Think Again: Tobacco

For tobacco control advocates, the tobacco industry is public health enemy number one: It sells a commodity that will kill 500 million of the 6 billion people living today. For governments, tobacco is both a health threat and a powerful economic force that annually generates hundreds of billions of dollars in sales and billions more in tax revenues. That clash of interests fuels a debate ensnarling everything from farm subsidies and export controls to healthcare spending, taxation, law enforcement, and free speech.

BY KENNETH E. WARNER | MAY 1, 2002

"Antismoking Policies Are Hazardous to a Nation's Economic Health"

Not true, for all but a handful of countries. The tobacco industry accounts for significant economic activity in many countries through farming and product manufacture, distribution, and sales. According to a recent World Bank study, an estimated 33 million people worldwide farm tobacco either full or part time. About another 10 million workers provide materials and services to the tobacco industry (harvesting equipment, cigarette papers, insurance, shipping, etc.). China, the world's largest consumer and producer of tobacco, has an estimated 15 million tobacco farmers. Substantial tobacco sectors also exist in India, Indonesia, Thailand, Turkey, Egypt, Bangladesh, and the Philippines. Malawi and Zimbabwe are major net exporters of tobacco and depend on tobacco leaf for a far larger share of total exports (60 percent and 23 percent, respectively) than any other nation.

But typically, in the vast majority of countries, tobacco represents no more than a small fraction of gross domestic product. And in those nations with large tobacco sectors, significant economic presence does not necessarily imply significant economic dependence. If money is not spent on cigarettes, it will be reallocated to other goods and services. This alternative spending pattern, in turn, will produce essentially the same number of jobs as would spending on tobacco. The only real cost of moving from spending on tobacco to spending on other products and services is the cost of transition from one economic activity to others. But since smoking is so addictive and policies designed to reduce smoking work so gradually (over a period of many years), transition costs will be tiny. Indeed, reductions in smoking won't throw tobacco farmers out of work. Rather, fewer of their children will go into tobacco farming as a career. The transition to non-tobacco economic activity will occur through normal attrition, such as retirement and death.

Tobacco industry executives shed crocodile tears for farmers and factory workers allegedly harmed by antismoking policies, but the industry itself is frequently responsible for their economic woes. The purchase of imported tobacco cuts into domestic farming. Mechanization of cigarette production plants costs factory workers their jobs. And wholesale price hikes that enhance companies' bottom lines reduce cigarette sales, thereby threatening tobacco jobs every bit as effectively as do the tax hikes the industry so vigorously opposes.

 SUBJECTS: HEALTH, BUSINESS
 

Kenneth E. Warner is the Avedis Donabedian distinguished university professor of public health at the University of Michigan and director of the university’s Tobacco Research Network.