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Report on a Savarese "brain-storming" meeting with the leaders of the Cash for Comments Economists Network

1988 Feb 2 James Savarese reports to the Tobacco Institute on a "brain-storming" meeting with a "core group of economists and lawyers to exchange thoughts and ideas on the Social Cost issue. [The total cost to the economy of smoking: related to health, pollution, cleaning, etc.]. Their goal was to determine project priorities and making assignments for 1988. The meeting was directed at ... [attacking] Anti-smoking activists [who] have distorted the issue of Social Cost. Even though economists ridicule their statistics, [the] politicians and the press believe them.
The core group of economists were:

[Note: This is lobbying pure and simple: The report's conclusions contain outright admissions. They expose the scientific and academic subterfuges being employed. This is not the result of a simple difference in economic opinion: network members were knowingly acting as paid lobbyists.]

Report Conclusions:

  • The higher rate of illness of smokers is a 'private cost' not a social cost '[and therefore should be ignored!]
  • It is not politically useful for us to argue the primary health statistics.
  • Up to this time, ETS has not been translated effectively by the opposition into cost numbers. Rather, it is a regulatory issue.
  • We cannot afford to lose the argument among people who think they are being harmed by ETS. If ETS causes harm, it becomes a classic case of real social cost.
  • We must make sure that primary costs of smoking be kept out of any social cost calculation. We must separate primary smoking statistics from ETS statistics.
  • More research is needed on ETS in order to deny health consequences.

Primary assumptions that need to be countered.

  • Insurance and Health Costs:
Health problems exist for smokers.
The cost for health care due to excess illness or death of smokers equals smokers' cost to society.
Insurance premium -- Discounts for non-smoker (not justified?)
Pension Plans -- Increased mortality rates saves money
  • Productivity and Absenteeism:
Smokers are absent more frequently than non-smokers.
The time spent by a employee smoking on the job is time spent not working. These factors make the smoker a less productive member of society than a non-smoker.
The worker bears the cost of absenteeism via fewer raises, less advancement, or termination. Society bears no burden.
  • Social Security and Medicare:
Based on lifetime calculations, smokers should be getting a rebate. We should propose a rebate program, rather than a tax program.
If non-smokers live longer, when the baby boomers reach retirement age, very high tax rates will be necessary to finance Medicare and Social Security.
If smoking is banned, it would cause some serious problems in future years.
Note: see here the infamous Death benefits argument... (paraphrased as...) "When people die young they are less of a burden on society."
  • Fires: It is not a social cost for a smoker to burn his house down, just a private cost.
Social cost only exists if a neighbor's house burns down (a much smaller number).
  • ETS: Blanket smoking.restrictions raise costs to private employers.
If restrictions are cost effective, individual companies will adopt them.

Goals: As a result of this meeting, we should devise a specific plan and timetable of implementation with assignments for specific projects.

We need to review and critique existing materials and develop our own core of research.
Note: They then allocated research projects to the economists and discussed additional ideas which might prove useful to the industry.
Both the Southern and Eastern Economic Association presented forums at which the economists could present papers and ...
  • Tollison is looking for one or two others.
  • (potentially a) major session at a university to bring together all relevant research on Social Cost will be planned after projects are completed.
  • Proceedings will be published in a monograph.   [1]