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China consumes about 30 percent of all cigarettes produced, more than any other country. The China National Tobacco Corporation also leads the world in tobacco and cigarette production. The U.S. only accounts for about 10 percent, but the industry takes in about $45 billion yearly. This comes out to the average smoker spending more than $260 per year on tobacco products. Sales in the industry have also shown an increase in the past decade from just over $200 billion to well over $260 billion (Hoovers).

The U.S. tobacco industry is extremely profitable because of the oligopoly the companies have, which makes entry into the market extremely difficult. The level of sales needed to justify the enormous legal cost associated with this controversial market also makes market entry difficult for new companies. Although tobacco companies profit margin is about double that of any other packaged good, the substantial costs of packaged goods on a national scale, along with the money it takes to acquire facilities for production and distribution, are major barriers to entry in the tobacco industry (Hoovers).

Higher selling prices and greater restrictions on where people are allowed to smoke have proven to be effective in lowering the consumption of tobacco. Another factor that has lowered consumption is America s increased interest in healthy living, largely attributable to the baby boom generation. The older people get, the more they pay attention to what constitutes a healthy lifestyle. These factors have called for the increased government regulation of tobacco in its industry. The regulations the government has set forth however, have ironically made the tobacco companies more profitable. The U.S. and state governments are direct beneficiaries of these profits receiving $11.9 billion from excise taxes in 1993 (Coltrain). Tobacco, in this aspect, can be argued that it is a great economical asset to our governments.

In 1998, a $206 billion agreement was reached between tobacco producers and 46 states to resolve all state claims for health costs related to smoking, which has forced the tobacco companies to make changes (Melillo). Earlier this year, advertising on billboards, sides of buses, subways, and tops of taxis has come to a halt. Stadium advertising has also stopped and tobacco companies are only allowed one sponsorship per year per company. In addition to this agreement, President Clinton signed legislation in August of 1997 to reduce tobacco consumption even further. This legislation will increase the federal excise taxes (FET), on cigarettes to 34 cents per pack beginning on January 1, 2000. Taxes on other tobacco products will also increase accordingly. On January 1, 2002, the FET will increase again for all tobacco products with a 39 cents per pack increase for cigarettes. In addition to the federal taxes, states can also impose taxes on tobacco products. These taxes range from one dollar per pack to as low as 2. 5 cents per pack. 43 states impose sales tax on cigarettes. The USDA has estimated that the taxes on tobacco have caused the consumption of cigarettes to decline nearly 10 percent from 1990 to 1998. The reason consumption has declined is because of consumers demand elasticity. Demand elasticity is a measure of how responsive a market is to price changes. Since the tobacco market is elastic, an increase in price would cause a drop in consumption (Standard & Poors).

The $206 billion dollar settlement that was reached last year between the tobacco companies and the 46 states was a compact replacement of the first attempted deal. The cigarette makers agreed to give the states $358 billion over 25 years, plus $10 billion up front in lump-sum damages. The money would have come from raising cigarette prices by 35 cents per pack straight away and by 62 cents after five years, plus allowances for evaluation. The only people this deal would hurt would be the consumers. This plan failed because congressional leaders were not brought on board, and for the plan to work they had to agree to it. The bill was then recast as a company-bashing measure and the manufacturers backed out. This resulted in the $206 billion settlement, a multi-state deal that required no cooperation in Washington (Standard & Poors).

It would have been better for states to impose an explicit, well-designed tax with more marketing restrictions. Instead, the settlement allows each participating state to levy a tax on cigarettes sold anywhere in America. The states that do not take part will still pay the tax and will receive no share of the revenues, which is a strong incentive for states to sign on. The reasons the explicit, well-designed tax with more marketing restrictions was not imposed is because there would have been nothing in it for the lawyers. These taxes would have also required express legislative approval state by state, which the settlement was designed to get around, and because an explicit tax could only be levied by any particular state only on cigarettes sold within that state. In short, the lawyers have come up with the settlement so they can get a piece of the action (Economist).


The nation s crop of leaf is grown by tobacco farmers, located mainly in the southeastern U.S., and accounts for 502,210 jobs (Capehart). Their crop is usually sold at public auction to the highest bidder. Leaf prices are supported under the Agricultural Adjustment Act of 1933, which has been amended many times over the years but the program s basic components remain in place. U.S. tobacco growers are guaranteed minimum prices through price supports and this system has made U.S. grown tobacco more expensive than most non-U.S. tobacco, which results in a decline in exports (Standard & Poors).

The number of farms growing tobacco has declined rapidly during the last 40 years. From 1992 to 1997 farm numbers declined more than any other period since 1950. This trend toward fewer, larger farms will continue, but at what rate will depend on several factors such as the factors covered earlier: policies and programs affecting tobacco, U.S. and world consumption of tobacco, and alternative crop and off-farm income opportunities for tobacco growers (Foreman).

Ethical Implications

Ethics is the general nature of morals and the specific moral choices an individual makes in relating to others. Like most major issues, the tobacco issue poses some ethical questions that are difficult to answer. One factor that makes these ethical questions so difficult is that people generally search for the answer that pleases them the most. For example, if one were to ask a person who had developed lung cancer from smoking whether or not the big tobacco companies should be responsible for his or her disease, he or she would probably answer affirmatively. However, if someone were to ask a nonsmoker who should be responsible, he or she would probably answer that the individual himself is responsible. Some of the ethical issues that society is facing with the tobacco industry are: the placement of responsibility on the consumer or the producer, the question of whether the producers have to pay compensatory damages for smoking illnesses, the issue of involuntary smoking, selling in foreign markets and lastly the promotion of tobacco products.

Tobacco use accounts for at least 29% of all cancer deaths, is a major cause of heart disease, and is associated with conditions ranging from colds and gastric ulcers to chronic bronchitis, emphysema, and cerebrovascular disease. On average, each cigarette pack sold costs Americans more than $3.90 in smoking-related expenses. The fact is, when smokers purchase a pack of cigarettes at the store they know what they are buying! Like many other products that are sold today, they are dangerous to your health if used excessively. If it were to be decided that the tobacco companies were responsible for smoking related illnesses, it could open up a whole new view on product liability. Take the alcohol industry for example: drinking an excessive amount of alcoholic beverages has been proven to increase the chances of developing serious health problems. Should the alcohol manufacturers be responsible for this? The logical answer is no! There have been warnings posted on cigarette packs since 1966 informing the consumer of the carcinogenic contents of cigarettes and their harmful effects. Consumers of tobacco products understand that there are certain health risks involved in smoking. It is not a case of merely educating people about the risks of smoking. What it comes down to is personal freedom: people have the right to smoke. Accompanying any type of right or privilege are consequences and responsibilities. People make the conscious choice to smoke and must therefore accept the consequences of that choice.

Smoking costs the United States approximately $97.2 billion each year in health-care costs and lost productivity. The ethical question posed here is whether or not the government should be compensated for this cost. The U.S. Justice Department launched a multi-billion dollar lawsuit against the tobacco industry, accusing the world s largest cigarette companies of conspiring to defraud and mislead the public for more than 40 years. The lawsuit, filed in Washington, seeks to recover the medical costs for treating smoking-related conditions paid by the federal government over the past six years as well as a potentially huge sum representing the disgorgement of ill-gotten gains dating back to the 1950 s (Edgecliffe, 1). Critics of this lawsuit say that the case is not based on facts and that the government is merely trying to make a financial gain. They also point out that the government has been involved in almost every aspect of the tobacco industry and has already collected tens of billions of dollars in taxes on cigarette sales. The case brought on by the justice department is not the only threat against the big tobacco companies. There are also cases being filed by 46 U.S. states, individual sick smokers, and even class action lawsuits. If the case with the U.S. Justice Department was settled, it would prohibit punitive damages for all future legal claims against the tobacco industry, set an annual cap on the amount of compensatory damages allowable in all future legal cases against the industry, prohibit class-action lawsuits, third-party payer suits, and claims against industry attorneys, and legislatively settle all present and future claims of potential plaintiffs, including generations of future tobacco victims not yet born (Siegel, 15). Each of these rulings involves some ethical implications. By prohibiting punitive damages and putting a cap on the amount of compensatory damages, the Justice Department is addressing the fact that the tobacco manufacturers are not doing anything wrong in production of their products, but it allows for people to collect compensatory damages up to a certain limit when serious illnesses occur.

When considering the ethical implications of smoking, one must look at everyone involved in the issue. Certainly, the consequences of tobacco use directly affect the user, who suffers the harm resulting from a conscious choice of using the substance. Just as significantly, passive inhalation has contributed to the declining health of non-users, who are exposed to this product (Otapski, 1). In 1993, the U.S. Environmental Protection Agency declared that secondhand smoke is a human carcinogen. They estimate that about 3,000 nonsmoking adults die of lung cancer each year as a result of breathing the smoke of others cigarettes. Government regulations relating to smoking in public buildings were rare prior to the 1970 s. Most of the regulations that were in effect were intended to promote safety through fire prevention. The number of regulations relating to second- hand smoke in public buildings has grown tremendously. These statutes, generally known as clean indoor air laws, extended public safety concerns by limiting the nonsmoker s exposure to tobacco smoke in public establishments and private work places (Otapski, 2). Smokers and nonsmokers have conflicting interests in exercising their respective liberty in shared facilities. To completely ban cigarette smoking would be unjust to smokers; yet allowing people to use tobacco products in public buildings, even if it is segregated, infringes on the non-user s rights. This is the ethical problem that concerns individual rights. Since the effects of secondhand smoke were discovered, most public places have banned cigarette smoking while others have divided the seating up into smoking and nonsmoking sections.

Per capita consumption of cigarettes continues to decline in the U.S. Data from the National Health Interview Survey (NHIS) shows that cigarette smoking among adults aged 18 and over declined 40% between 1965 and 1990. There was little to no change in smoking prevalence between 1990 and 1994, however. This has prompted the larger tobacco companies to use more aggressive marketing by expanding into foreign markets, hence increasing tobacco exports from about 2.1 billion in 1986 to 5.3 billion in 1996. The largest overseas markets for U.S. cigarettes are Japan and Europe. Does the U.S. bear any responsibility for chasing tobacco overseas? Not if it is determined that people are responsible for their own choices; there is no way to justify that it is morally wrong for the companies like Phillip Morris and RJ Reynolds to be responsible for smoking related illnesses that occur overseas.

The promotion of tobacco products is another area that has ethical implications. Critics of the tobacco companies suggest that the advertising for their tobacco products is geared toward the younger generation. This was especially true after the introduction of Joe Camel by RJ Reynolds. Before his introduction, Camel captured 1% of the teen market; now it s 60% (Bangor, 12). In defense of the tobacco companies since most youth-oriented magazines have many more adult readers than youth readers, these studies cannot exclude the possibility that cigarette advertisements in these magazines may be targeting young adult readers age 18 to 24 rather than those younger than 18 years of age (King, 516). On August 23, 1996, President Clinton approved the FDA regulation which includes reducing easy access to tobacco by youth by: setting a minimum age of 18 with age verification, banning vending machines except where minors are not allowed, prohibiting the sale of single cigarettes, and prohibiting the distribution of free cigarette samples. The FDA has also created other regulations in order to reduce the appeal of tobacco products to children.

There are numerous ethical implications when looking at the tobacco issue. The biggest issue is that of responsibility. The tobacco companies should not be held accountable for the illnesses that people incur from using tobacco products. There are many products on the market that can cause health problems if used in excess; cigarettes are not excluded. Since the consumer is responsible for his or her actions, the tobacco manufacturers should not be obligated to pay any compensatory or punitive damages on behalf of the tobacco user. Tobacco use in the U.S. is currently experiencing little or no growth. This is due partially to the more rigid regulations regarding advertising and to the fact that smoking is no longer allowed or has been constricted to a certain area in most public buildings. Since tobacco use is slowing down in the U.S., the tobacco giants are focusing their efforts toward foreign markets. The responsibility should be lifted for tobacco companies who sell their products overseas, as long as they follow the same requirements that the FDA has implemented in the U.S. No matter what country, people are ultimately responsible for how they want to live their lives. If they choose to buy a pack of cigarettes and ignore the risks written on the package, that is their right! Everyone knows that smoking kills, the question is: is it worth it?

Social Aspects of Tobacco Smoking

The consumption of tobacco by smoking is quite an intriguing social phenomenon. Although there are opposing views as to whether or not substances found in the smoke, such as nicotine, are physically addictive, it is not difficult to see the social compulsion exerted on a large number of people.

There are a number of ways in which we can observe some of the unique social aspects of smoking. One of the most interesting is that of the smoker s bond . There exists, among a surprising number of smokers, an instant unspoken bond amongst them, strictly because they do smoke. A smoker who happens to be out of cigarettes can approach a total stranger on the street and ask for a cigarette, and it is not perceived by the general public as being particularly odd. It is hard to think of any other consumable good that forms this kind of bond amongst strangers.

Another interesting observation is that of the cigarette as a prop, or as a tool. One might incorporate their smoking habit into their personal set of gestures and way of speaking, assimilating the habit into their personality so to speak. Additionally, smoking a cigarette can be used as a tool to pass the time, or to give the illusion of having an activity. If a person is standing on a street corner, just looking around and/or staring off into space, you might think What is that person doing? But if that same person were instead smoking a cigarette, now they have an activity: Oh, that person is stopping to have a smoke. These and other examples make a strong argument for tobacco smoking as a social addiction, perhaps even moreso than a physical addiction.

Techniques employed by tobacco companies

Tobacco companies do attempt to encourage consumption at the youngest legally allowed ages. “Studies show that 80 to 90 percent of U.S. smokers took up the habit before age 20. (CQ Researcher) This however, is nothing more than strategic target-marketing, employed by makers of all sorts of products. If the law allows tobacco to be sold to eighteen year olds, then why would a company not try to aim their marketing in that direction?

Some tactics criticized have included promotional items that seemingly appeal more to teen-agers than to adults. The complaint is that the items also appeal to those below the national smoking age limit of eighteen years of age. High schools have been known to ban students from wearing items such as T-shirts, jackets, and caps that bear the names of tobacco products. Curiously enough though, there are still high schools that allow some section of their student body (presumably those who are of age) to smoke in designated areas on campus, although this practice has diminished over the years.

Most of the above issues pertain to smoking and its effects here in the United States of America. However, another perceived issue is that of our tobacco exports to foreign countries. Just like any other potentially hazardous substance, pesticides for example, there are opinions voice that there are moral implications connected to selling products overseas where the regulations may not be as strict. But again, as referenced in other substance’s cases, it is ultimately the responsibility of the importing country to know what they are taking on. In fact, it would make sense that our Unites States made cigarettes would be probably safer than cigarettes manufactured locally in the third world countries due to our stricter manufacturing standards and regulations.

The climate towards smoking in the United States is probably at its most negative since the habit was introduced to our shores. Advertisements for smoking cessation programs and products flood the airwaves. The amount of information available to consumers is at an all-time high. Why then do people continue to smoke?

It might have been easy in the past to implicate the tobacco companies for lack of information concerning the health risks, but that is hardly the case today. There have been increased requirements for warnings on the advertisements as well as the products themselves.

Health information available via print, broadcast media, and especially the surge in popularity of the Internet all adds up to a wealth of information available. It is still the responsibility of the consumer to weigh his or her own personal pros and cons of using a product. It cannot ever be assumed that any product available for legal purchase on the open market does not carry any risk along with it.


Ultimately, tobacco use is a decision made by the individual. Although there are a number of factors that influence the consumer, it is ultimately that individual s conscious decision whether or not to engage in the activity, as well as to determine to what extent they will participate. Benjamin Franklin is often attributed as having endorsed the philosophy All things in moderation. It can be argued that a substance and its manufacturers are not simply evil just by existing. The concepts of use and abuse must be considered. Individuals who smoke a pack ( 20 cigarettes) or more per day ought to ask themselves whether they are using or abusing the substance. Conversely, individuals who enjoy a cigarette or cigar only once in a while on special occasion might ask themselves if they are actually engaged in such a dangerous activity.

There are steps that the government can take to help save people from themselves , but only if and when the majority of the people can agree that those steps are necessary. For example, there have been major increases in regulations over the course of the last 35 or so years, starting most notably with the 1965 Labeling Act. It is not fair to hold the tobacco companies responsible for tobacco-related deaths anymore than it is fair to hold the alcoholic beverage companies responsible for drunk-driving fatalities. Juries have demonstrated this multiple times over in our court system. Assuming that jury selection is fair, then it could be argued that this is representative of American popular opinion in the matter.

In summary, when one takes the time to weigh the evidence, it becomes clear that the ultimate responsibility falls on the people as a whole to educate themselves and be enlightened with respect to what is or is not healthy. Although it is convenient to have a large, wealthy corporation to blame when things go wrong, ultimately people need to first learn to take advantage of the resources available to educate themselves about the products they consume, and then learn to take responsibility for their own choices and actions.


Barr, Bob. No: This Unprecedented Power Grab Will Subvert the U.S. Court System and the Economy. Insight Magazine. Vol. 15, No. 41. 8 Nov. 1999: 5-11.

Byrne, John A. Philip Morris: Inside America s Most Reviled Company. Business Week. 29 Nov. 1999: 177-192.

Center for Responsive Politics, 7 Jun. 1998: 1-3. HYPERLINK http://www.opensecrets.org/alerts/v4/tobaccowebchart_1.html http://www.opensecrets.org/alerts/v4/tobaccowebchart_1.html

Coltrain, J.B. Cigarette Taxes Contribute Billions. Tobacco Series 4: 1-2. HYPERLINK http://martin.ces.state.nc.us/newsletters/tob.series/tob4.html http://martin.ces.state.nc.us/newsletters/tob.series/tob4.html

Columbia University Trustees. Go Ask Alice!:Alcohol Related Deaths. HYPERLINK http://www.goaskalice.columbia.edu/0599.html http://www.goaskalice.columbia.edu/0599.html

Department of Justice Press Release. United States Sues Cigarette Companies to Recover Federal Healthcare Costs. 22 Sep. 1999: 1-3. HYPERLINK http://www.usdoj.gov/opa/pr/1999/September/428civ.htm http://www.usdoj.gov/opa/pr/1999/September/428civ.htm

Involuntary Smoking Airlines, Other Public Conveyances, and Federal Buildings. 2 Jan. 1997: 1-2. HYPERLINK http://www.cancer.org/tobacco/involuntary.html http://www.cancer.org/tobacco/involuntary.html

Lucas, C.E. Alcohol and Trauma. : 1-4. HYPERLINK http://rmstewart.uthscsa.edu/alcohol.html http://rmstewart.uthscsa.edu/alcohol.html

Recent Major Tobacco Trials. 14 Oct. 1999: 1-7. HYPERLINK http://tobacco.neu.edu/Upcoming.html http://tobacco.neu.edu/Upcoming.html

Smoking Legislation. 19 Feb. 1998: 1-3. HYPERLINK http://www.cancer.org/tobacco/legislation.html http://www.cancer.org/tobacco/legislation.html

Snell, William M., A. Blake Brown, and Russell W. Sutton. Tobacco Policy. : 1-8. HYPERLINK http://ianrwww.unl.edu/farmbill/tobacco.htm http://ianrwww.unl.edu/farmbill/tobacco.htm

Torry, Saundra and John Schwartz. Tobacco Foes Failed to Stoke Voters Fire. Washington Post. 8 Nov. 1998: A02.

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