May 7, 2003

silhouette3.JPG From the desk of Jane Galt:

I've been meaning to link to this piece for a while, an excellent post by Fritz Schrank who thought they were going to eat their tobacco companies and have them too.

States have been spending the bejeesus out of the tobacco settlements, capitalizing the future payments to cover current spending, allocating the monies six ways from Sunday, promising activist groups and public sector unions a juicy cut of future payments in return for their support at the poll. They've also been raising the hell out of tobacco taxes in order to close budget shortfalls.

They thought that they could get away with this because cigarettes are a classic example of a price inelastic good: a good for which even large changes in price produce very small changes in demand. But it seems that cigarettes aren't quite as price inelastic as the states thought; when cigarette prices go up to $7.00 a pack, people do curtail their consumption. This hurts the revenue stream from which the states are supposed to take their payments. It may be an overall benefit to society, but that isn't going to help George Pataki placate the health care workers who thought they were getting raises financed by the tobacco money.

Matters are further complicated by the fact that settlements haven't stopped the class actions, and the payments on other class actions may force the tobacco companies into bankruptcy. If that happens, I'm told the states will have to stand in line like everyone else for pennies on the dollar.

It's especially interesting to me because there seems to be a significant manifestation of the tragedy of the commons. Each state has an incentive to maximize their personal revenue at the expense of the other states; hence the hike in tobacco taxes on top of the stealth tax hike represented by the settlements. But if they all raise their taxes, they push the companies into bankruptcy, and everyone is worse off than if they kept milking the revenue streams of a going concern. Yet because the incentive to defect is high, everyone rushes to raise their own taxes so they can get theirs while the getting is good.

Far down the road, we can also look forward to rising medical and pension costs, since smokers very conveniently die after their peak earning years, but before they require expensive long-term care. On the other hand, we get more years sitting at Granny's knee, and who can put a price on that?

Other than a lot of very angry public sector union workers, I mean.

Posted by Jane Galt at May 7, 2003 10:03 PM | TrackBack | Technorati inbound links
Comments
Posted by: Don P on May 7, 2003 11:15 PM

Your line about granny is what really matters. Tobacco smoking is the leading preventable cause of death in America. Yes, tobacco taxes are obviously not a reliable long-term revenue stream, and states that depend on them will be in trouble. Yes, smokers may actually subsidize health care and pensions for non-smokers. But in the end surely it is better that people stop smoking than that they continue to do so, and if tobacco taxes and lawsuits significantly further that goal I don't think the problems you mention really matter in comparison.

Posted by: Bob Dobalina on May 8, 2003 12:01 AM

Yeah, Don. So what if one class of citizens subsidizes another? As long as you don't approve of what they're doing, they ought to pay up!!!

Posted by: Andy Freeman on May 8, 2003 12:03 AM

Don is the sort of person who drives one to smoke and other forms of socially acceptable suicide.

Posted by: Don P on May 8, 2003 12:28 AM

Smoking doesn't harm only the smoker himself. It also harms others. So a libertarian argument won't work here either.

Posted by: Don P on May 8, 2003 12:31 AM

Andy Freeman:

Don is the sort of person who drives one to smoke and other forms of socially acceptable suicide.

Yeah, me and most other Americans. It's a wonder you're still alive. How can you stand the torture?

Posted by: Jane Galt on May 8, 2003 7:13 AM

That's incorrect, Don -- the evidence for harmful effects from secondhand smoke are very thin other than for people who have voluntarily chosen to live with heavy smokers, and allow them to smoke in the house, over decades. There is, for example, no convincing evidence I've seen that the bartenders and waitresses Bloomberg was trying to protect here in New York were being materially harmed by tobacco smoke.

Posted by: MattJ on May 8, 2003 8:37 AM

Of course, the best thing for smokers as a class would be for the tobacco companies to go bankrupt, so the new tobacco companies that replace them would no longer be burdened by the legal troubles of the current companies. The price of cigarettes should come down significantly then. As things currently stand, we basically have nationalized cigarette companies; the government profits tremendously more from each pack sold then does the company that manufactures it, and the government works to protect existing companies from new competition.

Posted by: Bolie Williams IV on May 8, 2003 9:12 AM

Not everyone who lives with a smoker for a long time choose to do so. children usually have little or no choice in who their parents are and whether or not they smoke.

Also, until smokers do not get any healthcare funded by anyone else, they are a burden on other people. If someone choose to smoke, fine. But I don't want them getting any government funded health care and I want my insurance company to be able to kick them off the plan. I also don't want them to be permitted to smoke around their children.

So as long as they only harm themselves, fine, let 'em smoke.

Having said that, the tobacco settlements are kind of stupid. I'd much rather see criminal charges brought against tobacco execs who deliberately concealed the harmful effects of tobacco or deliberately enhanced the addictive effects (assuming they did and it can be proved in a court of law). It's one thing to sell something that can cause harm. It's quite another to do so and hide this from your customers.

Bolie IV

Posted by: Bolie Williams IV on May 8, 2003 10:05 AM

I'd be interested in the what evidence there is, but I find it hard to believe that someone living with a single heavy smoker is going to get significantly more exposure than someone who works in a bar with many heavy smokers. It may be that bartenders and waitresses typically don't work at such jobs for long enough, but the exposure per unit time has got to be more, especially in a bar.

Bolie IV

Posted by: Dr. Manhattan on May 8, 2003 10:13 AM

Re: MattJ's comment, I'm not sure new tobacco companies would be able to escape the restrictions, though by all rights they should. See - I'm not sure how the case he discusses came out.

Posted by: Jay Solo on May 8, 2003 10:18 AM

Try being one of those people directly affected by secondhand smoke!

I consider being smoked around without my consent to be the equivalent of someone walking up and punching me.

I don't believe smoking or cigarettes should be taxed or regulated in any way. At least, if there is recognition of the previous statement and its implications.

I also believe that when I go into a place where smoking is allowed or known to happen, I am consenting. (Of course, I couldn't work in such a place.)

Posted by: David Walser on May 8, 2003 11:23 AM

The risks of secondhand smoke have been overblown and overstated. The amount of smoke a "secondhand smoker" breathes today is far less than a non-smoker breathed a century ago, when homes were heated and lighted by open flame. Our air is far cleaner and we are far less tolerant than the way things were just a short time ago. From a health perspective, secondhand smoke -- even for children living with parents who smoke -- should be a non-issue. Our time, effort, and money would bring about much greater improvements in public health if spent in other areas.

I don't smoke. I never have. I won't eat in an establishment that permits smoking, but I believe the owner should be able to make a choice whether or not to allow smoking. Comparing secondhand smoke to a physical assault is just absurd. And it is just this absurd overreaction that causes us to take such overreaching measures as forbidding the smoking in a building -- even if special air filtration equipment is installed. How many smokers have gotten ill because we force them to stand outside in the cold to have a smoke?

Posted by: Jonathan Falk on May 8, 2003 11:42 AM

To Bolie IV: Smokers consume more health care, burdening all of us to the extent that insurers can't discriminate, but they pay cigarette taxes and die sooner, subsidizing nonsmokers in the Social Security program. The best estimates are that, on net, it was about a wash BEFORE the cigarette settlement. (Do a search for the work of Kip Viscusi, who's been doing this research for years.) Now us nonsmokers are being subsidized big time, although as Jane points out, at a decreasing rate.

Posted by: Paul Zrimsek on May 8, 2003 11:58 AM

The secondhand-smoke-as-a-punch-in-the-whatever analogy would be a lot more convincing if it were common to see people punching themselves in the whatever-- a good deal harder, too-- and paying the state something like a quarter a pop for the privilege. Since we don't see tens of millions of people doing this, it's time to consider the possibility that catching a whiff of someone else's smoke isn't really all that much like being punched.

Posted by: dsquared on May 8, 2003 1:07 PM

>>The amount of smoke a "secondhand smoker" breathes today is far less than a non-smoker breathed a century ago, when homes were heated and lighted by open flame.

Did Americans used to heat their houses by burning tobacco leaves???

Posted by: Humphrey Bogus on May 8, 2003 1:27 PM

To Jonathan:
There are lots of groups that cost taxpayers more than they pay in taxes. Prisoners for example. Why not charge the families of prisoners for their imprisonment? Or people who eat fatty or salty foods? Certainly heart attacks and coronary artery disease cost states millions in health care payments. Why not a tax credit to people who eat their vegetables? Or a tax penalty for people who drop out of school? They cost the state future taxes on their lost potential earnings.... I have no problem taxing cigarettes. But the justification that "well, it costs the state lots of money" is a horrendous rationale, as it can be used to justify lots of extremely serious and unwarrented intrusions into our daily lives.

dsquaared:
They didn't burn tobacco, they burned wood, which causes lots of particulates to enter the immediate area. Many homes in those days weren't well ventilated. Also, factories back then were predominantly powered by coal, which didn't burn very cleanly. The technology for removing the particularly egregious emissions from coal-fired power plants and factories didn't exist until recently.

My thoughts:
Personally, I think states have truly squandered the tobacco settlement money. In California, they've been running ads demonizing the tobacco companies--rather than treating sick smokers. I'm not a smoker, and I like the fact that smoking is prohibited in bars and restaurants, flimsy as the rationale may be. I like it, but I recognize that the reasoning by which the law was promulgated was potentially shaky. I am inclined to prefer a market solution (if it's really smoky in one particular bar, I won't go there), but in this case I'm happy with the result, though it was achieved perhaps illegitimately.

Otherwise, I think the whole tobacco lawsuit bonanza is a crock. Sure, the tobacco companies lied. But the Surgeon General didn't, since 1969.

The day tobacco companies file for banruptcy is the day I buy their debt.

Posted by: Sean E on May 8, 2003 1:35 PM

I tend to think of spending time in the presence of a smoker as equivalent to being with someone who makes no attempts to hide their chronic flatulence. Inconsiderate and unpleasant, but not life threatening and certainly nothing I'd advocate passing a law against.

I do have concerns with people smoking around young children, but I've heard very few people calling for restrictions draconian enough to have much impact there (so far, at least).

Posted by: FDL on May 8, 2003 1:43 PM

Jane: you raise a couple of factual issues that I thought went the other way:

1. smokers die before they require long-term care. Now, I've heard that the net cost of smoking to society as a whole needs to consider the beneficial effects of early mortality on Social Security, but I'd heard that those beneficial effects were much smaller than the total extra cost of medical care to smokers as a class. Any further evidence/thoughts on this point?

2. Second-hand smoke. I've read that the evidence of cancer from second-hand smoke was thin, but the evidence of increased rates of heart disease, emphysema, stroke etc. was pretty strong. Am i wrong?

Posted by: Don P on May 8, 2003 2:23 PM

Jane Galt:

That's incorrect, Don -- the evidence for harmful effects from secondhand smoke are very thin other than for people who have voluntarily chosen to live with heavy smokers, and allow them to smoke in the house, over decades.

There is considerable evidence that second-hand smoke is physiologically harmful. Since we know to a medical certainty that first-hand smoke is extremely harmful, the idea that second-hand smoke is not harmful at all would be highly implausible even if there were no such evidence.

But in any case the harm of smoking is not limited just to clinical definitions of harm. Non-smokers do not like to be in smoky environments. It's unpleasant. That is why an increasing number of jurisdictions are banning or imposing increasingly strong restrictions on smoking in public places and public accommodations.

Posted by: Don P on May 8, 2003 2:30 PM

I won't eat in an establishment that permits smoking, but I believe the owner should be able to make a choice whether or not to allow smoking.

Do you also believe that restaurant owners should be able to choose whether to follow food safety and hygiene regulations? Do you believe that airlines should be allowed to choose whether or not to x-ray their passengers and baggage?

Posted by: David Walser on May 8, 2003 2:56 PM

Don P: "Do you also believe that restaurant owners should be able to choose whether to follow food safety and hygiene regulations? Do you believe that airlines should be allowed to choose whether or not to x-ray their passengers and baggage?"

No, I don't think restaurant owners should be able to ignore health and safety regulations. Neither do I think they should be able to murder their employees. Point is, study after study has shown that there is NO measurable health risk associated with secondhand smoke. None. If that's true, I don't see the reason the state should abrogate the restaurant owners' property rights.

If smoking causes the smoker harm, why doesn't secondhand smoke cause health problems? I don't think we know, but there are at least two plausible reasons that come readily to mind. First, the experience between smoking and breathing in secondhand smoke is vastly different. Perhaps the dry heat from inhaling makes lung cells more susceptible to the toxins and irritants in the smoke? Absent the dry heat, the cells can resist the ill effects of the smoke. Second, the amount of toxins encountered in smoking and breathing secondhand smoke is vastly different. People die if they ingest too much iron. Not enough and they become anemic. Perhaps there just is not enough toxin in secondhand smoke to cause harm -- the body can safely deal with those levels. After all, a lot of carbon monoxide is produced by a backyard BBQ -- it's only a problem if the BBQ's gasses become too concentrated. Something similar may be going on with secondhand smoke.

So, until the anti-smoking crowd can demonstrate material health risks (and it's their burden of proof), I'd prefer government power be used elsewhere. This, despite the fact I don't smoke and find the habit obnoxious. I don't think it's my right to outlaw things I find merely annoying.


Posted by: Paul Zrimsek on May 8, 2003 3:12 PM

Luckily for some people, the unpleasantness of sharing a country with puritanical control freaks is specifically exempted from the Unpleasantness Eradication Act of 1998.

Posted by: Jane Galt on May 8, 2003 3:47 PM

It takes years and years and years to get cancer, emphysema, or heart disease from smoking. Years of steady, pack-a-day exposure by inhaling a highly concentrated stream of smoke.

People who work in smoking establishments simply don't accumulate this level of exposure, for many reasons:

1) They don't generally work there for that long - most waitstaff and bartenders are young

2) If the ventilation system is up to code, the amount of smoke they inhale is not very concentrated

3) They inhale for a shorter period of time than smokers.

4) They only work in a highly smoky environment for a few hours a day.

Posted by: Toxic on May 8, 2003 4:15 PM

They didn't stop buying cigs when they went to 7 bucks--- they just starting a smuggling industry for people who drive to nearby states with cheap smokes and bring them back to sell to others.

Posted by: Don P on May 8, 2003 5:21 PM

David Walser:

Point is, study after study has shown that there is NO measurable health risk associated with secondhand smoke. None. If that's true, I don't see the reason the state should abrogate the restaurant owners' property rights.

It isn't true. Study after study has shown that second-hand smoke creates a significant health risk.

Health Canada on the health risks of second-hand smoke

The American Cancer Society on the health risks of second-hand smoke

Posted by: Don P on May 8, 2003 5:25 PM

David Walser:

I don't think it's my right to outlaw things I find merely annoying.

I assume you find littering annoying. Virtually all American cities have laws against littering. Do you favor the repeal of these laws?

Posted by: Sean E on May 8, 2003 6:01 PM

Don P., you linked to two anti-smoking advocacy groups who made bald claims that second hand smoke kills without providing any real data to back it up. I'm agnostic on the issue, but your links don't prove it's dangerous any more than a link to a Marloboro website claiming it's safe would prove we should feel free to light up around our kids. Propaganda isn't proof.

Posted by: Sean E on May 8, 2003 6:16 PM

"I assume you find littering annoying. Virtually all American cities have laws against littering. Do you favor the repeal of these laws?"

As far as I am aware, there are no laws against littering on private property with the owner's consent.

I also find country music annoying, so I try to avoid places where I know it will be plaid. I see now that a more reasonable course of action would be for me to lobby that it be made illegal in bars and restaurants.

Posted by: Sigivald on May 8, 2003 6:16 PM

Dsquared: The ill effects of tobacco smoke (other than nicotine dependence) are not related very strongly to the fact that the smoke is that of tobacco leaves, rather the fact that it's smoke of any sort.

Wood smoke and coal smoke aren't good for you either - both are quite capable of causing exactly the sort of lung damage that tobacco smoke does. If chronic exposure to secondhand tobacco smoke causes health problems, we would expect to see essentially identical problems from exposure to any sort of smoke... such as that our ancestors would have breathed from living in a wood-or-coal heated-and-powered world.

The whole thing is horribly overblown, and I suggest the dangers of the school of thought along the lines of "anything that makes people use more healthcare is fair game to regulate" far outweigh the benefits. The last thing I see as a Good Idea is giving government power over everything, which is exactly what that ends up doing.

Far better to simply remove government from healthcare entirely.

Posted by: Sean E on May 8, 2003 6:19 PM

Oops. S/b played, not "plaid", above. Of course playing country music while wearing plaid only compounds the offense.

Posted by: Don P on May 8, 2003 6:25 PM

Sean E:

Don P., you linked to two anti-smoking advocacy groups who made bald claims that second hand smoke kills without providing any real data to back it up.

No I didn't. I linked to Health Canada, which is Canada's national health care system, and to the American Cancer Society, which is the world's largest cancer organization. The links also contain citations to some of the primary medical literature on the effects of second-hand smoke.

Posted by: Don P on May 8, 2003 6:29 PM

Sean E:

As far as I am aware, there are no laws against littering on private property with the owner's consent.

He didn't say anything about private property. He said he doesn't think it's his right to outlaw things that he finds merely annoying. This would presumably include littering.

I also find country music annoying, so I try to avoid places where I know it will be plaid. I see now that a more reasonable course of action would be for me to lobby that it be made illegal in bars and restaurants.

Unlike banning tobacco smoking in bars and restaurants, I don't think that would be reasonable at all.

Posted by: David Walser on May 8, 2003 8:03 PM

Don P. - I did not say there were not any studies purporting to link health problems with secondhand smoke, I said that study after study had found otherwise. Here are just a few:

Passive Smoking Exposure and Female Breast Cancer Mortality http://193.78.190.200/14/1666.htm

Environmental tobacco smoke in an unrestricted smoking workplace: area and personal exposure monitoring. http://193.78.190.200/10h/ets.htm

Revisiting the Association between Environmental Tobacco Smoke Exposure and Lung Cancer Risk http://193.78.190.200/35/krager.htm

And for a layman's summary of the topic:

The Facts About Second Hand Smoke(Finally) http://www.davehitt.com/facts

To summarize my position: Before governmental power is used to abrogate property rights and personal freedoms, it should be shown that there is a REAL, not an imagined, problem.

Posted by: Humphrey Bogus on May 8, 2003 8:51 PM

Sean E:
The point is not to ban activities or products merely because we find them annoying, though that is permissible in a democracy. We ban activities or products that we define--and ultimately determine through a rather roundabout process of public elections of our elected representatives--as being intolerable or unwise for the society as a whole. Usually, these decisions are made based on a cost-benefit type of analysis, which is why getting the science right on the costs/benefits is of such importance. (Yes, I know many of these decisions are made by regulatory technocrats, but they are ultimately answerable to our elected representatives, at least in theory.)

We might ban something on such a flimsy rationale as "it's annoying"--playing loud loud music after midnight, for instance. We might ban something that degrades the "quality of life" for society as a whole--littering, leaving broken appliances in your yard, etc. We might ban other things for health or safety reasons--backyard nuclear reactors, making moonshine, or driving 200 mph. But in cases of health and safety, we try to use a calculus informed by science. Ultimately, we're evaluating risks--how much are we willing to pay not to take the risk that our water has cholera in it, for example. We similarly pay to ban annoyances, as sweeping the street costs the taxpayers money.

But eliminating risk entirely is outrageously expensive. We could all live in Class 1000 clean rooms, but the cost far exceeds any benefit. Smoking may be annoying to a large portion of the population; if a legitimate vote is held, we can ban it. But if you're going to advance a scientific rationale for what is at bottom a personal preference, then "we ban lots of annoying things" is not an adequate justification.

Posted by: Don P on May 8, 2003 9:17 PM

David Walser:

Don P. - I did not say there were not any studies purporting to link health problems with secondhand smoke, I said that study after study had found otherwise.

The fact that some studies have not found a link between second-hand smoke and various health problems is irrelevant, because there are many other studies that have found a strong link. Absence of evidence is not evidence of absence.

To summarize my position: Before governmental power is used to abrogate property rights and personal freedoms, it should be shown that there is a REAL, not an imagined, problem.

As I said, and as the links I provided show, there is considerable evidence that second-smoke causes a variety of serious, and in some cases fatal, health problems. That fact is, in part, why government action to restrict smoking is justified, and why such action is increasingly being taken.

Posted by: Don P on May 8, 2003 11:03 PM

David Walser:

By the way, I have to wonder if you even read your own links. For a laugh, I went to the second URL you provided (http://193.78.190.200/35/krager.htm), and found that it reports the exact opposite of what you claim. That is, it reports an increased risk of lung cancer for non-smoking women whose husbands smoke.

Posted by: David Walser on May 9, 2003 1:14 AM

Don P. - You need to read a little closer. The linked study found an 18% increased risk of cancer for women whose husbands smoke. Which may sound like a lot until you learn that changes of less than 200% are considered statistically insignificant. The 18% increase found in the study is nothing more than background noise.

Don, even the studies you cite cannot show any link between health risks and secondhand smoke -- without breaking the accepted rules for demonstrating such risks. The study authors may claim to have demonstrated such a relationship, but their data do not show it. Using long accepted practices, secondhand smoke has not been shown to be harmful.

The only way anti-smoking zealots have gotten their way is to exaggerate the risks associated with smoking. (Just as the only way the tobacco settlement could have been reached was for Florida to change the way the "cost" to society of smoking would be calculated. Under the new rules, only "harms" would be considered. Such harms would not be offset by the "benefits", taxes paid, lowered social security & pension costs, of smoking in determing the total "cost".) I don't think that public policy should be based on lies and distortions. Nor do I think that such a policy is likely to be a good one.

Posted by: Jane Galt on May 9, 2003 8:05 AM

Don P -- the fact that some studies show a weak link, and others show a weak negative link, is not taken as evidence that there's a link. It's taken as evidence that there's probably no measurable effect. That's basic statistics. You can't just throw out the studies that show no effect, and then claim that the studies that do validate your claims.

Posted by: Sean E on May 9, 2003 10:00 AM

Humphrey,

I agree with everything you said in your last post. My comments were were in reaction to Don P. who seemed to imply that even if there were no proven health risks from second hand smoke, the fact that some people found it unpleasant would be justification enough to ban it.

And Don P, I know exactly what Health Canada is, which is why I take anything they say about things like second hand smoke with a grain of salt. While I would hope our government wouldn't outright lie to us, I have no faith that their use of statistics is any more rigorous than yours.

Posted by: Joe Schmoe on May 9, 2003 3:30 PM

Call me intemperate, but I see this as a purely moral issue. Cigarette companies are evil and must be destroyed. If the states use litigation to destroy them, that's fine.

My basic problem with the cigarette companies is that they prey on the weak. They enable self-destructive behavior. They did not create this weakness or self-destructiveness -- I have always felt that the power of advertising is exxagerated, so I don't blame Joe Camel or the Marlboro man for causing young children to smoke. And it is also true that anyone who wishes to stop smoking can do so. It simply takes self-discipline.

The problem is that some people are weak. The cigarette companies take advantage of this weakness and profit from it. This is wrong, and they should be stopped.

I personally don't care if someone decides to smoke -- it's stupid, but hey, it's their life. But I am revolted by people who sell cigarettes. They prey on human weakness, and for this reason, I want to see them destroyed.

Posted by: Black Swan on May 13, 2003 3:49 PM

Joe, destroying the cigarette companies will put cigarettes into the same category as crack: smugglers and dealers will supply it, people will still buy it, but it will be totally unregulated and gangs will fight turf wars for distribution rights. Not, I think, a good idea on balance.

Posted by: Black Swan on May 13, 2003 3:52 PM

Joe, destroying the cigarette companies will put cigarettes into the same category as crack: smugglers and dealers will supply it, people will still buy it, but it will be totally unregulated and gangs will fight turf wars for distribution rights. Not, I think, a good idea on balance.

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