Tobacco Deal Won't Help Obesity
Stanford Review Says Settlements Not The Way To Combat Health Issues
Mar 23, 2007
In a recent visit to the United Arab Emirates, Prince Charles made an "off-the-cuff" remark wondering why that nation didn't simply banish McDonald's from its culture. Speaking as one monarch to another, he apparently felt comfortable with the idea that imposing mandated dietary health restrictions on the people is one of the good things about being a Prince. After all, it seems to have worked for the tobacco lawyers.
The belief that healthy consumption habits can be forced upon the public undoubtedly emanates from recent legal battles played out in the media regarding cigarettes.
The MSA "solution"
Legal solutions like the "Master Tobacco Settlement Agreement (MSA)" - which provided billions of dollars in negotiated penalties to the states and national government by multiple tobacco conglomerates - have seemed to have a psychological and financial impact on smoking. It has generated tons of money and consumer behavior change.
Which is why, as more players turn their attention to fast food and obesity concerns, advocates and health specialists alike believe that what's good for smokers is great for over-eaters. The fast food industry, after all, has the built-in advantage of drive-thrus that could easily serve up super-size legal payments to just about any lawyer hungry for a fee.
The economic impact
Unfortunately for those who have invested their hopes in MSA-type remedies, economic analyses are starting to call into question the success of the MSA, and, by implication, its extension to anti-burger solutions.
Stanford economist Jeremy Bulow is out front with such assessments about these tobacco solutions. His reviews of the governmental and economic impacts show that the MSA-imposed penalties are hardly a windfall of any kind. His conclusions indicate that solutions imposed by courts (or by implication, future Kings?) may do more harm than would result if natural market forces and pricing were allow to reflect the true costs of bad habits.
"In reality," Bulow says in a recent posting from the 2006 Milken Institute Review, "the (MSA) settlement preserved tobacco companies' profits while it gave the trial lawyers an incredibly large ongoing source of income gouged from the hides of smokers and handed state politicians bragging rights as Davids to Big Tobacco's Goliaths."
Settlements not quite what they appeared to be
The problem appears to be that many states did not understand the agreement when they signed it; they just saw it as a chance to get come cash to slay the monster health care costs heading their way.
Time has shown, however, that many states are not only getting fewer dollars than expected, but also that the terms of the MSA penalties are requiring that tobacco products remain on the shelves.
Many states had hoped that they would be able to reduce their health expenditures because of these mega-tobacco payments, thus freeing their other dollars for emerging health concerns, such as heart and weight problems. No such correlations are surfacing, however. New legal suits being brought by tobacco companies may successfully claim that, because of education efforts on behalf of the states, their profts are being hurt unfairly. After all, these efforts by the states go beyond the penalties imposed by the MSA.
"Straightforward taxes on cigarettes," Bulow opines, "would be fairer and have a more neutral impact on competing manufacturers."
What impact on the fast-food nation?
Which leaves those wanting money for obesity issues wondering what their strategic move should be. Should they look to taxing fast food burger joints directly? Or should they just stick with using their lawyers to go after whatever dollars they can get?
Right now the answers remain unclear. But the fast food industry seems worried. McDonald's lawyers responded instantly to the future King's comments, making sure that their legal defenses were ready to arise to whatever occasion - undoubtedly with a hefty price tag.
Interestingly, however, there are other potential solutions brewing. Nations like Brazil have shown that consumer and neighborhood empowerment has an interesting place at the food table, and at least one local involvement strategy might generate its own fountain of money for as little as a Nickel-a-Meal.
