2/21/2012

Tobacco companies responded far more quickly than Government did

The government right now imposes high tax to regulate the tobacco industry. That's not wrong: people have to take into consideration the negative externalities when smoking. But is it right for non-smokers to stop smokers from igniting a cigarette? Or is it right for the government to stop a legal product just because government thinks it immoral?

Now it is generally accepted that smoking can lead to some diseases, but people knew it long before the famous general surgeons' report in 1964, which marked the beginning of cigarette banning. In 1950s', cigarette companies spontaneously advertised the disadvantages of smoking, and the cigarette sales shrunk. What happened? Are the businessmen altruistic? Probably not.

It's interesting while not surprising to find out that it was the tobacco companies that had relatively small share of the market that advertised these ads more. Why? Because they saw profit in that. Since more people knew about the danger of smoking, even the hardcore smokers may smoke less in order not to die soon. So they desire healthier cigarette. Now these small companies could took the chance to develop the filter cigarette. Advertising the danger of regular cigarette can not only hurt competitors, but also can enhance the sales of filter cigarette. The consequence was that the tar and nicotine contained in cigarette dropped drastically in 1950s'. Who got the benefit? Customers!

But the government was not happy because they got less tax revenue generated from the tobacco industry (the cost of doing tobacco business increased). And in fact it was FTC that stopped the advertisement showing the dangers of smoking.

I can understand the non-smokers' opposition to smoking. But just like non-smokers gain utility from inhaling fresh and clean air, the smokers gain satisfaction from smoking. If it is right to ban smoking, does it mean that non-smokers' rights are far more important than smokers'?

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