When I was looking in the Philip Morris Documents Archive for information on their astroturf operations, I noticed some familiar names: The American Enterprise Institute, The Heartland Institute and the Cato Institute. All have been involved in employing and/or promoting John Lott.

For example, here is a quote from Philip Morris’ 1999 communications plan:

Our communications plan will include enlisting allies and other potential third parties to help provide an “echo chamber” of opinion in local, regional and national media, consistent with our messages.

Some of the “allies” listed were:

  • CATO Institute
  • Heritage Foundation
  • American Enterprise Institute
  • Competitive Enterprise Institute

Now, just because Cato allied itself with Philip Morris it doesn’t mean that their is something untoward going on. Cato say that part of its mission mission is to promote limited government, so both Cato and Philip Morris would oppose government regulation of cigarettes, Philip Morris because it would reduce their profits and Cato because of a general opposition to government regulations. But in this document on the Republican agenda and Tort reform, Cato, the AEI and Heritage are all enthusiastic about pushing Philip Morris’ agenda on tort reform:

During the week I spoke with the leadership of the Cato Institute, the American Enterprise Institute and Heritage Foundation to insure that as they submit policy initiatives to the Republican leadership (which all three groups have requested to do on an expedited basis) that they focus on tort reform as a priority and that they include us in the process. All are enthusiastic about the process.

Perhaps I’m missing something here, but the issue in this case is not supporting smaller government, but changing the law to help Philip Morris make more money.

One of the reasons that Cato et al were so eager to do Philip Morris’ bidding might have something to do with the payments listed in Philip Morris’ 1997 Budget:

American Enterprise Institute $100,000
Cato $175,000
Competitive Enterprise Institute $200,000
Heartland $50,000
Heritage $53,000
TASSC $200,000

On their “about cato” page, Cato states:

In order to maintain an independent posture, the Cato Institute accepts no government funding or endowments.

Apparently Cato feels that accepting money from the government would compromise its independence. It would seem that money from Philip Morris has had a similar effect.

Update: Julian Sanchez emails:

While I don’t know what sort of “assurances” the gentleman from Philip Morris feels he got from Cato, I do know that at an event I attended when I worked there, their legal scholar Bob Levy opposed (on federalism grounds) national legislation that would have immunized gunmakers against state suits. He makes essentially the same case in this article. Bob Levy had also been Cato’s point-man on tobacco issues, and while I can’t say for certain, I would be very surprised if he didn’t hold the identical position vis a vis private tobacco suits. Bob was certainly critical of some of the state lawsuits but I think his argument there is fully consistent with the general mission and principles of Cato, whether one agrees with those or not. Also, it’s hard to square some of his writing with the idea that he’s shilling for Phillip Morris. Here’s Bob’s chapter from a recent Cato Handbook for Congress:
The Master Settlement Agreement, signed in November 1998 by the major tobacco companies and 46 state attorneys general, transforms a competitive industry into a cartel, then guards against destabilization of the cartel by erecting barriers to entry that preserve the dominant market share of the tobacco giants. Far from being victims, the big four tobacco companies are at the very center of the plot. They managed to carve out a protected market for themselves, at the expense of smokers and tobacco companies that did not sign the agreement.

Phillip Morris is criticized by name in the same chapter

In another email he adds:

I assume what was going on in the meeting is that the Cato folk at the very least were opposing some of the state actions, and maybe some weird legal maneuvers the states themselves had undertaken. Florida, for instance, temporarily repealed the “assumption of risk” defense (barring the tobacco companies from arguing in court that they weren’t liable if smokers knowingly took a risk by choosing to smoke).

However, while Bob Levy criticises Philip Morris for helping to set up a cartel via the settlement, the actual policy recommendations proposed by Levy and Cato are:

Congress should
  • deny funding for the Justice Department’s suit against cigarette makers,
  • enact, under the Commerce Clause, legislation that abrogates the multistate tobacco settlement, and
  • deregulate the growing of tobacco and the manufacture and advertising of tobacco products.

Each of these proposals would greatly benefit Philip Morris. And while Levy opposes federal inteference in gun laws he thinks it is appropriate in the case of the tobacco settlement.

So I did some more searching and found a document detailing the tort reform changes Philip Morris wanted Cato to support. They included:

  • uniform product liability law for state and federal cases
  • limiting punitive damages
  • requiring victims to show by “clear and convincing evidence” that the harm they suffered was the direct result of malicious conduct

However, in Cato’s policy recommendations they oppose reforms similar to the Philip Morris ones on federalism grounds. So we do have a case where Cato has behaved independently from Philip Morris even though the Philip Morris guy said they had Cato’s “enthusiastic” support. Perhaps the Phillip Morris guy was trying to justify his salary by pretending Cato was much more supportive than it really was.


  1. #1 Donald Lacombe
    March 29, 2004

    You quote Cato as saying that they recommend Congress “deregulate the growing of tobacco and the manufacture and advertising of tobacco products” and that this would greatly benefit Phillip Morris, which I take to mean increase profits. As Jeremy Bulow and Paul Klemperer state in “The Tobacco Deal” (Brookings Papers on Economic Activity. Microeconomics. Volume 1998 (1998), 323-394 availiable via http://www.jstor.org) “As we showed earlier, however, there is likely to be little net profit gain to the industry in being able to advertisefor new customers becausethe marketing competition will dissipate a lot of the profits that the new customers generate.” (Bulow and Klemperer, p. 367). This is why the companies voluntarily agreed to give up Joe Camel and the Marlboro Man after the first day of negotiations. It is simply not the case that tobacco companies would be against regulation. If the regulation creats market power, they certainly would favor it.

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