Friday 30 March 2012

Forget Everything You Thought You Knew About Economics, Human Nature

It would seem that anti-tobacco drones have encountered something of a problem of late. Having spent their sad lives studying how to fit in with the public health community - to disguise what is, basically, just a dislike of a smell or an ideological distaste for big business - their incessant calls for ever-desperate rent-seeking means they are being thrust into areas such as economics and trade.

Things about which, embarrassingly for them, they haven't a scooby.

Consider this from yesterday's edition of BBC Radio 4's You and Yours programme. The subject was the illicit trade in tobacco (about 5 minutes long from 12:57 in). Talking to a Liverpudlian who exclusively buys his supplies from white van man at the local pub - saving around £2.50 per pack - the BBC interviewer asked about the effects of Osborne's 37p tax hike in the budget.

BBC: Does the rise in duty, then, have any effect on how much you are smoking?

Geezer: Makes you more likely to go round the pub, really. The dearer things get, the cheaper you want to get hold of them.

BBC: Don't you feel guilty at all? Shouldn't you be paying tax like everyone else?

Geezer: Not really, because other countries in the EU are paying less. I think there's a lot of tax on the likes of cigarettes and booze. I don't feel guilty at all about going elsewhere. No.
This, of course, is basic economics. If you charge too much, and there is a grey or black market in the same product, you will inevitably increase demand in illicit supply. Additionally, if a tax is seen as unfair, it will be begrudged and often avoided. There isn't an economist on the planet who would contest that.

Tobacco control do, though. You see, they're the experts on everything. They've already re-designed the laws of physics and chemistry to advance their agenda, why not the principles of economics too?

Joy (shome mistake, shurely?) Townsend of the London School of Health and Tropical Medicine (who just happens to have been on the editorial board of ASH's state-funded production, Beyond Smoking Kills) was quizzed immediately after this clear evidence that tax rises encourage the illicit trade.

Can you guess what happens next? You got it.
BBC: There must be a tipping point where you are forcing poorer people to buy their cigarettes without paying duty.

Joyless: Well, it's very interesting because [...] the tobacco companies always say that. If the tax goes up, this is going to increase smuggling. And they say it, it's one of their many deceits as it's not true.
Common sense be damned; human nature begone; Laffer Curve cower in the corner. Joy said let there be bullshit and, lo, there was bullshit. The Church of Public Health hath pronounced.

Before this gem of idiocy disappears from the Beeb forever, do go listen if you are able as it's a work of art. Watch out, too, for the guy from the Liverpool Alcohol and Tobacco Unit who seems to think that plain packaging has already been implemented.

Perhaps he has received a memo we aren't allowed to see.


George Speller said...

Why was the only coherent interviewee the Liverpuddlian who made rational economic decisions?

Jay said...

Belgium for the duty-avoiding win!  We're already planning our trip to
legally buy our rolling tobacco there; plus, we've always wanted to
visit Bruges. 

I don't know any white van men (or women) where I
live.  But then, I don't get out to the pubs much any more since the
smoking ban -- certainly not during winter.  If a pub doesn't have a
beer garden or suitable outdoor space where we can drink and smoke, we
don't go to it. 

When I do go to a pub, I always ask if they
supported the smoking ban.  If they say yes, then we never go back. 
This is entirely different than an establishment deciding not to allow
smoking -- I respect that choice.  Any business which supports a ban
will receive my custom. Ever.  That includes the BHF.  I'm boycotting

Jay said...

 PS:  This is a direct link to the place in the BBC programme where they begin speaking about the black market:

If you click on the "Link to This" button, you have choice of selecting to start the audio from where it currently is.  Copy that link and voila!

Lyn said...

I've heard of burying your head in the sand, but this lot have their heads so far up their own backsides, they can't possibly see what is happening right under their noses!

Of course, from that position, I guess their heads are nearer their brains!

DaveAtherton20 said...

Have a guess who wrote this:

"In the United Kingdom it is estimated in 2007-08 that the illicit market share for cigarettes was 11% and 49% for hand rolling tobacco.."

" Globally it is estimated that 11.6% of the cigarette market 
is illicit, equivalent to 657 billion cigarettes a year. ..In 2000 more than one in five cigarettes smoked in the UK was smuggled, costing the UK Government over £3bn in lost revenue..."

"HM Customs and Excise estimated at that time that large scale container fraud accounted for between 70% - 80% of illicit cigarette imports, with small-scale bootlegging accounting for much of the rest."

"The enormous profits to be made by evading tobacco duties make smuggling an attractive option for unscrupulous criminal interests. The Taliban, al-Qaeda, Hezbollah and the Kurdistan Workers Party (PKK) are involved in smuggling cigarettes as is the Columbian FARC. Both the Provisional IRA and the splinter group the Real IRA have been linked with tobacco smuggling as a way of raising money to fund their activities. Chinese Triads are central to the traffic to the UK of counterfeit cigarettes produced in highly sophisticated factories in the Far East."

Yes it is those tobacco paid stooges....ASH Scotland. 

Mark Wadsworth said...

Yup, most people are happy to accept certain economic principles in theory, but then steadfastly refuse to accept that they apply in real life. I get bombarded with people who claim that the laws of economics do not apply because politicians say they don't.

RichardAllan said...

An NHS worker came up to me as I was enjoying my lunch in the town centre and asked if I was a smoker or a non-smoker. "That's none of your business" was the only conceivable reply.

DaveAtherton20 said...

I hope you got my previous comment from ASH.

The posh economics term for this is "entrepot" trading. This is where goods and services are re-exported from low tax regimes to high tax regimes.

Jay said...

George, it is because he was the only one that doesn't receive government funds to have an opinion.  

Smoking Hot said...

We were in Adinkerke yesterday with the owner of the biggest chain of shops, Real Tobacco. He showed us round his operation and also showed us by how much trade has increased of late. He actively promotes our advice on recording all Customs interviews and not to sign their notebook after the interview. Since we've putting out this advice we have had no-one at all having their goods seized who have followed our advice.

In the pub in Adinkerke we got talking to 'bad boys' and they told us trade was roaring ... and they were from Liverpool! Our advice is of no use to them as if they are stopped by Customs they just walk away and leave it. This 'loss' is built-in to their operation. They said they had no worries about Customs as they never prosecute. If the 'bad boys' lose their goods, they just come again and buy more. Because of Customs actions against legitimate cross-border shoppers the 'bad boys' say their customer base is constantly growing.

Of course the idiot from the Tobacco Control Unit thinks he's winning because the can no longer find the 'illicit trade' ... they have adapted to his tactics and trade continues. As for Joy? ... what can you say that hasn't already been said?

Jay said...

Their brains have been removed and replaced with soft puddy and bogus statistics.  That is, of course, the best-case scenario.

Mark.S said...

Maybe I misunderstood but putting the price up will force people to quit.

Or they could embrace the free market. No they won't, we all just want to
Not really sold on that arguement.

Smoking Hot said...

I'll think on that Mark whilst l have a smoke of my EU Duty Paid cigarets at £2.10 a pack of 20. :)

Parmenion said...

......or you could have said to her "Do you prefer missionary or doggystyle?'s none of your fkn business!"

Dick_Puddlecote said...

I must remember that one. :)

Dick_Puddlecote said...

I'll bet they were jubilant on March 22nd as Osborne increased the attractiveness of their wares by another £3.70 per tube. More leeway for upping their own selling price a bit, too. 

The day can't be far away where more people source cross border tobacco than buy it in the UK. 

Dick_Puddlecote said...

The Alcohol and Tobacco Unit guy doesn't have much of a handle on what he's tackling either. Jin Ling IIRC came originally from one of the eastern bloc countries, not China. The Chinese manufactured Jin Ling is actually a counterfeit of a counterfeit! Gotta laugh. :)

Mark.S said...

 Smoking Hot, dear me..I rather think the lady in the report. lives in the land of marshmallow trees and chocolate rivers, if price has nothing to do with it.
BBC really do not do balance....

c777 said...

They "Weeviled" their way onto the public sector gravy train.
Well paid non productive jobs for slagging off smokers.
Why should I as a smoker pay for that?
Or any other taxpayer for that matter.

Non Butt Kisser said...

Like SH in an earlier comment ,I pop over to Belgium to re stock on
Amber Leaf (if you can get it) Guess what ,my friend an Amber smoker
unable to get any Amber was given a sample of FOREIGN Orlando to try
out .He liked ,he bought (£3.40p for 50 grammes) and now has kicked the
BRITISH product into touch.
Just a rumour in rough bars on the Flemish Coast ,German,Polish,Czech and Slovak Truckers have no problem getting Amber Leaf.? ? ? ? ?
A fag shop in the Ardennes (Walloon Belgium) informs me Amber Leaf is no longer available.?????  UK Gov interference ???
To sum up (crudely) untill the British grow some bollocks,this anti
smoking hysterical crap will continue

We few ,we merry band

Smoking Hot said...

Amber Leaf was in Adinkerke. Problem is JTI and not the government. JTI are bloody awful to deal with according to the tobacco shops and are a complete pain in the ass.

Try the tobacco shops that are there for the truckers.