Economics, Ethics and Morality

To give a break from the stunningly single-minded (according to some of you) economic stupidity in the housing market, we'll get back to the Editorial from the New York Times: When Don’t Smoke Means Do.

Philip Morris has adopted the role of good citizen these days. Its Web site brims with information on the dangers of smoking, and it has mounted a campaign of television spots that urge parents, oh so earnestly, to warn their children against smoking. That follows an earlier $100 million campaign warning young people to “Think. Don’t Smoke,” analogous to the “just say no” admonitions against drugs.

Just why the costly advertising campaigns produce no health benefits is a rich subject for exploration. The ads are fuzzy-warm, which could actually generate favorable feelings for the tobacco industry and, by extension, its products. And their theme — that adults should tell young people not to smoke mostly because they are young people — is exactly the sort of message that would make many teenagers feel like lighting up.

Philip Morris says it has spent more than $1 billion on its youth smoking prevention programs since 1998 and that it devised its current advertising campaign on the advice of experts who deem parental influence extremely important. But the company has done only the skimpiest research on how the campaign is working. It cites June 2006 data indicating that 37 percent of parents with children age 10 to 17 were both aware of its ads and spoke to their children about not smoking. How the children reacted has not been explored. And somehow the company forgot to tell the parents, as role models, to stop smoking themselves.

Philip Morris, the industry’s biggest and most influential company, is renowned for its marketing savvy. If it really wanted to prevent youth smoking — and cut off new recruits to its death-dealing products — it could surely mount a more effective campaign to do so.

Let me bluntly say that I abhor smoking. I'm terribly allergic to it, and have hated it since I was a child. My parents can tell you that I have, flat out, at age 7 told my grandfather that I'm going to leave the room while he was smoking, and will come back when he was finished (and followed up on that for the next 8+ years or so.)

I have also worked in the theater for 15+ years through graduate school, and those of you have some experience in the theater will know what I mean when I say "everyone" in the theater smokes, and I have put up with it, and pretty damned patiently at that.

However, all of these are personal opinions not "economic" or "rational" ones.

Let's go to the economic stupidity which is, after all, the point of this blog.

Firstly, there is quite literally, no incentive for a company to do something against its own interests.

The real question is not "would you?" but if you were the steward of a company with a given mandate, "would you?"

Please note that we're talking about the subtle distinction between ethics and morals here!

Secondly, the blunt economic truth is that governments can never ban anything that people genuinely want to do. At best, they can act as traffic policemen.

Ask yourself, how well has the "war on drugs" really performed? Which major American city can you not buy marijuana at any hour of the day or night? Hell! There's home delivery for the product!

Please note the argument for precisely what it is. I neither care for drugs nor cigarettes. Nor do I care for a nanny state. But then, nor do I care for free healthcare (if "you" can't pay, and the state is paying for "your" healthcare, then the state can and should ban cigarettes for "you", not for the people willing to pay.)

And, negative incentives do actually work. The trifecta of higher taxes, banning cigarettes in bars and restaurants, and free nicotine patches in New York has transformed the "Paris of the US" into a non-smoking paradise.

So if you want to disincentivize something, ask the Federal Government to behave like New York City, not the company to act against in its own self-interest.

Which brings us to the stupidity part, which is what the Editorial is being accused of!

Fair Disclosure: I used to own stock in Altria, and was forced to dispose it for professional reasons. (If not, I would've hung on to it!)