BLOWING SMOKE

Americans' obsession with punishing tobacco firms is wrong-headed, and
an obstacle to rational debate about illegal drugs

EVEN the judge could hardly believe his eyes. "A lot of zeros," he
chuckled. True enough: this was the largest civil-damages verdict in
history. After a two-year trial, a Miami jury decided on July 14th
that America's largest tobacco companies should pay $145 billion--yes,
that's billion, not million--in punitive damages to thousands of
Florida smokers for damaging their health. The jurors chose this
staggering amount to send a message that could not be ignored.

They certainly succeeded in doing that, capturing headlines that
broadcast far and wide their anger with the tobacco companies. But by
choosing such an absurd figure, they also--quite inadvertently--sent a
more important message: that it is high time Americans abandoned their
misguided attempt to "punish" the industry through lawsuits. Instead,
they should be formulating a rational scheme for regulating a product
which, however bad for health or noxious to some, is never going to
disappear. And the right way to do that is through legislation, not
litigation.

There is little chance that the tobacco firms will ever have to pay a
penny of this award, which is why tobacco shares barely responded to
the news. The eccentric way the trial was conducted, as well as the
colossal damages, means that the verdict will almost certainly be
overturned on appeal.

Nevertheless, this case is significant. It underlines what a wrong
turn the United States has taken on the question of tobacco
regulation. With their irresponsible verdict, the Miami jurors were
doing no worse than following a path pioneered by politicians since
1998, when state governments forced a $246 billion settlement on the
industry by threatening endless litigation aimed at recovering costs
to state health schemes of smoking-related illnesses. The Clinton
administration has filed a giant, and similarly misconceived, federal
lawsuit.

Free to be foolish

The theory behind these lawsuits is indefensible. Yes, tobacco is
addictive and damages your health. Yet every smoker for the past 34
years has known this, because each packet of cigarettes sold in the
United States has carried a warning to that effect. Long before that,
most people knew that smoking was not the healthiest of pursuits.
Neither is drinking lots of alcohol, driving fast or eating junk food.
Many of life's pleasures, unfortunately, are both unhealthy and
habit-forming, but people do have a choice about whether to take them
up in the first place. This obvious fact is why, until politicians
began using the courts to bully the industry, tobacco firms won nearly
all of the lawsuits filed against them by individuals.

The outcome of the states' settlement with the industry is also
perverse. Tobacco firms are paying for the settlement by raising
prices, and will do the same to pay damages in any other lawsuits.
Most smokers, remember, are addicted. So most will feel compelled to
pay these government or court-imposed price hikes. In effect, this is
taxation without representation. If the Miami verdict were ever
implemented, smokers in 49 states would end up paying billions to
current and past smokers in Florida, an outcome impossible to justify.

It may make sense to tax tobacco more heavily, or to restrict its
marketing and distribution more strictly. But voters in a
democracy--who include millions of smokers--are supposed to have some
say in these decisions through their legislatures. Courts can punish
and deter wrongdoing, but they are ill-equipped to weigh the complex
trade-offs involved in regulating a widely used product such as tobacco.

The resort to litigation carries another cost that is rarely
recognised. If the United States could succeed, through democratic
debate and legislative action, in agreeing a way to regulate tobacco,
it would also take a giant step towards finding a way to decriminalise
scores of other addictive and widely-used, though illegal, drugs. The
tobacco regime most likely to emerge from such a debate--"tax, control
and discourage"--promises to be an effective antidote to America's
general drug problem, unlike its present "war on drugs". That
misguided policy has put millions of people behind bars, cost
billions, encouraged crime and spread corruption while failing
completely to reduce drug abuse. As with tobacco, it is high time to
take the courts out of the equation, and for America to put aside its
obsession with punishment.