We’ve Stopped Spending (rpt)

I’ve decided to leave this post up for the time being, so that a few more people can read and perhaps add to the comments under it, all of which make a strong case that smoking bans have a far greater negative impact on the economy than is often suggested.

In the comments earlier today, Jax wrote that smoking bans had kicked off the economic slowdown. I was making a similar point a few months back in The Unhappy Shopper. But I’ve never been entirely convinced that smoking bans actually started the slowdown. But the argument isn’t a new one. It was used during US Prohibition (see right).

In our own tobacco prohibition era, ASH’s Deborah Arnott denies that smoking bans cut spending and reduce tax revenues.

DA: “People pay tax on different things. If you’re not spending the money on cigarettes, which just goes up in smoke, you’ll spend the money on other things.”

Do people really “spend the money on other things”? I certainly haven’t been. I can’t really think of any spending of mine that has increased since the smoking ban to compensate for the decrease in the money I spend in cafes and pubs and restaurants.

I now spend most of my time at home. And much of that time is spent online, or reading library books, or writing computer programmes, or thinking – and I don’t spend much money doing these things. I only make brief forays outdoors, and then mostly to just buy food. After all, for smokers it’s become a hostile, forbidding world out there. We’re not welcome. So I’ve been saving on petrol, and on shoe leather, and on clothes. And taxi and train fares. And also on the cakes and chocolates and books and magazines that I once used to buy on impulse.

There’s also been a cultural withdrawal on my part. I no longer buy any newspapers. And I no longer watch TV (and so pay no TV licence). I’ve been to see just one movie in the past five years. It’s become their culture. It’s not my culture any more. It’s not even my country any more. It’s been taken over by a bunch of Nazis, most of whom are as unelected as Deborah Arnott.

And, while I’m smoking pretty much as much as I ever did, quite a lot of the money I spend on it has gone abroad – either on black market tobacco, or on stuff that I’ve bought abroad (e.g. Spain) -. So while I continue to spend money on tobacco, a lot of it isn’t going into the UK economy.

The main point is that I’m not “spending money on other things”. Nor am I likely to start spending any time soon.  For even if I had a sudden windfall of cash, what the hell would I spend it on?

Here’s Rose’s comment:

It occured to me that I haven’t needed to use a taxi since July 2007.

I haven’t bought a dress to go out for the evening, because I haven’t needed one.

Nor bought a lipstick.

I found a receipt from my favourite hotel dated from April 2007, it was the last time I stayed there for the weekend.

I don’t vist teashops any more, I buy something from the bakery and take it home.

And Lou’s comment:

It’s not smokers alone. Most have family, almost all have friends – and they feature in this too. At least the sensitive ones do in my experience. Now, when I visit, it’s a case of something knocked up at home, or a takeaway, whereas previously it would have been the works and possibly a second coffee and several fags in a restaurant.

These are just one day’s comments on my blog. A few days back Leg-iron was saying the same:

I haven’t been inside a cinema or a restaurant since the ban came in and soon stopped using cafes too. It’s not relaxing to be made unwelcome, so why on Earth would I pay extra for it? I drink my tea and coffee at home too, and bought an espresso machine a few years back as a direct result of the smoking ban. It’s a Gaggia Cubika and it’s excellent.

In fact, it’s rather hard to imagine what else banned smokers might spend their money on. Is it really likely that they’d say, “No worries, I’ll just take up scuba diving instead”? Or, “Now’s my chance to build up a great stamp collection”? The mere fact that people have money in their pockets doesn’t mean they’re going to spend it – particularly when there is no longer much for them to spend it on.

The message is the same from all four: We’ve Stopped Spending. And when people like us stop spending, other people stop earning. And that means that business everywhere becomes depressed, and companies go bust, and people lose their jobs.

And when it’s about a quarter of the population that stops spending – stops buying drinks in pubs, or coffee in cafes, or meals in restaurants, that is bound to have an impact on the whole economy. When I lived in Devon, before the ban I used to buy just one pint of lager at the River every day, and occasionally two. Back then it cost about £2.50 a pint. So that’s easily £1000 per year. Add on everything else I stopped spending (restaurant food, teas, coffees, newspapers, etc), and it’s probably £2000 a year I stopped spending. If Britain’s 13 million smokers also stopped spending that amount, it adds up to £26 billion per annum. In 2009 the UK hospitality industry added some £33 billion in gross value to the UK economy total of £860 billion GVA (see also). “Gross value added” is the difference between the sale price and the production cost of a product. So if Britain’s smokers stopped buying a pint of lager and a pasty and chips (or their equivalent) every day, that’s about 3% of the UK economy gone missing. And not all of it would be lost in the hospitality sector.

So what does it take to cause a recession?