Lying About Health Risks

For decades tobacco companies have denied that there was any connection between smoking cigarettes and certain rather life-threatening illnesses, such as lung cancer. Mind, we are certainly not among those who believe that smoking should be restricted by government coercion just because it is unhealthy. We also have a lot of reservations about the fines tobacco manufacturers were forced to pay to government, which struck us as nothing but an old-fashioned shake-down.

Ronald Reagan in his younger years, promising to poison all his friends for Christmas

At some point in history, smokers may have had a legitimate claim against tobacco manufacturers on the basis that important information about the health risks of smoking was deliberately withheld from them. However, this hasn’t been true for ages. Medical research has asserted for decades that smoking is dangerous for one’s health. Today, no smoker can claim anymore that he or she “didn’t know” or was actually so stupid as to be “misled” by the makers of cigarettes (admittedly, one should never underestimate people’s stupidity).

The fact remains though that tobacco companies did lie about these health risks – and they continue to fight with all their might against having to disclose anything about this fact. Only in February this year, the following happened:

“America’s biggest tobacco companies asked a federal appeals court Monday to set aside a series of court-ordered advertisements saying they lied about the dangers of smoking. The companies told a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit that they’re ready and willing to pass along factual public health information about cigarettes, but said they won’t go along with being forced to underwrite an ad campaign that would have the companies brand themselves as liars.

The statements imply “that we’re still engaged in aspects of wrongdoing … (and) that we do things that we don’t do,” Miguel Estrada, an attorney representing the tobacco companies, told the panel.

In 2006, U.S. District Judge Gladys Kessler ordered the largest cigarette makers to publicly admit that they had lied for decades about the dangers of smoking. The ruling came after testimony from 162 witnesses, a nine-month bench trial and thousands of findings by the judge that defendants engaged in a massive campaign of fraud.

Kessler required the companies to publicly address smoking’s adverse health effects, nicotine manipulation and the health impact of secondhand smoke. The judge also required that the companies address the truth about “light” and “low tar” brands and the nature of cigarette addiction.”

We don’t want to comment on the merits of the court order the tobacco companies are fighting – the only point we wish to make is this: they did lie for a long time, and they are loath to admit it. If they could have somehow gotten away with it, they would undoubtedly have kept lying. This is important to keep in mind for the purpose of properly evaluating what comes next.

The Free Market versus Cronyism

As our regular readers know, we have often stated in these pages that big business is by and large actually not against the weed-like growth in government regulations that threatens to suffocate what little is left of the free market. The reason is simple: Established business organizations fear nothing more than competition from upstarts who threaten to do things better and cheaper. In order to protect their profit margins, they often enlist the help of the State. They simply try to shut the competition of less well-heeled competitors down by either obtaining privileges or pushing for an expansion in regulations which they know their smaller competitors won’t be able to afford.

Mind, we want to stress that we are not condemning big business as such. A company is not automatically “evil” just because it has become big. Rather, if a small company grows into a big one, it is generally a sign that it has served consumers better than its competition. Its success and growth shows that it has met with the approval of consumers, who vote daily in the marketplace with their wallets. Moreover, if not for the economies of scale big enterprises enjoy, many an advantage for consumers would disappear. A major reason why consumers today enjoy access to such a great variety of cheap consumer goods is precisely that these economies of scale exist.

However, in an unhampered market economy, a big company is not going to remain big unless it continually adapts to competition and offers either better, or cheaper products to keep consumers engaged. The free market takes no prisoners – entrepreneurial success depends on the “vote” of consumers alone, who are the true sovereigns over production. Unfortunately, we do not have an unhampered market economy, but a form of corporate-state cronyism (some refer to it somewhat less politely as fascism, because it mimics Mussolini’setatiste economic system). In light of this, an article recently published by Reuters is both infuriating and amusing, as it highlights the features of this system nicely.

Cronies standing in line …

Cartoon by Matson

Regulating the Competition to Death

Apparently, the very same tobacco companies that have lied about the health risks of smoking for decades are suddenly extremely concerned with the danger allegedly posed to the health of consumers by the products of its competition in the e-cigarettes, or “vaping” industry. Only severe government interference and heavy regulations can help! Regulations of the sort the tobacco firms themselves have fought tooth and nail for decades when they were aimed at traditional cigarettes. Here are a few pertinent excerpts from the Reuters article, which highlight the utter hypocrisy of this attempt to regulate the competition out of existence:

“The health warning on a Mark Ten electronic cigarette package is 116 words long. That’s much longer than the warnings on traditional cigarette packs in the United States. Nicotine, the e-cigarette warning says, is “addictive and habit-forming, and it is very toxic by inhalation, in contact with the skin, or if swallowed.” It is not intended for women who are pregnant or breast-feeding, or people … who take medicine for depression or asthma. “Nicotine can increase your heart rate and blood pressure and cause dizziness, nausea and stomach pain,” says MarkTen, a leading brand in the United States. The ingredients can be “poisonous.”

MarkTen’s parent company Altria (MO), maker of Marlboro cigarettes, said the language seemed appropriate. There is no required health warning on electronic cigarettes in the United States, so “we had to do what we thought was right,” said a spokesman for Altria Client Services.

The company’s frankness about the perils of nicotine dates back to the late 1990s, when it led a campaign for cigarettes to be regulated by the U.S. Food and Drug Administration (FDA). Small tobacco companies at the time said the big guys would use regulation to seal their dominance. Today, small e-cigarette makers are saying the same thing. Many argue that firms like Altria (MO) and Reynolds American (RAI) want hefty rules to help neutralize the threat that e-cigarettes pose to their businesses. By accentuating the risks of ‘vaping,’ they say, big firms may deter smokers from trying the new devices, even though most scientists agree they are safer.

“If you read that (warning) as a smoker, you might think ‘Oh, I’ll just stick with a cigarette,'” said Oliver Kershaw, a former 15-a-day-smoker who quit through e-cigarettes and founded websites that advocate them.

Big tobacco companies have pushed for a range of controls on e-cigarettes. These include lengthy health warnings, reduced product ranges, restricted sales, and scientific testing requirements. Kershaw and others say such efforts risk squeezing small players. Too many rules would stifle innovation and reduce the range of products to “a very simple, utilitarian e-cigarette,” said Fraser Cropper, CEO of Totally Wicked, an independent e-cigarette company based in the UK.

Big tobacco companies say their goal in pushing for firm control is not to hurt smaller competitors. Regulation will benefit consumers and e-cigarette companies alike by ensuring safety and quality standards and boosting confidence, they say. Small companies should not be exempt from responsible behavior.

“Our stated goal is to get to e-vapor leadership, to have the strongest brands in the marketplace,” said the Altria spokesman. He could not predict the impact of increased regulation on smaller firms. “I don’t know how they run their businesses and what it would cost them to meet those requirements.”

(emphasis added)

Popular BS meter

Via gifbin.com

The above should register as a “ten” on a ten-step BS meter. It seems glaringly obvious to us that this hefty push in favor of introducing heavy regulations for e-cigarettes is precisely for one reason only, namely the one so strenuously denied by Big Tobacco. It is aimed at hurting smaller competitors. It is simply not credible that tobacco manufacturers are suddenly worried about everybody’s health. The fact is that “vaping” represents a far smaller health risk than smoking traditional cigarettes, and the big firms are of course aware of that. More from Reuters below on the many obstacles Big Tobacco wishes to create to snuff its upstart competition out before it gains traction. As can be seen, it is an attack on many fronts:

Clive Bates, a former head of UK charity Action on Smoking and Health (ASH), thinks public health officials who advocate tough controls end up helping Big Tobacco’s conventional brands.“They really are all doing their utmost to protect the cigarette trade,” Bates said. “They just don’t realize it.”

In August, Reynolds – which does not produce mods – urged the FDA to “ban open system e-cigarettes, including all component parts.” Such systems, Reynolds wrote, present a “unique risk for adulteration, tampering and quality control.”

If the FDA does not want a ban, Reynolds suggested, it should regulate vape shops as manufacturers. That would subject them to FDA inspection, registration, manufacturing standards and product clearance requirements.

Vape shops often mix nicotine and flavoring, just as pharmacies compound drugs, said Richard Smith, communications manager at Reynolds. This means “the vape shop seller is a manufacturer under the applicable laws and regulations.”

E-cigarette independents say such a move targets them; analysts note that the business model of big tobacco firms depends on mass production, not mix-and-match. “I think they (Reynolds) probably want that snuffed out before it gains traction,” said Philip Gorham, an Amsterdam-based tobacco analyst at Morningstar.

Reynolds says that’s not true. “We fully support innovation in tobacco products, including vapor products,” said Smith. The company wants “a level playing-field where all manufacturers are subject to equal treatment.”

Steven Parrish, a former Altria executive who retired in 2008, said that as long as people are honest, there’s nothing wrong with advocating to protect their interests. And embracing regulation can help the tobacco industry win trust.

“I think one of the things the industry would like to see … is a world in which the tobacco industry is much more like the pharmaceutical industry in terms of how it operates,” he said: “Very heavily regulated and maybe not loved and admired, but at least acknowledged as a legitimate business.”

Most e-cigarette companies want tighter controls on who can buy, such as a minimum age. Altria’s NuMark goes further. It says U.S. purchases should also be “clerk-assisted or conducted in an otherwise non-self-service environment.”

Smaller e-cigarette makers say that would hand a big advantage to tobacco companies. U.S. convenience stores are the main outlets for tobacco products. Tobacco firms offer the stores rich incentives to promote their brands, and according to Morningstar, tobacco can provide more than a third of stores’ profit. Cigarettes can only be sold behind the counter. They are displayed on heavily branded shelving which the tobacco firms often provide. Putting e-cigarettes behind the counter would force the products to compete for consumer attention in space that tobacco firms influence, small companies say.

Some small e-cig firms are pushing back. Totally Wicked is challenging Europe’s Tobacco Products Directive (TPD), which was adopted in 2014 and comes into force in 2016. It’s up to member states to apply the EU rules in their own way, but the directive says manufacturers must tell regulators what’s in a new product six months before launch. Producers will have to list ingredients, emissions, toxicological data, nicotine doses and uptake, as well as health effects. A new notification is required for every big change.

Totally Wicked is fighting the TPD in the EU Court of Justice in Luxembourg. Such detailed reporting is more onerous even than for traditional cigarettes, the company argues. It says it is disproportionate, considering that e-cigarettes are probably less harmful. Its CEO says the six-month notification would slow innovation in an industry where manufacturers can move from concept to shelf in 10 weeks.

(emphasis added)

Assorted e-cigarettes: they are filled with a liquid containing flavors and nicotine, which is then vaporized. Contrary to traditional cigarettes, the lungs of smokers are subjected to far fewer dangerous by-products such as tar.

Photo credit: SaintKovalski

If the big manufacturers like Altria were to get their wish and become regulated by the FDA, competition from small companies would be snuffed out almost completely in one fell swoop. Interestingly, there is at least one big tobacco firm that openly admits that all these pushes for heavier regulation are highly likely to hamper competition from smaller players and are therefore likely stifle innovation and will by implication harm consumers:

“Japan Tobacco International (JAPAF), the world’s third-largest tobacco company, thinks strict regulations could hurt young firms. “If you make it extremely hard (to comply), you would drive small companies out of business,” said Ian Jones, JTI’s head of scientific and regulatory affairs for emerging products. “You would lose the value of the category, you would lose the spark.”

(emphasis added)

This statement is quite the fresh breath of air, so to speak, compared to all that hypocritical whining emanating from US tobacco companies.

Lastly, here is word from a former WHO (World Health Organization) tobacco official, who informs us of the relative risk that differentiates electronic cigarettes from traditional ones:

For Yach, the former WHO tobacco official, regulators should remember that e-cigarettes are more than a new business. “A heavy smoker has a 20 times greater risk of lung cancer,” Yach said. “Switch to e-cigarettes and that risk is virtually going to zero.”

(emphasis added)

In other words, the big manufacturers couldn’t be bigger hypocritical liars if they tried.

Conclusion:

We have nothing against tobacco companies as such, and we are also not knee-jerk opponents of big business. However, the tobacco companies were so forthcoming to provide us with an especially good example for how big business uses regulations to hamper competition in today’s crony economy. The same thing happens in many other business areas – just recall the scandalous outlawing of the incandescent light bulb in Europe, allegedly in order to “save the planet” by replacing the warm light of light bulbs with morgue lighting devices filled with poisonous mercury. As a closer examination showed, this was actually not done to save the planet, but to bolster the profit margins of Osram. The above example highlights exceedingly well that regulations that are introduced under the cover of “consumer protection”, very often harm rather than protect the consumer. As a rule, the consumer’s well-being is actually the last thing on the mind of their instigators.

Attempts to get the terminology right …

Cartoon by Ramirez