Lifestyle Economics

The rise of e-cigarettes – a parable of the free market


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Earlier this week, Hong Kong’s government decided to impose a full ban on the sale, manufacture and import of e-cigarettes. This is just the latest instalment in a worldwide regulatory clampdown on vaping. From Thailand to Turkey, more than 20 countries currently impose outright bans on the products, while many others, like Finland and New Zealand, heavily restrict their use.

Closer to home, the future of vaping is – thankfully – looking brighter. In contrast with other regulatory environments, where vaping contends with draconian rules and new businesses face huge barriers to entry, the British public health establishment has so far taken a (comparatively) light-touch approach. Though vaping faces advertising restrictions, UK consumers can choose between a wide variety of products, and there is an innovative, growing industry to provide them.

Recent survey findings from Public Health England confirm that e-cigarettes are now the most popular smoking cessation tool in the UK. Around 2.5 million people vape in England, of whom 51 percent, almost 1.3 million, have given up conventional tobacco in the process.

These developments come as no surprise – but are welcome nevertheless. So effective have e-cigarettes proven as a quitting aid, in fact, that when governments decide to restrict their use it inevitably means more lives will be lost, serving as a case study in the unintended consequences of short-termist policy-making.

The rise of e-cigarettes can be seen as a parable of the free market and the state. Consider how governments have, historically, attempted to deal with smoking. For the most part, their solutions are punitive and prohibitionist: for example, driving up the cost of smoking through high tax rates, anti-tobacco advertising campaigns, plain packaging or restrictions on smoking in public places.

Whereas these approaches have enjoyed varying levels of success in their aim of reducing tobacco use (significant tax hikes clearly alter behaviour, while plain packaging has yielded inconclusive results) the arrival of vaping has been unambiguously effective.

Many view healthcare and public health as privileged domains, which should remain shielded from the profit motive. But here, we should be careful what we wish for, since e-cigarettes are the kind of invention that could only have come from a profit-seeker.

Whereas the State tries and often fails to coerce people into quitting through taxes, or by phasing out smoking with patches and gums, the vaping industry instead aims to tempt consumers away with delicious flavours and a pleasurable smoking experience. It’s the kind of simple brilliance that would never have crossed the mind of a government bureaucrat. Rather than banning something outright or taxing it into oblivion, you devise a less harmful alternative that people actually want to use. And it’s amazing how creative businesses become when there are millions of potential customers to be had.

The rise of vaping is just one example of the way private enterprise and the profit motive often end up benefiting the population far more than government agents with moral agendas. Market competition provides solutions to other major issues of our time. Such forces are already helping the environment, for example, by encouraging investment in cleaner technologies, and dramatically lowering the costs of renewable energy. Likewise, using cutting-edge technologies, food tech companies are currently engaged in a global race to create cheap, lab-grown meat. Though driven by profit, these efforts, if successful, will lessen the colossal environmental damage caused by industrial farming methods.

In recent years, public health bodies have condemned the motives of traditional tobacco companies who have moved into the vaping space (and in fact, part of their suspicion of the sector stems from the idea that tobacco companies might, somehow, be profiting). This is deeply ironic. As the example of Hong Kong proves, “Public Health” now represents the single biggest threat to the health of the public when it comes to tobacco harm reduction.

Madeline is the IEA’s Editorial Manager, responsible for commissioning and running the IEA blog, and creating content for the IEA podcast channel and other media outlets. Prior to joining the Institute, she worked as a Parliamentary researcher and speechwriter, and as a reporter for Newsweek Magazine. Madeline graduated from St Hilda’s College, Oxford in 2014, with a degree in English. As an undergraduate, Madeline was actively involved in university politics, and was elected to Standing Committee of the Oxford Union during her studies.


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