Monday, 11 May 2020

The tobacco economists network - or how the Tobacco Institute recruited over 100 American economics professors. Part 7 of many

Overview of previous posts here

The social cost consultants

The Tobacco Institute's Cigarette Excise Tax Plan teaches us why the industry recruited the economists: the industry needed people with academic credibility telling legislators that "social cost" based actions were based on flawed argumentation and that taxes are evil.

Setting up the network
The task to set up an economists network was given to a subcontractor: James M. Savarese of consultancy-firm James Savarese & Partners. He worked closely with professor Robert D. Tollison. The PR-firm Ogilvy & Mather was hired to promote the output of the network.

Robert D. Tollison worked as consultant for the industry since at least 1979, researching social cost. James Savarese was a consultant who started working for the tobacco industry in the early 1980's. I was not able to find out how the industry put the two partners together.

Savarese usually was the person corresponding directly with the Tobacco Institute and usually he was the one presenting the invoices, even though some money seems to have been funneled through Covington & Burling. Sometimes Tollison or others billed directly. Savarese was much more than an administrative employee: he participated in meetings of the TI, set the strategy and testified for legislators, etc. He did not just run the economists network, but also worked with labor unions, trying to convince them excise taxes on tobacco would cause unemployment.

Some economists, like Richard Wagner and Tollison himself, seemed to have been recruited directly by the Tobacco Institute.  By 1985/1986 James Savarese was at least nominally responsible for expanding up and operating the network, the industry still provided leads for headhunting

A 1986 memorandum from Tobacco Institute's Susan Stuntz describes how the recruitment of several economists was done through the informal personal networks of James Savarese, Robert Tollison and Dwight R. Lee. Interestingly Stuntz in 1986 speaks of "several years" ago, while the excise tax plan only dates from 1984. Therefore the memo hints the Tobacco Institute used economists even before the formal creation of the economists network. We also learn the network started rather slowly. 

Susan Stuntz

As an example of such personal network: in 1984 James M Buchanan & Robert D. Tollison were the editors of the book Public Choice II. At least 9 of the 22 authors were or would later start working for the Tobacco Institute.

It is unclear how the economists were formally contacted by the Tobacco Institute after being recruited by Savarese/Tollison. A letter from K. Celeste Gaspari indicates recruiting some of the new members may have been through Robert Tollison's Center for the Study of Public Choice at George Mason University. 

Unfortunately, Savarese's full correspondence with the economists he worked with did not fully end up in the LTDL, so we will never know exactly how the network worked, nor will we know exactly how new network members were approached. We only know new members of the network would be contacted by someone from the Tobacco Institute once they were recruited.  In light of the letter by Celeste Gaspari contacts with the institute were likely made only by telephone

K. Celeste Gaspari

Do notice the letter illustrates the economists were fully aware they were working for the Tobacco Institute.

The network must have been set up after the industry finished the 1984 Tax Excise plan. At that time, several of the core members of the network were already working as industry consultants and they were already writing the book Smoke and the State.

It seems though the network was not complete until 1987, when the industry started to contact the economists, checking if the people Savarese
 had recruited were suited for the job the industry had in mind. Some economists seem to have dropped out at that point, or had moved state or simply lost interest in the network. 

Even though the economists in the network were subcontractors of Savarese and Tollison, they were fully aware they worked with the industry, and several documents in the LTDL (example) show the economists did not just have contact with James Savarese, but also with the Tobacco Institute itself.

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