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Tobacco Deal: Legal Mugging by Government

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Richard B. McKenzie, a professor in the Graduate School of Management at UC Irvine, is the author of "The Paradox of Progress" (Oxford, 1997). E-mail: mckenzie@uci.edu

The tobacco companies now will pay dearly for their past economic sins. The claim of the state attorneys general and plaintiffs’ lawyers who brought suits is straightforward: The tobacco industry caused hundreds of billions of dollars in health care expenditures. It should be held responsible for the financial drain that smoking has caused. Smokers are unwitting “victims” of tobacco company exploits.

Few seem willing to question the rhetorical foundation of the suits and claims, which seems to be no more sophisticated than, “The devil (meaning tobacco companies) made me do it.”

I do not smoke and never have, and I have no tie to the tobacco industry. I have no problem with the charge that smoking impairs health. But that doesn’t mean that I and other reasonable Americans must drop our policy scruples and blindly accept the plaintiffs’ claims. Clearly, the tobacco companies have contributed to the poor health of smokers. The companies made the “weeds” and encouraged people to smoke. People, however, had to buy them, so surely the smokers are at least partially--if not mostly--responsible for the puffs they have taken.

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Granted, smoking is addictive to some degree, but that doesn’t mean that individuals can shift all responsibility for their health problems to the tobacco companies. The fact that millions of people have kicked the habit indicates that a degree of choice plays a role in people’s decisions to smoke. Moreover, addicted smokers were not always so: At some point, they had a choice about whether to go down the addictive path of smoking.

True, many people start smoking when they are teenagers, when, perhaps, their judgment may be impaired. But that doesn’t mean that teenagers should not share responsibility for the damage they do to themselves. We hold teenagers responsible for their reckless driving for a simple reason: Absolving them of responsibility can increase their reckless driving. Similarly, pretending that the tobacco companies are totally responsible for teenage smoking can increase teenage smoking.

Without the admission of some choice in the matter, anti-smoking campaigns are a complete waste of time and money. Moreover, any complete denial of consumer choice may, inadvertently, cause fewer people to endure the stress of trying to quit smoking. They could reason, “Because my efforts will be in vain, there is no reason to even try.” Anti-smoking campaigns, then, suggest that liability for smoking choices must be shared by consumers.

By allowing “society” to pick up part or all of the health care costs of smoking, the federal and state governments have lowered the cost of smoking and have encouraged smoking. States have, in effect, been in cahoots with tobacco firms to increase smoking and attendant state-subsidized health care costs.

The attorneys general obviously are pleased that they will make those who have gained from cigarette sales pay for the past health care expenditures. However, the payments ultimately will be claimed not from “companies,” but from their current stockholders, many of whom bought their shares at prices inflated by the fact that they did not anticipate the health care claims. Many of the stockholders who gained from smoking long ago sold their stock for a profit. Similarly, current smokers will be forced to pay through higher prices for the health care costs of past smokers. Does that sound like ad hoc justice or what?

The attorneys general are attacking the tobacco companies for a simple reason: They are an easy target. The attorneys don’t have the political guts to go after the smokers with equal ferocity. But principle requires that we not single out groups for the imposition of health care damages just because they happen to be, for now, from the wrong side of the political tracks. Chocolate and potato chip companies sell products that may be as addictive to some consumers as tobacco is for others, and chocolate and chips very likely have hastened the deaths of tens of thousands of Americans. So should Hershey and Frito-Lay be subjected to suits for the considerable health care damage they (and their customers) have inflicted on the country because of the excess weight people carry?

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Critics may say, “But tobacco is more harmful than chocolate and chips.” Maybe so. But in trying to retain the resemblance of a free society, should we not seek to lean over backward and then some in allowing firms and consumers to do what they please, for good and bad reasons? If we don’t, does not the tobacco deal look suspiciously like a legal mugging?

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