The perpetual crisis: corporate strategy, youth recruitment, and the limits of regulation

“ Young people are not the future of the tobacco industry; they are the future of America. And we must take immediate, decisive action to protect them. We know that every day 3,000 young people will start smoking, and 1,000 of them will die prematurely due to tobacco-related disease. We know that 90 percent of adults who smoke—90 percent—began using tobacco before the age of 18. ”

“ I was part of a well-organized machine that depends on young people like you believing that cigarettes are okay. Some of the smartest people in America work at just one thing, figuring out how to get you to smoke. As tobacco kills off people like me, they need kids like you to replace me. ”

“ Every single day another 3,000 American children smoke their first cigarette. Most of them will be hooked for life, and a third of them will die earlier as a result.
That's why our administration has worked so hard to highlight the health threat teen smoking poses and to keep tobacco products out of the hands of our children. We supported State and local efforts to stop underage smoking before it starts. And we know these efforts work. Massachusetts has used education programs to reduce high school student smoking by 15 percent. ”

“ We know the power of tobacco advertising to reach out to children every day and to get them hooked on a habit we know is deadly. Every day nearly 3,000 young people start to smoke in this country, even though it's illegal to sell cigarettes to them. This week we received further chilling evidence why we must remain vigilant in our efforts to protect our children from tobacco. ”

“ This week I directed the Food and Drug Administration to propose stiff restrictions on the advertising, marketing, and sales of cigarettes to children, after a 14-month FDA study, an exhaustive study which found tobacco addictive, harmful, and readily available to young Americans. I did so because sometimes we must act sternly and boldly to fulfill our most fundamental moral obligation: Our duty as adults to ensure that our children grow up healthy and strong. ”

“ Parents also know that, aside from television and drugs, alcohol and tobacco are two of the biggest dangers to our children. Our administration is working hard, along with tens of thousands of citizens, including so many young people in antismoking groups, to keep our children away from tobacco. Every day 3,000 kids start to smoke in this country illegally, and 1,000 of them will have their lives shortened as a result. Our administration has proposed strong rules to prevent the advertising, marketing, and sales of tobacco to children. ”

“ Last year we took bold action to shield our children from tobacco, telling the tobacco companies: Market and sell your products to adults if you wish, but you must draw the line at children. And we launched a comprehensive plan that prohibits retailers from selling tobacco to minors and requires clerks to check I.D.'s before selling cigarettes to the young people. These regulations are critical to our goal of keeping tobacco out of our children's lives, but they must be enforced. ”

“ To put an end to the epidemic, Congress must act. Last fall I called on Congress to put aside politics and pass comprehensive bipartisan legislation to reduce teen smoking by raising the price of cigarettes by up to a dollar and a half a pack over the next 10 years, imposing strong penalties if the tobacco industry keeps selling cigarettes to our children, affirming the FDA's full authority to regulate tobacco, to prevent children's access to tobacco products, and to restrict tobacco ads aimed at young people, so that our children can't fall prey to the deadly threat of tobacco. ”

“ It is but a slight exaggeration to say that such transactions, which govern the course of industry, are carried out with an eye single to pecuniary gain,—the industrial consequences, and their bearing on the community’s welfare, being matters incidental to the transaction of business. In every-day phrase, under the rule of the current technology and business principles, industry is managed by businessmen for business ends, not by technological experts or for the material advantage of the community. ”

“ The more lucrative parts of the markets are zealously guarded by the company. Through legislation, policy measures, withholding of technology and know-how - the firm prevents its competitors from crossing the river into its protected turf.
Let little firms "develop" an industry and then come in and take it over. - This is precisely what Netscape is saying that Microsoft is doing to it. Netscape developed the now lucrative Browser Application market. Microsoft was wrong in discarding the Internet as a fad. ”

“ It should be further considered that any law is at once bad and vicious in its tendency which places before the citizen the alternatives of disobedience with profit, and obedience with loss or ruin. Such a law is the worst possible economy because in preserving the infection, it not only perpetuates the disease and its attendant losses for all time, but perpetuates forever the official expenses of keeping it in check, when a prompt extinction of the infection would once for all time abolish all loss and all outlay for surveillance. ”

“ I am showing that this commercial genius is no better than a high talent, for financial jugglery, and that its successes are achieved by a calculated disregard of the laws of the game. The "System's" fortunes have been won by means of marked cards and cogged dice, crooked wheels and bribed umpires—in other words, by the corruption of legislatures, the undermining of competitors, the evasion of railway rates, the wrongful manipulation of stocks, the perversion of justice, by intrigue, graft, and four play. Once the people realize this, the "System" is doomed ”

“ Tobacco company documents indicate that young people are an important and often crucial segment of the tobacco market. Children, who tend to be more price sensitive than adults, are influenced by advertising and promotion practices that result in drastically reduced cigarette prices. (25) Comprehensive advertising restrictions will have a positive effect on the smoking rates of young people. (26) Restrictions on advertising are necessary to prevent unrestricted tobacco advertising from undermining legislation prohibiting access to young people and providing for education about tobacco use. ”

“ Children are exposed to substantial and unavoidable tobacco advertising that leads to favorable beliefs about tobacco use, plays a role in leading young people to overestimate the prevalence of tobacco use, and increases the number of young people who begin to use tobacco. ”

“ Even the honest advertiser is less interested in giving an analysis of his product that will win him the rational estimation and favor of the reader than in creating in the reader through the skillful use of words, emotions and sympathies favorable to his product. The name of a talcum powder or tobacco is the subject of mature consideration by the advertising expert, because he knows that the emotional flavor of a word is more important in securing action than its rational significance. ”

“ The use of tobacco products in motion pictures and other mass media glamorizes its use for young people and encourages them to use tobacco products. (22) Tobacco advertising expands the size of the tobacco market by increasing consumption of tobacco products including tobacco use by young people. (23) Children are more influenced by tobacco marketing than adults: more than 80 percent of youth smoke three heavily marketed brands, while only 54 percent of adults, 26 and older, smoke these same brands. ”

“ Reducing the use of tobacco by minors by 50 percent would prevent well over 10,000,000 of today’s children from becoming regular, daily smokers, saving over 3,000,000 of them from premature death due to tobacco-induced disease. Such a reduction in youth smoking would also result in approximately $75,000,000,000 in savings attributable to reduced health care costs. (15) Advertising, marketing, and promotion of tobacco products have been especially directed to attract young persons to use tobacco products, and these efforts have resulted in increased use of such products by youth. ”

“ But for weeks now the Senate hasn't acted, as a few Members have done everything they could to protect big tobacco by putting off a vote.
Today I say to them: The delay has gone on long enough. You are not just trying to kill the tobacco bill; you are standing in the way of saving 1 million children's lives. The American people will not stand for it. The Senate should do nothing else until it passes tobacco legislation, and it should pass it this week. ”

“ What is your idea as to how we shall control the selling end?"
"I had given that little thought, Mr. Rogers," I replied. "I believe that easily takes care of itself. The demand is always greater than the supply. We shall have the metal to sell, the world will be more anxious to buy than we to sell: what more can be necessary?"
"Lawson," said the master brain of the greatest and most successful commercial enterprise in the world, "you know the stock-market, but you don't know the first principle of working to advantage a great business in which you absolutely control the production. ”

“ Victory is not guaranteed, losses loom constantly, investors are forever edgy, customers are fickle, bankers itchy, capital markets gloomy, suppliers beholden to the competition. Barriers to entry are almost always formidable and often insurmountable.
In the real world, tacit and implicit understandings regarding prices and competitive behavior prevail among competitors within oligopolies. Establishing a reputation for collusive predatory pricing deters potential entrants.
And a dominant position in one market can be leveraged into another, connected or derivative, market. ”

“ Anything which derails the competitor whenever he makes a headway, gains a larger market share, launches a new product - can be construed as a "pattern of retaliation".
Maintain excess capacity to be used for "fighting" purposes to discipline ambitious rivals. - Such excess capacity could belong to the offending firm or - through cartel or other arrangements - to a group of offending firms. ”

“ Such an increase leads to new demands imposed by the market, to modernization, innovation, the introduction of new management techniques (example: Just In Time inventory management) , joint ventures, training of personnel, technology transfers, development of proprietary intellectual property and so on. Deprived of a growing market share - the competitor will not feel pressurized to learn and to better itself. In due time, it will dwindle and die.
Acquire a wall of "defensive" patents to deny competitors access to the latest technology. ”

“ Indeed, so far is the machine process from having yet recast the principles of industrial management, as distinct from technological procedure, that the efforts inspired in responsible public officials and public-spirited citizens by this patent discrepancy have hitherto been directed wholly to regulating industry into consonance with the antiquated scheme of business principles, rather than to take thought of how best to conduct industrial affairs and the distribution of livelihood in consonance with the technological requirements of the machine industry. ”

“ The law perverted! The law—and, in its wake, all the collective forces of the nation—the law, I say, not only diverted from its proper direction, but made to pursue one entirely contrary! The law become the tool of every kind of avarice, instead of being its check! The law guilty of that very iniquity which it was its mission to punish! Truly, this is a serious fact, if it exists, and one to which I feel bound to call the attention of my fellow citizens. ”

“ The failure of a manufacturer or distributor to notify the Attorney General and the Secretary of the Treasury of their knowledge of tobacco products used in illicit trade. `` (tt) Making any express or implied statement or representation directed to consumers with respect to a tobacco product, in a label or labeling or through the media or advertising, that either conveys, or misleads or would mislead consumers into believing, that— `` (1) the product is approved by the Food and Drug Administration; `` (2) the Food and Drug Administration deems the product to be safe for use by consumers ”

“ If manufacturers state or imply in communications directed to consumers through the media or through a label, labeling, or advertising, that a tobacco product is approved or inspected by the Food and Drug Administration or complies with Food and Drug Administration standards, consumers are likely to be confused and misled. ”

“ But instead of sensible reform that rewarded success and freed the creative forces of the market, too often we’ve excused and even embraced an ethic of greed, corner cutting and inside dealing that has always threatened the long-term stability of our economic system. Too often, we’ve lost that common stake in each other’s prosperity.
Let me be clear: the American economy does not stand still, and neither should the rules that govern it. The evolution of industries often warrants regulatory reform – to foster competition, lower prices, or replace outdated oversight structures. ”