intrust

I will conclude this essay with a story. I have attempted to show above the interplay of social capital, trust, and transaction costs. In the interchange of material and immaterial goods, we seek out channels of trust where the transaction costs are low. We balance between the use of formal and informal institutions. We utilize science and technology and we seek emotional gratification when it offers itself, even when simplifying facts or sacrificing truth in the process.

The story is about tobacco. According to The WHO:

Tobacco is the second major cause of death in the world. It is currently responsible for the death of one in ten adults worldwide (about 5 million deaths each year). If current smoking patterns continue, it will cause some 10 million deaths each year by 2025. Half the people that smoke today – that is about 650 million people– will eventually be killed by tobacco.¹

The most popular cigarette in the world is Marlboro. Marlboro cigarettes were originally introduced in the US in 1924 as a women’s brand, sloganized as “Mild as May”. But in the 1950’s, in one of the most successful ad campaigns ever, Marlboro was relaunched as a filter cigarette for men, and the Marlboro Man was introduced as the epitome of stark, rugged, unfettered and individualistic masculine supremacy. In 1954 Marlboro’s US sales were less than one quarter of one percent of the market. By the time the Marlboro Man campaign went national in 1955, sales were at $5 billion, a 3,241% jump.

There is not a doubt that the American tobacco industry stretched all reasonable boundaries of truth in their advertising during much of the last century: Though the industry was occasionally hounded by the US Federal Trade Commission for all too imaginative slogans such as, “recommended by doctors”, “filters so safe they are used in nuclear power plants”, “good for your digestion” and “extra protection against colds”, the 1906 Pure Food and Drug act had freed tobacco from the supervision of its most likely antagonist, the US Food and Drug Administration. Tobacco was deemed neither a food or a drug, hence exempt from both prohibitions against the sale of adulterated food and drugs, and mandatory “honest” content declarations on product labels.²

The first strong connection made between lung cancer and smoking was published by I. Adler in 1912, yet during the years up until 1950, when American cigarette consumption reached 10 cigarettes per capita, the public was subject to conflicting claims of science. As late as 1948, The Journal of the American Medical Association (JAMA) had argued that, "more can be said in behalf of smoking as a form of escape from tension than against it . . . there does not seem to be any preponderance of evidence that would indicate the abolition of the use of tobacco as a substance contrary to the public health."

But in 1950 both JAMA and the British Medical Journal published reports definitively linking smoking to lung cancer. One study found that 96.5% of lung cancer patients interviewed were moderate heavy-to-chain-smokers, and the other, that heavy smokers were fifty times as likely as non-smokers to contract lung cancer.

These reports plus those of the American Cancer Society and the frequent anti-smoking articles published in Readers Digest, the largest circulation American magazine.³ put pressure on the tobacco industry to react. Their answer was to reduce particular substances, put filters on cigarettes and advertise more. Philip Morris, in order to counteract the perceived “sissy” image of a filtered cigarette, let the Leo Burnett ad agency in Chicago come up with the Marlboro Man campaign – a nonconformist in his rejection of the modern comforts of urban American for the splendour of the wild outdoors, but also a conformist to the ideals of American individualism and independence.

Law suits against the industry began in 1954, mostly on grounds of negligence and breach of warranty, which the tobacco monopolies countered with the doctrine of forseeability. There was no evidence that could prove producers had prior knowledge of the potential harm of smoking. Up until 1996, 40 years of litigation against the industry had not resulted in one single payout.⁴ On the contrary, in 1985, the Brown & Williamson tobacco company was awarded $3.05 million – the largest libel award ever paid by a news organization, against CBS and its news commentator Walter Jacobsen who had accused B&W of engaging in a lurid advertising campaign to get young people to smoke.

In 1964, the American Medical Association supported the tobacco industry’s objection to labelling cigarettes as hazardous to health and pocketed a $10 million grant in research money from six cigarette companies: nevertheless the Federal Cigarette labelling and Advertising Act was passed by congress the next year and the first Surgeon General’s Report on Smoking and Health was published and 17 tobacco liability suits were filed.

In 1970 many Americans learnt for the first time that there exits a figure known as “The Surgeon General” and that he has Determined That Cigarette Smoking Is Dangerous to Your Health.

In 1971 tobacco advertisements were banned on television and radio. Yet the assault on tobacco continued, laws were passed forbidding smoking in public places, nicotine was declared an addictive drug by Clinton in 1995, and the FDA was allowed to enter the fray.

The discovery and publication of the tobacco industry’s internal memos showing the industry’s knowledge of the deleterious effects of tobacco use and their awareness of the addictive effect of nicotine effectively stopped the industry’s most steadfast defences and opened the door to new claims. The three major categories of domestic tobacco litigation were and still are; individual personal injury cases, class action personal injury; and health care cost recovery, mostly brought by governments and unions. Litigation has mushroomed in all three categories. ⁵

In 1997, a settlement, “The tobacco Resolution” was worked out in which the cigarette makers agreed to hand over to the American states $358 billion over a period of 25 years, plus $10 billion upfront in lump-sum damages. The money was to be raised on jacking up the price of cigarettes. As part of the agreement, class-action suits and state claims would be settled, and individual claims against the industry would be capped. This deal failed to pass through congress and a new, and smaller, $206 billion “Master Settlement Agreement” was reached in 1998,, in which the tobacco firms were protected from state claims but not from private litigation. ⁶

From former Surgeon General C. Everett Koop remarked on the settlement: "Will it be good for public health? Yes. But remember, the tobacco companies are a sleazy bunch of people who misled us, deceived us and lied to us for three decades. Under this settlement, the Tobacco Institute will be gone, but the tobacco lobby will still be there. And they will never stop."⁷

In July 2000, in the the largest civil-damages verdict in history , a Miami jury decided that America’s largest tobacco companies should pay $145 billion in punitive damages to thousands of Florida smokers for damaging their health. And a $12 billion judgement was given against Philip Morris in March 2003 by a judge in Madison County, Illinois, for misleading advertising that downplayed the hazards of cigarettes marketed as “light”.

Yet the Marlboro man lives on, even though previous Marlboro men have passed away, some famously of lung cancer. The Marlboro Man and the Marlboro brand he fronts are among the most outstanding cultural icons of the 20^th century – not only in the United States but in every country where this cigarette was promoted – either directly, or via product placement in television shows, movies and magazines. Seldom has the common man been offered so much for so little.

By consuming Marlboros you are getting a lot more than a few puffs and a nicotine kick – you are buying into, for a relatively small sum of money, emotional gratification, and possibly self esteem. You are perhaps making yourself more attractive – sexier. In the words of Leo Burnett, “Marlboro is your most frequently shown possession. Every time you expose it, it says something about you”. To some extent you are the Marlboro Man, like him you choose to live dangerously, freely, without interference from meddling surgeon generals and ambulance chasing lawyers – better to die like a wolf than live like a lamb ... and like the Marlboro man you are risking your life.

There are, no doubt, many libertarians who feel that it is a person’s own prerogative whether to smoke or not, and certainly that prerogative has been the rule rather then the exception during much of the history of smoking, but it is also clear that the informal norms that govern so much of our daily activity are no match for the Leo Burnetts hired by the tobacco barons.

It is also clear that the tobacco industry effectively inhibited the executive and legislative branches of the US government from interfering with their lucrative business and though science eventually got around to irrefutably establishing the dangers of smoking, science was often subverted and distorted in the process.

The attack on cigarettes was forwarded through bans on smoking by the states and municipalities that had the least to loose in angering the tobacco lobby, and not least the United States’s conducive climate for tort litigation.