Abridged version published in The Financial Post, March 19, 2001, p. C-12
“What has always made the state a hell on earth,” wrote German poet Friedrich Hoëlderlin, “has been precisely that man has tried to make it his heaven.” With David Kessler’s new book, A Question of Intent: A Great American Battle with a Deadly Industry (New York: Public Affairs, 2001), all heaven is breaking loose.
In the last two pages of his book, the former head of the U.S. Food and Drug Administration and framer of Clinton’s antismoking policy proposes the dismantling of the private, for-profit, tobacco industry, and its replacement with a sort of public utility that would sell cigarettes in plain wrappers at cost. The other 391 pages chronicle the battle of the good, statist bureaucrat protecting his beloved people against bad, self-interested capitalists.
Which one is David, and which one is Goliath? The largest American cigarette producer, Philip Morris, which holds a 50% market share in that country, shows annual profits of about 8 billion USD on revenues of 80 billion USD, most of which is spent on manufacturing and distributing a product that consumers want. The U.S. federal health budget (excluding Medicare, Medicaid and other mandatory outlays) reaches 39 billion USD per year, a large part of which is devoted to controlling the lives of Americans and telling people all over the world how they should live.
Kessler – the sympathetic hero of his own book – reports that he received hate mail likening him to Hitler. There is, of course, no comparison. Although Hitler implemented the mother of all antismoking policies, he had a much larger discretionary budget than Kessler. He was nasty, and all hell broke loose. From what we learn in Kessler’s book, the author certainly loves his wife and children much more than the Führer did. (As a matter of fact, Hitler did not have children. Moreover, he wore a moustache.)
Let’s come back to the two last pages of the book. “It was not my goal to dismantle the industry when the FDA first undertook its investigation,” he writes, “but it has become apparent that nothing else will work.” This being said, Kessler emphatically denies that he wants tobacco prohibition. The writing is on the wall, though, and there are other signs that the prohibitionists are coming out of the closet.
We should not underestimate the power of an ideology, however mistaken, which has been growing at an accelerated pace for many decades, is supported by massive tax-financed and law-enforced propaganda, constitutes a PC requirement for membership in the intelligentsia, and has found the favour of a large proportion of the population. Add to this the fact that smokers are a small, guilty minority, with lower incomes and less education than the general population, and you have the ingredients for outright prohibition or, at least, for prohibition by regulation.
It would not be the first time that an apparently unrealistic idea suddenly balloons and metamorphoses into a coercive law. Charles Hanson Towne, an author who lived through alcohol prohibition, wrote that it “came upon us like a phantom, swiftly; like a thief in the night, taking us by surprise. Yet the Prohibitionists will tell you that no one should have been amazed, since for years – for almost a century – quiet forces have been at work to bring about this very thing” (quoted in Mark Thorton, The Economics of Prohibition, University of Utah Press, 1991). When, in January 1971, U.S. Surgeon General Jesse L. Steinfield argued that smoking should be banned in restaurants, theatres, airplanes, buses, and trains, many would have considered the idea completely unrealistic.
In the United States, tobacco prohibition has historical roots going back to the colonies. In Democracy in America (1835), Alexis de Tocqueville wrote, about the Connecticut Code of 1650: “Sometimes indeed the zeal of [the legislator’s] enactments induces him to descend to the most frivolous particulars: thus a law is to be found in the same Code which prohibits the use of tobacco.” Antismoking activism came back with the 19th-century temperance movement. During the 1920s, when alcohol prohibition was in force, many States enacted tobacco prohibitions.
Yet, it would be a mistake to envision a new tobacco prohibition as a purely American threat, given the rate at which the worst fashions from this country spill over in the world. In all Western countries, there now exist powerful, tax-financed, well-entrenched, public-health bureaucracies. Besides any honest – albeit misconceived – concern they may entertain for public welfare, public health bureaucrats or quasi-bureaucrats have personal, career interests in regulating and eventually prohibiting tobacco.
Economics 101 teaches that tobacco prohibition, or near-prohibition, would have adverse, and often unintended, consequences. Unsatisfied consumers’ demand would bring new suppliers to the market. Commercial production would move to more hospitable countries, perhaps in the developing world, and large scale smuggling would appear. Thriving, and violent, black markets would develop, just as they now do in illegal drugs. More potent cigarettes would flow in the market. Some customers would substitute dangerous drugs to tobacco. Calls for limitations of individual rights to combat tobacco-trafficking gangs would be heard, and heeded by desperate politicians.
Since the beginning of last year, the market has been quite bullish on tobacco. Yet, the tobacco industry’s price/earnings ratio (around 12) remains among the lowest of all industrial sectors, and about 60% less than p/e ratios of consumer non-cyclical goods or the S&P 500s. These data are not inconsistent with the market discounting the future of the tobacco industry.
Or course, there is no ineluctable historical law stating that the prohibitionists will win. Reason and the spirit of liberty are on the side of free choice. And Canadians should refuse to be drafted in the “Great American Battle.”
Buy Smoking and Liberty by Pierre Lemieux at Amazon.com. Original French version also available.