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Free Market Minute
Health Before Liberty

Freedom's blaze and health care's haze

By Dr. Karen Y. Palasek

May 16, 2005

Should smoking be banned from all restaurants in North Carolina? That's the question that HB 76 will answer with a "Yes" if it is passed by the North Carolina Legislature. Advocates of a statewide restaurant smoking ban pose the issue as a way to improve health and control health care costs. The health effects of direct smoking are not controversial—pulmonary, respiratory, and other body functions are compromised as a result of smoking cigarettes, the effects are cumulative with prolonged use, and the damage can be irreversible. The effects of second-hand smoke, on the other hand, are very controversial.

Possible harms are not the relevant point, however. Otherwise, we might consider banning all alcoholic beverage consumption, and indeed all eating, in bars and restaurants. Over-consumption of either food or drink also have the potential to create debilitating health effects and, frankly, to 'gross out' patrons nearby. One could certainly argue that the 350-pounder who piles her plate (not with salad) at a buffet, the cocktail hour patron who becomes loud and obnoxious, and the unwanted cigarette smoke at dinner are all negative spillover effects for some people. Cigarette smoking, and second-hand smoke, are not alone in their potential to irritate or disgust others.

We can personally reduce these negative experiences, if that's what they are for us, by choosing full-service restaurants, avoiding occasions with lots of alcohol, and opting for smoke-free environments. Restauranteurs are already free to create smoke-free establishments. If there are few of them, it means that few owners think a smoke-free eatery will be a commercial success. In an unregulated setting, different environments could be available in different restaurants: smoking-anywhere, limited smoking, and strictly non-smoking, without any need for a policy mandate. In the very competitive food industry, it is unlikely that a distinct preference for one or another dining experience would go unserved for very long.

Segregated seating for smoking vs. non-smoking preferences—the rule we now have—makes it less likely that an owner would voluntarily take the step of banning cigarettes altogether. It's economically risky to take an all-or-nothing stance. A new legal ban on all restaurant smoking would eliminate any competitive advantage that smoking-anywhere, or even limited-smoking venues, now enjoy. It would also insure that anti-smoking interests get their way with other people's privately-owned resources, all without the risk of losing money themselves if the total ban is not what their patrons want. Right now, neither smokers nor non-smokers can get what they really prefer, and mixed groups with both smokers and non-smokers together must choose one or the other, so they never get their choice.

Deregulation in two areas is needed here, not further restrictions. First, health insurance premiums should be market-determined to fully reflect the health risks of smoking. Because health insurance is likely to be a larger percentage of an individuals' budget than cigarette purchases, smokers will usually be far more sensitive to higher insurance premiums than to an added tax on butts (unless we are in my $50.00 or $75.00 dollar per pack range). This would reduce the claimed health cost burden of smoking through lower consumption, though it may raise future health care costs if people live longer as a result—another topic. Second, restaurant owners should be allowed to prohibit, encourage, or mix smoker seating as they see fit, and absorb the financial consequences of those decisions. That's what freedom, plus markets, yields.

An entirely smoke-free restaurant would certainly attract some patrons, just as it would turn others away. How do we resolve this conflict in tastes, as a matter of policy? The answer is: we don't need to, at least not in the private sector. As in other areas of market choice, it is no problem for people with conflicting tastes to effectively insulate themselves from one another, simply by voting with their dollars and with their feet.

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