President Clinton has rejected the
settlement negotiated between the tobacco companies and several of the states'
attorneys general, but by early indications, the program the president would put
in its place is likely to be at least equally faulty. In fact, the most obvious
objection to the negotiated settlement applies equally to the president's plan:
It too would leave the tobacco companies free to continue violating the public
health peddling cigarettes. With smoking estimated to cause 450,000 deaths per
year, neither the attorneys general nor the president has bothered to explain
exactly why the tobacco companies should be allowed such license to kill.
The president's plan pretends to
provide greater protections to children against the industry's efforts to seduce
them to smoke, but in fact, the president's plan, like the negotiated
settlement, sets the stage for a prosperous black market in tobacco products,
and children are always the easiest target for victimization by black
marketeers.
A black market in tobacco products is
a fearsome thing to contemplate. The black market in illicit drugs has defeated
the seventy-some year old drug control effort. So successful has been the black
market in drugs, that it has caused an enormous increase in the number of
addicts. In consequence, despite the huge growth of the general population
during those same seventy-some years, addicts are now estimated to constitute
about the same fraction of the population as before national drug control laws
were first adopted.
If we allow our policy makers to
blunder into a black market in tobacco, and if the resulting black market
follows the usual course of development, we will find ourselves a few years
hence with approximately equal numbers of children smoking, but: newly developed
cigarettes will have become more potent, more destructive of health and more
powerfully addictive; the tobacco commerce will be underground and completely
beyond the regulatory reach of the Food and Drug Administration; the job of
tobacco control will have been handed over to police authority; youthful
gangsters will be warring for control of an insanely profitable tobacco
commerce; the courts of our land will be clogged and our jails filled with
alienated young tobacco pushers.
We are already in the early stages. A
New York Times article carried in the San Francisco Chronicle of August 25,
1997, reports that a "huge" international black market in tobacco products has
already developed. To quote just three details from that article: "The largest
tobacco companies are selling billions of dollars of cigarettes each year to
traders and dealers who funnel them into black markets in many countries..." and
"...researchers say one-fourth of the cigarettes sold overseas pass through
smuggling rings set up to evade foreign taxes and sell major brands at discount." and finally, "Two sales managers for Brown & Williamson
Tobacco Corp. have pleaded guilty to aiding smugglers."
In recent years, cigarette prices have
risen as new taxes have been added. In the same period, smoking has increased
among the young. Yet, under the simplistic theory that increased price will
deter youthful smokers, the president proposes further to increase taxes on
tobacco. The settlement proposed by the attorneys general also would have
resulted in higher prices: It would add $368.5 billion to the cost of cigarettes
sold legally on the U.S. market. In either case, criminals would be motivated to
smuggle and sell black market cigarettes manufactured and distributed without
the overburden of taxes, the settlement cost, or both. To be more specific,
criminals would make fat profits by smuggling back into this country untaxed
cigarettes nominally manufactured for foreign consumption or by importing
untaxed cigarettes of foreign manufacture. Given expanded profit-making
opportunity, black marketeers could offer free smokes to every child to bring in
a new customer, and with children seducing children, the tobacco industry could
increase sales while foregoing traditional advertising. That is how the drug
lords do it in their black market.
One Alternative Proposal: Let Civil
Penalties Solve the Problem
Some critics of the negotiated settlement
have argued that we would be better off if the settlement were defeated and the
victims of tobacco injury were left free to pursue the tobacco companies in
court.
Perhaps the cost of legal damages
might put the tobacco companies out of business, as the advocates of this
strategy evidently hope, but it is more likely that the cost of damages would
become just another of the many costs of doing business in the tobacco
industry--a cost the manufacturers would have to recover in a higher price for
cigarettes. If that is the case, then, before we buy this "civil penalties"
solution, its proponents should be called upon to demonstrate how their solution
can be modified to avoid the black market danger. They need to show how
criminals could be prevented from selling black market cigarettes manufactured
outside (or free of) the added burden of civil damages. That is a tall order for
the proponents of this solution.
The Better Alternative
Actually, there is an effective strategy to protect the public health
from the depredations of the tobacco industry--and to do so without creating
opportunity for black-marketeering. Unfortunately, this strategy has been
overlooked in earlier public discussion. Before we go through the details of how
this strategy would work, let us first review some key elements of the social
dynamics of the tobacco problem, so as not to miss the fit between the problem
and its optimal solution.
The Mutual Stimulation of Supply and Demand
Under present market
conditions, consumer demand for tobacco products creates the opportunity for the
tobacco industry to profit by manufacturing and selling tobacco products. That
is, consumer demand stimulates the industry to supply. The tobacco industry
responds to the stimulus of profit-making opportunity both by supplying the
existing demand and (to increase profitable sales) by stimulating more demand.
In general, then, the mutual
stimulation of supply and demand is cyclical and reiterative, and the engine
that drives this mutual stimulation is profit. It follows that the way to
control the public health menace of tobacco is to interrupt the mutual
stimulation between supply and demand by eliminating opportunity to profit in
tobacco. How this can be done is spelled out below, but first, an historic
perspective.
Substance control measures that fail
to eliminate profit opportunity have never worked. The alcohol prohibition of
the 1920's did not eliminate profit opportunity, and it did not work. In fact,
prohibition increased profit-making opportunity in the manufacture and sale of
alcoholic beverages, and the resulting black-market commerce in bootlegged
alcohol gave rise to our country's first great epidemic of gangsterism and gang
violence, as criminal syndicates warred for control of the lucrative illegal
commerce. Over the last seventy-some years, similar measures of prohibition have
failed similarly to control the illegal drugs, and for the same social- dynamic
cause: Prohibition does not eliminate profit, it magnifies it.
An Effective Program
What public intervention could control the
mutual stimulation of supply and demand? The only way it has ever been possible
to do this is by creating a non-profit way to serve existing demand.
Interventions that effectively serve existing demand also effectively eliminate
the profit opportunity that motivates private enterprise. Therefore, an
effective program to eliminate profit-making opportunity and interrupt the
mutual stimulation of supply and demand would start with the following two core
elements:
1) Make private enterprise in the manufacture, distribution and sale of
tobacco products illegal, and
2) Create a public health agency authorized to supply the existing demand
for tobacco products.
Many people mistakenly imagine that simply making cigarettes illegal would
automatically make them an item of black market commerce. True, if the first
element were implemented without the second, unsatisfied market demand would
result. Scarcity would then cause tobacco prices to rise, and higher prices
would inflate profits. As a result, black marketeers would have a magnified
profit incentive to increase sales by seducing still more youngsters into
smoking. Competition for the super-profits of the black market would then add
still more fuel to the present- day high levels of gangsterism and gang
violence.
But that is not what would happen under the program here proposed because the
second of the above core elements would satisfy existing demand and foreclose
profit opportunity.
The above core program could be made an even more potent tool for protection
of the public health by adding a third element as follows:
3) To discourage tobacco consumption, require the public health agency to
price its products at the highest price consistent with the objective of
preventing a black market.
A consequence of this measure is that
the public health agency would earn substantial net income. Hence, a fourth
program element:
4) Empower the public health agency to expend its net income from tobacco
sales to implement smoking prevention and remedial measures, such as:
- Smoker education for harm reduction; that is, teaching smokers how to
reduce health detriments of smoking, to reduce consumption, to reduce harm to
others, and to quit,
- Anti-tobacco education for smoking prevention; and
- Negative advertising against tobacco products.
The above-outlined public health program can be self-funding. It can also be
self- regulating, in that the resources available for expenditure on prevention
and remedial measures would automatically decline along with the declining size
of the smoking population.
The following are a few additional elements that may not be necessary to the
workability of the above program, but which seem to make good moral and
political sense:
5) End the cooptation of government by the tobacco industry by eliminating
all general-fund taxes on tobacco products.
So-called "sin taxes" do not
eliminate or constrain sin; they only put government in league with the sin
industry.
6) End the federal subsidy to tobacco farming.
7) End the federal subsidy to foreign sales of U.S. tobacco products.
8) Consistent with existing
international agreements regarding international trafficking in dangerous and
addictive substances, prohibit U.S. manufacture of tobacco products for sale
abroad.
It should not be overlooked that the
above-suggested program avoids the criminalization of smokers. It treats smokers
as the innocent victims of commercial seduction by the tobacco industry. It
helps them to overcome tobacco addiction and evade serious health consequences.
Further Comments on This Workable
Program
Of all available strategies, the first four points above
constitute the only one that would completely eliminate the advertising and
peddling of tobacco products to the young. It does this by eliminating the
profit motive for the manufacture, distribution and sale of tobacco products to
everyone.
This strategy eliminates the profit
motive for all traditional modes of advertising tobacco products. It also
eliminates the profit motive for under-the-table payments to movie and TV
producers for glamorizing smoking in their respective media. This program
entails no impairment of free speech: We would all be free to advocate tobacco
use, but who would do so without a commercial purpose? This program does not
require the seduction of future smokers to pay damages for past smoking
injuries, as all alternative proposals would.
Finally, with this program in place,
there would be no reason why individuals, as well as states, should not also be
allowed to sue the tobacco companies (or their residuals) for damages.
Light at the End of the Tunnel?
If the above-outlined strategy is the right solution to the tobacco control
problem, and if the right solution remains unknown to the public, and if the
public remains misinformed as to the likely effects of the known alternatives,
then some messy political consequences follow. Obviously, no politician would
dare to champion the right solution (if he knew it) in the face of massive
public support for a wrong solution. Furthermore, so long as the misinformation
persists, properly positioned politicians are enabled to score points
simultaneously with both of the contending camps--that is, earning anti-tobacco
votes with mere anti-tobacco rhetoric, while earning campaign contributions from
the protected industry--and the black marketeers.
Seemingly our government must persist
in pro black market policies until the messy political condition changes.
Seemingly the messy political condition must persist until experts in the
relevant disciplines are emboldened to step forward and share with their fellow
citizens their knowledge of the relevant causes and effects.