Friday 27 April 2012

Great logic

A couple of academics have thrown their lot in with the plain packaging campaigners, claiming that it would be a "costless experiment that provides valuable information on the effectiveness of plain packaging at almost zero public cost". On the subject of counterfeiting, they come up with this gem:

Likewise, the concern that there will be a substantial increase in unbranded or counterfeit cigarette supply is unfounded. What is more likely is that the introduction of plain packaging will make cigarette production far cheaper, therefore making the illegal market less profitable, and less cost effective.

It is surely undeniable that banning all branding will lead to a "substantial increase" in the supply of unbranded cigarettes. That is kind of the point, no?

As for counterfeiting, I'll have a glass of whatever these guys have been drinking. Let me get this straight - plain packaging will make cigarette production "far cheaper", but only for those who produce cigarettes in the legal market? For counterfeiters, however, the efficiency savings of only having to produce one pack design instead of 200 will miraculously not apply. Furthermore, these counter-feiters will be driven out of business because Big Tobacco will be so much more cost effective. I see...

Of course, the only way the legal market could beat the illicit market would be by driving down prices, since low prices are the USP of counterfeit goods, but this apparently will not happen in practice because the government will yet again put up taxes.

'The claim from the tobacco industry that plain packaging will potentially reduce cigarette prices, is likely to be correct,' says Professor Clarke. 'But this price decline can be readily offset by increases in the tobacco excise.'

In summary, then, plain packaging will make it cheaper and easier to manufacture cigarette packs, but not if you're a counterfeiter. The government will then increase cigarette prices which - despite the fact that the illicit trade exists solely because of artifically high prices in the first place - will mysteriously make illicit cigarettes less appealing and less profitable.

Anti-smoking economics - like normal economics but in reverse.


Jonathan Bagley said...

Exactly. Increasing excise duty increases counterfeiting as it increases the difference between the cost price and the selling price; no matter whether the cartons are plain. The same principle works with designer clothes. Print a logo on a £2 T-shirt and sell it for £25. People are going to produce cheap copies. And the simpler the logo, the easier it is to produce the copies.

Smoking Hot said...

Glad l've not got any kids in the university where them 2 buffonos are! Jeez!

Anonymous said...

"Smoking causes cancer" "Smoking causes blindness". These warnings do not work. Why? Because people do not believe. And why people do not believe? Because people are rational. In fact, they know smokers who died very old and did not have any of these diseases. And they know nonsmokers who had one or more of these illnesses allegedly related to tobacco. Therefore, smoking is not a necessary nor a sufficient cause. So these warnings are lies and people know it. But the antis would say that smoking increases the probability... etc. Why, then, they do not put these (their) truth in the warnings? Why do not they just say "most of the medical community believes that smoking causes cancer?" This would be a rational argument capable of persuade people strongly risk averse. But smokers and young people are not strongly risk averse. Therefore, the antis appeal to fear and lack of information in the hope that it convinces mainly non-smokers. And get nonsmokers to exert social pressure on smokers. The antis have another explanation. The warnings do not work because smokers are not rational: the addiction speaks for them. This argument is good for themselves, because it justifies what is intrinsically a desire for power. But it is a very bad argument from the standpoint of a rational discussion. It is invalid because it denies to others what we demand for ourselves. (Apologies for the very bad English.)

prog said...

Good point anon. At the very least, most smokers believe/hope it won't happen to them. They also see non smokers contracting or dying from so-called smoking related diseases.

One major error the antis made was to lump all smokers together. That is, to no longer recognise that light/moderate smoking is far less risky than, say, a 40+/day habit. But they had to do this in order to justify the passive smoking claims. After all, if a couple of fags/day are not really endangering health then ETS isn't really something to worry about.

In fact, it's the heavy smokers that are skewing the averages. The same applies for those with poor diet or high alcohol consumption.

Jonathan Bagley said...

Well said prog. In the seventies the advice included cutting down, smoking low tar cigarettes and switching to cigars or a pipe. As you say, this advice can't now be given because of the passive smoking claims. To make matters worse, a large proportion of smokers now smoke unfiltered roll ups because of the huge price increases campaigned for by the anti smoking industry.

Mallon said...

It would be interesting to see the EU demand that Apple take their cute little logo of all of it's products and that Mercedes remove their badge from their cars.