Tobacco Woes

By Sandra Howe
Staff Writer

American cigarette manufacturers seemingly are in the fight of their lives, reeling under attacks from the public, media and politicians. But the industry has weathered such battles before, according to Adj. Prof. Richard McGowan, SJ (Economics), because g overnment could not bring itself to effectively regulate cigarettes.

"It is not only smokers who find it hard to wean themselves off cigarettes," said Fr. McGowan, who explores the relationship between the tobacco industry and government in his new book, Business, Politics and Cigarettes: Multiple Levels, Multiple Agendas. "The state and federal governments can't quit either, because there would be economic or political consequences."

In the book, Fr. McGowan traces the growth of the nation's tobacco industry, categorizing the opposition and regulation the industry has faced into three "waves." The two previous regulatory phases had a significant im pact on the industry, he said, yet also gave it new opportunities for growth. While the current wave appears ready to inundate cigarette manufacturers, Fr. McGowan says they will almost certainly survive this crisis, too.

"The cigarette industry is one which has experienced constant and repeated interventions from every branch and level of government," Fr. McGowan said. " I think they can survive any future obstacles, because they have been able to evolve and turn potentially negative situations into potentially positive ones."

Fr. McGowan found that the only government measure which has hurt cigarette sales is an increased excise tax. While cigarette taxes are politically popular in certain parts of the country -- like the Northeast -- they are not implemented vigorously enough to make people quit, he said. Too often, he said, state governments become more concerned with their economic or political self-interest, and put revenue ahead of health issues. Fr. McGowan pointed to Massachuset ts' recent excise tax increase of 25 cents per pack, which prompted New Hampshire to lower its tax in an attempt to lure cigarette buyers -- and tax revenue -- across the border.

"If the states were serious about getting consumers to stop buying cigarettes, they would double the excise tax right now and get it over with," said Fr. McGowan. " A move like that, however, might discourage too many people from buying cigarettes and therefore make the states lose precious revenue."

This paradoxical relationship between government and the to bacco industry goes back to the early 20th century, Fr. McGowan said, when the federal government broke the monopoly of the American Tobacco Co. Six firms emerged as a result, each with one brand of unfiltered cigarettes. But the competition that emerged focused on marketing and image, not price, to entice smokers to switch from pipes and cigars to cigarettes. The government's attempt to keep prices down was thwarted.

The industry "became a classic oligopoly, a few sellers who can influence price and other market factors," Fr. McGowan said.

The surgeon general' s announcement in 1964 that cigarettes were linked to certain health problems sparked a round of anti-smoking measures, including the counter-productive federal ban on television and radio cigarette advertising. Cigarette brands proliferated, as companies developed filtered cigarettes to make their products appear healthier, Fr. McGowan said.

Though the manufacturers were no longer permitted to advertise on television and radio, the stations were no lon ger required to provide equal air time for anti-smoking public service announcements, and cigarette sales rose. In addition, no new companies were able to enter the market because of limited advertising opportunities, "which solidified the oligopoly," he said.

The controversy over second-hand smoke ushered in the current regulatory wave, Fr. McGowan said, a phase which has seen the rise of state and local government controls, such as the implementation of regional public smoking bans to protect non-smokers. While this wave has yet to crest, Fr. McGowan is looking ahead to the next wave, which he thinks will focus on the debate over the addictiveness of cigarettes. Again, he said, the industry's tenacity should not be underestimated.

"President Clinton is willing to take a chance and lose segments of the country that are sympathetic to the tobacco industry," Fr. McGowan said. "But the measures he has suggested -- like banning vending machine sales and increasing limits on cigarette advertising -- would be ineffective. The industry has already withstood these types of intervention."

Return to Sept. 7 menu

Return to Chronicle Home Page