Enforcing laws against interstate tobacco smuggling

Cigarette taxes protect health by reducing smoking.

But tax disparities across states create a multi-billion-dollar annual market in smuggled tobacco products. Current enforcement efforts are inadequate and ill-organized.

As a result, the illicit trade in tobacco products (ITTP) is growing, and the larger the market grows, the harder the problem of controlling it. (That’s the usual positive feedback problem in violation rates due to enforcement swamping.) So inaction now has long-lasting costs.

Tax equalization would solve the problem, but isn’t likely to happen. Feasible changes in enforcement strategy could protect health and revenue while reducing crime.

Further thoughts on this from Mike DeFeo and me now up on SSRN.

Understanding a Global Illicit Drug Market

Iraq tobacco
In the souq of a small Iraqi town, I saw bags of tobacco leaf for sale. But the real attraction for customers was a booth stocked with well-known Western brands, of which I snapped this photo.

How did all these branded cigarettes make their way from the West to Iraq? They didn’t. They are among the more than one hundred billion fake Western brand cigarettes produced each year for the black market. What are the dynamics of the global tobacco black market, and what are its implications for public health, crime and taxation collection?

I answer these questions in my latest piece at Washington Post’s Wonkblog.

E-cigarettes and junk science

Clive Bates skewers a paper by a pair of UCSF researchers purporting to show that e-cigarettes lead to cigarette smoking, using purely correlational data. Making the inference from “People who have used e-cigarettes are more likely to have used tobacco cigarettes than people who haven’t” to “E-cigarette use is a gateway to smoking” is not done in polite company. The editors of JAMA Pediatrics should be embarrassed by this; the methods in the piece don’t pass the giggle test.

The good news is that the tobacco control research and policy community is not united on this issue, with plently of dissent from the anti-e-cig party line. The bad news is that politicians in places such as Los Angeles have allowed themselves to be buffaloed by junk science into making junk policy.

Banning e-cigs

Why not encourage them, as a harm-reducing alternative to conventional smoking?

The Los Angeles City Council just voted for a complete ban on e-cigarettes wherever real cigarettes are banned, including parks, beaches, and bars. (UCLA adopted a similar policy campus-wide a few months ago.) Seems to me like a bizarre choice, and likely to retard the movement from cancer sticks to e-cigs that, if not interrupted, might save hundreds of thousands of lives per year. This morning on KPCC I debated the issue with a member of the city council majority.

What are people inhaling when they advocate policies not to hire smokers?

I’m just dumbfounded that distinguished medical professionals would support such a policy.

I am an emphatic tobacco control advocate. My mother-in-law and my father-in-law both died horribly and young of lung cancer. I yield to no one in my desire to tax the hell out of cigarettes, require aggressive warning labels, the full list. I despise the tobacco industry, and would stop just-short of TP’ing Altria’s corporate headquarters.

I remain dumbfounded that distinguished medical professionals would countenance a policy of refusing to hire smokers. Of course, people shouldn’t smoke. I have no problem with any number of workplace smoking restrictions, particularly in medical settings.

Yet the proper goal of tobacco policy is embrace and help smokers, not to bully them or discriminate against them. Such employment policies are appallingly unfair and discriminatory. I also believe such policies are unethical, particularly when one considers the reality that tobacco use is increasingly concentrated among low-income and less-educated Americans whose economic and political influence is nowhere near what it used to be.

Mayor Bloomberg seems to have overstepped public opinion with his efforts to limit large serving-sizes of sugary drinks. Maybe so, but attacking the Big Gulps seems a much-less disturbing intrusion of the nanny state than a policy which would deny employment to otherwise-qualified smokers.

I’m not sure what people are smoking who advocate such discriminatory policies. They should smoke something else.

The first story about Mitt Romney’s Bain years that genuinely angers me

Because I’m so angry at Romney for policy reasons, and because I don’t know enough about the granular details of what Bain actually did, I’ve avoided prognostication about Romney’s character as a businessman beyond that. I’ll make an exceptio for this story of Bain’s role helping companies sell cigarettes in the United States and post-Soviet Russia.

I haven’t paid much attention to the debates over Romney’s Bain years. His behavior struck me as par for the course in that unsentimental neighborhood of American financial entrepreneurship that Bain called home.

My own beef concerns the immense psychological distance between Romney’s plutocratic policy positions and the creative destruction he has witnessed or unleashed over his business career. How could someone who witnessed the human consequences of plant closings and layoffs speak so disdainfully of 47 percent of Americans who are epically less fortunate than himself? How could he so obviously lack a sense of urgency regarding those left without health coverage—not to mention the elderly, low-income, and disabled Americans who rely on programs such as Medicaid his budget would deeply cut?

Because I’m so angry at Romney for policy reasons, and because I don’t know enough about the granular details of what Bain actually did, I’ve avoided prognostication about Romney’s character as a businessman beyond that.

I make an exception for this story. The story comes from the Crooks and Liars website citing a story by Jason Cherkis and Zach Carter at Huffingtonpost, via UCSF’s essential library of Legacy Tobacco Documents. The story concerns Bain’s role helping Philip Morris in the U.S., and helping British American Tobacco hawk cigarettes in post-Soviet Russia.  Mitt Romney was the CEO who oversaw this business.

Samefacts readers know my strong views regarding cigarettes, and the obscenity of people profiting from a product that kills 400,000 Americans and millions of people around the world. My wife and I watched her parents suffer from lung cancer. Both died, way too young, from this disease.

Bain provided a variety of strategic services and advice for Philip Morris, including this nugget from Huffingtonpost:

In one document labeled “Corporate Affairs,” Bain argues that the cigarette maker needs a “coordinated, long-term approach to legal/regulatory/public opinion opportunities and challenges to maximize shareholder wealth.”

Bain’s advocacy amounted to an early example of corporate “astroturf” tactics that are now commonplace….  In the same “Corporate Affairs” document, under “mobilizations,” Bain consultants encourage the company “to conduct federal and local grassroots programs in support of the company’s legislative and regulatory efforts.”

For one such mission, Bain called on the company “to initiate and execute programs to support smokers’ rights, combat regulatory moves and improve corporate image.” Specifically, Bain felt Philip Morris could build support within the hospitality industry and by openly seeking to curtail access to cigarettes for young people.

In another 1995 document, Bain suggested that the company produce smokers’ rights newsletters and jumpstart “state-level” lobbying work that involved phone campaigns. Consultants suggested augmenting their “phone scripts” to include the specter of job losses due to cigarette tax increases, and bringing up their own “medical, science related issues.” that could “combat regulatory pressure.”

Huffpo also links to documents in which Bain advises BAT to pursue activities which “support consumers’ freedom of choice to smoke.”

Post-Soviet Russia has experienced public health catastrophe. Tobacco and alcohol misuse are central elements of the problem. When I visited Saint Petersburg doing HIV prevention work, I met many public health workers who lit up to lighten the tension of their difficult work. I imagine quite a few smoked Marlboro’s, Benson and Hedge’s and other western brands–whose all-too- effective marketing sways many people who might otherwise have quit.

Bain is hardly the only firm to court tobacco money. It still deserves scorn for being an enthusiastic partner in the sale of addictive products that damage and shorten millions of lives. To my mind, helping tobacco companies sell cigarettes and evade regulatory constraints is no better than orchestrating a plant closing, breaking implicit contracts with employees, and the other catalog of questionable activities Bain is accused of having done.

This story is important for its own sake. Tobacco also reveals the amorality with which too many entrepreneurs and firms approach the business enterprise.