WTF

| January 31, 2017

Lessons for the tobacco industry—and the world at large—from a tumultuous 2016.

By George Gay

What was it with 2016? England and Wales voted for the U.K to leave the EU, the U.S. voted for Donald Trump to become president, and, apparently, some delegates at the Conference of the Parties to the World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC) questioned the principles of the treaty.

Were the peasants of the U.K. and the U.S. revolting? On the contrary, they were doing exactly as they had been bidden to do by the establishment: They were embracing change. But there was a catch. Whereas the establishment had for years been urging them to embrace the change ushered in by a postmodern world of casual, insecure, poorly paid work, and whereas they had for decades gone along with the madness of this institutionalized impoverishment, it seemed that last year they decided that not only did they want to embrace change, they wanted to instigate it. Perhaps they were revolting. And why not?

Well, a lot of people argued, with justification, that leaving the EU and electing Donald Trump were going to make things worse, not better, for the people at the bottom of the economic heap. But what these observers had failed to realize was that many people on the bottom couldn’t imagine how things could get worse, or why, given their situation, they should vote for politicians and institutions offering more of the same. The financially poor people of both the U.S. and U.K. were thrown to the corporate wolves by the Reagan/Thatcher axis, and they were largely left exposed to those wolves by later administrations that, in their incompetence, prepared the ground for the financial crisis of 2008, and that, in their indifference, forced the poor to pick up the pieces.

Writing in The Guardian on Nov. 14, Larry Elliott said that, since 1975, productivity in the U.S. had more than doubled, but average hourly compensation had increased by only 50 percent. The fruits of growth had been captured by the few, not the many. And later in his piece, turning to consideration of the most recent financial crisis to be visited on the financially impoverished, he said, “Between 2009 and 2012 more than 90 percent of U.S. growth went to the richest 1 percent, which included the financiers who caused the crisis in the first place.”

The following day, also writing in The Guardian, Katie Allen quoted the director-general of the International Labour Organization, Guy Ryder, as saying in an interview that politicians around the world risked giving more traction to nationalistic movements if they continued to ignore the growing number of workers getting a “raw deal” from globalization. Ryder described Donald Trump’s victory in the U.S. presidential election, and the U.K.’s vote for Brexit, as “the revolt of the dispossessed” and gave a damning assessment of the establishment’s failure to offer an alternative to protectionism.

More of the same

But is it likely that anything will change? I don’t think so. The establishment likes to talk of change but is driven by inertia. The Brexit and Trump votes are simply annoying noises caused by pebbles caught in the tread of the tires of the establishment’s limousine, Inertia I, and, as usual, the establishment will simply turn up the music, sink back into the leather seats and look at its own reflection in the blacked-out windows.

In a joint opinion piece in the German business weekly WirtschaftsWoche, U.S. President Barack Obama and German Chancellor Angela Merkel argued that while the world was at a crossroads, “the future is already happening, and there will not be a return to a world before globalization.” The opinion piece apparently ended: “Germans and Americans have to seize the opportunity to shape globalization according to their values and ideas.”

Clearly, Obama and Merkel are two unusual leaders who have managed to hold the reins of power in their respective countries while remaining decent people and continuing, deservedly, to command much respect. So to my way of thinking, they did themselves a disservice with their joint statement, which is largely froth. Who are these Germans and Americans who are going to be allowed to reshape globalization? Obama and Merkel cannot have forgotten that under globalization the appointment of the driver of Inertia I is made from among a list of big-business petrol-heads, so the only direction that vehicle is headed in is toward a world in which, to misquote Louis MacNeice from 1938, the people of the establishment enjoy their fancy lives while 99 in the 100 who never attend the banquet must wash the grease of ages off the knives.

But Obama and Merkel need to remember that a no-going-back argument is a “never” argument, and never is a long time. I feel certain, though I have no proof, that a number of financially impoverished people, in voting for Brexit and Trump, were willing to sacrifice themselves and, in a lot of cases, their principles, by lying down in front of Inertia I just for the joy of hearing the bottles smash against each other in the drinks cabinet.

Not that there aren’t already some signs that the pebbles in the tread are starting to make the Inertia I ride a little uncomfortable. Recently in the U.K., a couple of Uber drivers won a court case (subject to appeal when this piece was written) in which they claimed they were company employees rather than self-employed contractors, and thereby entitled to the benefits that come with direct employment: sick leave, holiday pay, etc. Other “self-employed” contractors are also starting to question the system, and I suppose the tobacco industry needs to take note, especially where farmers are contracted to grow tobacco in a way defined by the buyer and to supply all their tobacco to that buyer.

In tobacco, too

The general unfairness of the economic system is well-mirrored within the tobacco industry, especially in respect of tobacco users. For years in many countries, tobacco users have been forced to pay ridiculous levels of taxes, the revenues from which often go to supporting society as a whole, funding government deficits and paying for government vanity projects. And for years the establishment has seen its mission as continuing to increase those taxes—in the best interests of the tobacco users, of course.

I was amazed shortly after the election of Trump as president-elect to see a story (www.statnews.com, Nov. 16) suggesting what the new president could do to improve the health of people in the U.S. Under a section on tobacco use, it said that not all populations had benefited from overall reductions in cigarette use. “People who are uninsured are more likely to smoke, as are those living below the poverty line, those on Medicaid and those without a college degree,” it said. “We must use proven strategies—like better access to smoking-cessation materials and an expansion of tobacco taxation—to level the playing field for those groups in danger of being left behind.”

Nowhere was it acknowledged that, maybe, some of these people who are living below the poverty line and who are unable to afford insurance are in the position they are in partly because they pay levels of cigarette taxation that support projects that the rest of the community won’t pay for and that help make up for the tax avoidance and evasion that seem to have become endemic in the U.S.—and elsewhere. To suggest that expanding tobacco taxation could somehow level the playing field is to fly in the face of reason, unless one admits that tobacco use is nowhere near as addictive as some would have us believe.

The WHO has gone down a similar route by expending a lot of energy convincing countries to apply eye-watering amounts of taxation to cigarettes and then a ludicrous amount of energy on chasing, so far unsuccessfully, a track-and-trace system supposed to combat the illegal trade in cigarettes mostly caused by raising cigarette taxes. One can only hope that those questioning the principles of the FCTC are questioning the folly of employing the twin policies of encouraging increases in tobacco taxes and the imposition of a track-and-trace system to “eliminate”—if such were possible—the illegal trade in cigarettes.

They might also try to convince the WHO that the FCTC’s secretariat should not, in the words of Japan Tobacco International (JTI), manufacture “a conflict with international trade and investment agreements by pretending they are obstacles to the implementation of the FCTC.”

“It distorts international trade and investment law in order to justify its attempts to exclude tobacco from trade agreements and establish its own dispute settlement mechanism to deliberate on trade, a clear attempt to reach beyond the FCTC’s mandate and competence,” JTI said in a Nov. 7 note posted on its website.

JTI has a point, but there is another side to this argument. The WHO is charged with addressing health issues, and the biggest health issue worldwide is poverty, whether that poverty is measured on an absolute basis or on a relative basis within a country or region. So it can be reasonably argued that the WHO should not try to exclude tobacco from international trade agreements, or from certain aspects of those agreements, unless it also tries to exclude alcohol, sugar and arms, for instance.

But an argument can be put forward for the WHO to attack international trade agreements if they are likely to impoverish people, and here it would be on much more solid ground. As I understand it, Trump garnered a lot of votes by attacking the North American Free Trade Agreement, which some people blame for the loss of jobs in the U.S. and for the creation of poorly paid jobs in Mexico. And no doubt his threats against the signed but not ratified Trans-Pacific Partnership agreement brought in even more votes.

In theory, globalization, much loved by Merkel and Obama, should help improve the lot of everybody; but then, in theory, so should communism. The problem is that, in practice, globalization has been hijacked by robber barons to enrich the few at the expense of the many. They have turned it into a racket. Under globalization and the ludicrously named free-trade agreements, developed countries lose jobs to developing countries, but the jobs created in developing countries are often characterized by exploitative, sweat-factory practices.

Such exploitative agreements need to be abandoned or put on hold until some way is found to realize Obama and Merkel’s dream of having Germans and Americans—and Chinese and Zimbabweans—adapt globalization to the needs of ordinary people rather than the kleptocracy that currently exploits it. These agreements are put in place by greedy corporations working in secret with compliant governments, and the evidence of the recent past suggests that such a process will have only one outcome—voters will vote the “wrong” way.

Sometime after I had finished the above piece but before I had submitted it, I noticed a piece in The Guardian (Dec. 2) by Stephen Hawking, research director at the Centre for Theoretical Cosmology in Cambridge, U.K. Hawking admitted that he had been part of the establishment elite that had tried to persuade the people of the U.K. to stay in the EU—in his case because he believed leaving would damage scientific research in Britain. Now Hawking could, for a number of reasons that he described in his piece, be forgiven for being at a remove from the man in the street. But unlike many commentators he didn’t blame voters in the U.S. and U.K. for making the choices they had made. He described the “concerns underlying these votes about the economic consequences of globalization and accelerating technological change” as “absolutely understandable.”

“What matters now,” he wrote, “far more than the choices made by these two electorates, is how the elites react.”

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