Up in Smoke

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With the recent release of yet another dismal jobs report, commentators in the MSM have begun to ask, “Why aren’t jobs being created?” They should have been asking themselves this question for the last 40 months, but, hey, better late than never.

Yet the possibility that the explosive growth in regulation might play a role in deterring job growth is not something they spend much time discussing.

It should be.

A recent story gives us a fresh illustration of the role that regulation plays in destroying jobs. (By “regulation,” I mean all increases in statutory law, rulings by regulatory agencies, and expansions of common law aimed at controlling business activity.) It concerns a business that I, a nonsmoker, never heard of, one that has never been destroyed by regulation.

It turns out that in the face of huge taxes on cigarettes produced by the major tobacco companies, many cigarette smokers started frequenting small stores that owned “roll-your-own” (RYO) cigarette machines. The RYO machines allowed customers to buy loose tobacco, especially pipe tobacco (taxed at a far lower rate than manufactured cigarettes) and paper tubes in the shop, and use the RYO machine to churn out a carton of cigarettes in just a few minutes.

For a devoted smoker, the attraction of RYO shops is clear. They save about half the price of regular cigarettes. And they allow smokers to blend different and more flavorful tobaccos together, and use both tobacco and paper that are free from many of the chemical additives.

But naturally, the attractiveness of the shops angered two powerful groups. First, it pissed off puritan “progressives” who just cannot stand people smoking, and are always conducting an anti-smoking jihad. Not content with insane taxes on people who choose to consume a lawful product, they want to stop it altogether.

Second, it pissed off the major cigarette makers — aka Big Tobacco — who hate seeing customers choosing to buy cheaper in little shops around the country.

So in a classic case of rentseeking (businesses manipulating the regulatory system to hurt their competition, rather than producing a better or cheaper product) Big Tobacco found a politician — the truly execrable Sen. Max Baucus (D-MT) — to insert a small amendment to a massive transportation bill that redefines RYO shops so that they fall under the same category as Big Tobacco cigarette manufacturers, thus imposing a massive tax increase on them — one that is intended to destroy them, and probably will.

Baucus of course was happy to do this for the campaign cash Altria and other Big Tobacco companies shoveled at him. And those Big Tobacco companies are happy to stomp out of existence a group of little competitors. And Obama — who never met a regulation he didn’t like — was happy to sign the bill.

But the small businesses that bought the RYO machines have been screwed. Over a thousand of these machines (they cost over $36,000 each) were purchased, but are now virtually useless.

So, for example, Robert Weissen and his partners, who own a chain of six RYO shops in Las Vegas (cheekily named “Sin City Cigarette Factory”), says he will have to shut down the machines and lay off 40 people.

There are eight million regulations in our “progressive” (i.e., neosocialist) economy. This has been the story of just one of them.




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