel slaves.

2.) When I was a teenager in Washington D.C. I used to date Irish girls who worked as maids in embassies and the houses of the rich. I remember them as sturdy but rather dim girls with large breasts. They were indentured for about two years as I remember. I think they got a "path to citizenship" too.

3.) My uncle had a personal slave. Uncle Gerald never went to college and like to mock me for going to graduate school. Gerald was a self made millionaire. He got his money by owning liquor stores in the ghetto. He was just this side of being Tony Soprano. He had a lot of White guys who owed him money and favors. When Gerald's health failed he had a guy who owed him what they referred to as "gambling debts" become his full time driver and personal servant. He pushed my uncle's wheelchair around.

Albertosaurus

none of the above said...

On the right end of the bell curve, many 20-somethings are carrying large student loan debts. At the left end, many men are carrying large child support obligations. My understanding is that both of these are very hard to get rid of. This, along with credit card debt, makes young people much less able to just live their lives, change jobs, move where they want to live, etc.

Among older people, at least in the middle class, you have mortgages, but also employer-provided health insurance. Those two combine now to chain the middle-aged to their jobs.

Anonymous said...

I must say, 'peon' is not a bad sounding word. Paean to the Peon. The Peonist. Leon the Peon. A peon to pee on the world. Peon on a pony. Seance with Peons. Etc.

Anonymous said...

Is it true that the main profit at casinos come from slotmachines?
I see a lot of women play that stuff. Maybe it plays on their maternal instinct. Slots are like babies that constantly need to be fed and handled... until it finally burps and shits a load.

alonzo portfolio said...

Kylie, you would have loved the scene in Dave's Smoke Shop in Berkeley one day in '02. A scraggly 1960's retread, who I recognize as the operator of a fortune-telling stand around the corner on Telegraph Ave., comes in and buys ten lottery tickets. When they don't pay, he tears them up and flings them all over the store, screaming "F***, S***, Goddamit!" He goes back to the counter for more, and the same reaction ensues. When he leaves, I ask the cashier, a native Egyptian and laid-off Delta pilot, if the guy does that all the time. He says the guy spends about $500 a week in the store on lottery tickets.

Anonymous said...

But keep in mind... peons in the US have the vote, and politicians will pander to them and offer more aid, more relief, more writing off of debts, and more loans. WE NEVER LEARN NUTTIN.

So, we have something like Patropeonage Politics.

Anonymous said...

My grandfather twenty three grands ago - Abraham Piersay - brought White indentured servants to Jamestown in 1609...

When I was a teenager in Washington D.C. I used to date Irish girls who worked as maids in embassies and the houses of the rich. I remember them as sturdy but rather dim girls with large breasts...

My uncle had a personal slave. Uncle Gerald... was just this side of being Tony Soprano... a guy who owed him what they referred to as "gambling debts" become his full time driver and personal servant. He pushed my uncle's wheelchair around.



Maybe Albertosaurus really is the Dos Equis guy.

Anonymous said...

Let's not forget that until recently those Mexican peons operated on cash only in the US. This means that though what many of them owned wasn't spectacular, it was paid for upfront.

Even now, with their ability to do an identity reset, I doubt there are any debt slaves among the illegal population.

As I look back, I see how many Americans are so certain things are worth investing in as long as they can meet the minimum qualifications for the loan and everyone else is doing it. I wonder how long it's been since the typical American made logical, purposeful decisions wrt college loans, car ownership and home ownership rather than going along with the herd instinct. I also wonder how many people have made less than optimal decisions about any of the three yet are blissfully unaware of it.

It's like we're so many not-so-dead lemmings who are content enough that our decisions didn't go so terribly wrong that we ended up living under a bridge not to ask too many questions. ;0)

Zug Zug said...

Peon can't be a racist word. They use it in Warcraft.

Anonymous said...

Wow, my posts are getting approved without all the preliminaries. Maybe Blogger will keep it this way.

I think peon achieved its negative connotations because of the factual situation of peons. I believe that there was no attempt to defame an ethnic group. In my neighborhood the poles and other eastern european people who arrived after WWII were called displaced persons (DP's) which pretty quickly achieved negative connotations. They were powerless, less educated, uprooted, their social position was pretty much as expected. Negro started as a netural term but achieved negative connotations. Black started as a self imposed positive term but over time achieved negative connotations. African American has held up remarkably positive.

Anonymous said...

Peons shall inherit the Earth for eons and eons, and they will if they swell in numbers and keep electing fools like Obama.

douglas said...

My daughter is receiving a 200K undergraduate education from one of our august institutions.

Fortunately she is not going into debt peonage; however, I feel pretty strongly that I am being taken advantage of. Education that could be purchased for half the cost a decade ago now costs me obscene amounts of my savings.

I am having trouble connecting the two halfs of the post. Clearly the term "peon" is gone from our language precisely when we are recreating the class of persons in reality. Casinos? There is lots of financial slicing and dicing but as a former Wall Streeter, I do not fear the innovation and new instruments created in the Frankenlab. I have to say, contrary to the average persons gut feeling, in NYC it is possible to capitalize projects costing hundreds of millions of dollars with the free judgement of market participants the only factor. Everywhere else it is political
crap that funds worthless doomed connected sinkholes. Anyone remember the synthefules corporation that US taxpayers funded in the Carter years, for a 100% loss?
To be honest, most people could not possibly understand how a capital market benefits them in everyday life. Even as great an intellect as Dickens totally missed the good under his nose.

airtommy said...

Peonage? Don't you mean Pwnage?

Anonymous said...

I have to say, contrary to the average persons gut feeling, in NYC it is possible to capitalize projects costing hundreds of millions of dollars with the free judgement of market participants the only factor.

Care to provide some examples of socially beneficial projects that have relied upon such new-fangled finance? It's definitely not hard to come up with examples justifying the "giant vampire squid" analogy.

wmhde said...

IMF head:
eligible for diplomatic immunity?

if not, how much will be his bail as he is, plainly, a flight risk?

Anonymous said...

"Yes, of course, it kinda helps when you..."

Not Jewish but people like you who have an uncanny ability to not be able to deal with unwanted facts make us here all look like idiots.

Anonymous said...

Hey, I have an idea for a business. It seems most people go to casinos to have fun than to win money. Indeed, most know they will lose money but they feel it's worth it cuz they had fun. It's like we 'lose' money going to amusement parks, movies, sports games, concerts, etc but we do it cuz they give us fun. And same is true of videogame arcades. You don't win anything but you had fun.

So, from that angle, losing money at casinos isn't necessarily worse than 'losing' money going to a rock or classical concert. The problem is you can lose A LOT of money at the casinos.
So, what communities need is casinos where the emphasis is on the fun than on the money. Slotmachines where you put in a nickel and win maybe $5 tops. Or card games where you win maybe $1 to $5 a hand. And etc. This way, you can have fun all night and lose maybe $200 at most than $200,000.

Munch1 said...

"Care to provide some examples of socially beneficial projects that have relied upon such new-fangled finance? It's definitely not hard to come up with examples justifying the "giant vampire squid" analogy."

All right. you challanged me. Apparently you enjoy your computer and the power the Internet affords you. Apple raised moeny on Wall Street to move from a small business to a giant. Dell, Cisco, Sprint, Verizon, Level3, in fact every Internet backbone provider was financed in NYC by people like me. In Korea, Japan, Germany - large connected banks determine who gets capital and their industrial landscape changes hardly an iota over the years. The same few conglomerates dominate. There is no Facebook, Google, Walmart, in those countries.

And what is this "socially beneficial" stuff? If you open your pocket and voluntarily trade your hard earned dollars for something a company provides in return, it is beneficial to you - the only benefit that counts - a human being getting his wants or need met. Don;t you want human beings to have their needs met? Don;t you want people to be able to have their wants forfilled? I know that you want to subsititute your determination of their "good" (socially beneficial) but perhaps you should be slightly more humble and listen to their view of what is in their interest

Has to be said...

American peons? Nah. Debt peonage doesn't just mean that many people are in debt. It also requires that creditors have tremendous power over debtors.

Take the recent mortgage crisis (I refuse to call it subprime crisis.) Under a system of peonage there'd be a lot of people in jail now: those who took a loan they couldn't afford. In reality we have many calls to jail people but only creditors.