The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Norton’s First Law in Action: How Philip Morris benefits from new tobacco regulation & taxes.

Posted by iusbvision on April 9, 2009

Tim Carney at the Washington Examiner has a very informative column on why it is that the biggest players in an industry like more regulation and taxes.

Philip Morris, openly and without qualification, backs Kennedy’s and Waxman’s bills to heighten regulation of tobacco.

Philip Morris stands to benefit from this regulation in many ways. First, all regulation adds to overhead, and thus falls more heavily on smaller firms. Second, restrictions on advertising help Philip Morris’ Marlboro, a brand everyone already knows, by keeping lesser-known brands in the shadows. (Existing restrictions on advertising have already helped Philip Morris in this regard, with an added benefit spelled out in Altria’s annual report: “Marketing and selling expenses were lower, reflecting regulatory restrictions on advertising and promotion activities. … ”)

Finally, if the bill passes and the FDA gets added control over the industry, Philip Morris, more than any of its competitors, will have access to those bureaucrats and agency heads making the decisions. For all these reasons, RJ Reynolds and other tobacco companies oppose the bills Kennedy and Waxman are pushing.

This is exactly why ‘Corporatism’ and ‘POLITICAL MARKET ECONOMICS’ is hardest on the poor and middle class consumer.

For those of you who don’t know, corporatism is political market economics on steroids. Political market economics is not like regular market economics which is a meritocracy (where you make the best product at the best price for consumers), in political market economics the goal is to manipulate and lobby regulators and politicians to tilt the rules in your favor, which in turn enriches politicians by donations.

This brings us to Norton’s First Law:

Big business loves big government, which is why big business loves domestic taxes and regulation because it keeps the small and medium sized competition out of the competition. It also causes inflation, so ultimately it is you who pays and the poor who are hardest hit. (Big business often gets loopholes written in the laws for themselves such as Nancy Pelosi trying to get a part of the tuna industry exempted from the minimum wage law).

One Response to “Norton’s First Law in Action: How Philip Morris benefits from new tobacco regulation & taxes.”

  1. […] is why companies like Philip Morris lobbied Democrats to have tobacco taxes and regulations […]

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