Big government is working!
Today, CVS Caremark, the second-largest drugstore chain in the country, announced that it will stop selling all tobacco products – that means both cigarettes and chewing tobacco – by October 1.
Although the move will cost the company about $2 billion in annual revenue, it is not expected to affect its overall 2014 earnings.
When asked about the decision, CVS CEO Larry Merlo told the Associated Press that his company had “come to the conclusion that cigarettes have no place in a setting where healthcare is being delivered.”
While it’s easy to pass off CVS’ plan to stop selling tobacco products as a clever PR decision designed to attract an increasingly health-conscious American public, there’s more to this story than just good marketing.
CVS’ decision to “just say no” to tobacco is the latest success story of government stepping in to counteract the dangers of unregulated capitalism.
Just 44 years ago in 1970, approximately 40 percent of adult Americans smoked cigarettes. Today that number has dropped to 18 percent.
Why has this happened? Conservatives and libertarians don’t want to hear it, but the only reason American tobacco use has dropped since the middle of the twentieth century is government regulation.
Since Surgeon General Luther Terry released his landmark report on the connection between tobacco use and cancer in 1964, state and federal governments have unleashed a wave of regulations on tobacco.
They’ve slapped cigarette packs with graphic warning labels, banned tobacco TV ads, outlawed flavored cigarettes, created smoke-free areas, and raised taxes on cigarette purchases. They were helped along the way by those trial lawyers Republicans love to hate, but the basic fact of the matter is true: government regulation worked.
And it worked in the best way possible.
According to a recent study published in the Journal of the American Medical Association, anti-smoking efforts have saved over 8 million lives in the 50 years since Surgeon General Luther Terry announced the dangers of tobacco use.
One of the most effective ways to save lives has been raising taxes on cigarette packs. This has been proven by study after study.
As the USA Today editorial board recently pointed out, states with the highest excise taxes – that is those states with the highest tobacco sales taxes – have the lowest teen smoking rates. And according to the Center for Budget and Policy Priorities, raising the price of cigarettes by just 10 percent leads to a decrease in smoking by 3 to 7 percent among adults and 5 to 15 percent among people under the age of 18.
Make no mistake about it, if state and federal agencies hadn’t regulated tobacco like they have over the past 50 years, CVS never would have stopped selling cigarettes and chewing tobacco.
CVS takes in about $123 billion every year in sales and it expects to lose $2 billion in sales from its decision to stop selling tobacco products, although by refusing to sell tobacco products it will likely be able to sell itself as a more health-related company and make up for lost tobacco sales by selling healthy products. Regulation and taxes have cut into the tobacco market so much that that $2 billion dollar sales loss is nothing to worry about in the long term.
But CVS’ decision to stop selling tobacco products is about more than just cigarettes and it’s about more than just one company’s good business decision. It’s an example of what we need to do stop other dangers of unregulated capitalism like obesity and global warming.
If we want to do to things like fight obesity and stop global warming, then we need to do what we did to clamp down on tobacco use. We need to use government regulation and taxation to actually change the behavior of people and businesses. We need to make it so costly for people to drink soda or for companies to pump out fossil fuels that they radically reduce those activities.
Conservatives say modifying behavior is a bad thing, but they’re wrong. It’s a good thing, and we’ve been doing it since the founding of our republic. Alexander Hamilton used tariffs during the George Washington administration to get Americans to buy American manufactured goods, and today the federal government uses tax incentives of all types to encourage people to get married, buy a house, and even have kids.
We should “pick winners and losers” and we should use the government to change the way people and businesses act because doing so is the best way to ensure positive outcomes for society. Picking winners and losers worked to clamp down on big tobacco and it will work to do things like fight obesity and climate change.
Picking winners and losers will also help pay for the costs to society of bad behaviors like selling or eating fatty foods and polluting the atmosphere. When someone eats a Big Mac they don’t just hurt themselves, they hurt everyone else by raising national healthcare costs; when a company burns coal to fuel a power plant, that company doesn’t just dirty up the sky, its saddles you and me – the taxpayer – with the cost of disaster relief needed to clean up after climate-change-fueled super storms. The listgoes on.
When Surgeon General Luther Terry warned Americans about the dangers of tobacco use 50 years ago, the idea of a major drugstore chain like CVS actually refusing to sell tobacco products was inconceivable. Today, it’s just common sense.
Let’s start doing to big sugar and big oil what we did to big tobacco so that someday soon, people will think refusing to sell soda and refusing to use fossil fuels are just as common-sense as refusing to sell or smoke cigarettes.