Leg-iron thinks that, now that plain packaging is coming to Australia, tobacco companies should pull out:
I still say the tobacco companies should make an example of Australia. Pull out. Close every factory and every warehouse. Source no packaging within Australia. Nothing. Pull out altogether.
I don’t mean ‘threaten to do it’. I don’t mean ‘warn the government you plan to do it’. Justdo it. Start shutting down operations in Australia. Start with those who make the packaging now. You don’t need them any more anyway. Close factories and warehouses. Refuse to import any products to Australia. Let the black market have Australia and let the tax revenue die. See if they can recoup their losses from the anti-tobacco Nazis who have never, and will never, contribute a single penny to any country’s economy.
I follow his reasoning, but it looks to me to be a bit more complicated than that.
Yes, it would knock a big hole in the Australian government’s tax revenues, and one they probably wouldn’t be able to easily recoup elsewhere. They might have to cut government spending. And it would remove the raison-d’etre (and quite possibly the tax funding) of all the antismoking outfits in Australia, which would maybe close down.
But it would also knock a big hole in the tobacco companies’ profits to lose several million Australian customers overnight. Could they recoup it elsewhere? Only if they sold directly to the black market, which I imagine is probably illegal.
And what would happen to Australian smokers? While some of them probably already have access to black market cigarettes, most of them probably don’t. And it would be pretty much ‘cold turkey’ for those who didn’t. Which would probably be a very unpleasant experience for many of them, particularly the older ones. They’d probably get very angry (if they aren’t angry already). And wouldn’t it mean that anyone seen smoking anywhere at all in Australia could only be smoking black market tobacco? What else could they smoke once the tobacco companies had pulled out? And wouldn’t that be the signal for smokers all over Australia to be hauled up in court?
Maybe that would be a good thing. Maybe that would swell the growing global army of angry smokers, and determine them to destroy Tobacco Control and everything it stands for. But then maybe they’d direct their anger at tobacco companies that had left them in the lurch.
And wouldn’t the departure of the tobacco companies be hailed as a first for Australia by ASH and the WHO. “Australia is tobacco-free at last!” they’d gloat. “First Australia, next the world!” Australia’s angry smokers would carry on being ignored, just like angry smokers everywhere else. Mightn’t they take the opportunity to make tobacco illegal in Australia, to make sure the tobacco companies never regained a hold in Australia. They’d lock the door behind the departing tobacco companies.
And would it really hurt the antismoking lobbyists that much? They’re already diversifying into alcohol and food. They’ll still be able to find funding for anti-alcohol and anti-fat and anti-salt lobbying. The target will be different, even if the message will be the same.
Also, while many antismoking lobbyists rely on tax funding, many don’t. The antismoking doctors, for example, probably really do believe – like Sir George Godber – that smoking is a disease just like head lice, or cholera. They really do want to eradicate it. They wouldn’t care if the tax revenues dried up, and they’d leap at the opportunity to make tobacco as illegal as opium or cocaine or cannabis.
Tobacco Control is probably a coalition of interests. The lobbyists would like to keep the tax revenues from tobacco: it’s a nice little earner. But the antismoking doctors, who get their funding elsewhere, won’t care. Divisions could open up in Tobacco Control.
The odd thing though is that it seems to me that the tobacco companies might actually be forced to pull out of Australia whether they want to or not. If their product becomes indistinguishable from any other then, as Chris Snowdon has argued, there’d be a price war between the remaining tobacco companies. Prices would tumble. And those with the most to lose would be the premium brands. And in such price wars, the losers are likely to be driven out of the market completely. And they’d close down. There would only be a few manufacturers of the cheapest cigarettes left.
Which brings me round to another problem I see in Leg-iron’s suggestion, which is that his proposal would only work if all the tobacco companies act in unison, and pull out of Australia. When have the tobacco companies ever acted in unison? Isn’t it more likely that when some pull out, others will remain, and reap big dividends from staying? Isn’t it even likely that new tobacco manufacturers would start up, to take the opportunity created by the departure of the premium brands?
On a slightly different tack, I wonder about the highlighted sentence from Chris Snowdon:
Plain packaging will result in people paying less for their cigarettes for other reasons. The first is that manufacturers operating in a completely “dark market”—ie. one in which they have no communication with their customers—are only able to compete on price.
As I’ve said before, what’s to stop them communicating with their customers on the inside of the packs? There are going to be a lot more angry smokers in Australia after “plain” packaging is introduced (it won’t be “plain” at all, but will be defaced with disgusting health warnings), and the tobacco companies can easily communicate with their customers by including messages or advice inside the packs. They might even replace one cigarette with a rolled-up editorial. The tobacco companies are in the prime position to reach out to smokers.
But do they need them? Maybe not. Below is a graph of tobacco stock prices from Zero Hedge:
P.S. More on Nannying Tyrants.