Markets Always Work. Eventually.

Home / Essays / Markets Always Work. Eventually.

Cigarette companies began creatively lying to consumers about the health dangers of smoking over a half century ago, according to a 2006 court ruling against Big Tobacco.

Starting yesterday, TV commercials and full-page newspaper ads in the US began running with various versions of that admission, though just falling short of declaring that the American public had been purposefully deceived.

Did it take 11 years to finish such an imperfect advertising campaign? No, Big Tobacco used every legal ploy at its disposal to delay starting it, just like it avoided paying a penny to terminally ill smokers for decades.

It’s a good case history in the power of markets, and the ability (and willingness) of participants to subvert them.

A “market” is a space — a business trading floor, a newsstand on a street corner, an election for public office, or a courtroom or cocktail party — in which information is shared, vetted, and then used to make decisions that benefit both individuals and the community that market serves.

Adam Smith believed that such open platforms of information, using an agnostic valuation mechanism otherwise known as money, enabled cost/benefit analyses that weren’t skewed by the participants’ beliefs or institutional power. Markets were more fair and reliable decision makers than governments, business magnates, politburos, or populist hordes.

He also thought that any values asserted by these “invisible hands” would be measured by the morality everyone brought along with them. Participants would want the market to work best for everyone because they knew it was the only way they would benefit individually.

Big Tobacco spent over a half century doing the opposite.

It distracted, obfuscated, and spun information about its business, and exploited every possible technical tool to slow, disperse, confound, and often simply outlast its accusers. No market for information about its business was too sacrosanct to abuse and dishonor.

The ultimate goal wasn’t to empower individuals to make informed decisions about smoking cigarettes; rather, it was to cloud those decisions in confusion, and thereby impede the market for another day, which meant making more money and acquiring new smokers (necessary to replace those who’d died the day prior).

The lawyers negotiating the advertising campaign that broke yesterday probably got a bonus for every year they delayed its implementation.

The market for cigarettes, and tobacco generally, is not good. Use is way down, it’s banned in most public spaces, and smoking is considered stupid far more than it is cool. The same technology revolution that has given the world e-cigarettes has also spawned the diagnostic tools that will make using them too dangerous and costly.

The market has caught up, even though Big Tobacco successfully subverted its efficiency for decades by doing whatever it could to enrich itself at the expense of others (or simply have no regard for them).

There’s a school of thought that thinks this is capitalism — that the invisible hand is intended to swat others — as if the pursuit of self-interest at all costs is not just allowed, but laudable.

It’s not.

While no amount of rules and regulations can enforce moral behavior, no market can operate efficiently without that spiritual underpinning.

So thank goodness there were laws that eventually caught the cigarette makers; yesterday’s ad campaign is just the latest reminder that the courts of law and public opinion are ultimately unavoidable, even if market participants can get away with pretending otherwise…for a time.

Laissez-fair economics work, though unfortunately in this case it meant tolerating the deaths of hundreds of thousands of people, and many billions of healthcare and social costs imposed on our communities.

More deaths and costs will follow, since it’s likely Big Tobacco will continue to do whatever it can to reach that next day of profits and new smoker addiction.

Like smoking, old habits die hard.

[This essay was originally published at Medium]
Contact Us

Let's talk about innovation.

Start typing and press Enter to search