Nothing but Health

FMRS 2 1

A lot of effort will be required to prevent more intensive interventions in the freedom of consumption.

The current pandemic is surely the most significant health-related occurrence since the Second World War. We don’t remember the times when every morning a large part of the population was awaiting the information on the number of infected or dead with such concern. The consequences of governmental and centralized regulations such as lockdowns, blanket testing, and closed businesses have become a common part of the past year. Since so much space has been devoted to the coronavirus over the past year, I would like to pay attention to the less noticeable ways in which the state, in the name of health protection, interferes with the freedom of citizens.

The sugar tax, butter tax, Nutella tax, restrictions on the number of fast-food restaurants, Europe’s beating cancer plan, or healthy lifestyle for all campaign – these are examples of the new implemented or abolished measures and campaigns aimed at protecting the population from themselves. They are also the symbol of a new era, a symbol of the paternalistic approach of the state. Governments, with a careful or even maternal instinct, take care of their citizens whose lifestyles may jeopardize their life expectancy because it is the life expectancy of the population that has become a symbolic criterion to measure the quality of a state or the effectiveness of the healthcare system.

Health has reached the pedestal it holds first place in the ranking of values and desires. An example of an ideal citizen is no longer a virtuous citizen but a health-conscious citizen. Wikipedia says the longest living person was the French woman who reportedly lived to be 122 years old. According to some studies the average life expectancy of a person, taking into account possible risks such as accidents or disasters is assumed to be over 100 years. The highest average life expectancy is currently in Hong Kong – 85 years. Thus, people live 15 years less than they could and the governments are here to fix it. So there is a huge room for a number of policies that will allow our organisms to survive longer, to approach the mythical goal of immortality.

What are the arguments behind these public policies? Mostly these policies are measured and measures are proposed on the basis of information asymmetry. Citizens like to take care of their pleasures but their ability to imagine the future consequences is not perfect. Whether it is health or retirement security, the role of a government, in this case, is to provide sufficient information to enable the responsible citizen to make rational decisions. And so the packaging of each food product and now also some restaurant menus provide us with details on macronutrient proportions, on the cigarette packs we are shown diseases we are in danger of.

But scientists and politicians have long noticed that the information alone is not enough to change the behavior. Nutrition values are read mainly by those who would look them up either way. On the contrary, those who, according to politicians and activists should read the information, often ignore it. Several studies have shown that the disclosure of the caloric values of foods in fast foods didn’t affect the final caloric intake. Such a situation is unsatisfactory for those who insist on doing good. A wide range of activists, often doctors, journalists, politicians cannot idly watch an informed citizen losing his healthy years of life. Information campaigns are thus complemented by taxes and bans.

How can these measures and prohibitions be justified if we start from the cultural premise of contemporary civilization which perceives a man as a sovereign individual who has the right to decide on his body, behavior, interest, property, and life? Let’s take smoking as an example. Today excise tax on tobacco is a typical example of a penalty for inappropriate behavior and therefore we rank this tax among the so-called sin taxes. Let’s disregard the fact that originally this tax wasn’t related to health effects at all and that even today it is not being increased due to healthcare expenditures but for other reasons – higher government revenues. Activists have succeeded in convincing the general public that the costs of treating smoking-related diseases are huge. In reality, the public doesn’t know how huge these costs are. The public doesn’t know that from the point of view of public finance the average citizen is more expensive than a smoker. A smoker usually doesn’t live to retire. He often doesn’t make it for complex and expensive treatment of elderly diseases.

Cigarette taxes account for 80 percent of the pack price and the revenue from this tax covers 15 percent of health care spending in Slovakia which is more than the direct medical costs associated with smoking. This fact complicates the activists’ campaign PR and they had to call econometrists for help. The so-called lost product of a prematurely deceased smoker had to be included in the costs equation so that activists can show in monetary terms why further interference in the behavior of a free person is justifiable. This step represents a paradigmatic change in thinking. It is no longer a free citizen who decides how to manage his body and free time. Now it is the society that claims his time and even his product.

The citizen has become an asset of the state, an individual whose healthy body generates tax revenue and benefits other. In the culture of this attitude anything that worsens health must not only be demonized but also eliminated. The European Commission is no longer interested in how the health care costs related to smoking evolve. In the latest campaign, it sets a clear goal that by 2030 tobacco will be used by less than five percent of the population. In the same way, reducing excessive drinking or obviously harmful consumption in the case of pregnant women ceases to be important for the World Health Organization (WHO). The aim now is to reduce the absolute consumption of alcohol in liters per person, not the costs of drinking. The enemy is alcohol as such. The WHO as a supranational institution is quick to add a proposal for it to collect the alcohol tax and lead programs for reduction of alcohol consumption.

These two examples aptly characterized the current paternalistic approach. It is not an attempt to encourage and help the individual so that he is the one to make the final decision on how he will minimize the risks he faces. For example, in such a way that the government would proactively inform people about the lower risks of smokeless cigarettes or vaping or that the European Commission would finally acknowledge that due to the use of snus in Sweden there is a significantly lower incidence of smoking-related cancer and thus its authorization in other countries would help reduce healthcare costs. It is an attempt to control the individual by prohibitions because for the advocates of these prohibitions tobacco or more precisely nicotine is the enemy number one with whom the war is waged until its complete defeat. Here, however, we come to the heart of the method – the defeat of whom? – multinational companies. That is silly. It is the citizen who will become defeated. In fact, he is already paying for it today because he cannot buy the less harmful snus. Paradoxically, this far-left approach leads to higher expenses in the healthcare system today. To see the effect it is enough to compare the result of the British regulators’ responsible approach to less harmful forms of tobacco consumption and the Australian regulators’ that have effectively banned the new forms. The decline in the consumption of conventional cigarettes is significantly higher in the UK.

Paternalism can take several forms. Trying to inform about the negative consequences of long-term action is certainly of a different character than an effort to remove tobacco from our lives over the course of 20 years. Achieving such an extreme goal creates the risks that the present tobacco control in public places will expand into households too. The idea that anyone raising a minor will have to have a smoke detector at home connected to a central system no longer sounds as science fiction. Just like shopping carts that only allow you to buy a certain amount of calories and a mandatory minimum weight of vegetables, health-motivated paternalism will gradually surmount the walls of privacy. After all, the new citizen is not supposed to harm his health, is he?

The paradox of paternalism is the reluctance of many states to transfer risks to health insurance. In the free market, there is naturally an incentive not to share costs between all consumers. And so, young drivers have more expensive collision insurance than older ones. This type of price discrimination is exactly what private health insurance companies should do. Take risky behavior into account when setting insurance prices. However, the state especially in the European Union, disapproves of this type of price discrimination because of not the way and fairness of financing a healthcare system but the right to healthcare services is in the spotlight. This is one of the reasons why revenues from tobacco taxes are usually not earmarked and automatically transferred to healthcare.

Ultimately, politicians are trying to successfully give the impression that the government cares about the health of voters and the best way to do it is through centralized healthcare financing from general taxes and finding bad smokers. Try to imagine a politician who will publicly suggest that obese people should pay higher health insurance – how many voters would he automatically lose?

I fear that the future of progressive growth of paternalism is ahead of us. A lot of effort will be required to prevent more intensive interventions in the freedom of consumption to prevent a state that takes full responsibility for the citizen and thus claims for him more taxes.

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  • Radovan Ďurana

    Radovan Durana is a founding member of the Bratislava Institute INESS, analyzing public finances, social security, and pension systems. He is the co-author of numerous international and domestic publications on public finances, a Fellow of the French institute IREF, and a regular collaborator with CI Consult & Research.

The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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