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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.