Up in Smoke
When Big Tobacco agreed to
the previously unimaginable last year--severe marketing restrictions on
cigarettes and a $368.5 billion payout to the states and the federal government
over the next 25 years--anti-tobacconists pouted instead of cheering. The
American Lung Association dismissed the restrictions as "a mere inconvenience"
to the industry. The Food and Drug Administration's David Kessler groused that
the agreement would block the feds' right to regulate nicotine levels in
cigarettes for 12 years. And the , who had dragged Big Tobacco into court with
dreams of winning $18 billion in fees, protested that the deal cheated them.
Even after Sen. John McCain, R-Ariz., proposed increasing the payout to $506
billion and adding new regulations to the bill, the anti-tobacconists still
complained. (To read why the "deal" keeps flying apart, click .)
Two
questions: 1) What made the once-invincible tobacco makers capitulate? 2) How
many trillions does it take to make an anti-tobacconist smile?
Peter Pringle's ticktock of the legal battle, Cornered:
Big Tobacco at the Bar of Justice , answers the first question: The
plaintiffs' lawyers and the attorneys general proved indefatigable;
incriminating documents were leaked from inside the big tobacco companies; an
important industry scientist defected; and, most importantly, Wall Street,
fearing a bottomless payout, signaled the industry to submit.
As Pringle
reports, the trial attorneys filed their class action suits in the early '90s
after having tapped out the conventional product liability market: asbestos,
IUDs, and silicone implants. The attorneys general, also primed by asbestos
settlements, joined in with a new legal argument that held the industry liable
for the Medicaid bills of all tobacco-damaged patients--an argument that has
proved persuasive in three states. Joining this coalition were anti-smoking
activists like Kessler, who thinks of smoking as a "pediatric disease" and
regulation as the cure.
Against them stood the united front of Big
Tobacco--R.J. Reynolds, Philip Morris, Lorillard, Brown & Williamson (a
division of B.A.T. Industries), Liggett & Myers, and U.S. Tobacco. It
wasn't until August 1996, after four decades of courtroom sparring, that a jury
finally ordered the industry to pay damages to a smoker for ruining his health.
The tobacco cartel also fractured in 1996 when the runt of the litter, Liggett,
sensed the power shifting and cut a separate deal. What may have caught
Liggett's eye were: First, newly purloined documents from industry archives
that revealed the magnitude of Big Tobacco's deceit about tobacco's role in
addiction and disease; and second, the fact that a B&W scientist, Jeffrey
Wigand, had gone over to the other side. The new information to be gleaned from
the documents and Wigand could conceivably persuade juries in the 300-plus
tobacco-liability suits then pending to award hundreds of billions in
damages.
If the legal levee was about
to burst, Liggett CEO Bennett LeBow figured, why shouldn't he let the flood
lift him to greater glory? Portraying himself as a "whistleblower," LeBow
simultaneously surrendered to the anti-tobacconists, with whom he hoped to
settle for a few million and some marketing restrictions, and launched a
takeover bid for RJR. LeBow's hope, which ultimately proved false, was that RJR
investors would welcome a takeover if it would allow RJR to share in Liggett's
lenient settlement. This would give RJR/Liggett a huge competitive edge over
industry giant Philip Morris, which would presumably face tougher terms.
Wall
Street initially recoiled at the idea of a settlement but then bid Big
Tobacco's stocks up at nearly every mention of an impending deal. What sweet
irony: The specter of unlimited legal liability was a bigger threat to the
industry's well-being than a straightforward settlement. And the $368.5 billion
deal was affordable for the companies, especially considering the tax benefits
of a payout and the time value of money. These economic truths reunited Big
Tobacco behind a settlement on the industry's terms. Having won the public
relations war by agreeing to a settlement, the industry continues to use its
leverage to win a sweeter deal. Just last week, RJR led Big Tobacco in
declaring its opposition to the McCain bill.
Which brings us to Question 2. When Big Tobacco was finally
brought to the bargaining table, why didn't the anti-tobacco activists rejoice?
Jacob Sullum's For Your Own Good: The Anti-Smoking Crusade and the Tyranny
of Public Health surveys five centuries of tobacco abolitionism and
concludes what tobacco's foes want more than money: They want to see the last
butt snuffed out.
Sullum
reaches back to King James I's 1603 anti-tobacco tirade, A Counterblaste to
Tobacco , to prove that the is nearly as old as the smoking habit itself.
The campaign has grown so successful that Americans now think cigarettes are
more deadly than they really are. Sullum cites a Harvard economist's
survey in which respondents guessed that the average smoker forfeits 11.5 years
from his life span, when the "true" loss is between 3.6 and 7.2 years. So much
for the idea that more "education" will deter tobacco use.
Adequately warned, why do people persist
in sucking cancer-causing tars into their lungs? Anti-tobacconists insist that
nicotine's addictive powers explain it all. But when the industry attempted to
create , the same activists protested again, declaring the "safer" cigarette
evil because it would encourage smokers to continue their habit. As it turns
out, Big Tobacco was ambivalent about the safe-cigarette projects because they
exposed the industry to an uncomfortable double bind: Making a "safer"
cigarette is tantamount to confessing that regular cigarettes are dangerous
when taken as directed, something the industry had spent billions denying.
As the
endgame approaches for Big Tobacco and Congress, one is tempted to sympathize
with the anti-tobacconists. Big Tobacco has lied at every step, denying the
addictive properties of nicotine and the causal link between tobacco tar and
cancer. A wealth of circumstantial evidence indicates that they've threatened
witnesses and committed criminal fraud by illegally withholding subpoenaed
documents.
But consider the evil done to the truth by the "good"
anti-tobacconists. Their propaganda has exaggerated the health dangers of other
tobacco products--pipes, cigars, snuff, and chew--all of which are . Thanks to
their accomplices in the press, the beyond recognition. And they've distorted
the health costs that smokers impose on the government. Sullum cites convincing
statistics showing that the cost of smoking probably more or less equals the
benefits, if you factor in the exorbitant taxes smokers pay and recognize that
by dying early they save us a bundle on Social Security.
How wise is it to endow the
state with powers to force us into wellness even if we prefer risk? Now that
the anti-tobacconists are on top, will they too know no bounds?
If you
didn't click through to all the internal links, fire up a menthol and read at
your leisure about behind the litigation and the for why the settlement deal
keeps collapsing. Kessler and C. Everett Koop didn't invent tobacco repression,
as informs us. Proving that they knew tobacco tars caused lung cancer, the
industry did develop a couple of "" cigarettes. Click to learn what the Harm
Reduction movement could teach the anti-tobacconists and for the Environmental
Protection Agency's own estimate of how dangerous secondhand smoke really
is.
