[HN Gopher] How profitable was/is tobacco? ___________________________________________________________________ How profitable was/is tobacco? Author : Amorymeltzer Score : 59 points Date : 2021-11-06 18:30 UTC (4 hours ago) (HTM) web link (genehoots.substack.com) (TXT) w3m dump (genehoots.substack.com) | markdown wrote: | > Only a grove of an obscure exotic nut was higher. | | Anyone know which nut he's referring to? | nemo44x wrote: | I suspect Macadamia. Take forever to begin producing and have | limited environments they thrive in. But they bring in a | fortune. | lindseymysse wrote: | I've been reading Double Entry: How the Merchants of Venice | Created Modern Finance by Jane Gleeson-White, and the last few | chapters are an exploration of double entry accounting's | inability to factor in environmental degradation and social | costs. In the end, price and money are poor measures of important | things in this world. | | Raj Patel estimates that the true cost of a Big Mac is $200: | https://www.sfgate.com/books/article/The-Value-of-Nothing-by... | SiempreViernes wrote: | All that profit and the only "downside" is causing one in five | deaths in the US (before covid)! | | https://www.cdc.gov/tobacco/data_statistics/fact_sheets/heal... | twofornone wrote: | I feel like this is misleading because it's not like 1 in 5 | people who smoke are dropping dead from a deadly poison. More | like after 30-60 years of daily tobacco use someone dies a few | years before life expectancy of cancer and/or heart/lung | disease. | | It's an important distinction, because otherwise the danger of | tobacco and culpability of tobacco companies are exaggerated. | For many people a lifetime of pleasure from nicotine justifies | the risk. | nuclearnice1 wrote: | Your post is posed as a plea to avoid misleading information. | | You wrote: "dies a few years before life expectancy" | | The article in the comment you reply to writes "Life | expectancy for smokers is at least 10 years shorter than for | nonsmokers" | csee wrote: | It's terrible but not all of that is because of smoking. | Smokers are often also drinkers, drug users, bad eaters, | and just generally unhealthy people. | [deleted] | Ma8ee wrote: | Maybe on average it's only a few years. But some smokers live | to old age, and some die of lung cancer in their early | forties while their kids are still young. | yokaze wrote: | Some details, which are in my view not unimportant: | | - The tobacco use is not only affecting the person "choosing | the lifetime of pleasure", but their surroundings too, thanks | to second hand smoke. | | - Nicotine is highly addictive: | | "The majority of smokers would like to stop smoking, and each | year about half try to quit permanently. Yet, only about 6 | percent of smokers are able to quit in a given year" [1] | | For me, that makes it highly questionable, if that is a | voluntary choice. I know enough people, which have chosen to | indulge in that particular pleasure, and after decades of | abstinence still have to put a conscious effort into not | relapsing (in certain situations). | | [1] https://www.drugabuse.gov/publications/research- | reports/toba... | betwixthewires wrote: | Well, secondhand smoke is not an issue when one smokes only | outside away from others or only in the company of other | smokers, and I think a significant portion of people who | try to quit smoking do so because of the potentially | overstated risk pointed out in the comment you're | responding to, or the artificially inflated cost due to sin | tax imposed and justified by that potentially overstated | risk. Would those people try to quit if they calculated the | cost more accurately? | | That said, I'm an ex smoker, and I'm glad I quit, and I | will never touch a cigarette again. To me it was not so | much the risk of very early death as it was the impact on | my health for however many years I will remain alive, the | financial cost (imposed by governments) and the fact that I | came to hate smoking cigarettes and got no pleasure from it | whatsoever (which is not the case with nicotine in general | or other forms of tobacco such as cigars, which I do enjoy | once or twice a year). | Talanes wrote: | I imagine there's also some false positives from people | who know that "wanting to quit" is the more socially | acceptable answer. | version_five wrote: | I think the second hand smoke thing was largely overblown | to make it an "us vs them" thing rather than letting | smoking be a personal choice. Smoking is a terrible | habit, I hate being around people who are smoking, but I | really think that modern anti smoking campaigns were less | about health and more about puritan values, and not being | able to stand the idea of someone else enjoying | themselves in ways you disagree with. We see this | regularly but it usually doesn't get enough traction to | matter. The "dangers of second hand smoke" happened to be | what finally stuck. | | From what I understand, anti smoking campaigns have | actually had a positive impact on life expectancy in | western countries. On that metric, this is a positive | thing. Personally I don't believe it outweighs the ills | of allowing others to tell you what to do in the name of | your health. I actually think all of the covid craziness | can trace itself back to some extent to when we gave in | and banner indoor smoking in most places. You start | letting people make rules "for your safety" (and try to | spin it so it's really about others) and next thing you | know we've got the current hysteria as a popular thing. | | Edit, because everyone that's replied so far has missed | the point. I dont mean second hand smoke is pleasant. The | rhetoric used to make it so it's not a business decision | but a state mandate, is that it was killing people. This | was overblown, and is a completely different bar than "it | smells bad and gives me a headache" - I agree with that, | but its unreasonable to argue the state should be telling | people what they can't do because of it. I'd sooner see | Axe body spray outlawed on those grounds, big again, it's | not the states business. | lotsofpulp wrote: | Indoor smoking bans are about others. Other non smokers | who do not want to smell disgusting cigarette smoke. It | has tar in it and sticks to all surfaces and never goes | away. | twofornone wrote: | So let establishments dictate whether or not to allow | smokers. And smoking sections were generally well | isolated from non smoking sections. | acdha wrote: | > And smoking sections were generally well isolated from | non smoking sections. | | This definitely does not match my memory. If businesses | had to meet air quality standards that'd be one thing but | usually they just pretended that a 4 foot gap was an | airlock. | acdha wrote: | I strongly disagree. Smokers always used the excuse that | it only affected them, even though everyone knew it had a | negative impact for anyone within 20-30 feet, if not how | precisely bad it was. | | The studies confirming the risks of secondhand smoke were | what gave social and legal weight to ending that period. | When businesses were faced with liability, suddenly it | became possible to taste your dinner and not be exposed | to carcinogens. People stopped making excuses for | exposing children as soon as society stopped indulging | polite lies about it being harmless. | TheOtherHobbes wrote: | I was one of those children. My father used to smoke. I | hated it, and so did my mother - who had given up and had | various respiratory problem. | | We didn't get a choice. | | I have no doubt that the tobacco industry is simply evil. | History still hasn't come to terms with the horror and | catastrophe created by an industry devoted entirely to | farming and promoting addictive toxins. | acdha wrote: | Me too - my dad only stopped smoking around us when my | sister and I got migraines and he couldn't tell himself | it wasn't a problem. This was 100% supported by the | tobacco companies' well-funded propaganda machine. | tshaddox wrote: | It's not really an important distinction, because _all_ | deaths are deaths that would have happened later anyway. | ohdannyboy wrote: | I don't know a single old smoker who thinks that. My | grandfather, great uncle and others acknowledged their shitty | older years were their own damn fault but they urged me to | never start. There was no "make a choice" or "it's worth it | to some people." | | I've only heard younger smokers say that but I don't think | they've internalized how bad it's going to be. | systemvoltage wrote: | How many deaths does smoking marijuana cause? | hn_throwaway_99 wrote: | Marijuana is much less damaging to the lungs than tobacco | smoke: | | https://www.ucsf.edu/news/2012/01/98519/marijuana-shown- | be-l... | systemvoltage wrote: | > Whether smoking marijuana causes lung cancer, as | cigarette smoking does, remains an open question. | | https://www.drugabuse.gov/publications/research- | reports/mari... | dncornholio wrote: | At least they die peacefully and not danger other people. | Alcohol causes way more harm. Let people smoke if they want. It | doesn't bother me as long as they do it respectfully and away | from non-smokers. | devwastaken wrote: | No actions live in a bubble. Wether we like it or not what | you and I do affect each other. Certain things we should | protect for people to do individually, and others should not | be. How that is weighed is based on the level of harm. The | cost of medical and other socioeconomic issues in individuals | that smoke, along with them harming others through second | hand smoke is a far larger cost to society. Therefore, we tax | it. | [deleted] | erulabs wrote: | Not pushing one way or the other, but it's important to | consider the framing: Ignoring the second-hand smoke | complexity for a moment, if everyone pays for every one | else's health, then of course we should ban or tax | cigarettes and/or anything that causes excess harm to a | single person that others have to pay for (taxes help cover | the externality). However, if each individual pays for the | entirety of their own health-care costs, then it is far | less obvious what actions should be taken. | | To put it another way, if I was in command of an army, I | wouldn't allow smoking or various unhealthy or time-wasting | activities. China wants a higher GDP: ban all the video | games! | | This sort of social-engineering is _possibly_ for the best, | and possibly for the worse, but I think it's a bit of an | injustice to just state "well we all have to pay for each | other's health so the policy should be ______". We don't | necessarily have to all pay for each others health. | Absolutes aside, a smoker _should_ have higher insurance | costs than a non-smoker. | | If we all had to pay for each others hobbies, for example, | you'd bet there would be folks trying to get cloud-watching | banned in favor of something productive like knitting. This | sort of social planning rarely works out how one expects it | to. | wheels wrote: | > _Absolutes aside, a smoker should have higher insurance | costs than a non-smoker._ | | This is probably false. Smokers rack up less health care | costs than nonsmokers because they die earlier. The study | I'm linking doesn't consider the possibility of exiting | paying into a healthcare system early, but even most | smokers die after retirement: | | https://www.nejm.org/doi/full/10.1056/nejm199710093371506 | alasdair_ wrote: | Retired people provide a lot of useful labor, it's just | much of it is in the home and therefore both unpaid and | invisible. | | Grandparents provide childcare for working children and | they help take care of their spouses that would otherwise | need in-home care. It's a complicated calculation. | Clubber wrote: | I would argue in the US, that sort of thing benefits | corporate healthcare more than anything. Nobody wants | other people telling them what to do. In other words, the | more people say we're going to ban ______ because I don't | want to pay for your risky lifestyle through my | healthcare taxes, the less likely universal healthcare | will ever be a thing in the US. If we really want | universal healthcare, we should allow everyone to join, | thus the universal part. | | But people like to preach to other people, so Que Sera, | Sera. | Talanes wrote: | > _If we all had to pay for each others hobbies, for | example, you 'd bet there would be folks trying to get | cloud-watching banned in favor of something productive | like knitting._ | | If I had to pay for other people's hobbies, surely I'd | want the opposite? Why would I prefer to buy someone yarn | rather than let them watch clouds for free? | TheOtherHobbes wrote: | I find it it interesting that spending billions on | promoting smoking somehow _isn 't_ considered social | engineering, but trying to prevent it somehow is. | rank0 wrote: | This is a horrible argument. I could apply the same logic | to all your unhealthy habits as well. | | I don't smoke but regressive tax structures and social | control "for the greater good" are signs of a dystopia. | | Good intentions, road to hell...etc | MichaelZuo wrote: | Quite a lot of people on HN are arguing for such social | control in the US through promoting a universal | healthcare system. And which many countries currently | implement... so your contrarian opinion is interesting. | | How would you balance tradeoffs in either direction? | im_down_w_otp wrote: | That's not a very complete representation. When my | grandmother died from lung cancer that metastisized to her | brain, there was nothing particularly peaceful about the | coughing and hacking (sometimes with a fair share of blood) | that would send her into fits of convulsions, the tumor | induced dementia, etc. Nor the effects that it had on her | kids who grew up in an environment of insatiable chain | smoking. | dncornholio wrote: | You're putting your argument out of my context. Your | grandmother was not a 'respectful smoker'. | hn_throwaway_99 wrote: | Peacefully?? Go watch someone die of emphysema, it's pretty | terrifying to be slowly suffocated to death. | dncornholio wrote: | Misinterpretation. Peacefully in the sense, without | violence. | Groxx wrote: | Second-hand smoke causes plenty of harm. | markdown wrote: | No danger to other people? I wonder how many deaths are due | to cancer patients using up an outsized proportion of a | nation's healthcare budget. | NilsIRL wrote: | And there are also (naturally) economic downsides as well: | The costing model in this study covers three areas where | smoking has been shown to create 'external' costs: the | direct costs to European public healthcare systems in a given | year; productivity loss to the EU27 economy due to increased | absenteeism; and the monetised cost of premature | mortality Taking the three main cost factors | together, the loss to the EU in 2000 is estimated to be at | approximately EUR363 billion. This figure corresponds to about | 3.4% of the EU27 GDP. | | https://ec.europa.eu/health/sites/default/files/tobacco/docs... | listenallyall wrote: | Seems like some double dipping here. Not familiar with the EU | patterns, but if seniors & retired people receive income from | public sources, like Social Security in the US, then | premature mortality results in a big savings, not additional | costs. | ksaj wrote: | They should break this down further, and state the average | dollar hit per smoker. Most people don't mentally comprehend | how many smokers there are in the world at any given time, or | whether the financial impact even high when applied to an | entire population. | | "On average YOUR smoking costs approximately $X" would be far | more easy to understand. | qwertyuiop_ wrote: | Social Media along with monopolistic ad giant Google is the new | Tobacco. | joe_the_user wrote: | I'm always skeptical of an industry or business being inherently | profitable in the context of a public stock/equity market. | | Sure, high profitability from the start is possible. But it seems | like once you have an ongoing public company, whether growing or | stable, the market is going to be pricing in future profits and | that the profitability of the stock will tend toward average. | Microsoft, Apple and Google, for example, have a tremendous venue | stream and good prospects for the future ... so their stock | prices are correspondingly high and investing in these stocks | shouldn't be inherently better than investing on other stocks. | | _Each fall, farmers supplied the leaf tobacco. How did they fare | economically? Tobacco had the second highest profit per acre of | any crop in the world. (Only a grove of an obscure exotic nut was | higher.)_ | | Sure, I'm not even sure what matters here. Different land uses | produce crops of higher or lower value. Land that can produce | higher value crops is quite valuable, sure. So is land in | Manhattan. | | Tobacco tended to be a monopoly, monopolies get a large revenue | per capital invested. | | It's simpler to say tobacco was a large, concentrated industry | producing an addictive drug. Any industry like tends to produce a | lot of revenue per dollar invested and this is because industry | leverage their connections or ability to navigate/manipulate | regulators and the state. | stefan_ wrote: | What does the stock valuation have to do with the profit of the | actual enterprise? | loeg wrote: | > The price-to-earnings ratio (P/E ratio) is the ratio for | valuing a company that measures its current share price | relative to its earnings per share (EPS). The price-to- | earnings ratio is also sometimes known as the price multiple | or the earnings multiple. | | > P/E ratios are used by investors and analysts to determine | the relative value of a company's shares in an apples-to- | apples comparison. It can also be used to compare a company | against its own historical record or to compare aggregate | markets against one another or over time. | | https://www.investopedia.com/terms/p/price-earningsratio.asp | mxschumacher wrote: | The global tobacco industry is more concentrated than ever, we | might see Altria and Philipp Morris International merge again, | then practically all of the world's cigarettes will be sold by | 4-5 companies. | | For Tobacco companies a few things are going on, the number of | cigarettes sold in Western countries is declining, yet profits | are up (a conundrum explained by the industry's enormous | pricing power). Smoking rates are still extremely high in | countries like Indonesia. | | The biggest brands in the various "alternative" tobacco | products like e-cigarettes are already owned by the | conventional incumbents. | | Simultaneously these stocks face a lot of ESG pressure and are | being sold by many funds on principle, not valuation. Just | looking and multiples on profit, it is remarkable how low the | valuations of some of these firms is. | barney54 wrote: | How was tobacco a monopoly? And if it were a monopoly why was | it profitable to farmers instead of the monopolist squeezing | the farmers? | monocasa wrote: | > How was tobacco a monopoly? | | https://en.wikipedia.org/wiki/United_States_v._American_Toba. | ... | | > And if it were a monopoly why was it profitable to farmers | instead of the monopolist squeezing the farmers? | | The monopolists did squeeze the farmers. It was still | profitable for the farmers, but under what a fair market rate | would be. Just because you're getting paid enough to keep | going doesn't mean you're getting a fair rate. | | It's sort of like the SF tech anti poaching. No one denies | that SF engineers get paid a lot. That also doesn't mean that | they didn't get shafted out of thousands by a wage fixing | scheme. | megablast wrote: | > The monopolists did squeeze the farmers. It was still | profitable for the farmers, but under what a fair market | rate would be. Just because you're getting paid enough to | keep going doesn't mean you're getting a fair rate. | | Obviously it paid better than other crops, so it is not | about getting paid enough to keep going. | monocasa wrote: | Enough to keep going with that crop versus others. | netcan wrote: | >How was tobacco a monopoly. | | Philip Morris. | netcan wrote: | I think you're assuming a level of market rationality that | doesn't exist IRL. In practice, certain industries _have_ | tended to be more profitable than others... even long term. | | Same for stock. Apple & MSFT's stock price does, in theory, | "price in" their tremendous revenue, growth potential and | profitability. But.... This was also true 10, 20 & 30 years | ago. Yet, investments in tech companies over those years _did_ | yield market beating returns. | | I think that for tobacco and other cash crops, it helps that | it's relatively durable and that the market is quality | oriented. | intrepidhero wrote: | Yeah, wow. No mention of external costs makes this an incredibly | naive analysis. What's the name for the fallacy of getting | distracted by dollar signs to the point of ignoring downsides? | "There ain't no such thing as a free lunch" is a truism for a | reason. | loeg wrote: | It sets out to address a very specific question, and does so | relatively concisely. I like that it doesn't get distracted and | try to address every possible question. | | It's worth understanding the incentives of the businesses | profiting from tobacco to help understand how it is so | pernicious to society. I don't think the author is wrong to | highlight the profits to businesses. | curmudgeon22 wrote: | I think it's fine for the article to have a focus, | profitability in this case. It's an interesting thought | experiment after seeing how many people profit at each stage in | the tobacco supply chain to then consider how pervasive tobacco | was despite all the downsides. | personjerry wrote: | What are the external costs? | Hjfrf wrote: | Healthcare is the big one | Iefthandrule wrote: | Who gets the profit vs who pays for the costs? | missedthecue wrote: | Smokers pay more for healthcare, at least in the US. That's | an internalized cost, not an externality. | more_corn wrote: | You misunderstand what externalized means. Externalized | cost means external to the manufacturer. It is a phrase | used to refer to a method os extracting profit while | harming society/humanity/the world. It literally means a | cost born by someone other than the one profiting. | | The health cost is externalized for the producer because | it is shifted to the consumers. | [deleted] | lalaland1125 wrote: | Cigarettes actually are a net reduction in overall cost. | They mostly kill people before they get old enough to have | really expensive conditions. | | It also significantly reduces costs in terms of social | security. | pengaru wrote: | Such a claim requires impossible amounts of hard evidence | to make. | | There's a _lot_ of casual smokers who never become that | pack-or-two a day kind of extreme addict one can clearly | attribute their smoking to their lung /mouth/throat | cancer. | | But they are still more likely to develop some kind of | ailment from their lighter smoking, as it's equivalent to | frequently subjecting your body to a poison that enters | the bloodstream. Especially since it's not necessarily | going to be a respiratory cancer, attributing cause | becomes ambiguous enough to to make all the stats | unreliable at best. | | Consider the fact that some american cities ban wood | burning fireplaces/stoves as a public health measure. And | that's diffuse atmospheric smoke, nobody is sucking | directly from the stacks day after day, year after year. | more_corn wrote: | This is obviously false. As people die of lung cancer and | emphysema they generate astronomical costs on the | healthcare system. Health insurance then spreads that | burden widely so healthy Americans pick up the tab. | (assuming of course that markets would accurately reduce | the cost of health insurance if costs of healthcare were | to drop) | Ma8ee wrote: | I suspect that is a myth. Treating lung cancer isn't | cheap. | op00to wrote: | Uh, do you know what COPD ICU end of life treatment | costs? I have first hand experience. It's not cheap. | jliptzin wrote: | Why should a profitability analysis include external costs when | no one in the cigarette supply chain cares about the external | costs? | d0mine wrote: | wow. The comments are just filled tobacco sympathizers. I thought | the topic was closed after decades upon decades of research. My | guess some people wouldn't mind to see the world burn tomorrow if | they make profit today. | crocodiletears wrote: | Decades of research have illustrated the consequences of | tobacco consumption. | | Science is descriptive, not prescriptive. | | The actions individuals and societies take based on that | information are based on their own subjective values. | dehrmann wrote: | Parts of the tech scene have a libertarian bent. | [deleted] ___________________________________________________________________ (page generated 2021-11-06 23:01 UTC)