WEBVTT

NOTE What the Government Doesn't Want You to Know About Tobacco

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Pleased to see a big crowd out today. I thought, given what's going on in Washington, that most of you would be home, glued to the television.

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This is particularly true after the report I read on the onion this morning, that the highlight of the parade would be Saddam Hussein being hauled down Pennsylvania ag in some kind of a circus wagon.

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I thought, you know, if they could have put J. Edgar Ashcroft in that with him, well, I would have even stayed home and watched, but I...

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Mr. Thornton kindly supplied the specific topic for this talk, and it shows a certain cynicism on his part.

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You know, if we really believed that the government was competent, we wouldn't know what they didn't want us to know about tobacco and he assumed that we do and that there's enough that we know that to take 30, 40, or even 50 minutes of time.

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but I think that maybe the way I should spin this is to say that there are a lot

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of things that we think that we know about tobacco policy and smoking which

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are not true and the source of our information is varied but a great deal

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of it does come from the government and I think as a consequence of what

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We have been told that we have a very poor understanding of some issues that I think are very important from a health and from a financial perspective.

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Now to start off, I know that anyone who talks about tobacco is sort of required to make some confessions about what I've done is just because I'm interested in it and I have been reimbursed for some of the work that I've done.

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I along with some others here at Auburn in the 1970s received support from a couple of DC consulting firms which were in all likelihood funded by the Tobacco Institute.

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I don't know that to be the case but I suspect it to be the case.

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And essentially at that point what we did is look at some of the allegations that were being made by the government about smoking and the consequences of smoking

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and responded to them and I feel that when the government is making a case against smoking that they have an obligation to make an honest case

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and what we found that is in a number of their studies where they estimated the costs of smoking

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it was quite clear that their methodology was designed to get a very big number

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and in fact at one point they had a software package that was used to calculate the economic cost of smoking

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and it was sort of a black box where you could give some data about population, average ages, percentage of people smoking

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and on the basis of that it would generate some number about what the economic cost per year of smoking was in that particular community

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The Black Box was developed at the University of Minnesota, publicly funded, and when we tried to get a copy of it, they in essence wouldn't give it to us, and they said we were afraid you're connected to the Tobacco Institute, and we don't want them to have a copy of it.

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And so we had to get a graduate student to write to them saying that he was thinking about,

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I guess everyone's thinking about everything, thinking about doing a dissertation on the evils of smoking

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and they were very happy to send him their black box and then he passed it on to us.

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And among the other things we found is that what they would do is they would look at various illnesses

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and look at the incidents for smokers and for non-smokers and then calculate the excess

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illness due to smoking and then associate some economic cost to that. And to their surprise,

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they found out that there were some diseases and illnesses which were less prevalent among smokers

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and so rather than calculate that as a benefit, they said well we know that smoking is harmful

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and it can't possibly be a benefit and so the package ignored that and we know that any type of

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estimating technique is going to overestimate some things and underestimate other things and when you

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systematically throw out some without throwing out the rest well you are you are fudging the results

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and so maybe I'm trying to rationalize what I did in the past but I felt that if they are

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They're fudging the results, well then it's worthwhile to attack their results.

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Also later in the 19, a few years later I worked for a few months for a Kansas City

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law firm with the, I think, interesting name of Shook, Hardy and Bacon, which represented

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Philip Morris.

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And essentially what I was asked to do is they would send me drafts of proposed anti-smoking

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ordinances and I was asked to express an opinion about if you were trying to argue against

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the imposition of this ordinance, what arguments would you make.

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During the last five or six years, I and others here at Auburn have received some research

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and research support from the University of Alabama at Birmingham's unrestricted grant funded by the U.S. Smokeless Tobacco Company and in particular they are interested in getting information disseminated about the consequences of switching from smoking cigarettes to using tobacco or getting nicotine in alternative forms.

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and so we've done several studies on that and I'll get to these as we move along here.

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What I plan to do is to talk about a brief history of the tobacco industry and smoking.

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A little bit about the switch in the type of tobacco Americans use

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used from chewing tobacco to cigarettes, a bit about the tobacco policy that was implemented,

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I guess, in the Roosevelt administration where we had allotments set aside to grow the types

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of tobacco that is used to cigarettes, and I'll talk a little bit about the war on tobacco

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in the Master Tobacco Settlement.

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If you go back to the very early days

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of the Jamestown settlement,

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a problem that occurred there

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and in many of the other colonial settlements

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was that food was in short supply

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and hunger was an ongoing problem.

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And as one could imagine when settlers are hungry,

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they're not happy and it created a lot of problems.

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And so reports from the natives had suggested

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that the use of tobacco was an effective way

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to suppress appetite.

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And so they originally started cultivating tobacco

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for among other things to suppress appetite

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and it apparently worked.

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They knew this intuitively.

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Later on, I'll show you some statistics

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and we can look at how much weight differs

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among smokers and non-smokers and smokers

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and former smokers, but they were onto something.

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And so it was a good product in the sense

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that it suppressed hunger.

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It also, I think, elevated mood in a certain sense.

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And so, it was extremely widely used during that period of time and I'm going to avoid talking very much about that period in history because I know that with Thornton and Sophocles here, they know so much more about economic history that I'll embarrass myself very quickly and so I don't want to knowingly do that.

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So starting out, essentially, tobacco was chewed. Then it was some pipe tobacco was used, and I think some cigars, but chewing remained the primary way that tobacco was used, partly because, I don't know if you forget the history of tobacco,

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Do any of you know when the match was perfected?

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I knew that at one time and before people had matches,

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I would guess that smoking something like cigarettes would be a pain in the ass

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because when you wanted a cigarette, you wouldn't have fire.

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And so it was after matches that were perfected

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and started to be widely used that that smoking became became more prevalent but

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in 1881 someone named James Bonsack invented an automatic rolling machine

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and the Industrial Revolution came to the tobacco industry. James Duke bought the

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A license from Bonsack and by 1884, his rolling machines were producing 120,000 cigarettes

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per 10-hour shift.

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And so as a consequence of the rolling machine, what happened is that the cost and therefore

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the price of cigarettes fell relative to the other tobacco products that were available.

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And so their use increased dramatically.

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If you go back and look at the incidence of smoking, what you find is that it grew pretty

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steadily and then there would be rapid increases during time of war.

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Again, I'm not sure about too much of history.

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I suspect even going back to World War I that American soldiers were provided with cigarettes

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and I think that a lot of people learned to smoke in the military and I'm told that young

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American males could have a reasonably good time in almost any city in the world simply

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by having a few American cigarettes.

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American tobacco at that point was such preferred and American cigarettes were much better than

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and anywhere else.

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And so if you could provide cigarettes to natives,

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you could get a lot of favors in exchange for them.

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That's just things I've learned from reading books.

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Let's see.

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The next, I think, issue that I'd like to talk about

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was sort of the episode of tobacco regulation that started in 1938 and prevails today.

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I first gave this presentation last summer.

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George Mason, the Mercatus Institute, has a program where they do two-day training seminars for House and Senate staffers.

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So I did one on smoking policy, and when I'd agreed to do it for a modest sum of money,

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well, Rob called me and said,

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we're thinking about ending the buyout program, and there's some proposed legislation,

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and what I want you to do is, if you can, is to read up on that and have something to say about that.

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And I said, sure, that'll be fine.

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And so I started reading up on it, and I realized pretty quickly that I regretted having done it

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without Extra Pay, because it was truly astounding.

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In fact, after spending a couple days reading on it, I tried to explain what I thought was

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correct to a couple colleagues, Randy Beard being one of them, and his response is, no,

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it couldn't possibly work that way, but I think that it did.

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Now, without getting bogged down in the details of the program, the essential details are

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that starting in 1938, certain plots of land were assigned tobacco quotas, and you could

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grow some types of tobacco, but the two types of tobacco that are used in cigarettes could

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only be grown on quota land.

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And each year, tobacco buyers indicate what they plan to buy at the beginning of the growing

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season and then the planning is adjusted to reported demand and penalties are assigned

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if the buyers fail to buy as much as they indicated that they wanted.

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A minimum price is determined by a formula which includes production cost, historical

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costs and quota holders are guaranteed that price. Lots of tobacco which failed to bring

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that price adoption are bought up by a cooperative of buyers and sellers and plowed under. And

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so it's some type of a scheme where buyers and sellers join together to keep the price

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to subsidize buyers and sellers and I thought about trying to do a graph of this and it was absolutely astounded.

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I should point out that the quotas can be rented or permanently transferred under rules that vary from state to state.

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In some states you can only transfer rights within a county or an adjacent county

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and so it's complicated by different rules in different states.

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Now, as bizarre as this may seem, one of the articles that I found assessing this policy,

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which is allegedly by a couple of the experts in this area from Texas A&M,

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They end up by talking about eliminating the tobacco program.

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Now, listen to this.

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An extreme policy option available to policymakers

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is to completely eliminate the price support production control program, okay?

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Now, I think it's, we see that there's real trouble

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when we think of decontrol as being an extreme policy option.

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Again, without really getting involved in all of the details, let me show you a couple of things that have happened to the U.S. tobacco market in recent years under this program.

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And if we think about it, it's not really, really surprising.

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If we look from 1960 to the present, what we find is that there's been a fairly steady decline

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in the U.S. share of world tobacco exports, and these are exports of the types of tobacco used in cigarettes.

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And not surprisingly, at the same time, the share of U.S. tobacco used in U.S. cigarettes

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has fallen from about about 90% to 40% and so what has happened is although I think the United States clearly had a pretty strong comparative advantage in growing these types of tobaccos the government policy kept the price so high that growers in Brazil in particular and other countries had an incentive to produce competing products and and government policy has in essence

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resulted in the partial demise of the U.S. tobacco production.

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Now, I suppose if someone were really sufficiently anti-tobacco,

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they might say that this is a good thing,

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but almost everyone knows that imports are bad and exports are good,

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and to justify this perverse program on the basis that it has these results, would be a real stretch, I think.

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Okay, so I think the discussion is still going on about ending the quota program.

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And two of the strongest advocates of this were Philip Morris.

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And what is that group? Children Against Tobacco or something. It was Philip Morris and one of

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the anti-smoking groups and I thought to have these two favoring the end to the same program,

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either one or both of them is confused or the program is so complicated that it's very difficult

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I don't see what the results would be, but I'm sorry, yeah, exactly, that an argument that, I'm so bad with names, our colleague at Clemson,

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Bruce Yandle makes, is the bootleggers and Baptists argument, in that to get something done, you need a group like the Baptists that provide a lot of voter support,

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but you also need another group like the bootleggers that will oil the wheels of political progress and so I guess in this case Philip Morris is supposed to come up with the money and the anti-smoking groups are supposed to come up with the votes.

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While I'm on this, I don't think I've prepared anything specifically about secondhand smoke here, but I think that when we use the bootleggers and Baptists type of argument, it becomes important.

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How many of you know that secondhand smoke is a serious health problem? Or think that you know that?

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Have any of you heard that second-hand smoke is a problem?

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Yeah, where did you get that information?

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I think from the government.

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Yeah, okay.

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I think from the government.

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And studies of spouses of smokers

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suggest that there are only slight differences,

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very minor differences in the incidences

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of the type of illnesses and diseases associated

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with Smoking for the spouses of smokers

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compared to the spouses of non-smokers.

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And so I'm not about to say it's a non-issue.

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I think that it's a very trivial issue,

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but I think it's an opportunistic issue

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because what we have done is we have empowered non-smokers,

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which now are the large majority of adults in this country.

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And we have given them a good reason to get involved in a fight which one could argue is essentially none of their damn business.

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And whether that's an explanation or not, I'm not sure, but it's certainly a plausible explanation.

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Next thing I want to talk about is the war on tobacco and started in the 60s where originally advertising restrictions were placed on the tobacco companies

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and warning labels were put on the packages.

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In fact, I'm told today that most young people get most of their information about cigarettes,

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or even the existence of cigarettes by the proliferation of anti-smoking commercials on television.

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And in essence, they would know very little about what cigarettes, well, they would know what they are,

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But if you survey people, they will tell you, oh, I've seen cigarettes advertised on television in the last two weeks.

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A majority of Americans say that, and what they've seen is the anti-smoking measures.

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So even that effort doesn't seem to be worked out too effectively.

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Okay, but we do know that this in combination with higher taxes on cigarettes and a lot

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of restrictions on indoor smoking and even in some communities, outdoor smoking, John,

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your favorite place in the country I think is Maryland and I believe it was one of the

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small towns in Maryland that passed the law against smoking out, was it anywhere outdoors?

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But I think it was against the law to smoke in your own backyard.

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In your own backyard.

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Okay.

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In the prosecution.

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Okay.

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Okay.

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Okay.

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Now, let me see if I can, well I don't need to put the overhead up, but one other overhead

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What I had provided was a graph of Philip Morris' doc compared to the Dow Jones average.

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What we find is that starting in 1964, between 1970 and 2004,

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The Dow Jones Average had gone up to 10 times its original level, and the price of a share

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of Philip Moore stock adjusting for splits had gone up by 160 times.

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And so we have a war on tobacco and then we had the master settlement and what the master

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settlement did is that most of the states sued the tobacco companies for the excess

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health care costs that they had incurred due to smoking and the settlement amounted to

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to $246 billion and from this graph what we find is that the stock of Philip Morris fell

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to about one half its initial level after the announcement of the settlement.

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I remember hearing that and I thought, well, you know, the tobacco companies are gone and

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Within two years, the stock had bounced back and risen above its previous level, and you

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could wonder how in the world this could be the case for, I don't know who the economist

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working for Philip Morris was, but for Philip Morris shareholders, whatever they paid him

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was a whole lot less than what his services were worth, and if you look at the nature

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In order of the agreement, essentially what the tobacco companies did is agreed to stop advertising cigarettes.

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Now in a market like that, we know that advertising has a minor effect on total consumption,

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and it's all about how the sales are split up.

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And so had they been free to do so, they would probably formed a cartel to start out agreeing not to advertise

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because the less they all advertise, the more profitable they are.

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So the agreement, in essence, forced them to behave in this fashion.

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Now, it was even more clever than that in deciding who paid these $246 billion being paid over 25 years

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And in deciding how the funds were to divide up among the tobacco companies,

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it was based partly on market shares, but it was also based upon future market shares.

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And it was set up in such a way that any new company that entered the market paid a huge penalty.

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I mean, they paid about twice as much as the incumbent firms.

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And so they created a situation where no new firm wanted to enter the market.

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The fines from the government were prohibitive.

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It was also the case that each firm in some sense had a strong incentive to reduce its market share.

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And so if everyone's trying to reduce its market share and you have an inelastic demand curve, well what you do is you raise prices.

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And so what happened is that, intentionally or unintentionally, the master settlement was one which forced the tobacco companies to behave in a more profitable way than they had previously.

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Now, you know, we have at least two explanations. One is that the government in some sense bungled things and another one may have been that they had some good economic analysis working for the tobacco companies, but that's essentially the way things have panned out.

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Okay, now let's look at the, at sort of the current situation, see how I'm doing for time, I'm doing pretty well.

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When I say current, this is probably a couple years old, but there are approximately 46 million current smokers, percentages of men and women.

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These are, I guess, over the age of probably 21. I'm not sure about that.

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When they talk about a sustained decline, 1965 to 1990, I think 65 was the height of smoking incidents in this country,

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And 42% of American adults smoke cigarettes at that time.

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I don't remember how that was broken down among males and females.

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And so what we find is that since then, smoking has been reduced to about half its previous level,

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as a percentage of the population.

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I think it should, we should point out that, well, we can talk about a sustained decline.

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What happened is that there was a fairly sharp decline until about 1990 and now things have

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have leveled off and so despite the high prices and all the notices about the ills of smoking, we still have 46 million current smokers and in some studies indicate that these smokers are somewhat different than previous smokers in that the ones who, almost everyone had incentive to try to quit and the ones who are still smoking in some sense are hardcore smokers.

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They tend to smoke more than smokers on average did previously and these are people who, most of whom, have tried to quit and have failed.

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Now, I see in today's Plainsman that maybe if they were students at Auburn they would have succeeded.

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There's a picture of a smoker's dream and someone smoking here and the psychology department is running an experiment.

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It seems like a far-fetched notion, one that no one would ever thinking about, but they're testing to see if smokers would quit if you paid them to do so.

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And when asked where they came up with this idea, someone said they heard about it from someone at Johns Hopkins.

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And so apparently they didn't learn about this in an economics class, but they learned about it.

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Now, it's not clear what the results are going to be, but one wonders about funding research projects,

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which suppose they find out that people will quit smoking if you pay them to.

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Can you imagine the politics behind trying to get taxpayers to pay smokers not to smoke?

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You know, if it has no political viability, well, you know, I really wonder whether they could have spent the money better elsewhere.

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You see, how much they're about, hey, I'll be willing to take it up a little bit.

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Well, here's the article. You can read about it. I'll pass this down to you.

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I think you can make up to $165 in this experiment, okay?

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Now, if we talk about these smokers and generalize, think of them as being inveterate smokers.

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They use cigarettes as a convenient and inexpensive source of nicotine.

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Now, this may seem obvious, but it's not obvious to everyone.

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The government still operates as if people smoke for reasons other than nicotine.

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For example, a recent, or not too recent, 1993, I guess, manual funded by the Federal

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The Federal Government gave these hints in how to quit smoking, okay?

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It says, keep your hands busy.

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Well, you can read.

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I don't have to read this aloud to you.

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But it seems to imply that we smoke because we don't have a daydream ready to go.

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And it's this simple.

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People smoke because they are, I know there's some libertarian Austrians who might be offended

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by this term, but they're addicted to nicotine.

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Now by addicted, I guess I mean that if they go without nicotine very long, they have a

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craving for nicotine.

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Now let's raise this question.

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If burning cigarettes and inhaling the smoke is very bad for your health, and people do

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that because they want nicotine, and you wanted to get them to engage in more healthful practices,

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What would you suggest?

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Daydreaming about smoking?

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Well, maybe.

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Pardon me?

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Take nicotine.

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Yeah, I mean, wouldn't the solution be, well,

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get your nicotine in a better form?

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And are there other ways to get nicotine?

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And the answer is yes.

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Before we had a lot of cigarettes, we had chewing tobacco.

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And one way is to go back and chew.

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Now, I'm not going to advocate that too strongly

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because the whole idea of it's a pretty disgusting habit.

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Leland, I don't know if you remember your days of teaching at Texas A&M,

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but I remember when I got there years later,

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the students would still carry a cup into class

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and they would chew and spit in their cup,

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Which was pretty disgusting, but even more so because they had tendency of bringing a clear cup in with them.

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And so when I talk about tobacco or smoking substitutes, yes, chewing tobacco is one.

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And actually, now that we have indoor smoking bans, I think that chewing tobacco could become fairly popular

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in the sense that people, I think a lot of bosses would prefer their employers to chew on the job

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than to leave every 45 minutes to step outside to have a cigarette.

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But it's not just chewing.

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There are also some firms who have tried to market a product where flavored water is laced with nicotine,

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and government regulatory agencies refuse to allow them to market it.

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Now, why would you want to prevent someone

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from marketing nicotine in water, which is harmless?

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Well, their argument is, well, if we do that,

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someone might start using this product.

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And once they become addicted to nicotine,

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then they will switch to smoking

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and they will suffer the health consequences.

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Well, come on, I mean, we know, or we should know,

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although the government, yeah, it hasn't done a perfect job,

303
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that smoking is terrible for you,

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that nicotine is essentially harmless,

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cigarettes are highly taxed,

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and how many people are going to switch

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from a safe, inexpensive product

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to a dangerous, expensive alternative?

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And I think the answer is a handful,

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but that's all we need to ban something, you know.

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If there's any harm, ban it, okay?

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What I'm proposing is we think in terms of harm reduction.

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Now, I'm not suggesting that the cigarette alternatives are perfectly safe.

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They aren't. Cigars are a bit safer than cigarettes, but not a whole lot more.

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Chewing tobacco is a whole lot more safe.

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Now, I know the case against chewing tobacco.

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Do you remember when the campaign against chewing was in its heyday and the colleges banned the use of chewing?

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I think the Major League was still chewing. I don't watch enough baseball to know. They are.

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But we were trying to get everyone to quit chewing.

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Do you remember how the scare tactic that was used?

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Pictures of the mouths, and I'm told by Dr. Radu, who we work with in UAB, that he's worked with cancer, oral cancers, for 25 years, and he has never once found anyone who chews tobacco who has oral cancer.

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In fact, in investigation, the pictures that they used were of smokers, not chewers.

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And so, even for oil cancer, the incidence is greater among smokers than it is among chewers.

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So, there's almost no oil cancer from chewing tobacco?

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Almost none.

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Well, I'll get to some numbers here.

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A couple of points will become clear.

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Okay.

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Our strategy that we're proposing is that if someone is addicted to nicotine

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and is currently ingesting it in a harmful fashion and has tried and failed to quit,

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then let's provide nicotine to them in a less harmful fashion.

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Now, you might say, well, what's wrong with the patches?

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We have the patches, we have the gum, and the answer to that is, well, pardon me?

334
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And the little inhalers, like cigarettes.

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We have the little inhalers, but what we find is that, how well this graph will come out,

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I love graphs that have nothing on the axis, but the graph here is one where you have sort of absorption of nicotine and time here.

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And so what you find is that if you start off smoking a cigarette, you have a real quick burst of nicotine in your blood level.

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And then it drops fairly quickly and then, I'm sorry, I should have the data here, I'm not sure exactly, I think it lasts about 40 minutes and that's why cigarette smokers tend to want to smoke about every 40 minutes after a reasonable period of time.

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The nicotine is leaving the bloodstream

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and the craving for nicotine is occurring again.

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And so they come back.

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Now, if we look at the gum and the patches,

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what we find is that they deliver the nicotine

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in a slower fashion.

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And so for people who crave the nicotine right now,

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they don't get what they are looking for right now.

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And so what they're inclined to do is to go back to smoking.

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Now, if we look at smokeless tobacco, one of the benefits is we find that it really mimics smoking quite well.

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And there's a reason to believe that if this were promoted,

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that it would be an extraordinarily successful way of smoke cessation.

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Now you might ask, a good question would be, well, what would the success rate be?

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And the answer is, at least in this country, we don't know because we have discouraged the use of smokeless tobacco so much that we have very few people who use it, very few people who switch to it, and to my knowledge, no real studies of this.

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Other studies that we've looked at suggest that, you know, there are other ways that you can quit.

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Self-help, just cold turkey in essence.

355
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It's hard. Various sources produce success rates.

356
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The problem with this is how do you, if someone says, I need to quit, I'm going to quit today,

357
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and then an hour later they're smoking, was that an attempt to quit?

358
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And I don't know what constitutes an attempt to quit.

359
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And so when you report success rates of around 3%,

360
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well, I think it's sort of a wild-ass guess

361
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or something like that.

362
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Behavior modification, I guess,

363
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this would be hypnosis and other procedures like this,

364
00:43:00.940 --> 00:43:05.400
fairly expensive, but about a 15% success rate.

365
00:43:05.400 --> 00:43:10.400
Nicotine gum has a success rate of around 13 to 15%.

366
00:43:10.400 --> 00:43:16.400
In the nicotine patches, this suggests that the patches in gum delivered about the same way,

367
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but for some reason, the success rates are lower than 10%.

368
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And Zyban, I don't know what Zyban is, but they have had considerable success with that, about 28%.

369
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Now, if we looked at smokeless tobacco,

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I have every reason to believe that the success rate would be a whole lot higher than this.

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Now, when I talk about smokeless tobacco, in Sweden, and I won't take the time to show

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all these slides, I'm running out of time here, but in Sweden, for reasons that I don't

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quite understand, smokeless tobacco is extraordinarily popular among men, but not among women.

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And the way they use smokeless tobacco is they have little gauze packages that they

375
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They slip between their lip and gum, and they absorb the nicotine into their gum.

376
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Because they aren't chewing, there's no need to spit.

377
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In fact, when Professor Radu first introduced some of us to this topic,

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the facts looked good and all I could think was, well, it's a good product,

379
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but it's so disgusting that we couldn't possibly get anyone to use it, particularly not women.

380
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And after he finished his talk, he said,

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now, I'm not doing this, I'm not going to do this

382
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because I don't want to use any tobacco products,

383
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but he said, now, I know what you're thinking.

384
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And he said, I want you to know that I've been using

385
00:44:47.360 --> 00:44:49.600
smokeless tobacco the whole time that I've talked to him.

386
00:44:49.600 --> 00:44:51.360
He reached in, he pulled this little packet out

387
00:44:51.360 --> 00:44:54.800
from under his gum and he had talked to us for 50 minutes.

388
00:44:56.080 --> 00:45:00.080
There was no interference with his ability to speak clearly

389
00:45:00.080 --> 00:45:04.800
and he had satisfied a presumed nicotine need

390
00:45:04.800 --> 00:45:12.800
without, inside, without any secondhand smoke or anything like that.

391
00:45:12.800 --> 00:45:29.800
Now, in Sweden, what we find is that among men they have the highest rate of use of smokeless tobacco of any country in the world.

392
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And they have the lowest smoking rate.

393
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They also have the lowest cancer rate of any developed country in the world.

394
00:45:39.800 --> 00:45:47.800
Within the same country, the women there smoke cigarettes at a level that's quite high by European standards,

395
00:45:47.800 --> 00:45:58.800
and the women there have the second highest lung cancer rate of any population in Europe.

396
00:45:58.800 --> 00:46:23.800
And so, although that's not holding everything constant, there's overwhelming evidence that suggests within a certain country that people who switch from cigarettes to another form of tobacco enjoy huge health benefits and those who continue to smoke do not.

397
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Let me just put a couple of other things on the board very quickly.

398
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If we look, life expectancies between never smokers and smokers are large.

399
00:46:49.800 --> 00:47:02.800
And if we look at the difference between switchers, those who switch to smokeless tobacco, what we find is that switching and quitting is essentially the same.

400
00:47:02.800 --> 00:47:12.800
I think the best estimates are that for a 40-year-old, if you use smokeless tobacco as opposed to not using tobacco,

401
00:47:12.800 --> 00:47:18.800
Your life expectancy is reduced from about 19 by about 19 days on average.

402
00:47:18.800 --> 00:47:25.800
Now one other thing I want to mention and then I'll wrap up.

403
00:47:25.800 --> 00:47:27.800
There's some other facts.

404
00:47:27.800 --> 00:47:34.800
This data applies to men.

405
00:47:34.800 --> 00:47:43.800
But what we find is that this is the amount that American males gain over a nine-year period of time

406
00:47:43.800 --> 00:47:52.800
and non-users gain seven pounds on average, smokers gain less, smokers who quit gain a whole lot more,

407
00:47:52.800 --> 00:48:02.800
smokers who switch to snooze gain just about a little bit more than non-users do.

408
00:48:02.800 --> 00:48:10.800
And so what we find is that one of the consequences of quitting smoking is that people gain weight.

409
00:48:10.800 --> 00:48:19.800
And in fact, about 20% of the increase in obesity that has occurred in this country over the last 12 years

410
00:48:19.800 --> 00:48:23.800
is attributable to the decrease in smoking.

411
00:48:23.800 --> 00:48:28.800
Now one study that we're currently working on, we haven't done all the calculations yet,

412
00:48:28.800 --> 00:48:51.800
But what we're looking at is the net health consequences of quitting using different techniques and it seems pretty clear to me that what we're going to find is that quitting smoking by going to smokeless tobacco is the best way to quit.

413
00:48:51.800 --> 00:49:07.800
And the reason it is is that while you have slight risks, slight costs because you're continuing to use tobacco, the weight that you fail to gain or the value of that is greater than the cost.

414
00:49:07.800 --> 00:49:18.800
And so if I had a teenage son or daughter who was smoking and I could choose the way that they were going to quit,

415
00:49:18.800 --> 00:49:28.800
If I were solely interested in their health, I would prefer that they switch to smokeless tobacco than quit cold turkey.

416
00:49:28.800 --> 00:49:32.800
Now, what does the government do? Let me see if I can pick up one.

417
00:49:32.800 --> 00:49:37.800
The government doesn't care about the children?

418
00:49:37.800 --> 00:49:43.800
Let's see if I can find that.

419
00:49:43.800 --> 00:49:55.800
This is from a bill that's now before Congress, the DeWine-Kennedy bill, I don't know who DeWine is, we probably know who Kennedy is, and it says,

420
00:49:55.800 --> 00:50:03.800
No person may introduce or deliver for introduction into interstate commerce any modified risk tobacco product,

421
00:50:03.800 --> 00:50:10.800
unless approval of an application filed pursuant to subsection D is effective with respect to product.

422
00:50:10.800 --> 00:50:20.800
You are not allowed to advertise something as being a reduced risk product without government approval.

423
00:50:20.800 --> 00:50:24.800
Now, what constitutes advertising?

424
00:50:24.800 --> 00:50:35.800
Well, if a smokeless tobacco manufacturer responds to media inquiries regarding the ongoing public debate regarding tobacco harm,

425
00:50:35.800 --> 00:50:42.800
That is viewed as advertising and the product is subject to regulation.

426
00:50:42.800 --> 00:50:49.800
If a smokeless tobacco manufacturer finds a researcher who has a result of individual scientific research,

427
00:50:49.800 --> 00:51:00.800
publishes a paper concluding that the use of smokeless tobacco is significantly less harmful than cigarette smoking,

428
00:51:00.800 --> 00:51:04.800
the product is then subject to regulation.

429
00:51:04.800 --> 00:51:21.800
And so what they're in essence saying is we are not going to allow anyone to promote any potentially harmful subject as being a good alternative to smoking.

430
00:51:21.800 --> 00:51:28.800
It's the attitude, quit using tobacco or die.

431
00:51:28.800 --> 00:51:32.800
And I think there are better choices.

432
00:51:32.800 --> 00:51:36.800
Okay, I'm sorry I used a lot of time, but I've said all I need to say.

433
00:51:36.800 --> 00:51:46.800
You know why government allows the gum and the patch and not the water?

434
00:51:46.800 --> 00:51:49.800
Is it because they're distributed that way?

435
00:51:49.800 --> 00:51:51.800
Well, let's see. I'm trying to think now.

436
00:51:51.800 --> 00:51:54.800
The gum and the patch were both prescription only, weren't they?

437
00:51:54.800 --> 00:51:57.800
And what is the situation now?

438
00:51:57.800 --> 00:52:12.800
I don't think they're prescription anymore. I think you can buy a patch. But they are sold primarily by pharmaceutical companies.

439
00:52:12.800 --> 00:52:37.800
Philip Morris, they actually have an economist on their board of directors. They used to have one in the 80s, I'm not sure what his name was, but I think the one that's on there now is, her name is Elizabeth Bailey, right on their board of directors.

440
00:52:37.800 --> 00:53:01.800
The interesting thing about Zyban is that there's another pharmaceutical name for it, and it's an antidepressant, but they can't get as much money to go back because they're competing drugs, and so they can't contain the pharmaceutical requirement that doctors prescribe Zyban because they can't afford it, and it's called Zyban.

441
00:53:01.800 --> 00:53:12.800
I'm sure everybody's seen those commercials by Truth.com. They're the ones that always drag the body bags out and everything.

442
00:53:12.800 --> 00:53:18.800
My brother and I were watching it a couple years ago, watching one of those commercials, and neither of us is a smoker.

443
00:53:18.800 --> 00:53:24.800
I mean, I have a pipe that I smoke once every eight months or so.

444
00:53:24.800 --> 00:53:41.800
We're both libertarian, anti-government types, pretty resistant to anybody telling us what to do.

445
00:53:41.800 --> 00:53:45.800
We both came away from watching these commercials saying that makes me want to take up smoking.

446
00:53:45.800 --> 00:53:48.800
So we went to their website and wrote a message.

447
00:53:48.800 --> 00:53:51.800
Are you secret shills for Philip Morris or somebody?

448
00:53:51.800 --> 00:54:01.800
The last year, a friend of mine was majoring in marketing up there in North Carolina, DCU.

449
00:54:01.800 --> 00:54:06.800
And one of her marketing classes, they were assigned some projects.

450
00:54:06.800 --> 00:54:10.800
They had to look at some various marketing campaigns and look into the background

451
00:54:10.800 --> 00:54:14.800
and how this marketing campaign came out and everything.

452
00:54:14.800 --> 00:54:23.800
They happen to look at the truth.com campaign and it turns out that they're 100% funded by full forms.

453
00:54:23.800 --> 00:54:33.800
It may not be for the reason you think. I believe that they legislate.

454
00:54:33.800 --> 00:54:35.800
Okay, okay.

455
00:54:35.800 --> 00:54:40.800
Has anybody seen PGR Works' response to the tobacco settlement?

456
00:54:41.800 --> 00:54:46.800
So basically for the money that they spent on that settlement, that they could have just gone down,

457
00:54:46.800 --> 00:55:03.800
Bribed Castro told him, look, we'll set you up in Geneva with a couple of billion dollars in an account, we'll buy all the real estate in Cuba, and we'll legalize it there, we'll do our operations in Cuba, and we'll make more money smuggling it into the U.S. once we make it legal.

458
00:55:16.800 --> 00:55:40.800
We were bombarded from the government and from the news media about just general, I don't remember any specifics, but general statements that, you know, the whole purpose of the suit was to make up the amount of money spent for Medicare and so forth, treating smokers because they have more illnesses and so forth.

459
00:55:40.800 --> 00:55:51.800
And my first thought then was, well, what about the money that is saved because they died eight years earlier and therefore they don't bring social security on sometimes, not at all, etc., etc.

460
00:55:51.800 --> 00:56:08.800
And I heard of a study that a guy, somebody had done anyway, showed that there was actually a net savings to government when you factor all that in, but I've never actually seen a study, have you seen any data on that?

461
00:56:08.800 --> 00:56:33.800
There are various studies out there. This guy, Barber, calculated the social cost in a paper book on smoking. This calculation is not obvious. The government saves money by prohibiting smoking and by some regulation.

462
00:56:33.800 --> 00:56:41.460
Well, we had looked at the first half and were convinced that the costs, that I've seen

463
00:56:41.460 --> 00:56:48.800
various estimates about how much excess healthcare costs are, and we felt that they were so inflated

464
00:56:48.800 --> 00:56:54.080
that trying to do the other side of it and compare it with what you'd have to do both

465
00:56:54.080 --> 00:56:57.040
sides of it, but it was not at all clear.

466
00:56:57.040 --> 00:57:01.920
Now, some people, you know, an argument that's made is, well, you can't possibly consider

467
00:57:01.920 --> 00:57:31.920
One of the most egregious errors that the government makes in the statistics is to rely on mortality records, and the position in a hospital situation, or even in any other situation, someone dies, a kidney problem,

468
00:58:01.920 --> 00:58:08.120
and the study that Richard was speaking of is called the SAMAC study which was

469
00:58:08.120 --> 00:58:15.880
developed at the University of Minnesota and it is so real that you know these

470
00:58:15.880 --> 00:58:21.920
states usually calculate numbers of deaths in states in order to

471
00:58:21.920 --> 00:58:37.920
I think the data about eight years left of smokers versus non-smokers on average is pretty clear.

472
00:58:37.920 --> 00:58:40.920
It's pretty clear that smoking causes one cancer.

473
00:58:40.920 --> 00:58:46.920
There is not a very sophisticated competition in economics.

474
00:58:46.920 --> 00:58:56.920
We go through those medical studies and not really want to make that conclusion as firm as the medical profession does, but it's pretty clear in terms of the relationship.

475
00:58:57.920 --> 00:59:15.920
There's also the issue of smoking is not something that you can really isolate from other habits because by and large people who are smokers have similar other habits

476
00:59:15.920 --> 00:59:45.920
You're right. I remember this came up. One of the cases that when they were making the case against smoking, the government estimated the economic costs of excess absenteeism comparing smokers with non-smokers, but if you look at smokers, they also are disproportionately male, disproportionately blue collar workers, disproportionately heavy drinkers.

477
00:59:45.920 --> 00:59:52.720
and so they have all the characteristics that are associated with absence from work

478
00:59:52.720 --> 00:59:57.920
and even single men are more inclined to smoke than married men

479
00:59:57.920 --> 01:00:03.620
and so the studies took only the one variable into account

480
01:00:03.620 --> 01:00:08.420
and I know that the people who were doing that were aware of what they were doing

481
01:00:08.420 --> 01:00:13.420
but they got a bigger number if they did it dishonestly than if they did it honestly

482
01:00:13.420 --> 01:00:24.420
And, in fact, I never doubted. I mean, I really thought the case against smoking was so strong that there was no reason to fudge the numbers, and I believe the government numbers.

483
01:00:24.420 --> 01:00:35.420
And then when we looked into it, what we found is that they had a strong case in some respects, and they weren't content with the strong case.

484
01:00:35.420 --> 01:00:44.420
In some cases they wanted to exaggerate it, and once you do that then you really start wondering about what else is going on here.