Gambling or investing in the future?

I read an article about the president’s proposed changes to Social Security that got me thinking about the great debate over whether investing in the stock market is or isn’t gambling.

Within the past week, I’ve written a draft of the section of Roll the Bones covering several stock bubbles of the 18th and 19th century. I’m going to give you a sneak preview sample, as that’s the best way to put the article into historical context:

[Even after several bubbles crashed] investors still sought the next “sure thing,” showing that the English gambling spirit was irrepressible. One writer described Jonathan’s, a coffeehouse near the royal [stock] exchange, as “being full of gamesters, with the same sharp, intent looks,” although these gamesters had turned in their cards and dice for stock in the Bank, East India, South Sea, and lottery tickets.

So is investing Social Security money in the stock exchange tantamount to gambling? Read on to see if the AARP and Christian Coalition have any more clue than 19th century English stockjobbers.

From The Hill:

Anti-gambling groups are backing President Bush’s Social Security reform plan and rejecting critics who have compared the creation of private accounts to the playing slots.

Social conservatives, known for their opposition to gambling, say that investing Social Security money in the stock market has few, if any, parallels to gambling.

AARP has launched a $5 million ad campaign against the president’s plan that sends a very different message. Underneath a picture from the trading floor of the stock exchange, one AARP ad reads: “Winners and losers are stock market terms. Do you really want them to become retirement terms?”

Another ad states, “If we wanted to gamble, we’d play the slots.”

Social conservative groups say they do not see Bush’s privatization efforts as being morally questionable.

“The moral problem is what we are doing today” with Social Security, said Tony Perkins, president of the Family Research Council. “We need to be morally responsible and stop the deception that is going on all around us.”

Perkins said the president’s revision to Social Security would make it less risky than the current system: “We allow people to believe they are paying into a safety net when in fact, for folks my age, it is not going to be there at all. Had I invested my money in the stock market, I would have that, plus some.”

American Values president Gary Bauer said investing in the stock market is significantly different from playing the roulette wheel: “Gambling is marked by a reality that every player knows … the house always wins. While it’s true that on rare occasions, someone may be lucky, they are the exception to the rule.”

“Over time, the American markets have consistently rewarded long-term investors. The hope that investors show in America and her economy has been realized from generation to generation,” Bauer said.

Social Security investment not gambling, groups say

Like I’ve always said, gambling is a social construct that is very malleable; at different times, cultures may deem some things gambling and others not. Many people don’t consider raffling prizes gambling, but it clearly has all the elements: submitting a stake for the possibility of a greater reward determined by chance. Can the same be said for the stock market?

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