Wednesday, July 18, 2012

Big Business and Big Government: The Big-Rip Off

By Rich Kozlovich

Yesterday I received my daily report from the American Council on Science and Health with this article, A closer look at what the Tobacco Control Act hasn't done. The link to the article carried this comment; ‘Last week, we were less than pleased by FDA commissioner Margaret Hamburg’s empty boasting about the success of the 2009 Family Smoking Prevention and Tobacco Control Act. This week, ACSH scientific advisor Dr. Michael Siegel, who is on the faculty of Boston University’s School of Public Health, does us one better.”

I think that it is important to lay out some fundamentally important history regarding the government and the tobacco companies by reviewing information from Timothy P. Carney’s book “The Big Ripoff, How Big Business and Big Government Steal your Money”. Do you remember the States Attorneys General lawsuit against the tobacco companies of 1998? It was on all the news and in all the newspapers for some time.....and everything they told you were mostly lies of omission. First of all who was the biggest supporter of that agreement? Phillip Morris! That is the same Phillip Morris that is the huge tobacco company which produces Marlboro, Virginia Slims, Benson and Hedges, Merit, Parliament, Alpine, Basis, Cambridge, Bucks, Dave’s Chesterfield, Collector’s Choice, Commander, English Ovals, Lark L and M, Players, and Saratoga.

What came out of all of that is what is known as “The Master Tobacco Settlement Agreement”, which forged a financial relationship between the states and big tobacco that "Critics have called 'one of the most effective and destructive cartels in the history of the Nation.'” One that was supposedly to go to Medicaid and Medicare costs related to the care of those who developed afflictions due to smoking. Where has most of it gone? Into the various states General Funds. At this point it is to the State’s best financial interest to keep people smoking. Who won and who lost after this settlement?

The losers start first with the smokers; who lost for two reasons. They pay more for their habit and the consequences of continuing this habit has detrimental consequences on their health. Second, the smaller competition to the large companies within the tobacco industry because there is a two tier payment system keeping the small companies small and allowing the large companies to avoid the competition they would bring to the market place. The taxpayers because the states became hooked on “nicotine” income and spent the money, not on Medicaid and Medicare, and became even more profligate in their waste of the people's money, ultimately costing the people even more.

The winners were the state legislatures because they could continue in their profligacy, the big tobacco companies, especially Phillip Morris, because it guaranteed that there would be no more lawsuits, kept competition down, and they could pass the costs of these so-called penalties on to the consumer, which in reality makes these penalties ‘excise taxes’ that didn’t have to be voted on. And of course, the attorneys; “earning unimaginable riches by hiking taxes and helping create a business cartel. Florida's attorneys received $3.43 billion; Mississippi's 1.43 billion and Texas $3.3 billion ". Furthermore, "in the first year or two, the legal teams in each state would receive hundreds of millions of dollars". The attorneys general did okay, with a couple of them now (this was in 2006) holding governorships.”

So why would we think any other government program would be any different? Does anyone really think that any central planning system from any government could be bereft of unending corruption and incompetence? Does anyone really think that such corruption, which is endemic within every department of the government, can go on forever without some sort of major economic downturn?

When I was going to school we were taught that Rome fell as a result of moral decline. As I grew older and read more regarding the history of Rome I was amazed and wondered how they could their moral standards have possibly gone any lower. The reality is that Rome didn't fall. It went broke.

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