2-4-6-8,who we gonna regulate?

The Democrats are in charge and have decided that the FDA (my personal bete noire) should regulate tobacco. So, how have those shorts on tobacco panned out?

Terrible. As Adam Smith told us in 1776, businesses don't want freedom and a level playing field. They, like incumbent politicians, want protection from innovation and competition. Morgan Stanley and Citigroup analyses both tout the positive effects of the bill on big tobacco's share value. Citigroup says "We believe the results" of regulation "would actually help the major cigarette manufacturers since it would entrench their position further allowing them to maintain market share or increase it."

This is from a Wall Street Journal editorial (paid link) that enumerates the advantages to entrenched providers:

First, the Kennedy bill (co-sponsored by Texas Republican John Cornyn) specifically prohibits the FDA from banning tobacco products, so some in the industry feel this gives the Marlboro Man and the Camel brand a new lease on life.

Second, the call for new advertising restrictions "clearly protects the dominant name-recognized brands," according to Dr. Gilbert Ross, a tobacco specialist at the American Council on Science and Health. Ad restrictions would help Philip Morris freeze in place its 51% of the cigarette market.

Third, the bill would prevent the smokeless tobacco industry from claiming that it is safer than cigarettes, as if they are equally dangerous. The big cigarette makers figure that this will reduce the appeal of smokeless products that are the biggest competitive threat to cigarettes. Never mind that a large share of addicted smokers get sick or die from smoking, while the figure is 1% for users of smokeless tobacco.

Everybody wins, huh? I'm going back to bed now...

110th Congress Posted by jk at March 13, 2007 10:50 AM