First broadcast on WSHU/WSUF-FM
December 8, 1995
December 8, 1995
Last week, I recounted our discovery of the sorts of investments that Suzanne's mutual fund held. Maybe because we both are former cigarette smokers, her investments in tobacco companies jumped out as incongruous in today's world. We both started smoking well over 30 years ago, when as teenagers we had no idea that cigarette smoking was anything other than cool. Cigarette packages danced on television. For both of us, it took years of struggle to kick this very addictive habit.
Apparently, a similar freewheeling attitude toward cigarettes now exists in Asia, where American tobacco companies use rock and sports stars and other US cultural icons to convince youth and women there that smoking is "cool."
"Thanksgiving was different this year. Nobody smoked and there was much less drinking." Suzanne's daughter Kira was talking about the celebration with her fathers' family that she has attended most of her 27 years. "The floor of the New York Stock Exchange is different," said Erin when we saw her over the holiday. "Nobody smokes there anymore." And I heard a Delta airlines commercial last week boast that their flights are smoke-free around the world.
These three bits of information were very encouraging. To find solutions to many of our problems, we need to create a widespread change in attitude-toward our food, our cars, each other and the environment. Seeing such a dramatic attitude change in my adult life gives me hope.
The New Haven Register recently had a front page graphic that reinforced the reality behind these Thanksgiving anecdotes. It showed that average cigarette consumption in this country went down from over 4,000 in 1972 to about 2,600 in 1992. This is the lowest level of consumption in fifty years.
But still, these figures got me wondering. They are for cigarettes per person, not per smoker. That equals 132 packs of cigarettes for each of us, every year. According to Connecticut's Attorney General and the Centers for Disease Control, every pack of cigarettes sold produces over two dollars in medical costs to our society. In other words, each time someone buys a package of cigarettes, we all get a bill for more than the cost of those smokes.
This brings the per capita cost of smoking to nearly $300. Multiply that by the quarter of a billion people in this country, and we come up with some real money - over $50 billion! Given the high cost of health care, and the wide ranging ill effects of smoking, this is probably a reasonable number.
Then I got to thinking about the companies in which Suzanne's mutual fund is invested. The world's largest tobacco company sells about 45% of the cigarettes in this country, which would suggest that it enables nearly $25 billion of those health costs. Its 1992 annual report says that it took in $12 billion in revenue from domestic tobacco, which produced just over $5 billion in profits (some of which were presumably passed onto Suzanne's retirement fund). So its total income from manufacturing and selling cigarettes is just one fifth of what those cigarettes cost us for health care. (No wonder we have a problem paying for it.)
It is interesting that its international tobacco sales bring in more money but produce less than half as much profit. Maybe that's because of the high costs of flying those American celebrities to Asia to promote smoking and getting the US State Department to fight for its right to advertise freely there.
So I begin to see why we may have some serious financial problems in this country. We've got a system in which well-meaning school teachers invest in a company which works to eventually hook the very students these teachers strive to point towards a healthy future. And, those widely encouraged addictions will produce shared health care costs many times greater than the investment returns.
It's not an accident that many of the investments that produce high returns are those which also produce the greatest widespread social costs. Automobiles, chemicals, violent entertainment and junk food come to mind.
We need to find ways to invest for the future which don't create social costs, but rather produce social benefits, such as better health, cleaner environment, relevant education, and strong communities.
I suspect that gardens and small farms may be one of the best bets for such investments.