Whenever I used to think of nationalising industries, I would think of industries relating to critical infrastructure or 'prestige industries'. Reading the following threw my intuitions overboard!

A tobacco industry buy-out

In the current model, the tobacco industry has a corporate mission of selling unhealthy products so as to profit its shareholders. Its aims and purposes are intrinsically misaligned with the public good and will ever remain so. However, if the tobacco industry were nationalised, with the intent of winding down operations, the interests of those providing tobacco and public health would be aligned.

For the amount of health harms caused, the tobacco industry is not highly profitable. The total profit of the three major tobacco companies in Australia in 2007 was $600 million on assets of $3.6 billion.27 The profit per tobacco related death was approximately $20 000. Profits must decline in time as smoking rates fall as intended. Based on asset base and a reasonable profit to projected earnings multiple, a buy-out in Australia might cost in the range of $5 billion. Estimates of the cost of nationalisation in Canada range from $0–15 billion.28 Purchase could be sweetened by protection from civil litigation. Even if it costs of the order of several billions, it would rapidly return that in terms of quantifiable reductions in healthcare costs.


Would the tobacco industry be for or against this? Would there be an opposition except from deontological libertarians?

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Here's a hint, replace "tobacco" with "marijuana", or some drug that's currently fashionable. Note, how your intuition changes.

2Jiro4yWhat quantifiable reduction in healthcare costs? Everyone dies once; unless death by old age is substantially cheaper than death by lung cancer, dying later wouldn't decrease healthcare costs at all. Furthermore, if they die later, they consume more Social Security and other things generally consumed by older people. Letting them die of lung cancer can save money.
0ChristianKl4yGiven the interantional nature of the tobacco industry I'm not sure how a paln to nationalize it would even look like.

Open Thread, Feb 8 - Feb 15, 2016

by Elo 1 min read8th Feb 2016224 comments


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