Posts tagged ‘tobacco’

But its for the Kids

What is adult prohibition of marijuana achieving, if teenage use rates of marijuana are nearly as high as those for cigarettes, where we don't have adult prohibition.  Prohibitionists argue that adult marijuana must be banned because its legal availability to adults would make it easier for teens to obtain, but a direct comparison of marijuana and tobacco smoking demonstrates little utility from this approach:

The cigarette use figure represents a sharp drop from
the 2005 survey, when it was 23 percent. Marijuana use, at 20.2 percent
in 2005, showed a much smaller decline....

Another report
released this week, the Fiscal Year 2007 Annual Synar Report on tobacco
sales to youth, showed the 10th straight annual decline in the rate of
illegal tobacco sales to minors. In 1997, 40.1 percent of retailers
violated laws against tobacco sales to minors. In 2007 the rate had
dropped to just 10.5 percent, the lowest ever.

"Efforts to curb
cigarette sales to teens have been wildly successful, and it's past
time we applied those lessons to marijuana," said Aaron Houston,
director of government relations for the Marijuana Policy Project in
Washington, D.C. "Tobacco retailers can be fined or put out of business
if they sell to kids, but prohibition guarantees that we have zero
control over marijuana dealers. Foolish policies have guaranteed that
the marijuana industry is completely unregulated."

Jacob Sullum provides additional analysis in the rest of the post.

Drug Prohibition Doing Nothing To Affect Teen Use

One of the arguments for banning adult legal access to drugs like marijuana (and even allergy medications) is that it helps to prevent abuse of these drugs by underage kids.  This would be nice to test in a true control group setting, but we really don't have the opportunity under current laws to do so.  But we can work by proxy.  We can compare drugs that are illicit for everyone, like marijuana, to drugs that are legal for adults but not for minors, like tobacco. 

If drug warriors are correct, teenage tobacco use should be much higher than use of other illicit drugs.  This is particularly true because the proxy is an imperfect one, since the tobacco is a far less intimidating drug to try than, say, heroin.  However, it turns out not to be the case.  The new figures our out from our friendly US Government drug warriors, and it turns out that tobacco use is barely higher among teens than illicit drug use.

For example, the study shows that past month tobacco use among kids 12-17 was 12.9% in 2006, while past month illicit drug use in the same group was 9.8% (tables G.16 and G.7).  That's lower, but certainly not decisively so.  Both of these use numbers have fallen since 2002 at about the same rate.

Even more interesting are the figures for the number of kids 12-17 who had initiated use of certain substances in the past year (table G.26).  In that year, 2.45 million had initiated cigarette use, but 2.79 million had initiated illicit drug use.  Further, when asked if certain substances carried "great risk" in trying to purchase them, 68.7% of underage cigarette smokers said yes (table G.25).   This response was 10 or more points higher than that of teenage occasional users marijuana, cocaine, or even heroin.  In short, teenagers are saying it is more difficult and/or riskier to support cigarette use than it is to support a weekly marijuana, cocaine, or heroin habit -- exactly the opposite of the drug warriors' argument for prohibition  (but consistent with the libertarian argument that bringing these drug sales above ground will make underage purchase more visible and easier to combat).

HT: Hit and Run for the link

The Next State AG Boondoggle

Chris Horner reports that the next mass-state-AG-tort, modeled after their fairly succesful efforts against tobacco companies, will be against oil companies over global warming:

A little birdie recently chirped about some
usual-suspect state attorneys general preparing a litigation strategy
document for/with environmental pressure groups, providing a roadmap
for cooperatively replicating the tobacco litigation of a decade ago in
the "global warming" context, substituting that projected catastrophe
for cancer and "big energy" for tobacco companies.

The point of
such exercise would not be to litigate the matter to conclusion "” ever
more challenging what with forced corrections of the temperature
record, recent exposure of the woeful reliability of our own world's
most reliable surface measuring network, and of course no global
warming in a decade (or, we now know, since 1900 for that matter) "” but
to extract massive settlements from the energy industry to further fund
the trial lawyers, greens and the greens' pet projects. Just imagine
the anti-energy campaign that this model would yield! And at no cost,
really, except to anyone who uses energy and/or invests in these sleepy
"granny stocks". Oh, and the economy.

He goes on to include a copy of the memo making the rounds of the AG offices.   This will certainly be a circus, and generally an expensive time-waster that will just serve to line the pockets of tort lawyers and the politically connected.  If things turn out like the tobacco settlement, the oil companies may jump on board early, since the tobacco settlement has turned into a state-enforced oligopoly for the major tobacco companies.  On the bright side, this might be an opportunity to subpoena the details of a bunch of climate work that is currently kept secret.

The Pepsi Challenge

Many of us remember the old Pepsi challenge commercials, where blind taste tests vs. Coke showed people preferring Pepsi.  One of the interesting results of these commercials was that Pepsi gained market share, but Coke did not lose it -- much of the Pepsi market share gain came from other brands.  In essence, the commercials established in consumer's minds that the cola choice was Coke or Pepsi, and so it did as much for Coke as it did Pepsi.

So now take this experience to anti-smoking commercials.  It turns out that they may backfire:

The more anti-smoking ads middle schoolers see, the more likely they are to smoke, according to a study in the August issue of Communication Research.
Hye-Jin Paek, an assistant professor at the University of Georgia's
College of Journalism and Mass Communication, and Albert Gunther, a
professor of life sciences communication at the University of
Wisconsin at Madison, analyzed data from surveys that asked middle
school students about their exposure to anti-smoking messages and their
intention to smoke:

They found that, overall, the
more the students were exposed to anti-smoking messages, the more
inclined they were to smoke. The exception"”where exposure to
anti-smoking ads correlated with a reduced intention to smoke"”occurred
among students who said their friends were influenced by anti-smoking

In the context of other advertising research, such as the old Coke/Pepsi campaign, this is not surprising.  It is even less surprising for this type of ad, where a certain amount of anti-authoritarian response can be expected.  In fact, I have seen a number of ads that use this anti-authoritarian streak and distrust of the government as a feature.  Ads that say "The government doesn't want you to know about X" or "What the oil companies don't want you to know."

I wonder when the first member of the plaintiff's bar will initiate a lawsuit against the tobacco companies for promoting teenage smoking by running... anti-smoking ads.

The Drug War -- It's for the Children?

I have written a number of times about the high cost of the war on drugs, and the craziness of locking up drug users for years in prison "for their own good." 

Usually, the argument for the drug war devolves to "its for the children."  The argument is that by keeping various narcotics and other drugs illegal to all, children, who by definition can't make adult decisions well, will find it harder to obtain and use these drugs.  Also, drug warriors argue that full prohibition prevents kids getting the message that drug use is OK, presumably because they might interpret "legality" as "approved for use."

We could prove or disprove this hypothesis that full drug prohibition reduces that drug's use among kids with a simple experiment:  Make some drugs legal for adults, but illegal for children, and make other drugs illegal for everyone, and see what happens. 

But wait!  We already have such an experiment in place.  Drugs like cocaine and marijuana are illegal for everyone, and a drug like tobacco cigarettes are legal for adults but illegal for kids.  If the drug warrior's hypothesis is correct that total bans on drugs reduce childhood use, then we should see tobacco use among children much higher than use by those same kids of drugs that are illegal for all.  Well, here are the stats, from Monitoring the Future (hat tip: Hit and Run), whose funding comes from the war-on-drugs folks.  I will use the 2006 data on drug use in the last 30-days, but any of the table shows the same basic results:

% Using Illegal

% Using Tobacco

8th grade



10th grade



12th grade



Can you see the point?  Tobacco use is the same or even lower than the use of illegal drugs in this survey.  Legalizing a habit-forming drug for adults does not seem to increase use of that drug among kids vs. full prohibition.  So what is the war on drugs buying us, anyway?

Squashing Dissent

The word "censorship" is used all-too-often in this country.  I take a much more narrow definition of censorship.  In my mind, only the government can be guilty of true censorship, which I define as using the coercive power of government to prevent certain forms of speech.  By even this narrow definition, the recent threats against Exxon by Senators Jay Rockefeller and Olympia Snowe come awfully close to censorship:

We reprint the full text of the letter here,
so readers can see for themselves. But its essential point is that the
two Senators believe global warming is a fact, and therefore all debate
about the issue must stop and ExxonMobil should "end its dangerous
support of the [global warming] 'deniers.' " Not only that, the company
"should repudiate its climate change denial campaign and make public
its funding history." And in extra penance for being "one of the
world's largest carbon emitters," Exxon should spend that money on
"global remediation efforts."

Senators aren't dumb enough to risk an ethics inquiry by threatening
specific consequences if Mr. Tillerson declines this offer he can't
refuse. But in case the CEO doesn't understand his company's jeopardy,
they add that "ExxonMobil and its partners in denial have manufactured
controversy, sown doubt, and impeded progress with strategies all-too
reminiscent of those used by the tobacco industry for so many years." (Our emphasis.) The Senators also graciously copied the Exxon board on their missive.

is amazing stuff. On the one hand, the Senators say that everyone
agrees on the facts and consequences of climate change. But at the same
time they are so afraid of debate that they want Exxon to stop
financing a doughty band of dissenters who can barely get their name in
the paper. We respect the folks at the Competitive Enterprise
Institute, but we didn't know until reading the Rockefeller-Snowe
letter that they ran U.S. climate policy and led the mainstream media
around by the nose, too.

While I tend to believe that the warming camp is correct that manmade CO2 is creating or will create some global warming, there are a lot of very very good reasons to be skeptical of the magnitude of their warming estimates and their hysterical calls for massive government intervention in the world economy.  I call this the skeptical middle ground on climate.  (Update: more reasons to be skeptical of current "consensus" models here).  A skeptics guide to An Inconvenient Truth is here.

The "Nature" of Modern Scientific Consensus

I am often told, in emails that vary from friendly to downright threatening, that global warming science is not scientific consensus and my skepticism puts me on par with tobacco company lobbyists.  An upcoming paper in Theoretical and Applied Climatology looks back at a recent peer-reviewed Nature article that purported to provide more evidence for man-made global warming and found the much quoted article by Isabel Chiune in Nature to be complete crap:

What is important here is not the truth or falsity of
the assertion of Chuine et al. about Burgundy temperatures. Rather,
what is important is that a paper on what is arguably the world's most
important scientific topic (global warming) was published in the
world's most prestigious scientific journal with essentially no
checking of the work prior to publication.

Moreover "” and crucially "” this lack of checking is not the result
of some fluke failures in the publication process. Rather, it is common
for researchers to submit papers without supporting data, and it is
frequent that peer reviewers do not have the requisite mathematical or
statistical skills needed to check the work (medical sciences
excepted). In other words, the publication of the work of Chuine et al.
was due to systemic problems in the scientific publication process.

The systemic nature of the problems indicates that there might be
many other scientific papers that, like the paper of Chuine et al.,
were inappropriately published. Indeed, that is true and I could list
numerous examples. The only thing really unusual about the paper of
Chuine et al. is that the main problem with it is understandable for
people without specialist scientific training. Actually, that is why I
decided to publish about it. In many cases of incorrect research the
authors will try to hide behind an obfuscating smokescreen of
complexity and sophistry. That is not very feasible for Chuine et al.
(though the authors did try).

Finally, it is worth noting that Chuine et al. had the data; so they
must have known that their conclusions were unfounded. In other words,
there is prima facie evidence of scientific fraud. What will happen to
the researchers as a result of this? Probably nothing. That is another
systemic problem with the scientific publication process.

Oops.  By the way, accepting the hypothesis that man made CO2 is causing some warming does not require that one also accept Al-Gore-type estimates of catastrophic 6-8 degrees C warming or more in the next 50 years.  In fact, the evidence still is that man-made warming effects will be small, and predictions of massive warming are way out on a scientific limb with little proof.  I discuss these issues in my article on the skeptical middle ground on climate, as well as my earlier primer on an Inconvenient Truth.

Failure of the War on Drugs

Frequent readers of this site will know that I support the legalization of most illegal narcotics for adult use, not because I am a secret user who wants to come out of the closet, but because prohibition and efforts to save people from themselves always result in failure.  In particular I remember the old joke that communicates so well the inherent contradictions embodied in the drug war.  It goes: "What is the worst thing that can happen to a teen who smokes marijuana?  Answer: He can get thrown in jail."

Whenever I make the argument for drug legalization, 100 out of 100 times the first response is "what kind of message does that send to kids."  They argue that even if kids under 18 are not allowed access to drugs, legalization for adults will send the message to kids that drug use is more acceptable, and their use of drugs will increase.

What is most surprising about this statement is how easy it is to test.  The approach was suggested to me by something I read in Reason the other day.

Check out this press release from the Department of Health and Human Services on youth drug use:

The Substance Abuse and Mental Health Services Administration today
announced that current illicit drug use among youth ages 12-17
continues to decline.   The rate has been moving downward from 11.6
percent using drugs in the past month in 2002 to 11.2 percent in 2003,
10.6 percent in 2004 and 9.9 percent in 2005....

The  rate of past month cigarette use among youth ages 12-17 declined from 13.0  percent in 2002 to 10.8 percent in 2005.

The counter proof to the "what about the kids" argument is right here in these two paragraphs.  Tobacco today, which is illegal for teens while legal (but frowned upon) for adults, is a good proxy for post-legalization narcotics.  Note therefore that illicit drug use among teens is 9.9 percent, while tobacco use is 10.8 percent.  There is virtually no difference!  The legal-for-adults substance is used by teens at only slightly higher a rate than illicit drugs, and this from the drug warriors' own figures.  At most, the"message" sent by legalizing tobacco seems to be no different than the "message" sent by making narcotics illegal. Tobacco is legal for adults, does not carry nearly the same stigma as illegal drugs, is far easier for a teen to obtain, and carries much lower penalties for its use, and still it is used by teens at about the same rate as illegal drugs.  In fact, in the figures you can see the legal tobacco use falling faster than illegal drug use.

So what has prohibition, prohibition-related drug violence, and hundreds of thousands of people in jail for drug use achieved?

Does the Left Really Believe this?

When I see statements like this, I am left to wonder whether folks on the left really believe this, or if it is just throwaway political rhetoric which no one really expects intelligent people to believe (key passage in bold):

But how are people dealing with these drops on their own today?
Mostly by going into debt. As I show in my book, median household debt
as a share of income for married parents was more than 125 percent of
income in 2004. The economist Herb Stein once said, "If something can't
go on, it won't." And the debt hemorrhage of the American family simply
can't go on.

If the returns of rising risk add up to the ability to borrow more
to dig oneself out of short-term holes (thus digging a deeper long-term
hole), then I think we can safely say that most Americans would be
happy to give up the returns to obtain greater security.

But here's the kicker: We can provide security and help our
economy. Just as businessmen and entrepreneurs are protected against
the most severe economic risks they face to encourage economic
investment and growth,
we are most capable of fully participating in
our economy, most capable of taking risks and looking toward our
future, when we have a basic foundation of financial security.

How are businessmen and entrepeneurs protected?  By who?  I own and run my own small business, and I have yet to encounter
anyone who has given me any help or succor in our bad years. Or good
years. I don't even get covered by the minimum safety net type stuff my
employees have (workers comp, unemployment) without paying extra out of
my own pocket, which they don't have to do.

This is exactly the kind of throwaway absurdly false statement that
makes it impossible for me as a small business owner to take anyone on
the left seriously
, however much I am attracted to them for their
position on a variety of social and war issues. I am sure that this is
the type of statement that most of his readers on the left nod their
heads to, sure that all of us business owners are all dialed into the
fat life somehow via the government, when in fact I spend most of my
life dealing with the myriad of government-required wastepaper that
makes it nearly impossible to run a business at all.

  I am certainly willing to believe that there are certain Fortune
100 companies that recieve all sorts of government rents -- Steel
companies, in the form of protectionism; Wal-mart, in tax abatements
and eminent domain handouts; ADM, in the form of ethanol subsidies;
tobacco companies, in the form of government roadblocks to new

However, these type of large politically connected corporations make
up about .001% of the total mass of corporations. And, entrepeneurs,
unless they are already rich and powerful from a previous business,
never get any breaks and in fact often face government roadblocks set
in place by powerful incumbents with political pull. I am all for
eliminating these coporate welfare handouts and incumbent protection
schemes. Before you scream aha! remember that 3 of the 4 government
rent recipients I listed as examples are beneficiaries of programs from
the left side of the aisle.

I discussed this risk-shift concept in more depth here.  One thing I didn't mention in the previous article was the author's attempt to tie household debt to income risk.  I skimmed the book and didn't see any
empirical linkage between rising income uncertainty and household debt.
I am willing to believe they both went up at the same time, but
correlation is not equal to causation. Ten years ago, when folks
lamented rising household debt, it was an issue of personal
responsibility and having the discipline to live within one's means.
Are we past that now? Is debt really going to be added to the list of
things nowadays that are-not-my-fault?

Update:  If he is referring to stuff like this, I share his outrage.  But it doesn't justify his general statement.

The Skeptical Middle Ground on Warming

I did not see the ABC special the other night on climate, but I am told that as a skeptic of the extreme global warming scenarios, I was compared to both a holocaust denier and a tobacco executiveBoy, you gotta love free scientific inquiry!

One of the tricks of all debaters, not just climate folks, is to create a straw man opponent who is easy to knock down.  Now apparently this show did not even bother to interview a skeptic at all, but they chose as their straw man "people paid off by the oil companies who believe man has no effect on climate."

Well, gee, I certainly can see how with current state of knowledge it is getting tougher to credibly sell the "no impact at all" argument, but I would say that with climate and all its vagaries its still a position that a person can stake out and not be a wacko

There is, though, a middle ground of skepticism that falls somewhere between "man has no effect" and "temperatures will rise ten degrees and the world will end unless we make Al Gore our economic dictator."

One of the things they never explain on shows like ABC's is that most
climate scientists agree that when other variables are held constant
(more in a minute), increases in CO2 will only increase global
temperatures by 1-2 degrees, some of which we have already seen.  It is
seldom mentioned in the press that there is a strong diminishing return
relationship between CO2 levels in the atmosphere and warming (leaving
everything else equal for a moment).  So, the next doubling in CO2
concentrations will have substantially less impact on global
temperatures than the last doubling.  This is something that most
reputable climate scientists will agree with.

So, how do climate researchers get 6-8 degress of additional warming or
more in their models?  They get it from positive feedbacks.  Most of
Nature's processes are negative feedbacks -- push a pendulum one way,
nature tries to bring it back to the center.  Positive feedback is like
a rock balanced on the top of a mountain -- one little push and it
starts rolling faster and faster.

Climate scientists posit (but as yet have not observed and can't prove)
a number of feedback processes that might tend to amplify or dampen the
effect of increase atmospheric CO2 on global temperatures.  The easiest
to understand is the effect of water.  As temperatures rise due to CO2
concentrations, one might expect clear air humidity to go up worldwide
(as higher temperatures vaporize more water) and you might expect cloud
cover to increase (for the same reason).  If water vapor goes mostly to
humidity, then global warming is accelerated as water vapor in clear
air is a strong greenhouse gas.  One to Two degrees of warming from
increased CO2 might then become four or six or eight.  If instead vaporized water mostly
goes to cloudcover, the effect of CO2 is instead dampened since more
clouds will reflect more sunlight back into space.

Generally, one can make two observations about how most of the climate models
that make the news treat these positive and negative feedback loops:

  • Climate scientists tend to include a lot of positive feedback
    loops and downplay the negative feedback loops in their models.  Some
    skeptics argue that the funding process for climate studies tends to
    reward researchers who are most agressive in including these
    acclerating effects.
  • The science of these accelerating and decelerating effects is
    still equivocal, and their is not much good evidence either way between
    positive and negative feedback.  We do know that current models with
    heavy positive feedback loops grossly overestimate historic warming.
    In other words, when applied to the past, these positive-feedback-heavy
    models say we should be hotter today than we actually are.

My much longer article on the same topic is here, where I also address other things that may be happening in the climate and reasons why a poorer but colder world may be worse than a warmer and richer world.  I recommend to your attention this article, which is the best statement I can find of the skeptical middle ground. 

More on the Health Care Trojan Horse for Fascism

Frequent readers will now that I have long warned of government-funded health care acting as a Trojan horse for micro-management of our personal lives, the logic being that if our lifestyles or behaviors make us less healthy, then the government that funds medical care may claim an interest in regulating those behaviors.  I often post examples of this phenomena, the most recent of which is here.

This installment comes via Reason, and looks at the NYC Health Commissioner Thomas Friedan's new fascism to prevent diabetes program.  I am not sure I even need to comment on the following for you to get the picture:

New York City is at the forefront of this new public health movement. In
January, city health officials began
that medical testing labs report the results of blood sugar tests for all
the city's diabetics directly to the health department. This is first time
that any government has begun tracking people who have a chronic disease.
The New York City Department of Health will analyze the data to identify
those patients who are not adequately controlling their diabetes. They will
then receive letters or phone calls urging them to be more vigilant about
their medications, have more frequent checkups, or change their diet....

So what could be wrong with merely monitoring and reminding people to take
better care of themselves?  New York City Health Commissioner Thomas Friedan
has made it clear that it won't necessarily end there. If nagging is not
sufficient to reduce the health consequences of the disease, other steps
will be taken. Friedan
that "modifications of the physical environment to promote physical
activity, or of the food environment to address obesity, are essential for
chronic disease prevention and control." Friedan envisions regulations for
chronic disease control including "local requirements on food pricing,
advertising, content, and labeling; regulations to facilitate physical
activity, including point-of-service reminders at elevators and safe,
accessible stairwells; tobacco and alcohol taxation and advertising and
sales restrictions; and regulations to ensure a minimal level of clinical
preventive services."

The NYC health department starred in a previous post for their brave attack on restaurants that give patrons too much for their money.

Horrible Verdict

In what we may look back on as one of the worst and most destructive jury verdicts of the decade, three paint makers were found guilty of selling lead paint back when it was, well, legal:

A Rhode Island jury today found Sherwin-Williams Co. and two other
paintmakers guilty of creating a 'public nuisance' by manufacturing
lead paint after it was found to be dangerous." If upheld, the verdict
will force the companies to contribute millions toward abatement of
existing paint; a judge will also consider demands for punitive
damages. The ruling, the first of its kind, is also expected to
encourage the filing of more suits against the industry

As Walter Olson points out, the suit was dreamed up by veteran law firms from tobacco and asbestos lawsuits, using bits of both litigation models:

The verdict is an unfortunate confirmation that the "tobacco model" of
mass tort litigation remains alive and well. In particular,
contingency-fee private counsel have once again managed to 1) dream up
a novel idea for litigation based on the idea that some category of
public expenditure is really blameable on long-ago sales of a product;
2) sell the idea of suing to public officials who agree to front the
action, and who thus provide (along with advocacy groups) a suitably
public face for the lawsuit; and 3) manage to get liability attributed
retroactively to businesses whose actions decades ago were plainly
lawful under the standards of that time.

The firm Ness Motley who is RI's partner in this, is, surprise surprise, the largest single political donor in the state.

The WSJ($) has more thoughts today about why this verdict is so bad:

There are so many screwy aspects to this case that
it's hard to know where to begin. The jurors heard no evidence about an
injured party, nor were they informed of any specific house or building
that constituted the "nuisance." As for the defendants, Judge Michael
Silverstein instructed the jury that it wasn't necessary to find that
Sherwin-Williams, NL Industries and Millennium Holdings had actually
manufactured the paint present in Rhode Island or that they had even
sold it there.

Oh, and did we mention that at the time the companies
may or may not have sold lead paint in Rhode Island it was an entirely
lawful product? "The fact that the conduct that caused the nuisance is
lawful does not preclude liability," Judge Silverstein said. Lead paint
was banned for residential use in 1978.

So why is this such a big deal?  One only has to look at the situation in asbestos to see the potential ramifications.  The asbestos mess began, sensibly enough I guess, with lawyers suing makers and heavy users of asbestos products into bankruptcy for the benefit of people seriously ill (though one can argue that most of these cases belonged in the workers comp. system, but workers comp. doesn't allow those juicy punitive damage payments that pay the fuel bills for the lawyers' Gulfstream V's).  Eventually, the asbestos mass tort morphed into lawyers suing any company with deep pockets that had even heard of the word asbestos for the benefit of tens of thousands of people who had never been harmed but only claimed to have been present in the same zip code as asbestos. 

Here is the problem with the potential lead paint mass tort:  It has skipped right to the asbestos end-game, bypassing the "helping people who were seriously harmed" stage and jumping right to the settlements for billions without proof of any related injury.  And for all the ubiquity of asbestos, lead paint was even more prevalent in its day.  Will Sears be bankrupted for selling lead paint?  Will auto-makers and homebuilders be bankrupted for using it?   And, separately, will any of the settlement money that flows to states really go to lead paint abatement, or will most go to general revenue, as it did with tobacco?

OK, so its clear why those of use who care about stuff like property rights and individual responsibility might be appalled at this decision, but you progressive public policy types should be appalled as well.  If this thing gets rolling, the country will end up diverting hundreds of billions of dollars to a problem, mainly childhood lead poisoning, that while not solved has really been greatly reduced over the past few years.  Just to get a sense of scale, for example, we are talking about far more money potentially focused on lead paint than the total spent today publicly and privately on AIDS and cancer research combined.  Totally insane.

Oakland Passes Anti-Individual Responsibility Tax

Oakland is fed up with high school kids that litter, throwing the lunch wrappers from their Big Mac on the ground rather than putting them in the trash.  The city is arguing that these folks' inconsiderate littering is making a mess of the town and costing the city a fortune in clean up.  The city wants to send a clear message to its kids that this is not going to be tolerated and they expect people to take responsibility for this, so the City Council has boldly passed a new law to ... tax McDonalds to clean up after the little darlings.

So City Council Member Jane Brunner is proposing to charge major fast
food restaurants a fee of $2,400 to hire crews to pick up garbage
around town. She says a study shows fast food restaurants account for
20-percent of Oakland's litter.

Vince Thomas, Kentucky Fried Chicken franchise owner: "I don't have any control over it once it leaves my lot."...

The Restaurant Association reminded the council it could be getting itself into a discrimination lawsuit.

Johnnise Downs, California Restaurant Association: "Because it singles
out and penalizes one specific group of businesses, and basically
places the entire burden of Oakland's litter problems on those

You know what this reminds me of?  It's as if parents were frustrated that their kid never cleaned up after himself and always left messes around the house, so they choose to deal with it by hiring a maid to clean up after him.  What about actually, you know, enforcing litter laws.

By the way, here's another question.  We all know how little of the tobacco settlement that was ostensibly to fund health care actually went to health care.  I wonder in this case how much will actually go to incremental trash pickup and how much will just be dumped into general revenue.

Big Bone Lick

Kentucky, the state that made me get an egg license, is in the news again because it is complaining that it is not getting its fair share of the tobacco settlement funds, and so needs to increase cigarette taxes even more. 

Don't feel guilty if you can't actually remember what the settlement was about other than just more tax money.  The settlement was the result of a series of lawsuits from state AG's against cigarette companies arguing that use of their product is costing the states money in the form of higher medical costs (the health care as Trojan horse for total government control argument I have discussed before).  The substantially increased taxes on cigarettes was supposed to both deter use and to raise money for state health care.

Well, check out this statement form the Kentucky governor as to why he wants to raise the cigarette taxes, and notice what justifications for the taxes are NOT there:

The additional revenue from the tobacco settlement,
according to [governor] Fletcher, would increase the state's debt capacity and
allow for more spending on more projects, such as an information
technology research center and expanding the Big Bone Lick State Park.
He also says the added revenue would allow the state "to ease the tax
burden on small businesses."

I do have to admit that "Big Bone Lick" state park seems the perfect monument to government taxation.

This is a great example of the perverse incentives "sin" taxes put on government.  First put in place to reduce some behavior, once government officials become addicted to the spending the tax allows, the government tends to shift posture to supporting, rather than reducing, the "sin" since its continued existence is required to maintain tax revenues.  This is happening all over with the tobacco settlement, as government has suddenly become the tobacco companies' partner in maintaining revenues and market share.  And here I wrote about a similar occurrence.

Postscript:  By the way, not accounted for by the governor in his "fair share" of settlement funds are the large subsidies that flow to Kentucky tobacco growers.  In surely one of the best examples of how most government programs are all about rent-seeking rather than whatever their stated purpose is, the US is vigorously taxing tobacco, ostensibly to reduce its use, while at the same time aggressively subsidizing the production of tobacco.

Proved Right at Internet Speed

Here was my prediction, in an article on "community" investment in services like broadband:

Bureaucracies never, ever let themselves die, and there is no way a
municipal broadband business will ever let itself be killed by a
competitor - that competitor will be blocked, even if that likely means
that local broadband consumers have to stick with higher costs and
outdated technologies.

Now there is nothing abnormal about this -- every business tries to protect itself from competitors.  But only the government has the unique and dangerous power to block competition by law, which makes it a particularly dangerous owner of business assets (either on their own or via the dreaded "public-private" partnership).

I must admit, I expected it to take some time to be proven right.  I expected that things would go OK for the local governments in broadband until an (inevitable) technology shift found them defending their outdated infrastructure against new entrants.  However, proof comes much faster, via Reason's Hit and Run:

Boston's Logan International Airport is attempting to pull the plug on
Continental Airlines' free Wi-Fi node, which competes with the airport's
$7.95-a-day pay service.

In an escalating series of threatening letters sent over the last few weeks,
airport officials have pledged to "take all necessary steps to have the (Wi-Fi)
antenna removed" from Continental's frequent flyer lounge....

At stake is a sizable chunk of revenue that Massport receives from its
pay-per-use Wi-Fi service, which is operated by a commercial provider
called Advanced Wireless Group.


Update:  By the way, the mother of all government backed cartels using state regulatory power to squash competition that might reduce government rents is in tobacco.  Good article here at Reason.  They summarize:

In short, a cartel of states has colluded with a cartel of tobacco companies to create a public-private
supercartel: a market-fixing scheme that is locked in by law, yet is accountable to no particular
government authority; that is immensely profitable to the parties at the expense of millions of hapless
consumers; and that is enforced with penalties that clobber any would-be defectors. The deal also creates
what amounts to a new national taxing authority that arises from state collusion and that bypasses Congress.
The companies provided the deep pockets, the states provided the muscle, private law firms provided the
legal talent, and public-interest groups provided legitimacy.

Ad Hominem Science

I thought this quote, via Reason, from anti-smoking advocate Michael Siegel is representative of how many pseudo-scientific advocacy groups work today:

In the 20 years that I was a member of the tobacco control movement,
I was led to believe that there were only two sides to any anti-smoking issue:
our side and the tobacco industry side. Therefore, anyone who disagreed with our
position had to be, in some way, affiliated with the tobacco industry. I was
also taught to respond to their arguments not on any scientific grounds or on
the merit of their arguments, but by simply discrediting the person by attacking
their affiliation with the tobacco companies.

As I have found out over the past two decades, there are a lot of
individuals who disagree with a number of positions that the anti-smoking
movement has taken (interestingly, now I find myself to be one of them). And not
all of these individuals are affiliated with, or working for the tobacco
industry. As individuals who are not part of a tobacco industry campaign, these
people are entitled to express their opinions and their arguments really deserve
to be addressed on their merits. At very least, anti-smoking organizations and
advocates should not attack these individuals. Attacking their arguments is
legitimate, but attacking the individuals, in these cases, is not.

Take this statement, substitute global warming for anti-smoking and oil industry for tobacco industry and the statement still works just as well.

Update:  For another example, see the debate over child seat efficacy at the Freakonomics Blog.  A couple of researchers studied data on injury rates of kids in car seats vs. kids in seat belts, and found little incremental benefits of seat belts.  Note their desire to find the truth under the numbers:

What is more puzzling to me is why my results and Heaton's both suggest very
little injury benefit of car seats, but the medical literature often finds 70%
(!!) reductions of injuries with car seats relative to seat belts. We find
reductions that are an order of magnitude smaller. They use very different
methods -- surveying people in the weeks after crashes for instance -- but still
it is really a puzzle. Which is why, when you read my paper, I am extremely
cautious in interpreting the injury findings.

I hope that the medical researchers, Heaton, and I can all work together to
try to make some sense of the conflicting results being generated by these
different methodologies to resolve this important question.

Seems like a reasonable scientific attitude.  Now (via Marginal Revolution) here is the response of a child seat "activist" to their findings:

Their [Levitt and Dubner] conclusions stand in stark contrast to the existing
body of scientific data that support current child restraint recommendations,
and are, in our opinion, irresponsible and dangerous....We hope that this
misleading article does not cost a child his life.

In other words:  Open scientific debat = killing children.  Levitt and Dubner must work for Haliburton.  Levitt has an update to the whole debate here.

Disaster in Zimbabwe

I am a little late linking this, but the world is in the midst of one of those pure, tightly controlled experiments to demonstrate the true price of socialism.  And, as usual, no one will learn from it.  Via Jane Galt:

It is depressing to look back at history and see how regularly the same
nice-sounding idea--"let's take the land from the rich people who unjustly own
it and give it to those who need it"--turns into tragedy for everyone. It's even
more depressing to realise that despite the seeming predictibility of the
result, lots of people want to do it anyway.

The Atlantic, which she quote in a follow up post, has more detail:

Mugabe decided on what he called "fast-track land reform" only in February of
2000, after he got shocking results in a constitutional referendum: though he
controlled the media, the schools, the police, and the army, voters rejected a
constitution he put forth to increase his power even further. A new movement was
afoot in Zimbabwe: the Movement for Democratic Change"”a coalition of civic
groups, labor unions, constitutional reformers, and heretofore marginal
opposition parties. Mugabe blamed the whites and their farm workers (who,
although they together made up only 15 percent of the electorate, were enough to
tip the scales) for the growth of the MDC"”and for his humiliating rebuff.

So he played the race card and the land card. "If white settlers just took
the land from us without paying for it," the President declared, "we can, in a
similar way, just take it from them without paying for it." In 1896 Africans had
suffered huge casualties in an eighteen-month rebellion against British pioneers
known as the chimurenga, or "liberation war." The war that brought Zimbabwean
blacks self-rule was known as the second chimurenga. In the immediate aftermath
of his referendum defeat Mugabe announced a third chimurenga, invoking a valiant
history to animate a violent, country-wide land grab...

The drop-off in agricultural production is staggering. Maize farming, which
yielded more than 1.5 million tons annually before 2000, is this year expected
to generate just 500,000 tons. Wheat production, which stood at 309,000 tons in
2000, will hover at 27,000 tons this year. Tobacco production, too, which at
265,000 tons accounted for nearly a third of the total foreign-currency earnings
in 2000, has tumbled, to about 66,000 tons in 2003.

Mugabe's belief that he can strengthen his flagging popularity by destroying
a resented but economically vital minority group is one that dictators elsewhere
have shared. Paranoid about their diminishing support, Stalin wiped out the
wealthy kulak farming class, Idi Amin purged Uganda's Indian commercial class,
and, of course, Hitler went after Jewish businesses even though Germany was
already reeling from the Depression. Whatever spikes in popularity these moves
generated, the economic damage was profound, and the dictators had to exert
great effort to mask it.

Overall, the country has gone from a net exporter of food to outright famine.  For this particular experiment, I am happy to live in the control group.  Stay tuned, as this show is likely to hit the road soon and move to Venezuela

Proud Holder of a Kentucky Egg Liscence

One of the eye-opening experiences of being a small business person is finding all the licenses you need - sales tax license, witholding license, unemployment, occupancy, food handling, alcohol, tobacco, prescription drug sales, etc etc.  This gets multiplied for us since we are in 10 states.

This week I got my new favorite:  My Kentucky Retail License to Handle Eggs.

I was afraid that there might be some special training that went with this - something like walking a hundred yards with an egg on a spoon without dropping it - but fortunately all they wanted was our name and $5.  Note that there is a $100 a day fine for selling eggs without a liscence in KY, so beware all you black market egg purveyers.

"Sin" Taxes Put Perverse Incentives on Government

The government has found over time that it is able to sell higher taxes to the voters on certain items if they can portray those items as representing some socially unwanted behavior. These are often called "sin" taxes. The justification for the tax in its beginning is as much about behavior control as revenue generation.  Taxes on cigarettes, alcoholic beverages and even gasoline and plastic grocery bags have all been justified in part by the logic that higher taxes will reduce consumption.

However, a funny thing happens on the way to the treasury.  Over time, government becomes dependent on the revenue from these taxes.  The government begins to suffer when the taxes have their original effect -- ie reducing consumption -- because then tax revenues drop.  The government ultimately finds itself in the odd position of resisting consumption drops or restructuring the tax so it no longer incentivizes reduced consumption so that it can protect its tax revenue collections.

Cigarettes are a great example.  In this article, via overlawyered, from Forbes (simple registration required):

Big tobacco was supposed to come under harsh punishment for decades of deception when it acceded to a tort settlement seven years ago. Philip Morris, R.J.Reynolds, Lorillard and Brown & Williamson agreed to pay 46 states $206 billion over 25 years. This was their punishment for burying evidence of cigarettes' health risks.

But the much-maligned tobacco giants have subtly and shrewdly turned their penance into a windfall. Using that tort settlement, the big brands have hampered tiny cut-rate rivals and raised prices with near impunity. Since the case was settled, the big four have nearly doubled wholesale cigarette prices from a national average of $1.25 a pack (not counting excise taxes) in 1998 to $2.10 now. And they have a potent partner in this scheme: state governments, which have become addicted to tort-settlement payments, now running at $6 billion a year. A key feature of the Big Tobacco-and-state-government cartel: rules that levy tort-settlement costs on upstart cigarette companies, companies that were not even in existence when the tort was being committed.

So, a tax that was originally meant to punish supposed past wrong doing by cigarette makers is causing problems because it was... actually doing what it was supposed to by hurting those companies.  Lots of good stuff, I encourage you to read it all - basically state governments have gone from opponents of the cigarette companies to their partners.  Antarctic Liberation Front opponent Eliot Spitzer comes in for particular attention.

A second example I discussed comes from San Francisco, where a tax aimed at discouraging use of plastic garbage bags was modified so that it collected more money, but no longer discouraged use of plastic.

A third example comes to us via Vodka Pundit, which points out that California now is considering supplementing their gas tax with a per-vehicle-mile tax.  The gas tax was always effectively a per-vehicle-mile tax, since the amount of gas you used was proportional to the number of miles you drove.  And, of course, the gas tax is far easier to manage than a per-vehicle-mile tax (yes, coming soon, its the odometer auditors!)

So why a need for the new tax?  Well, it turns out that Californians are buying a lot of very fuel-efficient cars, including new hybrids, which reduces gas consumption and thus taxes.  Of course, this is EXACTLY what most people hope the gas tax is doing - helping to conserve gasoline and reduce emissions and incentivizing people to purchase efficient vehicles.  Now California is considering substituting a new tax that collects more money but provides no conservation incentives.

UPDATE:  Welcome Carnival of the Vanities!  If you're looking to kill more time at work today, check out my rant on the recent New London eminent domain case in front of the Supreme Court titled "all your base are belong to us".

Anatomy of a Tax Increase

Via the Club for Growth:

[San Francisco's] Commission on the Environment is expected to ask the mayor and board of supervisors Tuesday to consider a 17-cent per bag charge on paper and plastic grocery bags. While the goal is reducing plastic bag pollution, paper was added so as not to discriminate.

"The whole point is to encourage the elimination of waste, not to make people pay more for groceries," said Mark Murray, executive director of Californians Against Waste.

Environmentalists argue that plastic bags jam machinery, pollute waterways and often end up in trees. In addition to large supermarkets, other outfits that regularly use plastic bags, including smaller grocery stores, dry cleaners and takeout restaurants, could eventually be targeted.

Officials calculate that the city spends 5.2 cents per bag annually for street litter pickup and 1.4 cents per bag for extra recycling costs.

What might have started out as a desire to change behavior or pay for a specific problem has become, as is typical, a general revenue grab.  Note two things:

  • They want to reduce plastic bag use, but put the tax on all bags.  Therefore, it will have no effect on behavior in the market when someone asks "paper or plastic" since they still will cost the same.  If they had put it only on plastic, then people might well have shifted en mass to asking for paper - I certainly would, as I am usually indifferent as to bag type.  But someone probably pointed out that if they only taxed plastic, everyone would shift to paper and they would get no extra revenue, despite the fact that the behavior shift was what started the proposal in the first place.
  • If they really only wanted to pay for cleanup costs, which presumably were calculated based on plastic since paper biodegrades pretty fast, they would not have made the tax 2.5 times their calculated cost.  What is the extra amount over 6.6 cents for?  General revenue of course.

If you think I am reading too much into this, ask how much of the cigarette taxes imposed by the tobacco liability settlement really went towards education and the health care costs of smoking-related illnesses (the original intent).  The answer is well less than half, and in some states, none.  In fact, the tobacco settlement has become such a strong general revenue source for states that some states are now supporting legislation to protect the business of large tobacco companies in the settlement. 

By the way, in a story only related because it involves taxes in California, all I can say is go, Arnold, go.

Please Don't Let the Government Invest Funds in the Stock Market, part II

I am all for restructuring the whole social security system, but, as I have written before, we cannot let the government invest social security funds in private equities.  The potential for manipulation and creeping socialism are astronomical.  Its easy to picture fights over whether the social security funds should be invested in tobacco makers, gun makers, hospitals that conduct abortions, Domino's Pizza (that donates funds to oppose abortion), Haliburton, etc. etc. 

I have always used government-funding of universities as an example -- the government uses the leverage of this funding (and the threat of its withdrawal) to force all kinds of regulations on universities.  Today, we have a good case example that is even more directly applicable. 

Over the past several years, Calpers (the California state workers retirement fund) has been a great example of how government control of equity investments can be a disaster.  In the case of Calpers, their huge pension investments automatically make them one of the largest investors in each company in their portfolio.  Calpers has used that power wisely at times, promoting improvements in corporate governance, but has also used it astronomically poorly. 

Under Sean Harrigan, Calpers portfolio has been unbelievably politicized, up to and including having the portfolio use its ownership in several grocery chains to support striking members of the grocery union run by... Sean Harrigan.  Professor Bainbridge has a couple of good roundups here and here.

If we are change how social security funds are invested, let individuals make their own investment choices. 

Rule of the Courts

This post in The Commons raises an issue that has concerned me for years.  Increasingly, activists are using the courts to achieve regulatory goals that legislatures and/or voters have rejected.  While I am still not sure there is constitutional justification for the degree of legislated regulation that exists in this country, there certainly is no basis for individual courts running whole industries (e.g. telecom, tobacco). 

State attorneys general and private plaintiffs lawyers are increasingly turning to the nation's courts to adopt regulatory measures that legislatures reject. Such "regulation by litigation" has been used against numerous unpopular industries in suits by government and private attorneys. The first set of cases sought to regulate and extract rents from the tobacco companies, but subsequent cases have been brought by both private lawyers and government agencies against gun makers, lead-paint producers, coal-burning utilities, diesel engine manufacturers, and many other industries. In each case, the aim is to extract rents and impose regulatory controls that could not be adopted through the legislative or administrative process.

Read the whole thing.