Foolish Politicians, Nannies and Wowsers

Prohibition Redux

The old adage from George Santayana runs, those who do not learn from history are condemned to repeat it.  A corollary is the proverb, a hundred blows on the back of a fool make no impression (Proverbs 17:10), but a word to the wise is sufficient. 

History has illustrated and taught repeatedly that when the state overreaches to ban or criminalise something as contraband (all for our own good, of course), criminals get richer and stronger.  It happens every time.  When governments overreach to ban tobacco and cigarettes, or tax them out of existence, it becomes, in the words of Yogi Berra, deja vu all over again. 

This, from Breitbart London:

Bootleg Tobacco

By David Atherton  
3 Apr 2014, 4:55 AM

New York City is set to challenge an epidemic of bootleg tobacco as a result of high taxes on cigarettes. The situation is similar to other areas of the world, where criminal gangs are finding themselves by selling cheaper tobacco to people who cannot afford the higher prices of legitimate cigarettes.

New York State has a $4.35 tax on a pack of cigarettes and Michael Bloomberg, when city Mayor, added another $1.50. Missouri by comparison is a paltry 17c. A pack in Kentucky costs $4.96, while nearly another $10.00 at $14.50 is what awaits the smoker in New York.  Bloomberg reports: “. . . someone on a pack-a-day habit over a year will be over $3,500 worse off [in New York state].”  . . . . Consequently New York state has seen an epidemic of bootleg tobacco. It is estimated $7 to $10 billion is lost in state revenue annually.

The situation in New York City is even worse. In a paper published in 2012 by Dr Klaus von Lampe of the Department of Law at John Jay College of Criminal Justice, found that in the South Bronx only 19.4 percent of packs were legally purchased with NYC tax paid.  The New York Post reports that: “In an effort to crack down on the sale of illegal smokes in New York, Cuomo is set to announce Monday a 13-agency task force dedicated to keeping illegal cigarettes out of the state.  “This new law-enforcement strategy will help to crack down on these illegal cigarette sales and capture those smugglers who seek to evade the law and rob the state of the revenue it is rightly owed,” Cuomo said. . . .

The people behind the smuggling operations are diverse and sinister. Action on Smoking and Health (ASH) Scotland says the culprits are “Chinese Triads…The Taliban, al-Qaeda, Hezbollah, and the Kurdistan Workers Party.” In Europe, the miscreants are allegedly the Russian Mafia, Real IRA and Provisional IRA Certainly, the high profile convictions in New York City of Basel Ramadan and Youssef Odeh in October last year, are alleged to have extremist Islamist ties. They funded themselves by importing cigarettes from Virginia and are also accused of soliciting the murder of witnesses.

In Europe, matters follow a similar pattern. Cigarettes are even more expensive than America where in the UK a pack costs £9.00 ($15.00), Norway £10 ($16.60) and Ireland £7.80 ($9.50).  The Irish Tobacco Manufacturers Association has released new data claiming that 28.3 percent of all tobacco is paid without duty. In Norway the figure is 49.2 percent.  Britain’s relatively low smuggling rate of 15.6 percent can be put partly down to smokers crossing the Channel to legally buy Belgium tobacco in Adinkerke. As long as they are for personal consumption you can bring back as much as you like.

There are two ways this situation can be dealt with, either enforcement or lower taxation. As you imagine, Sheila Duffy of ASH Scotland prefers enforcement. She said to me today “The key way to tackle the illicit trade it through enforcement.  Improved enforcement, and restrictions on the smuggling links of tobacco companies themselves, has seen illicit tobacco in the UK consistently decline over the last decade, while tobacco regulation has increased.”

While Simon Clark from the smokers group Forest said to me, “Instead of launching a cigarette smuggling task force, paid for with public money, they should reduce tobacco taxation. It’s not rocket science!”

Whether either option gets adopted or in part, tobacco smuggling threatens to not only undermine legitimate businesses but, worryingly, the rule of law too.

American Prohibition saw nearly a whole society turned into deliberate or unwitting criminals.

Government Wowsering

Up in Smoke

In New Zealand we have a messianic crusade to make the country “smoke free” by 2025.  The definition of this paradisaical state is as follows:

 What does Smokefree New Zealand 2025 mean?

• Our children and grandchildren will be free from exposure to tobacco and tobacco use

• The smoking prevalence across all populations will be <5%. The goal is not a ban on smoking.

• Tobacco will be difficult to sell and supply.  [http://smokefree.org.nz/smokefree-2025]

Of course this is being promulgated by government and its agencies, and driven by particular wowser-politicians.  We do not question the motives of said protagonists.  Smoking can cause much harm.  But we do question the wisdom of the wowsers. 

Moreover, we are also deeply sceptical of government promoted programmes and causes where the underlying object is to restrain government spending on health (as is the case of the anti-tobacco movement).  The reason is straightforward: when an entire population (that is, more than 5 percent) is dependant upon government provided healthcare, the government has been given a license to control human behaviour to an extraordinary extent for its own ends.  In this case, the broader campaign against smoking shows every sign of not being driven primarily by concern over smokers welfare, but by a desire to restrain public health expenditure.

The fiscal logic is simple: less smoking mean less smoking related diseases which, in turn means, less government spending on health.  Such logic is pernicious in that it “proves” far too much.  It can (and has) rapidly extended to arguments for nanny controls over food, diet, exercise, and drinking. 

In addition, the fiscal argument is just sloppy.  It is relentlessly self-defeating.  The cold fact is that from a fiscal perspective once medicine and health is socialised and paid for out of the public purse, the sooner people die off, the less expenditure impact upon government revenues.  Thus, from a fiscal perspective alone, the more people that smoke and become obese the better.  The shorter the life span, the less the cost to the government (and the taxpayer), because the biggest costs always occur towards the end of life, particularly when, as is the case in New Zealand, we have a universal, non-means tested, taxpayer funded, retirement income scheme. 

In the end, then, the wowser campaign against tobacco falls back on humanitarian concerns–trying to prevent people from harming themselves.  This is a highly tendentious position, particularly because the actual results are likely to be desultory.  And the unintended consequences are adverse to say the least. 

One of our daily newspapers carried a “canary in the mine” story about how people are likely to respond to ever increasing taxation costs upon tobacco (the key strategy being employed to make people stop smoking):

A Southland woman is beating tobacco tax price hikes by turning over a new leaf and growing her own. Liz, who does not want her surname published for fears someone might steal her crop, has been growing, curing, and smoking her own tobacco for about two years.  She and her partner each smoked about 50 grams of loose, roll your own tobacco per week, she said.  “Who wants to pay $60 a week for something you can grow yourself for less than $5?”

Each plant provides about 100 grams of tobacco, and takes four to six months to grow, she said.  Liz said that after picking the leaves, she hangs them and leaves them to “colour cure”. . . .  The plants grow to up to 2 metres tall, and Liz grows them throughout her garden at home.  “I’ve got about 30 in at the moment, they grow really well down here but they can’t go anywhere near frost so you have to get your seasons right,” she said.

It is legal to buy seeds, grow and smoke tobacco for personal use in New Zealand, but against the law to sell or give away home grown tobacco away.

We have seen the home-brew market grow substantially in New Zealand–and that without any substantial restrictions upon the sale of alcohol.  We have also seen an explosion in home poultry.  The opportunity of saving around $60 per week will  no doubt generate a huge expansion in home-grown tobacco. 

How are the wowsers and the nannies likely to respond?  By campaigning to make home-grown tobacco illegal.  And that is when the trade will become extremely profitable to criminal gangs and smugglers. 

One wonders how many times we have to repeat this kind of folly before we learn. 

Unintended Consequences

Prohibition Works Out Well for Criminal Gangs

It is universally acknowledged that Prohibition was a failure in the United States in the 1920’s.  Not only did it fail in preventing access to alcohol, it proved a boon for criminal gangs which were able to prosper significantly manufacturing and selling contraband alcohol.  But, as we are well aware, those who do not learn history’s lessons are condemned to repeat them.  Consequently, we find many voices clamouring for prohibitions of various kinds in our day.  Dumb and dumber.

As with the Prohibition movement early last century, there are always plenty of social evils to garnish the argument for prohibiting whatever the evil substance du jour  might be.  Tobacco is the biggie at the moment.  New Zealand has a diverse bunch of wowsers who have publicly committed to making New Zealand “smoke free” by 2025.
  There are lots of incremental steps which are being proposed along the way to get us closer to prohibition heaven: steeply rising excise taxes upon tobacco; banning all smoking in all public places, in cars, on beaches, in places of work; ghastly photographs on cigarette packages accompanying the health warnings; growing restrictions upon advertising; and plain packaging.

In these matters we are following along after Australia. As we lemming along in its wake it is starting to become clear that the unintended perverse effects of Prohibition in the United States are very much alive in Australia more than a century later.  Funny that.  Criminal gangs are flourishing off the (now) illicit cigarette trade, which means that they are able to fund and facilitate expansion into other “business lines” (exactly as occurred in the United States).  Smoking is starting to rise, since contraband has a coolness and an allure which is more attractive than legal products.  And the punitive excise rates upon tobacco which are designed to price it off the market have simply opened up enormous profitable arbitrage opportunities for smugglers.

KPMG has produced an analysis of the unintended (but inevitable) effects of Australia’s “war” on tobacco.  No doubt the wowsers feel more self-righteous, but their folly and ignorance is going to end up doing great harm.  Some people will never learn.  This from the Herald Sun:

ILLEGAL tobacco is booming across Australia, funding international criminal gangs, and costing taxpayers more than $1 billion each year.  And the introduction of plain packaging for legal cigarettes has failed, according to a report released this morning.  That report states that ­tobacco consumption in Australia will rise this year for the first time since 2003.  Demand for cheap counterfeit and contraband cigarettes is accelerating, driven by excise increases on legitimate tobacco.  And shops dispensing ­illegal tobacco do so with ­apparent impunity, despite a fine of up to $340,000 for selling a single packet.

The Tobacco Plain Packaging Act, passed in 2011, made Australia the first country to remove all logos, colour and design from cigarette packets.  But a report compiled by the international auditing firm, KPMG, and released exclusively to the Herald Sun, shows that while sales of legal cigarettes and tobacco have slipped slightly in the past 12 months, surging demand for counterfeit and contraband cigarettes and chop chop tobacco has more than made up that shortfall.

The KPMG report was commissioned by big players in the legal tobacco industry. . . .

Despite the bust last month of one illegal tobacco importation ring and the discovery of a huge haul of illegal tobacco in 16 shipping containers at Melbourne’s docks, that is the tip of the iceberg, according to KPMG.   In that raid, Victorian police arrested 10 people and seized 71 tonnes of tobacco along with 81 million cigarettes.The haul would have avoided $67 million in excises. Tellingly, guns and other weapons were also found.

But KPMG estimates that 1433 tonnes of illegal tobacco has entered Australia in the last 12 months, an increase of 154 per cent.  It calculates that illicit tobacco is 13.3 per cent of total Australian sales and getting towards a market share enjoyed here by the world’s biggest manufacturer, Imperial Tobacco.  Contributing to the problem is that Australians are paying not much short of $20 for a packet of cigarettes, while the same or equivalent brands in our region might be as low as $1.08 in countries such as Vietnam, Cambodia, the Philippines, Indonesia or South Korea, a common source of our illicit tobacco.

The upshot is that NZ wowsers are as stupid as Australian wowsers.  No surprises there.  Australians are dumb.  Yet we New Zealanders are dumber still.  We get to pursue our wowsering even whilst the bad consequences of Australia’s folly are emerging as we speak.  Now what does that tell us about ourselves?  

Sideswipe

Ineffectual Wowsers

. . . The next step, if the Government follows Australia’s lead, is to allow cigarettes to be sold only in identical packets – probably a dirty brown, featuring pictorial health warnings even more gruesome that those they already carry. The manufacturer’s brand would be permitted only in small type somewhere.

When this rule came into force across the Tasman, a French manufacturer put a line on sale in Europe featuring a kangaroo on the packet and the legend: “Popular in Australia.” So much for fun.

John Roughan
NZ Herald

No Idea What Freedom Means

Swaddled in Kindness That Kills

People have a right to go to the grave in their own way.  It’s called freedom.  Necessarily contingent to the ethic of freedom is that we have a human right to damage to ourselves, undermine our own health, shorten our lives by stupid habits, and otherwise act to our own destruction. Not before God, mind–but before civic authorities.

The most oft-heart objection to freedom arises out of social welfare: since the cost of paying for damage is collectivised in our kookie world, those who damage themselves–by what they eat, or drink, or ingest, for example–end up costing the collective.  So, they must be made to stop it.

Rubbish.
  Economic models have demonstrated repeatedly that people who live short, relatively diseased lives cost the Exchequer far less than those who live long lives of physical probity.  The people with stupid self-harming behaviours actually do the Exchequer (that is, all of the rest of us) a great good.  They are saving us all money.

In the United States, Michelle Obama has accepted the duty to be the nation’s Mother–lecturing all and sundry about the duty of healthy eating.  Mayor Bloomberg, wowser-in-chief, has banned just about everything ingestible to improve public health and to fight obesity in New York.  Both–along with all their confabulating confederates–are enemies of human freedom.

Far, far more salutary would be a very simple message: take responsibility for yourself and face the consequences of your actions.  That’s what a freedom is after all.   Therefore, you have a right to be stupid, to do damage to yourself, to shorten your own life, to impoverish yourself, and to engage in your own destruction. And the rest of us will defend your right to do it, even while choosing other courses.

Ironically, US citizens sing about living “in the land of the free and the home of the brave”.  Nah.  In Bloomberg City and Obamaland US citizens live in the land of the wowser and the home of the cocooned.  “We know what’s best for you, so do what we say.”

Yes, we shall.  Mayor Bloomberg is our Father and Michelle is our Mother.  Will you sing nursery rhymes to us as you swaddle us in our beds?