IEM’s Economic Note • JANUARY 2012 What if tobacco were simply prohibited? by Valentin Petkantchin, associate researcher at the Institut économique Molinari In their fight against smoking, many governments, including the French government, have continued to raise taxes and increase the volume of regulations. This has reached the point where the possibility of tobacco prohibition has been raised openly in some countries, with legislative proposals being put forward. The economic and social effects of prohibition policies have been analysed extensively, with the cure found to be worse than the disease. Prohibition has led to consumption of lower‐quality products posing greater dangers to the health, along with illicit trafficking, contraband, high enforcement costs and a level of corruption that, together, create a burden on public finances and on society as a whole. "DE‐NORMALISATION" OF THE LEGAL A ban on displaying cigarettes at points of sale (under‐the‐ SUPPLY OF TOBACCO counter requirement). This ban already exists in Iceland, Ireland and Norway, with Finland set to follow in 2012. In this era of Internet purchases and globalised exchanges, the idea of prohibiting the sale of a product such as A prohibition on producers' use of graphic tobacco – with a history going back thou‐ presentations (logos, designs, brand images, sands of years1 – may simply appear unreal. etc.) to differentiate their packaging from other brands. This involves imposing so‐ However, driven in particular by the WHO called "neutral" or "generic" packaging.5 Framework Agreement on Tobacco Control, Australia is the first country to impose this which took effect in 2005,2 public authorities measure, starting this year (2012). Legislative in many countries have committed themselves proposals along these lines have been pre‐ to the notion of tougher restrictions on sented in France.6 tobacco consumption and also – something relatively new – on tobacco supply. The stated aim of this regulatory arsenal is the "de‐normalisation" of the tobacco indus‐ Beyond ever‐higher taxes – now more than try, says Yves Bur, a member of the French 80% of French retail cigarette prices3 – and a National Assembly and the originator of one growing number of smoking prohibitions,4 such proposal. this framework convention calls for a series of measures setting new limits on the With demand refusing to disappear,7 this marketing and sale of tobacco. logic, aimed increasingly at suppressing the legal supply of tobacco, could lead down the This incomplete list includes, for example: road to the tobacco industry being nationali‐ sed (a public monopoly that could easily Compulsory health warnings on packages offer "generic" tobacco products) or to the with shocking images aimed at dissuading people from smoking. sale of tobacco being prohibited either de jure (with a prohibition Ten European countries, including France, require these images. by law) or de facto (by gradually making it unprofitable for legal 1. Tobacco was grown by indigenous peoples in America as far back as 6000 B.C. On this subject, see Omar Shafey et al., The Tobacco Atlas, American Cancer Society, 2009, p. 90, available at: http://www.tobaccoatlas.org/downloads/TobaccoAtlas_sm.pdf. 2. "WHO Framework Convention on Tobacco Control," WHO, 2003, available at: http://whqlibdoc.who.int/publications/2003/9242591017.pdf. At the end of 2011, it was adopted by 174 countries, including France. 3. See the French Customs information sheet "La charge fiscale des tabacs, pour l'année 2010," available at: http://www.douane.gouv.fr/page.asp?id=3902 (site visited in January 2012). 4. Whereas in January 2004 no European country prohibited smoking in bars and restaurants, by January 2011 this type of prohibition existed in 16 European countries, including France. See Luk Joossens and Martin Raw, "The Tobacco Control Scale 2010 in Europe", Association of European Cancer Leagues, March 2011, p. 15, available at: http://www.ensp.org/node/576. 5. See the Guidelines for implementation of Article 11 (Packaging and labelling of tobacco products) of the WHO Framework Convention on Tobacco Control, WHO, 2009, p. 31, available at: http://whqlibdoc.who.int/publications/2009/9789241598224_eng.pdf. 6. See the bill proposed by Yves Bur aimed at requiring neutral and standardised cigarette packaging, No. 3005, submitted 7 December 2010. A similar proposal on neutralisation and standardisation of tobacco products (No. 4048) was submitted on 7 December 2011. 7. In France, for example, the percentage of people who smoke went between 2005 and 2010 from 32% to 34% of the population aged 15‐75 — Rapport national ITC France (2011), p. 7. 1 What if tobacco were simply prohibited? suppliers to provide tobacco products). The neo‐prohibitionist option has been discussed by various specialists in the anti‐tobacco Figure 1 8 battle. French economist and public figure Jacques Attali says this Alcohol consumption in the United States between topic should be at the centre of debate in the 2012 French 1910 and 1929 (in gallons of pure alcohol per capita) presidential campaign.9 1.81,8 Some countries have already proposed legislation to this effect. 1.64 1.61,6 1.46 One such bill in Finland calls for the country to become smoke‐free 1.31 by 2040.10 A bill in Iceland aims to prohibit cigarette sales except in 1.41,4 1.24 1.23 1.13 1.17 1.13 pharmacies, and – after 10 years – only with a doctor's prescription.11 1.21,2 1.08 1.08 s n 1 0.9 lo 0.8 Bhutan, a South Asian country, has already taken the plunge. In l ga0.80,8 2004, it enacted a total ban on tobacco sales. This failed to make 0.60,6 consumption disappear, however, and a black market has replaced 0.40,4 0.26 the official market to meet existing demand. As a study notes, 0.20,2 "illegal tobacco smuggling, including black market sales due to the sales ban in Bhutan, remains robust."12 0 Theory and experience confirm the consequences of these types of prohibitionist policy. Source : Clark Warburton, The Economic Results of Prohibition, Columbia University Press, 1932; in Mark Thornton, 1991, op. cit., p. 214. PROHIBITION DOES NOT MAKE CONSUMPTION DISAPPEAR deciding on the products they wish to consume and for which they are prepared to pay the price. By disregarding this, public authori‐ These policies are justified to the public by the notion that ties are putting the cart before the horse. decreeing the prohibition of a product is all it takes for the product to cease being consumed. This reasoning – however tempting its This is why we can observe that prohibition policies do not cause simplicity may be – is, in reality, an illusion. Why is this so? consumption to disappear. And declines in consumption, if they occur, tend not to be long‐lasting. First, it is misleading, because prohibition, though it may increase the financial cost of procuring the forbidden product, does not lead This is what happened during what was undeniably one of the to the disappearance of the ultimate reasons that explain why the western world's harshest prohibition experiences, namely the "dry product is still desired, sought and demanded. law" in force in the United States from 1920 to 1933. According to estimates, while alcohol consumption trended downwards prior to Beyond the issues of addiction and known health risks, it is hard to prohibition, reaching a low point in 1920‐1921 at the start of it, deny that individuals who – however knowingly – decide to smoke, consumption went back up subsequently.13 For example, although get a subjective pleasure in some form or other (excitement, better consumption remained lower than before the First World War, by stress management, peer pressure, etc.). Accordingly, the only 1929 it was five times higher than in 1921 and 16% higher than in lasting way to make tobacco disappear would be for smokers to 1918, in other words before the "dry law" was imposed. decide of their own free will to change their lifestyles and stop smoking, which they can do at any time in the absence of and Similarly, cigarette prohibitions15 were implemented in the 1890s in regardless of any prohibition, as many ex‐smokers have done. the states of Washington, North Dakota, Iowa and Tennessee. Ho‐ wever, as noted in a study, "cigarette use declined between 1896 Prohibition inevitably runs up against consumers' "sovereignty" in and 1902 but then increased continuously until the prohibitions 8. See, for example, Wayne Hall and Robert West, "Thinking about the unthinkable: a de facto prohibition on smoked tobacco products," Addiction, 103, 2008, pp. 873‐874, and Richard Daynard, "Doing the unthinkable (and saving millions of lives)," Tobacco Control, 18, 2009, pp. 2‐3. 9. See Jacques Attali, "Il faut interdire le tabac," L'Express, 9 February 2011, available at: http://www.lexpress.fr/actualite/sciences/sante/il‐faut‐interdire‐le‐tabac_960741.html. In his view, "the time for dithering is over. Everything is clear now: the production, distribution and consumption of tobacco must be prohibited." 10. See "Finland embarks on plan that will ban all smoking," National Business Review, 15 January 2010, available at: http://www.nbr.co.nz/article/finland‐embarks‐plan‐will‐ban‐all‐smoking‐117181. 11. See "Iceland to ban tobacco?," IceNews, 30 May 2011, available at: http://www.icenews.is/index.php/2011/05/30/iceland‐to‐ban‐tobacco/. 12. M. Givel, "History of Bhutan's prohibition of cigarettes: implications for neo‐prohibitionists and their critics," International Journal of Drug Policy, July 2011, 22(4), pp. 306‐10. 13. On this subject, see Mark Thornton, "Alcohol Prohibition Was a Failure," Cato Institute Policy Analysis No. 157, July 1991, available at: http://www.cato.org/pubs/pas/pa157.pdf.