This report suggests that banning smoking in pubs could be surprisingly costly. Here, then, are three reasons why the move might be justified despite this.
First, the report overstates the aggregate long-run costs of the ban. Bear-baiters and employers of child chimney sweeps suffered when these activities were banned, but in the long-run they found other jobs, albeit slightly less remunerative.
Indeed, as loss-making pubs exit the business, the profits of the remaining ones should rise, from the lower base.
What’s more, if smokers don’t go down the pub, they’ll spend money elsewhere, thus generating profits for other businesses, like off-licenses.
Second, competition between smoking and non-smoking pubs won’t necessarily lead to an optimum outcome, because the market isn’t free.
One interesting imperfection here is that the minimum wage limits competition.
Imagine bar staff were to prefer working in smoke-free pubs. In a free market, they would accept lower wages in exchange for doing so. Smoke-free pubs would then gain a competitive advantage, which would allow them to expand at the expense of smoking pubs, as they could charge lower prices or employ more or better-looking staff.
With a minimum wage in place, though, bar staff cannot trade-off clean air for wages. Pubs offering clean air don’t therefore get the competitive edge they would in a free market, so there are fewer of them than would be efficient.
Clearly, a good solution to this would be to scrap the minimum wage. But in the presence of such a restriction, we cannot assume that the market will create sufficient smoke-free pubs. That increases the case for banning smoking, as a second-best solution, as I suggested in an earlier post.
(Libertarians will point out here – rightly – that this is yet another example of how one intervention begets another.)
Thirdly, smoking is an other-regarding action, in that it does impose costs on others.
Its advocates deny this, claiming that smokers benefit the tax-payer by paying big excise duties and dying early. But this report by ASH shows that this isn’t necessarily the case.
For one thing, excise duties on tobacco aren’t so much extra revenue as displaced revenue. If people didn’t smoke, they’d buy other things, hence generating extra taxes. Alternatively, the government would raise taxes on other things. It’s theoretically possible – though I’ll grant unlikely in practice – that these could actually have positive benefits if they internalize externalities, for example by taxing pollution or road congestion.
Also, although smokers save on pension payments, they cost the tax-payer money because they claim lots of disability benefit.
A precise quantification of this is almost impossible, partly because so many claimants of disability benefit are in fact just disguised unemployed.
All I’m saying is that there might be a case for banning smoking in pubs.
Certainly, opposing the ban should not be a priority for libertarians. Defending fox-hunting, opposing ID cards and supporting quaint old ideas like jury trials and habeas corpus are all much more important.
All that said, I should declare my prejudice here. I side with the Blue Sky Boys against Tex Williams’ biggest hit:
I don’t smoke and I don’t chew
And I don’t go with girls that do
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