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Smoke For Victory!

June 30th, 2009 Posted in Uncategorized by

chinasmokeChina is often heralded as the new champion of free markets. And there is no doubt that it has some of the most liberal trade rules in the world. But sometimes adoration of the People’s Republic can lead commentators to forget that, even in the economic sphere, China is incredibly interventionist.

It also remains a textbook case of what happens when bureaucrats rule. But the latest proposal appears to truly beggar belief. In fact, if it did not appear in several independent sources, I would believe that it was a satire.

Chinese government officials have been ordered by the government to smoke more cigarettes to boost the economy. Departments whose staff smoke too few cigarettes will lose revenue that they would have received from state tobacco taxes; individual civil servants will be fined unless they smoke local brands.

The policy was originally introduced in Hubei Province, where local government agencies and institutions were given a target of 230,000 packs of locally-produced cigarettes a year, according to Hubei-based Chutian Metropolis Daily reported. This follows a policy earliest this year in Hefei province where civil servants were pressured to buy flats to keep the property market afloat.

So staggeringly stupid is this, that it seems almost nit-picking to point out two particular economic features of this. The first is the belief that increasing tax revenues will increase the economy. The second is the fact that protectionism appears to be emerging between Chinese provinces.

On the other hand, if bureaucrats are so stupid that they are ordering bureaucrats to smoke more, perhaps a Darwin Award is in order.

10 Responses to “Smoke For Victory!”

  1. Tristan Says:

    China is often heralded as the new champion of free markets.

    Obviously by people who don’t know what a free market is. Or people who willfully wish to pollute the term even further (leading to people claiming all sorts of things as being market failures when infact the market is so restricted its hardly a market at all – eg banking, railways etc)


  2. GMB Says:

    I’m with Tristan. There’s something seriously wrong when someone describes a communist state as having ‘free markets’ – just shows the way that the world is going.


  3. Morus Says:

    But as well as the disposable income consumed by the habit rather than being put into savings, there must be some benefit beyond cutting life expectancy and thus pensions.

    If all public servants smoked and the average life expectancy dropped to 63, would that not mean a much, much smaller state, and affordable tax cuts?!


  4. tim leunig Says:

    Perhaps they could go further, and order people to smoke more cigarettes produced in their town? Or in their road? Or in their own property? A return to subsistence farming, maybe, as a strategy to promote growth??!!

    (hat-tip: this is a precis of an excellent letter in the FT a couple of days ago on US buy-American policies)


  5. Frank H Little Says:

    Bad timing for Kenneth Clarke, who will have to give up his second jobs – one of which is non-exec director of British American Tobacco – if he wants to stay in the shadow cabinet after this parliament, under the latest Cameron diktat.


  6. Julian H Says:

    Is Dave really going to make him quite BAT? I wouldn’t have thought he had the power. If I was KC I’ll tell him to go self-copulate.


  7. Tom Papworth Says:

    Julian,

    Of course he has the power. It is entirely up to the leader who serves in his shadow cabinet; if KC wants to shadow Mandleson he has to obay his leaders’ whims.

    In addition, the Tories are not as democratic as us so it is possible (as we have seen) for the leader for force a members’ deselection (though I don’t think he’d go this far in KC’s case).


  8. Julian H Says:

    Aye, but what of the consequences of him doing this? Technically Gordo is Mandy’s boss, but we all know where the power really lies.

    KC could cause Dave considerable damage if he quit – and he himself has nothing to lose, whereas DC has everything to lose.


  9. Bunny Smedley Says:

    Tom and Julian both make very good points.

    The funny thing is, if the Tory Party’s loosest of heavy-gauge cannons rolled away over the issue of members’ outside interests, for once this wouldn’t just be seen (at least with the Party) as Ken being Ken – such is the level of front- and back-bench resentment, not only over this particular diktat of Dave’s but of his failure to defend or support his MPs over the recent expenses scandal, that the damage done to Dave might well be more serious – especially if there was any chance at all that the Tory poll lead might sag a bit, because frankly good polls is all that stands between Dave and the desire of most of his Parliamentary party to tear him limb from limb, before setting off to find George Osborne …


  10. Julian Harris Says:

    So, to confirm, my point was probably better than Tom’s.


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