Although cigarettes are without a doubt bad for your health, especially when consumed regularly, my small libertarian perspective on life has made me naturally skeptical of the anti-tobacco movement. But even if you don't share my live-and-let-live philosophy, there are some pragmatic and empirical arguments to be made against several of the measures promoted by the very well-organized and very well-funded worldwide anti-tobacco movement.
One such measure often touted here in Canada is "plain packaging," which involves removing from cigarette packages all logos, colours, and lettering associated with companies' brands and replacing them with a picture of a lung that looks like an overcooked chicken breast. And/or covering the pack with the dullest color you can imagine. Such graphic health warnings already appear on cigarette packs here in Canada, but some people are always pushing to enlarge these warnings and to remove all elements of intellectual property (logo, colours).
Australia went down this road in 2012. Under their current legislation, companies are forced to sell their cigarettes in bleak brown, logo-free packaging. The Australian government said the policy would reduce smoking. But one year later, the data showed that Australia's policy experiment didn't have the effect the government intended. If anything, the opposite seemed to happen.
According to a recent KPMG study, total tobacco consumption rose slightly in 2013. This was largely driven by the growing use of illicit products (+5.4 per cent), while legal domestic consumption stayed relatively flat (+0.7 per cent). In fact, the illegal consumption of tobacco reached record levels, growing from 11.8 per cent in 2012 to 13.9 per cent in 2013. What was the key driver of this growth? A large increase in the consumption of illegal, branded cigarettes, primarily in the form of contraband. Not exactly a policy success in my book. Now, these numbers cover just a few months, since the measure is new, so it will take some more time before the real impact can be determined.
Not only is this measure apparently ineffective, but it has also hurt Australian businesses. Indeed, according to another study, 69 per cent of small retailers said plain packaging was having a negative impact on their businesses overall.
Moreover, Australia's plain packaging law is an unprecedented destruction of brands, and therefore of private property. Its introduction has demolished a fundamental characteristic of a competitive marketplace, as the benefits of branding are well understood. From the consumer's point of view, the function of a brand name is to convey information about a producer's reputation, so that these producers have an incentive to maintain the quality of their products in order to preserve the value of their brands. This plain packaging nonsense is a classic case of a policy that focuses on "good intentions" rather than "good results."
It also raises the question of whether anti-tobacco groups aren't first and foremost anti-legal tobacco companies, rather than pro-health groups. After all, proponents of plain packaging have long realized that its health effects would be marginal, as illustrated by an expert panel study commissioned by Health Canada in 1995, whose conclusions were, at best, ambivalent.
Governments have the responsibility to ensure that the laws they pass meet their stated goals, are evaluated based on objective standards, and do not entail negative consequences such as boosting the illegal market at the expense of legitimate manufacturers and retailers.
Or to put it another way: Any measure that proposes to attack private property and intellectual property the way this measure does has to be very well justified, and backed by solid empirical data. This is simply not the case when it comes to plain packaging.
Michel Kelly-Gagnon is President and CEO of the Montreal Economic Institute. The views reflected in this column are his own.