5 Strange Ways Governments Make Their Money
We all vaguely know how the government makes its money. It sneaks into people’s homes at night and cuts off pieces their bodies, then they make this into soup and sell the result at roadsides. Either that or they just write the words “this is money, actually” on banana skins, since they have the power to do that.
But no. It seems governments have all kinds of side hustles for when they need a few bucks more for pizza. For example...
New York Makes Millions By Tapping A Landfill for Gas
Staten Island used to have the biggest landfill in the world. It was called Fresh Kills — “kills” comes from the Dutch word for riverbed, but it probably also referred to various bodies buried there by the mafia. This place was truly huge. It was a couple thousand acres, three times the size of Central Park. The mounds of garbage may count as the biggest humanmade structures in history.
The landfill hasn’t accepted any new garbage since 2001. After that, New York began the long process of converting it to usable land, without first removing the 200-foot trash hills. First, they capped the trash with a layer of plastic. Next, they layered on some soil. Then they planted grass and trees, and let in water to bring back wetlands. After that, they just sat back for a couple decades and let everything take root. It’s a park now. The full thing won’t be ready for another 15 years or so, but it’s partly open now.
Along with the massive conversion came a small rebranding. It’s no longer “Fresh Kills.” The park is instead called “Freshkills.” That was a very 2000s idea, that sliding words together without a space separating them makes it sound clean and modern somehow.
All that squishy garbage stays underground at the site, decomposing anaerobically. As a result, it releases methane, which the city pipes away and manages to actually sell. This process happens at other landfill sites as well, on a smaller scale, and it’s remarkable for a few reasons. First, though you always count on landfill waste producing methane, that’s normally a bad thing. The methane goes straight to the atmosphere instead of into pipes and tanks, and it’s a strong greenhouse gas (much worse than carbon dioxide). It’s so bad that some states ban you from throwing out organic waste this way, forcing you to instead compost it. Collecting the gas from dumps before it flies away, however, isn’t so easy.
Second, though a lot of waste has some kind of energy potential, each little bit doesn’t have much. While you can invent a generator that runs on human hair, collecting all that hair may take so much energy that the whole endeavor becomes pointless. But as Fresh Kills shows, if you happen to have all that decaying stuff in one spot, that’s an opportunity. The landfill held 150 million tons of waste, moved there during decades when it was the one landfill for all of New York City.
New York City was making $4 million a year selling these trash farts a decade ago, and the park says it’s producing just as much gas today. Now if we can just get every dog in the city to shit in one designated place, our energy crisis will be forever solved.
DMVs Make So Much Money Selling Your Data
This one sounds like a conspiracy theory. Your strange neighbor Bernice (the one with the birds) refuses to give the DMV her data for fear that they’ll sell it, while you reasonably say, “Uh, I think the government already has your data. And has plenty of money. And the DMV barely manages its own workload, forget about gigs on the side.”
But Bernice is right. When credit agencies, private investigators, third-party data brokers and other buyers ask for your info, the DMV in many states happily provides it. That’s stuff like your address, date of birth and phone number. Though the DMV doesn’t charge much for each request, perhaps as little as a penny each time, they sell so many people’s data, and sell it over and over enough that it definitely starts to add up. In 2017, for instance, California made more than $50 million this way. Florida made over $75 million.
We’re not saying you necessarily need to be outraged by this. This privacy invasion isn’t going to kill you. But... hold on, we take that back. Maybe it will kill you.
Okay, it probably won’t kill you, but we should mention the case of Robert Bardo. The 1994 Driver’s Privacy Protection Act restricts DMVs from selling your data, and it’s because of Bardo. He was a fan of actress Rebecca Schaeffer, and by “fan,” we mean “fanatic, in the worst possible way.” He stalked her for years, then saw her do a sex scene in a movie and became enraged. She was supposed to stay pure for him.
He hired a detective who obtained her address for him through the DMV. Then Bardo showed up at her house, and she willingly met him then wished him goodbye. An hour later, he returned and shot her in the heart. He ran down the highway, yelling, “I killed Rebecca Schaeffer.” He is now serving a life sentence in prison.
Like we said, that incident led to a law restricting how DMVs can release personal data. That law still included various exceptions, which is why the practice continues today and makes more money than ever. One of those exceptions? DMVs can sell data to private investigators. Bardo got data through a private investigator, so great job responding to Schaeffer’s murder, lawmakers.
Pitcairn Island Made Most of Its Money Selling Stamps
Pitcairn is a tiny island in the Pacific Ocean. Not many people live there, so if anywhere in the world could be funded by selling souvenirs, it may as well be Pitcairn. But this Pitcairn situation gives us an excuse to talk about the history of postage, which really is a fascinating subject. If you don’t find stamps fascinating, feel free to skip ahead; we talk about booze and cigarettes later.
For a long time, Pitcairn had no stamps. Its population was too tiny to have a formal postal service. Many of the people there descended from mutineers from the HMS Bounty, who landed there in 1790 and were a lot more interested in mutiny than letter writing.
When people on the island did write letters, they didn’t stamp them. They just handed them over to a passing ship, who agreed to carry them for free. You might question why a mail boat would agree to carry a letter for which no one had paid postage. We’ll do you one better and question why any country ever agrees to deliver another country’s mail, whether there’s a stamp on it or not.
Think about it. If you send a package from (say) Dallas to Sydney, you buy American stamps. That means you pay the U.S. Postal Service. You do not pay Australia Post, you do not pay the Australian mailman who drops it at the address, and you also fail to pay any intermediary ships between you and there.
Anyway, the answer to that question is that, for many years, each country delivered each other country’s mail for free. They just assumed that it would all balance out — an Aussie postman would deliver an American package without the American sender paying Australia because an Australian sender would probably mail some vegemite to America later, and they’d buy lots of stamps from Australia Post.
However, that system made no sense. Deliveries did not balance, since some countries have more stuff worth shipping, leading to a lot of one-way traffic. We switched to a different system, a worldwide system administered by the United Nations in Switzerland. When you buy American stamps to send a package to Sydney, the money gets divided up, and some of it now does indeed go to Australia.
Sometime during this renaissance period in which postage started to make sense (circa 1940), Britain opened an official post office in their territory of Pitcairn, complete with stamps. Collectors liked stamps from this country with an anomalous postal history, and tourists (who greatly outnumbered residents) liked them too. Stamps soon paid for two-thirds of Pitcairn’s budget.
Until 2004, that is. People suddenly weren’t so interested in Pitcairn’s stamps. Maybe it was because letter writing fell out of fashion. Or maybe it was because of a high-profile 2004 trial in which one-third of the male population was charged with rape. With few stamp buyers funding the government, Pitcairn declared bankruptcy.
Virginia Has A Monopoly on Booze and Makes Hundreds of Millions Off It
If you’re from a state where the government has a monopoly on liquor sales, you’ll be well aware of that fact. If you’re not, you may be surprised that such a thing could even be possible. But in more than a dozen states in America, the government has some kind of monopoly over selling alcohol. That means either retailers buy alcohol from the government or — in the more extreme cases — no private retailers can sell alcohol at all. The state runs its own Alcoholic Beverage Control stores, which people call “ABC stores” or “state stores.”
Virginia was recently debating privatizing booze sales, so that gave us a glimpse into the money involved here. Virginia’s ABC stores make the state more than half a billion a year. Almost half of that is from taxes that would kick in even if other stores sold alcohol, but the rest is straightforward retail profit.
States don’t do this for any other product. You’d generally call state monopolies like these socialism, and yet they’re biggest in the most conservative states, who reject the free market in this one case. They don’t want an efficient alcohol industry, because they consider drinking a vice to be fought. Vices can also be very lucrative for the government, however. Case in point...
A Chinese County Forced Everyone to Smoke Cigarettes to Raise Money
Cigarette taxes are the bane of every smoker’s existence. Well, cigarette taxes and emphysema, but we’re talking about cigarette taxes right now. In the U.S., the taxes can add up to more than $4 a pack if you wander into the wrong state, and it can be double that in parts of Europe. In Australia, it’s $25 tax per pack (that’s U.S. dollars). (Now we know what all those Americans have been shipping to their friends in Australia.)
The primary goal behind these taxes is to discourage smoking, not to make the government money. Sometimes, revenue from cigarette taxes is earmarked specifically for treating lung disease. Other times, the taxes do make the government money, and the government finds itself puffing on some perverse incentives.
In 2009, the county of Gongan in China issued an order demanding that its officials smoke cigarettes. More cigarette purchases meant more money for the government thanks to cigarette taxes, they reasoned. They assigned each official a quota, with the goal of smoking a total of 23,000 packs, raising some $600,000. Based on those numbers, the tax was about the same as Australia’s per pack but was dramatically more in percentage terms.
Officials who missed their quotas had to pay a fine. The fine was likely more than the cigarettes’ cost, so the government got their money either way. The taxes only benefited Gongan County if people smoked cigarettes manufactured there, though, so if you smoked cigarettes from elsewhere, Gongan would fine you for that as well.
Gongan eventually dispensed with the mandatory smoking once word got out and everyone mocked them. At this point, we assume, they went back to raising money simply by seizing it from people, without the extra, cancer-causing steps.