E-cigarettes: Good for people, bad for the economy?

Cigarettes generate a lot of economic activity.

The tobacco industry supports:

1. Landowners who rent to
2. Tobacco farmers who employ laborers and buy equipment.
3. Companies that buy the tobacco and pay workers to refine the product, and various professionals to research all aspects of the product, to design and package the product, to bring the product to market.
4. Companies that move the product to store shelves.
5. Stores that sell the product.
6. Health workers (doctors, pharmacists, etc.) that come in when smokers get sick.
7. The pharmaceutical industry around quit smoking products.
8. The anti-smoking industry.
9. Bureaucrats involved around regulatory issues.
10. General support for government spending through taxes levied on smokers and tobacco companies.

How can e-cigarettes compete with this?

Being a mass produced manufactured good, the agricultural component is mostly gone. Since vapers don’t get sick or need to quit there goes all the support for the health industry and bye bye to pharmaceuticals and the anti-smoking groups. And goodbye to most of the taxes.

In general, things that break down, damage your health, or damage the environment create a lot more jobs and flow of capital than things that don’t.

So I guess it is kind of a selfish thing to do to switch to ecigs, thinking only of our own health and not about the wealth of the community. The very least we can do is thank the remaining smokers for holding the fort for the rest of us.

11 thoughts on “E-cigarettes: Good for people, bad for the economy?

  1. Hi Paul.
    At #7, I think that (1) the treatment drugs for sick smokers is the largest earner (chemotherapy, COPD, cardiac and vascular drugs); followed by (2) the boost to many drug sales because smokers are unhealthy (diabetes drugs etc.); and (3) pharmaceutical interventions for smoking cessation, which are the smallest item in pharma’s income from smoking.
    It probably goes something like: $100bn from treatment drugs; $50bn from the boost to general drug sales; and $4bn from quit-smoking pharmacotherapies (global, annual gross).
    The treatment drugs market is the biggie, and the one they are really fighting to protect. Quit smoking is chump change by comparison.

      • Yes Paul, the numbers are not just ballpark, but a total stab in the dark. However they are probably available to a researcher who is familiar with locating industry market sizes.

        I know the figures are somewhere in the right direction because it is not difficult to locate them in the UK, a small place with good statistical data. Example: smoking cessation is about £200m annually, drug treatment for sick smokers is approaching £2bn. There ya go.

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  3. “Being a mass produced manufactured good, the agricultural component is mostly gone.”

    Still gotta grow the nicotine somewhere.

    • Current opinion seems to be that tobacco for nicotine extraction is almost exclusively grown in China; that extraction is split between China and India; and that there is little or even none of either in the USA, as they source the pharma-grade product abroad, certificated
      by Swiss firms. So perhaps the situation is very much like that in e-cigarettes, where US vendors claim to manufacture in the USA, but this is simply marketing; it all comes from abroad.

      This may be the case for nicotine because very large volumes of feedstock are required, and the process is extremely ‘dirty’ in environmental terms. Both these issues mean that China can produce at a fraction of the cost. Nobody makes something for $1,000 that you can buy for $10 in China and then badge engineer.

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