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[Note: A group of 50 academics and 27 organizations, including both myself and ICLE, recently released a statement of principles for lawmakers to consider in discussions of Section 230.]

In a remarkable ruling issued earlier this month, the Third Circuit Court of Appeals held in Oberdorf v. Amazon that, under Pennsylvania products liability law, Amazon could be found liable for a third party vendor’s sale of a defective product via Amazon Marketplace. This ruling comes in the context of Section 230 of the Communications Decency Act, which is broadly understood as immunizing platforms against liability for harmful conduct posted to their platforms by third parties (Section 230 purists may object to myu use of “platform” as approximation for the statute’s term of “interactive computer services”; I address this concern by acknowledging it with this parenthetical). This immunity has long been a bedrock principle of Internet law; it has also long been controversial; and those controversies are very much at the fore of discussion today. 

The response to the opinion has been mixed, to say the least. Eric Goldman, for instance, has asked “are we at the end of online marketplaces?,” suggesting that they “might in the future look like a quaint artifact of the early 21st century.” Kate Klonick, on the other hand, calls the opinion “a brilliant way of both holding tech responsible for harms they perpetuate & making sure we preserve free speech online.”

My own inclination is that both Eric and Kate overstate their respective positions – though neither without reason. The facts of Oberdorf cabin the effects of the holding both to Pennsylvania law and to situations where the platform cannot identify the seller. This suggests that the effects will be relatively limited. 

But, and what I explore in this post, the opinion does elucidate a particular and problematic feature of section 230: that it can be used as a liability shield for harmful conduct. The judges in Oberdorf seem ill-inclined to extend Section 230’s protections to a platform that can easily be used by bad actors as a liability shield. Riffing on this concern, I argue below that Section 230 immunity be proportional to platforms’ ability to reasonably identify speakers using their platforms to engage in harmful speech or conduct.

This idea is developed in more detail in the last section of this post – including responding to the obvious (and overwrought) objections to it. But first it offers some background on Section 230, the Oberdorf and related cases, the Third Circuit’s analysis in Oberdorf, and the recent debates about Section 230. 

Section 230

“Section 230” refers to a portion of the Communications Decency Act that was added to the Communications Act by the 1996 Telecommunications Act, codified at 47 U.S.C. 230. (NB: that’s a sentence that only a communications lawyer could love!) It is widely recognized as – and discussed even by those who disagree with this view as – having been critical to the growth of the modern Internet. As Jeff Kosseff labels it in his recent book, the key provision of section 230 comprises the “26 words that created the Internet.” That section, 230(c)(1), states that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” (For those not familiar with it, Kosseff’s book is worth a read – or for the Cliff’s Notes version see here, here, here, here, here, or here.)

Section 230 was enacted to do two things. First, section (c)(1) makes clear that platforms are not liable for user-generated content. In other words, if a user of Facebook, Amazon, the comments section of a Washington Post article, a restaurant review site, a blog that focuses on the knitting of cat-themed sweaters, or any other “interactive computer service,” posts something for which that user may face legal liability, the platform hosting that user’s speech does not face liability for that speech. 

And second, section (c)(2) makes clear that platforms are free to moderate content uploaded by their users, and that they face no liability for doing so. This section was added precisely to repudiate a case that had held that once a platform (in that case, Prodigy) decided to moderate user-generated content, it undertook an obligation to do so. That case meant that platforms faced a Hobson’s choice: either don’t moderate content and don’t risk liability, or moderate all content and face liability for failure to do so well. There was no middle ground: a platform couldn’t say, for instance, “this one post is particularly problematic, so we are going to take it down – but this doesn’t mean that we are going to pervasively moderate content.”

Together, these two provisions stand generally for the proposition that online platforms are not liable for content created by their users, but they are free to moderate that content without facing liability for doing so. It recognized, on the one hand, that it was impractical (i.e., the Internet economy could not function) to require that platforms moderate all user-generated content, so section (c)(1) says that they don’t need to; but, on the other hand, it recognizes that it is desirable for platforms to moderate problematic content to the best of their ability, so section (c)(2) says that they won’t be punished (i.e., lose the immunity granted by section (c)(1) if they voluntarily elect to moderate content). 

Section 230 is written in broad – and has been interpreted by the courts in even broader – terms. Section (c)(1) says that platforms cannot be held liable for the content generated by their users, full stop. The only exceptions are for copyrighted content and content that violates federal criminal law. There is no “unless it is really bad” exception, or a “the platform may be liable if the user-generated content causes significant tangible harm” exception, or an “unless the platform knows about it” exception, or even an “unless the platform makes money off of and actively facilitates harmful content” exception. So long as the content is generated by the user (not by the platform itself), Section 230 shields the platform from liability. 

Oberdorf v. Amazon

This background leads us to the Third Circuit’s opinion in Oberdorf v. Amazon. The opinion is remarkable because it is one of only a few cases in which a court has, despite Section 230, found a platform liable for the conduct of a third party facilitated through the use of that platform. 

Prior to the Third Circuit’s recent opinion, the best known previous case is the 9th Circuit’s Model Mayhem opinion. In that case, the court found that Model Mayhem, a website that helps match models with modeling jobs, had a duty to warn models about individuals who were known to be using the website to find women to sexually assault. 

It is worth spending another moment on the Model Mayhem opinion before returning to the Third Circuit’s Oberdorf opinion. The crux of the 9th Circuit’s opinion in the Model Mayhem case was that the state of Florida (where the assaults occurred) has a duty-to-warn law, which creates a duty between the platform and the user. This duty to warn was triggered by the case-specific fact that the platform had actual knowledge that two of its users were predatorily using the site to find women to assault. Once triggered, this duty to warn exists between the platform and the user. Because the platform faces liability directly for its failure to warn, it is not shielded by section 230 (which only shields the platform from liability for the conduct of the third parties using the platform to engage in harmful conduct). 

In its opinion, the Third Circuit offered a similar analysis – but in a much broader context. 

The Oberdorf case involves a defective dog leash sold to Ms. Oberdorf by a seller doing business as The Furry Gang on Amazon Marketplace. The leash malfunctioned, hitting Ms. Oberdorf in the face and causing permanent blindness in one eye. When she attempted to sue The Furry Gang, she discovered that they were no longer doing business on Amazon Marketplace – and that Amazon did not have sufficient information about their identity for Ms. Oberdorf to bring suit against them.

Undeterred, Ms. Oberdorf sued Amazon under Pennsylvania product liability law, arguing that Amazon was the seller of the defective leash, so was liable for her injuries. Part of Amazon’s defense was that the actual seller, The Furry Gang, was a user of their Marketplace platform – the sale resulted from the storefront generated by The Furry Gang and merely hosted by Amazon Marketplace. Under this theory, Section 230 would bar Amazon from liability for the sale that resulted from the seller’s user-generated storefront. 

The Third Circuit judges had none of that argument. All three judges agreed that under Pennsylvania law, the products liability relationship existed between Ms. Oberdorf and Amazon, so Section 230 did not apply. The two-judge majority found Amazon liable to Ms. Oberford under this law – the dissenting judge would have found Amazon’s conduct insufficient as a basis for liability.

This opinion, in other words, follows in the footsteps of the Ninth Circuit’s Model Mayhem opinion in holding that state law creates a duty directly between the harmed user and the platform, and that that duty isn’t affected by Section 230. But Oberdorf is potentially much broader in impact than Model Mayhem. States are more likely to have broader product liability laws than duty to warn laws. Even more impactful, product liability laws are generally strict liability laws, whereas duty to warn laws are generally triggered by an actual knowledge requirement.

The Third Circuit’s Focus on Agency and Liability Shields

The understanding of Oberdorf described above is that it is the latest in a developing line of cases holding that claims based on state law duties that require platforms to protect users from third party harms can survive Section 230 defenses. 

But there is another, critical, issue in the background of the case that appears to have affected the court’s thinking – and that, I argue, should be a path forward for Section 230. The judges writing for the Third Circuit majority draw attention to

the extensive record evidence that Amazon fails to vet third-party vendors for amenability to legal process. The first factor [of analysis for application of the state’s products liability law] weighs in favor of strict liability not because The Furry Gang cannot be located and/or may be insolvent, but rather because Amazon enables third-party vendors such as The Furry Gang to structure and/or conceal themselves from liability altogether.

This is important for analysis under the Pennsylvania product liability law, which has a marketing chain provision that allows injured consumers to seek redress up the marketing chain if the direct seller of a defective product is insolvent or otherwise unavailable for suit. But the court’s language focuses on Amazon’s design of Marketplace and the ease with which Marketplace can be used by merchants as a liability shield. 

This focus is unsurprising: the law generally does not allow one party to shield another from liability without assuming liability for the shielded party’s conduct. Indeed, this is pretty basic vicarious liability, agency, first-year law school kind of stuff. It is unsurprising that judges would balk at an argument that Amazon could design its platform in a way that makes it impossible for harmed parties to sue a tortfeasor without Amazon in turn assuming liability for any potentially tortious conduct. 

Section 230 is having a bad day

As most who have read this far are almost certainly aware, Section 230 is a big, controversial, political mess right now. Politicians from Josh Hawley to Nancy Pelosi have suggested curtailing Section 230. President Trump just held his “Social Media Summit.” And countries around the world are imposing near-impossible obligations on platforms to remove or otherwise moderate potentially problematic content – obligations that are anathema to Section 230 as they increasingly reflect and influence discussions in the United States. 

To be clear, almost all of the ideas floating around about how to change Section 230 are bad. That is an understatement: they are potentially devastating to the Internet – both to the economic ecosystem and the social ecosystem that have developed and thrived largely because of Section 230.

To be clear, there is also a lot of really, disgustingly, problematic content online – and social media platforms, in particular, have facilitated a great deal of legitimately problematic conduct. But deputizing them to police that conduct and to make real-time decisions about speech that is impossible to evaluate in real time is not a solution to these problems. And to the extent that some platforms may be able to do these things, the novel capabilities of a few platforms to obligations for all would only serve to create entry barriers for smaller platforms and to stifle innovation. 

This is why a group of 50 academics and 27 organizations released a statement of principles last week to inform lawmakers about key considerations to take into account when discussing how Section 230 may be changed. The purpose of these principles is to acknowledge that some change to Section 230 may be appropriate – may even be needed at this juncture – but that such changes should be careful and modest, carefully considered so as to not disrupt the vast benefits for society that Section 230 has made possible and is needed to keep vital.

The Third Circuit offers a Third Way on 230 

The Third Circuit’s opinion offers a modest way that Section 230 could be changed – and, I would say, improved – to address some of the real harms that it enables without undermining the important purposes that it serves. To wit, Section 230’s immunity could be attenuated by an obligation to facilitate the identification of users on that platform, subject to legal process, in proportion to the size and resources available to the platform, the technological feasibility of such identification, the foreseeability of the platform being used to facilitate harmful speech or conduct, and the expected importance (as defined from a First Amendment perspective) of speech on that platform.

In other words, if there are readily available ways to establish some form of identify for users – for instance, by email addresses on widely-used platforms, social media accounts, logs of IP addresses – and there is reason to expect that users of the platform could be subject to suit – for instance, because they’re engaged in commercial activities or the purpose of the platform is to provide a forum for speech that is likely to legally actionable – then the platform needs to be reasonably able to provide reasonable information about speakers subject to legal action in order to avail itself of any Section 230 defense. Stated otherwise, platforms need to be able to reasonably comply with so-called unmasking subpoenas issued in the civil context to the extent such compliance is feasible for the platform’s size, sophistication, resources, &c.

An obligation such as this would have been at best meaningless and at worst devastating at the time Section 230 was adopted. But 25 years later, the Internet is a very different place. Most users have online accounts – email addresses, social media profiles, &c – that can serve as some form of online identification.

More important, we now have evidence of a growing range of harmful conduct and speech that can occur online, and of platforms that use Section 230 as a shield to protect those engaging in such speech or conduct from litigation. Such speakers are clear bad actors who are clearly abusing Section 230 facilitate bad conduct. They should not be able to do so.

Many of the traditional proponents of Section 230 will argue that this idea is a non-starter. Two of the obvious objections are that it would place a disastrous burden on platforms especially start-ups and smaller platforms, and that it would stifle socially valuable anonymous speech. Both are valid concerns, but also accommodated by this proposal.

The concern that modest user-identification requirements would be disastrous to platforms made a great deal of sense in the early years of the Internet, both the law and technology around user identification were less developed. Today, there is a wide-range of low-cost, off-the-shelf, techniques to establish a user’s identity to some level of precision – from logging of IP addresses, to requiring a valid email address to an established provider, registration with an established social media identity, or even SMS-authentication. None of these is perfect; they present a range of cost and sophistication to implement and a range of offer a range of ease of identification.

The proposal offered here is not that platforms be able to identify their speaker – it’s better described as that they not deliberately act as a liability shield. It’s requirement is that platforms implement reasonable identity technology in proportion to their size, sophistication, and the likelihood of harmful speech on their platforms. A small platform for exchanging bread recipes would be fine to maintain a log of usernames and IP addresses. A large, well-resourced, platform hosting commercial activity (such as Amazon Marketplace) may be expected to establish a verified identity for the merchants it hosts. A forum known for hosting hate speech would be expected to have better identification records – it is entirely foreseeable that its users would be subject to legal action. A forum of support groups for marginalized and disadvantaged communities would face a lower obligation than a forum of similar size and sophistication known for hosting legally-actionable speech.

This proportionality approach also addresses the anonymous speech concern. Anonymous speech is often of great social and political value. But anonymity can also be used for, and as made amply clear in contemporary online discussion can bring out the worst of, speech that is socially and politically destructive. Tying Section 230’s immunity to the nature of speech on a platform gives platforms an incentive to moderate speech – to make sure that anonymous speech is used for its good purposes while working to prevent its use for its lesser purposes. This is in line with one of the defining goals of Section 230. 

The challenge, of course, has been how to do this without exposing platforms to potentially crippling liability if they fail to effectively moderate speech. This is why Section 230 took the approach that it did, allowing but not requiring moderation. This proposal’s user-identification requirement shifts that balance from “allowing but not requiring” to “encouraging but not requiring.” Platforms are under no legal obligation to moderate speech, but if they elect not to, they need to make reasonable efforts to ensure that their users engaging in problematic speech can be identified by parties harmed by their speech or conduct. In an era in which sites like 8chan expressly don’t maintain user logs in order to shield themselves from known harmful speech, and Amazon Marketplace allows sellers into the market who cannot be sued by injured consumers, this is a common-sense change to the law.

It would also likely have substantially the same effect as other proposals for Section 230 reform, but without the significant challenges those suggestions face. For instance, Danielle Citron & Ben Wittes have proposed that courts should give substantive meaning to Section 230’s “Good Samaritan” language in section (c)(2)’s subheading, or, in the alternative, that section (c)(1)’s immunity require that platforms “take[] reasonable steps to prevent unlawful uses of its services.” This approach is problematic on both First Amendment and process grounds, because it requires courts to evaluate the substantive content and speech decisions that platforms engage in. It effectively tasks platforms with undertaking the task of the courts in developing a (potentially platform-specific) law of content moderations – and threatens them with a loss of Section 230 immunity is they fail effectively to do so.

By contrast, this proposal would allow, and even encourage, platforms to engage in such moderation, but offers them a gentler, more binary, and procedurally-focused safety valve to maintain their Section 230 immunity. If a user engages in harmful speech or conduct and the platform can assist plaintiffs and courts in bringing legal action against the user in the courts, then the “moderation” process occurs in the courts through ordinary civil litigation. 

To be sure, there are still some uncomfortable and difficult substantive questions – has a platform implemented reasonable identification technologies, is the speech on the platform of the sort that would be viewed as requiring (or otherwise justifying protection of the speaker’s) anonymity, and the like. But these are questions of a type that courts are accustomed to, if somewhat uncomfortable with, addressing. They are, for instance, the sort of issues that courts address in the context of civil unmasking subpoenas.

This distinction is demonstrated in the comparison between Sections 230 and 512. Section 512 is an exception to 230 for copyrighted materials that was put into place by the 1998 Digital Millennium Copyright Act. It takes copyrighted materials outside of the scope of Section 230 and requires platforms to put in place a “notice and takedown” regime in order to be immunized for hosting copyrighted content uploaded by users. This regime has proved controversial, among other reasons, because it effectively requires platforms to act as courts in deciding whether a given piece of content is subject to a valid copyright claim. The Citron/Wittes proposal effectively subjects platforms to a similar requirement in order to maintain Section 230 immunity; the identity-technology proposal, on the other hand, offers an intermediate requirement.

Indeed, the principal effect of this intermediate requirement is to maintain the pre-platform status quo. IRL, if one person says or does something harmful to another person, their recourse is in court. This is true in public and in private; it’s true if the harmful speech occurs on the street, in a store, in a public building, or a private home. If Donny defames Peggy in Hank’s house, Peggy sues Donny in court; she doesn’t sue Hank, and she doesn’t sue Donny in the court of Hank. To the extent that we think of platforms as the fora where people interact online – as the “place” of the Internet – this proposal is intended to ensure that those engaging in harmful speech or conduct online can be hauled into court by the aggrieved parties, and to facilitate the continued development of platforms without disrupting the functioning of this system of adjudication.

Conclusion

Section 230 is, and has long been, the most important and one of the most controversial laws of the Internet. It is increasingly under attack today from a disparate range of voices across the political and geographic spectrum — voices that would overwhelming reject Section 230’s pro-innovation treatment of platforms and in its place attempt to co-opt those platforms as government-compelled (and, therefore, controlled) content moderators. 

In light of these demands, academics and organizations that understand the importance of Section 230, but also recognize the increasing pressures to amend it, have recently released a statement of principles for legislators to consider as they think about changes to Section 230.

Into this fray, the Third Circuit’s opinion in Oberdorf offers a potential change: making Section 230’s immunity for platforms proportional to their ability to reasonably identify speakers that use the platform to engage in harmful speech or conduct. This would restore the status quo ante, under which intermediaries and agents cannot be used as litigation shields without themselves assuming responsibility for any harmful conduct. This shielding effect was not an intended goal of Section 230, and it has been the cause of Section 230’s worst abuses. It was allowed at the time Section 230 was adopted because the used-identity requirements such as proposed here would not have been technologically reasonable at the time Section 230 was adopted. But technology has changed and, today, these requirements would impose only a moderate  burden on platforms today

Yesterday was President Trump’s big “Social Media Summit” where he got together with a number of right-wing firebrands to decry the power of Big Tech to censor conservatives online. According to the Wall Street Journal

Mr. Trump attacked social-media companies he says are trying to silence individuals and groups with right-leaning views, without presenting specific evidence. He said he was directing his administration to “explore all legislative and regulatory solutions to protect free speech and the free speech of all Americans.”

“Big Tech must not censor the voices of the American people,” Mr. Trump told a crowd of more than 100 allies who cheered him on. “This new technology is so important and it has to be used fairly.”

Despite the simplistic narrative tying President Trump’s vision of the world to conservatism, there is nothing conservative about his views on the First Amendment and how it applies to social media companies.

I have noted in several places before that there is a conflict of visions when it comes to whether the First Amendment protects a negative or positive conception of free speech. For those unfamiliar with the distinction: it comes from philosopher Isaiah Berlin, who identified negative liberty as freedom from external interference, and positive liberty as freedom to do something, including having the power and resources necessary to do that thing. Discussions of the First Amendment’s protection of free speech often elide over this distinction.

With respect to speech, the negative conception of liberty recognizes that individual property owners can control what is said on their property, for example. To force property owners to allow speakers/speech on their property that they don’t desire would actually be a violation of their liberty — what the Supreme Court calls “compelled speech.” The First Amendment, consistent with this view, generally protects speech from government interference (with very few, narrow exceptions), while allowing private regulation of speech (again, with very few, narrow exceptions).

Contrary to the original meaning of the First Amendment and the weight of Supreme Court precedent, President Trump’s view of the First Amendment is that it protects a positive conception of liberty — one under which the government, in order to facilitate its conception of “free speech,” has the right and even the duty to impose restrictions on how private actors regulate speech on their property (in this case, social media companies). 

But if Trump’s view were adopted, discretion as to what is necessary to facilitate free speech would be left to future presidents and congresses, undermining the bedrock conservative principle of the Constitution as a shield against government regulation, all falsely in the name of protecting speech. This is counter to the general approach of modern conservatism (but not, of course, necessarily Republicanism) in the United States, including that of many of President Trump’s own judicial and agency appointees. Indeed, it is actually more consistent with the views of modern progressives — especially within the FCC.

For instance, the current conservative bloc on the Supreme Court (over the dissent of the four liberal Justices) recently reaffirmed the view that the First Amendment applies only to state action in Manhattan Community Access Corp. v. Halleck. The opinion, written by Trump-appointee, Justice Brett Kavanaugh, states plainly that:

Ratified in 1791, the First Amendment provides in relevant part that “Congress shall make no law . . . abridging the freedom of speech.” Ratified in 1868, the Fourteenth Amendment makes the First Amendment’s Free Speech Clause applicable against the States: “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law . . . .” §1. The text and original meaning of those Amendments, as well as this Court’s longstanding precedents, establish that the Free Speech Clause prohibits only governmental abridgment of speech. The Free Speech Clause does not prohibit private abridgment of speech… In accord with the text and structure of the Constitution, this Court’s state-action doctrine distinguishes the government from individuals and private entities. By enforcing that constitutional boundary between the governmental and the private, the state-action doctrine protects a robust sphere of individual liberty. (Emphasis added).

Former Stanford Law dean and First Amendment scholar, Kathleen Sullivan, has summed up the very different approaches to free speech pursued by conservatives and progressives (insofar as they are represented by the “conservative” and “liberal” blocs on the Supreme Court): 

In the first vision…, free speech rights serve an overarching interest in political equality. Free speech as equality embraces first an antidiscrimination principle: in upholding the speech rights of anarchists, syndicalists, communists, civil rights marchers, Maoist flag burners, and other marginal, dissident, or unorthodox speakers, the Court protects members of ideological minorities who are likely to be the target of the majority’s animus or selective indifference…. By invalidating conditions on speakers’ use of public land, facilities, and funds, a long line of speech cases in the free-speech-as-equality tradition ensures public subvention of speech expressing “the poorly financed causes of little people.” On the equality-based view of free speech, it follows that the well-financed causes of big people (or big corporations) do not merit special judicial protection from political regulation. And because, in this view, the value of equality is prior to the value of speech, politically disadvantaged speech prevails over regulation but regulation promoting political equality prevails over speech.

The second vision of free speech, by contrast, sees free speech as serving the interest of political liberty. On this view…, the First Amendment is a negative check on government tyranny, and treats with skepticism all government efforts at speech suppression that might skew the private ordering of ideas. And on this view, members of the public are trusted to make their own individual evaluations of speech, and government is forbidden to intervene for paternalistic or redistributive reasons. Government intervention might be warranted to correct certain allocative inefficiencies in the way that speech transactions take place, but otherwise, ideas are best left to a freely competitive ideological market.

The outcome of Citizens United is best explained as representing a triumph of the libertarian over the egalitarian vision of free speech. Justice Kennedy’s opinion for the Court, joined by Chief Justice Roberts and Justices Scalia, Thomas, and Alito, articulates a robust vision of free speech as serving political liberty; the dissenting opinion by Justice Stevens, joined by Justices Ginsburg, Breyer, and Sotomayor, sets forth in depth the countervailing egalitarian view. (Emphasis added).

President Trump’s views on the regulation of private speech are alarmingly consistent with those embraced by the Court’s progressives to “protect[] members of ideological minorities who are likely to be the target of the majority’s animus or selective indifference” — exactly the sort of conservative “victimhood” that Trump and his online supporters have somehow concocted to describe themselves. 

Trump’s views are also consistent with those of progressives who, since the Reagan FCC abolished it in 1987, have consistently angled for a resurrection of some form of fairness doctrine, as well as other policies inconsistent with the “free-speech-as-liberty” view. Thus Democratic commissioner Jessica Rosenworcel takes a far more interventionist approach to private speech:

The First Amendment does more than protect the interests of corporations. As courts have long recognized, it is a force to support individual interest in self-expression and the right of the public to receive information and ideas. As Justice Black so eloquently put it, “the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.” Our leased access rules provide opportunity for civic participation. They enhance the marketplace of ideas by increasing the number of speakers and the variety of viewpoints. They help preserve the possibility of a diverse, pluralistic medium—just as Congress called for the Cable Communications Policy Act… The proper inquiry then, is not simply whether corporations providing channel capacity have First Amendment rights, but whether this law abridges expression that the First Amendment was meant to protect. Here, our leased access rules are not content-based and their purpose and effect is to promote free speech. Moreover, they accomplish this in a narrowly-tailored way that does not substantially burden more speech than is necessary to further important interests. In other words, they are not at odds with the First Amendment, but instead help effectuate its purpose for all of us. (Emphasis added).

Consistent with the progressive approach, this leaves discretion in the hands of “experts” (like Rosenworcel) to determine what needs to be done in order to protect the underlying value of free speech in the First Amendment through government regulation, even if it means compelling speech upon private actors. 

Trump’s view of what the First Amendment’s free speech protections entail when it comes to social media companies is inconsistent with the conception of the Constitution-as-guarantor-of-negative-liberty that conservatives have long embraced. 

Of course, this is not merely a “conservative” position; it is fundamental to the longstanding bipartisan approach to free speech generally and to the regulation of online platforms specifically. As a diverse group of 75 scholars and civil society groups (including ICLE) wrote yesterday in their “Principles for Lawmakers on Liability for User-Generated Content Online”:

Principle #2: Any new intermediary liability law must not target constitutionally protected speech.

The government shouldn’t require—or coerce—intermediaries to remove constitutionally protected speech that the government cannot prohibit directly. Such demands violate the First Amendment. Also, imposing broad liability for user speech incentivizes services to err on the side of taking down speech, resulting in overbroad censorship—or even avoid offering speech forums altogether.

As those principles suggest, the sort of platform regulation that Trump, et al. advocate — essentially a “fairness doctrine” for the Internet — is the opposite of free speech:

Principle #4: Section 230 does not, and should not, require “neutrality.”

Publishing third-party content online never can be “neutral.” Indeed, every publication decision will necessarily prioritize some content at the expense of other content. Even an “objective” approach, such as presenting content in reverse chronological order, isn’t neutral because it prioritizes recency over other values. By protecting the prioritization, de-prioritization, and removal of content, Section 230 provides Internet services with the legal certainty they need to do the socially beneficial work of minimizing harmful content.

The idea that social media should be subject to a nondiscrimination requirement — for which President Trump and others like Senator Josh Hawley have been arguing lately — is flatly contrary to Section 230 — as well as to the First Amendment.

Conservatives upset about “social media discrimination” need to think hard about whether they really want to adopt this sort of position out of convenience, when the tradition with which they align rejects it — rightly — in nearly all other venues. Even if you believe that Facebook, Google, and Twitter are trying to make it harder for conservative voices to be heard (despite all evidence to the contrary), it is imprudent to reject constitutional first principles for a temporary policy victory. In fact, there’s nothing at all “conservative” about an abdication of the traditional principle linking freedom to property for the sake of political expediency.

Neither side in the debate over Section 230 is blameless for the current state of affairs. Reform/repeal proponents have tended to offer ill-considered, irrelevant, or often simply incorrect justifications for amending or tossing Section 230. Meanwhile, many supporters of the law in its current form are reflexively resistant to any change and too quick to dismiss the more reasonable concerns that have been voiced.

Most of all, the urge to politicize this issue — on all sides — stands squarely in the way of any sensible discussion and thus of any sensible reform.

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After spending a few years away from ICLE and directly engaging in the day to day grind of indigent criminal defense as a public defender, I now have a new appreciation for the ways economic tools can explain behavior that I had not before studied. For instance, I think the law and economics tradition, specifically the insights of Ludwig von Mises and Friedrich von Hayek on the importance of price signals, can explain one of the major problems for public defenders and their clients: without price signals, there is no rational way to determine the best way to spend one’s time.

I believe the most common complaints about how public defenders represent their clients is better understood not primarily as a lack of funding, as a lack of effort or care, or even simply as a lack of time for overburdened lawyers, but as an allocation problem. In the absence of price signals, there is no rational way to determine the best way to spend one’s time as a public defender. (Note: Many jurisdictions use the model of indigent defense described here, in which lawyers are paid a salary to work for the public defender’s office. However, others use models like contracting lawyers for particular cases, appointing lawyers for a flat fee, relying on non-profit agencies, or combining approaches as some type of hybrid. These models all have their own advantages and disadvantages, but this blog post is only about the issue of price signals for lawyers who work within a public defender’s office.)

As Mises and Hayek taught us, price signals carry a great deal of information; indeed, they make economic calculation possible. Their critique of socialism was built around this idea: that the person in charge of making economic choices without prices and the profit-and-loss mechanism is “groping in the dark.”

This isn’t to say that people haven’t tried to find ways to figure out the best way to spend their time in the absence of the profit-and-loss mechanism. In such environments, bureaucratic rules often replace price signals in directing human action. For instance, lawyers have rules of professional conduct. These rules, along with concerns about reputation and other institutional checks may guide lawyers on how to best spend their time as a general matter. But even these things are no match for price signals in determining the most efficient way to allocate the scarcest resource of all: time.

Imagine two lawyers, one working for a public defender’s office who receives a salary that is not dependent on caseload or billable hours, and another private defense lawyer who charges his client for the work that is put in.

In either case the lawyer who is handed a file for a case scheduled for trial months in advance has a choice to make: do I start working on this now, or do I put it on the backburner because of cases with much closer deadlines? A cursory review of the file shows there may be a possible suppression issue that will require further investigation. A successful suppression motion would likely lead to a resolution of the case that will not result in a conviction, but it would take considerable time – time which could be spent working on numerous client files with closer trial dates. For the sake of this hypothetical, there is a strong legal basis to file suppression motion (i.e., it is not frivolous).

The private defense lawyer has a mechanism beyond what is available to public defenders to determine how to handle this case: price signals. He can bring the suppression issue to his client’s attention, explain the likelihood of success, and then offer to file and argue the suppression motion for some agreed upon price. The client would then have the ability to determine with counsel whether this is worthwhile.

The public defender, on the other hand, does not have price signals to determine where to put this suppression motion among his other workload. He could spend the time necessary to develop the facts and research the law for the suppression motion, but unless there is a quickly approaching deadline for the motion to be filed, there will be many other cases in the queue with closer deadlines begging for his attention. Clients, who have no rationing principle based in personal monetary costs, would obviously prefer their public defender file any and all motions which have any chance whatsoever to help them, regardless of merit.

What this hypothetical shows is that public defenders do not face the same incentive structure as private lawyers when it comes to allocation of time. But neither do criminal defendants. Indigent defendants who qualify for public defender representation often complain about their “public pretender” for “not doing anything for them.” But the simple truth is that the public defender is making choices on how to spend his time more or less by his own determination of where he can be most useful. Deadlines often drive the review of cases, along with who sends the most letters and/or calls. The actual evaluation of which cases have the most merit can fall through the cracks. Often times, this means cases are worked on in a chronological manner, but insufficient time and effort is spent on particular cases that would have merited more investment because of quickly approaching deadlines on other cases. Sometimes this means that the most annoying clients get the most time spent on their behalf, irrespective of the merits of their case. At best, public defenders are acting like battlefield medics and attempt to perform triage by spending their time where they believe they can help the most.

Unlike private criminal defense lawyers, public defenders can’t typically reject cases because their caseload has grown too big, or charge a higher price in order to take on a particularly difficult and time-consuming case. Therefore, the public defender is stuck in a position to simply guess at the best use of their time with the heuristics described above and do the very best they can under the circumstances. Unfortunately, those heuristics simply can’t replace price signals in determining the best use of one’s time.

As criminal justice reform becomes a policy issue for both left and right, law and economics analysis should have a place in the conversation. Any reforms of indigent defense that will be part of this broader effort should take into consideration the calculation problem inherent to the public defender’s office. Other institutional arrangements, like a well-designed voucher system, which do not suffer from this particular problem may be preferable.

In a recent NY Times opinion piece, Tim Wu, like Elizabeth Holmes, lionizes Steve Jobs. Like Jobs with the iPod and iPhone, and Holmes with the Theranos Edison machine, Wu tells us we must simplify the public’s experience of complex policy into a simple box with an intuitive interface. In this spirit he argues that “what the public wants from government is help with complexity,” such that “[t]his generation of progressives … must accept that simplicity and popularity are not a dumbing-down of policy.”

This argument provides remarkable insight into the complexity problems of progressive thought. Three of these are taken up below: the mismatch of comparing the work of the government to the success of Jobs; the mismatch between Wu’s telling of and Jobs’s actual success; and the latent hypocrisy in Wu’s “simplicity for me, complexity for thee” argument.

Contra Wu’s argument, we need politicians that embrace and lay bare the complexity of policy issues. Too much of our political moment is dominated by demagogues on every side of policy debates offering simple solutions to simplified accounts of complex policy issues. We need public intellectuals, and hopefully politicians as well, to make the case for complexity. Our problems are complex and solutions to them hard (and sometimes unavailing). Without leaders willing to steer into complexity, we can never have a polity able to address complexity.

I. “Good enough for government work” isn’t good enough for Jobs

As an initial matter, there is a great deal of wisdom in Wu’s recognition that the public doesn’t want complexity. As I said at the annual Silicon Flatirons conference in February, consumers don’t want a VCR with lots of dials and knobs that let them control lots of specific features—they just want the damn thing to work. And as that example is meant to highlight, once it does work, most consumers are happy to leave well enough alone (as demonstrated by millions of clocks that would continue to blink 12:00 if VCRs weren’t so 1990s).

Where Wu goes wrong, though, is that he fails to recognize that despite this desire for simplicity, for two decades VCR manufacturers designed and sold VCRs with clocks that were never set—a persistent blinking to constantly remind consumers of their own inadequacies. Had the manufacturers had any insight into the consumer desire for simplicity, all those clocks would have been used for something—anything—other than a reminder that consumers didn’t know how to set them. (Though, to their credit, these devices were designed to operate as most consumers desired without imposing any need to set the clock upon them—a model of simplicity in basic operation that allows consumers to opt-in to a more complex experience.)

If the government were populated by visionaries like Jobs, Wu’s prescription would be wise. But Jobs was a once-in-a-generation thinker. No one in a generation of VCR designers had the insight to design a VCR without a clock (or at least a clock that didn’t blink in a constant reminder of the owner’s inability to set it). And similarly few among the ranks of policy designers are likely to have his abilities, either. On the other hand, the public loves the promise of easy solutions to complex problems. Charlatans and demagogues who would cast themselves in his image, like Holmes did with Theranos, can find government posts in abundance.

Of course, in his paean to offering the public less choice, Wu, himself an oftentime designer of government policy, compares the art of policy design to the work of Jobs—not of Holmes. But where he promises a government run in the manner of Apple, he would more likely give us one more in the mold of Theranos.

There is a more pernicious side to Wu’s argument. He speaks of respect for the public, arguing that “Real respect for the public involves appreciating what the public actually wants and needs,” and that “They would prefer that the government solve problems for them.” Another aspect of respect for the public is recognizing their fundamental competence—that progressive policy experts are not the only ones who are able to understand and address complexity. Most people never set their VCRs’ clocks because they felt no need to, not because they were unable to figure out how to do so. Most people choose not to master the intricacies of public policy. But this is not because the progressive expert class is uniquely able to do so. It is—as Wu notes, that most people do not have the unlimited time or attention that would be needed to do so—time and attention that is afforded to him by his social class.

Wu’s assertion that the public “would prefer that the government solve problems for them” carries echoes of Louis Brandeis, who famously said of consumers that they were “servile, self-indulgent, indolent, ignorant.” Such a view naturally gives rise to Wu’s assumption that the public wants the government to solve problems for them. It assumes that they are unable to solve those problems on their own.

But what Brandeis and progressives cast in his mold attribute to servile indolence is more often a reflection that hoi polloi simply do not have the same concerns as Wu’s progressive expert class. If they had the time to care about the issues Wu would devote his government to, they could likely address them on their own. The fact that they don’t is less a reflection of the public’s ability than of its priorities.

II. Jobs had no monopoly on simplicity

There is another aspect to Wu’s appeal to simplicity in design that is, again, captured well in his invocation of Steve Jobs. Jobs was exceptionally successful with his minimalist, simple designs. He made a fortune for himself and more for Apple. His ideas made Apple one of the most successful companies, with one of the largest user bases, in the history of the world.

Yet many people hate Apple products. Some of these users prefer to have more complex, customizable devices—perhaps because they have particularized needs or perhaps simply because they enjoy having that additional control over how their devices operate and the feeling of ownership that that brings. Some users might dislike Apple products because the interface that is “intuitive” to millions of others is not at all intuitive to them. As trivial as it sounds, most PC users are accustomed to two-button mice—transitioning to Apple’s one-button mouse is exceptionally  discomfitting for many of these users. (In fairness, the one-button mouse design used by Apple products is not attributable to Steve Jobs.) And other users still might prefer devices that are simple in other ways, so are drawn to other products that better cater to their precise needs.

Apple has, perhaps, experienced periods of market dominance with specific products. But this has never been durable—Apple has always faced competition. And this has ensured that those parts of the public that were not well-served by Jobs’s design choices were not bound to use them—they always had alternatives.

Indeed, that is the redeeming aspect of the Theranos story: the market did what it was supposed to. While too many consumers may have been harmed by Holmes’ charlatan business practices, the reality is that once she was forced to bring the company’s product to market it was quickly outed as a failure.

This is how the market works. Companies that design good products, like Apple, are rewarded; other companies then step in to compete by offering yet better products or by addressing other segments of the market. Some of those companies succeed; most, like Theranos, fail.

This dynamic simply does not exist with government. Government is a policy monopolist. A simplified, streamlined, policy that effectively serves half the population does not effectively serve the other half. There is no alternative government that will offer competing policy designs. And to the extent that a given policy serves part of the public better than others, it creates winners and losers.

Of course, the right response to the inadequacy of Wu’s call for more, less complex policy is not that we need more, more complex policy. Rather, it’s that we need less policy—at least policy being dictated and implemented by the government. This is one of the stalwart arguments we free market and classical liberal types offer in favor of market economies: they are able to offer a wider range of goods and services that better cater to a wider range of needs of a wider range of people than the government. The reason policy grows complex is because it is trying to address complex problems; and when it fails to address those problems on a first cut, the solution is more often than not to build “patch” fixes on top of the failed policies. The result is an ever-growing book of rules bound together with voluminous “kludges” that is forever out-of-step with the changing realities of a complex, dynamic world.

The solution to so much complexity is not to sweep it under the carpet in the interest of offering simpler, but only partial, solutions catered to the needs of an anointed subset of the public. The solution is to find better ways to address those complex problems—and often times it’s simply the case that the market is better suited to such solutions.

III. A complexity: What does Wu think of consumer protection?

There is a final, and perhaps most troubling, aspect to Wu’s argument. He argues that respect for the public does not require “offering complete transparency and a multiplicity of choices.” Yet that is what he demands of business. As an academic and government official, Wu has been a loud and consistent consumer protection advocate, arguing that consumers are harmed when firms fail to provide transparency and choice—and that the government must use its coercive power to ensure that they do so.

Wu derives his insight that simpler-design-can-be-better-design from the success of Jobs—and recognizes more broadly that the consumer experience of products of the technological revolution (perhaps one could even call it the tech industry) is much better today because of this simplicity than it was in earlier times. Consumers, in other words, can be better off with firms that offer less transparency and choice. This, of course, is intuitive when one recognizes (as Wu has) that time and attention are among the scarcest of resources.

Steve Jobs and Elizabeth Holmes both understood that the avoidance of complexity and minimizing of choices are hallmarks of good design. Jobs built an empire around this; Holmes cost investors hundreds of millions of dollars in her failed pursuit. But while Holmes failed where Jobs succeeded, her failure was not tragic: Theranos was never the only medical testing laboratory in the market and, indeed, was never more than a bit player in that market. For every Apple that thrives, the marketplace erases a hundred Theranoses. But we do not have a market of governments. Wu’s call for policy to be more like Apple is a call for most government policy to fail like Theranos. Perhaps where the challenge is to do more complex policy simply, the simpler solution is to do less, but simpler, policy well.

Conclusion

We need less dumbing down of complex policy in the interest of simplicity; and we need leaders who are able to make citizens comfortable with and understanding of complexity. Wu is right that good policy need not be complex. But the lesson from that is not that complex policy should be made simple. Rather, the lesson is that policy that cannot be made simple may not be good policy after all.

Writing in the New York Times, journalist E. Tammy Kim recently called for Seattle and other pricey, high-tech hubs to impose a special tax on Microsoft and other large employers of high-paid workers. Efficiency demands such a tax, she says, because those companies are imposing a negative externality: By driving up demand for housing, they are causing rents and home prices to rise, which adversely affects city residents.

Arguing that her proposal is “akin to a pollution tax,” Ms. Kim writes:

A half-century ago, it seemed inconceivable that factories, smelters or power plants should have to account for the toxins they released into the air.  But we have since accepted the idea that businesses should have to pay the public for the negative externalities they cause.

It is true that negative externalities—costs imposed on people who are “external” to the process creating those costs (as when a factory belches rancid smoke on its neighbors)—are often taxed. One justification for such a tax is fairness: It seems inequitable that one party would impose costs on another; justice may demand that the victimizer pay. The justification cited by the economist who first proposed such taxes, though, was something different. In his 1920 opus, The Economics of Welfare, British economist A.C. Pigou proposed taxing behavior involving negative externalities in order to achieve efficiency—an increase in overall social welfare.   

With respect to the proposed tax on Microsoft and other high-tech employers, the fairness argument seems a stretch, and the efficiency argument outright fails. Let’s consider each.

To achieve fairness by forcing a victimizer to pay for imposing costs on a victim, one must determine who is the victimizer. Ms. Kim’s view is that Microsoft and its high-paid employees are victimizing (imposing costs on) incumbent renters and lower-paid homebuyers. But is that so clear?

Microsoft’s desire to employ high-skilled workers, and those employees’ desire to live near their work, conflicts with incumbent renters’ desire for low rent and lower paid homebuyers’ desire for cheaper home prices. If Microsoft got its way, incumbent renters and lower paid homebuyers would be worse off.

But incumbent renters’ and lower-paid homebuyers’ insistence on low rents and home prices conflicts with the desires of Microsoft, the high-skilled workers it would like to hire, and local homeowners. If incumbent renters and lower paid homebuyers got their way and prevented Microsoft from employing high-wage workers, Microsoft, its potential employees, and local homeowners would be worse off. Who is the victim here?

As Nobel laureate Ronald Coase famously observed, in most cases involving negative externalities, there is a reciprocal harm: Each party is a victim of the other party’s demands and a victimizer with respect to its own. When both parties are victimizing each other, it’s hard to “do justice” by taxing “the” victimizer.

A desire to achieve efficiency provides a sounder basis for many so-called Pigouvian taxes. With respect to Ms. Kim’s proposed tax, however, the efficiency justification fails. To see why that is so, first consider how it is that Pigouvian taxes may enhance social welfare.

When a business engages in some productive activity, it uses resources (labor, materials, etc.) to produce some sort of valuable output (e.g., a good or service). In determining what level of productive activity to engage in (e.g., how many hours to run the factory, etc.), it compares its cost of engaging in one more unit of activity to the added benefit (revenue) it will receive from doing so. If its so-called “marginal cost” from the additional activity is less than or equal to the “marginal benefit” it will receive, it will engage in the activity; otherwise, it won’t.  

When the business is bearing all the costs and benefits of its actions, this outcome is efficient. The cost of the inputs used in production are determined by the value they could generate in alternative uses. (For example, if a flidget producer could create $4 of value from an ounce of tin, a widget-maker would have to bid at least $4 to win that tin from the flidget-maker.) If a business finds that continued production generates additional revenue (reflective of consumers’ subjective valuation of the business’s additional product) in excess of its added cost (reflective of the value its inputs could create if deployed toward their next-best use), then making more moves productive resources to their highest and best uses, enhancing social welfare. This outcome is “allocatively efficient,” meaning that productive resources have been allocated in a manner that wrings the greatest possible value from them.

Allocative efficiency may not result, though, if the producer is able to foist some of its costs onto others.  Suppose that it costs a producer $4.50 to make an additional widget that he could sell for $5.00. He’d make the widget. But what if producing the widget created pollution that imposed $1 of cost on the producer’s neighbors? In that case, it could be inefficient to produce the widget; the total marginal cost of doing so, $5.50, might well exceed the marginal benefit produced, which could be as low as $5.00. Negative externalities, then, may result in an allocative inefficiency—i.e., a use of resources that produces less total value than some alternative use.

Pigou’s idea was to use taxes to prevent such inefficiencies. If the government were to charge the producer a tax equal to the cost his activity imposed on others ($1 in the above example), then he would capture all the marginal benefit and bear all the marginal cost of his activity. He would thus be motivated to continue his activity only to the point at which its total marginal benefit equaled its total marginal cost. The point of a Pigouvian tax, then, is to achieve allocative efficiency—i.e., to channel productive resources toward their highest and best ends.

When it comes to the negative externality Ms. Kim has identified—an increase in housing prices occasioned by high-tech companies’ hiring of skilled workers—the efficiency case for a Pigouvian tax crumbles. That is because the external cost at issue here is a “pecuniary” externality, a special sort of externality that does not generate inefficiency.

A pecuniary externality is one where the adverse third-party effect consists of an increase in market prices. If that’s the case, the allocative inefficiency that may justify Pigouvian taxes does not exist. There’s no inefficiency from the mere fact that buyers pay more.  Their loss is perfectly offset by a gain to sellers, and—here’s the crucial part—the higher prices channel productive resources toward, not away from, their highest and best ends. High rent levels, for example, signal to real estate developers that more resources should be devoted to creating living spaces within the city. That’s allocatively efficient.

Now, it may well be the case that government policies thwart developers from responding to those salutary price signals. The cities that Ms. Kim says should impose a tax on high-tech employers—Seattle, San Francisco, Austin, New York, and Boulder—have some of the nation’s most restrictive real estate development rules. But that’s a government failure, not a market failure.

In the end, Ms. Kim’s pollution tax analogy fails. The efficiency case for a Pigouvian tax to remedy negative externalities does not apply when, as here, the externality at issue is pecuniary.

For more on pecuniary versus “technological” (non-pecuniary) externalities and appropriate responses thereto, check out Chapter 4 of my recent book, How to Regulate: A Guide for Policymakers.

This post was co-authored with Chelsea Boyd

The Food and Drug Administration has spoken, and its words have, once again, ruffled many feathers. Coinciding with the deadline for companies to lay out their plans to prevent youth access to e-cigarettes, the agency has announced new regulatory strategies that are sure to not only make it more difficult for young people to access e-cigarettes, but for adults who benefit from vaping to access them as well.

More surprising than the FDA’s paradoxical strategy of preventing teen smoking by banning not combustible cigarettes, but their distant cousins, e-cigarettes, is that the biggest support for establishing barriers to accessing e-cigarettes seems to come from the tobacco industry itself.

Going above and beyond the FDA’s proposals, both Altria and JUUL are self-restricting flavor sales, creating more — not fewer — barriers to purchasing their products. And both companies now publicly support a 21-to-purchase mandate. Unfortunately, these barriers extend beyond restricting underage access and will no doubt affect adult smokers seeking access to reduced-risk products.

To say there are no benefits to self-regulation by e-cigarette companies would be misguided. Perhaps the biggest benefit is to increase the credibility of these companies in an industry where it has historically been lacking. Proposals to decrease underage use of their product show that these companies are committed to improving the lives of smokers. Going above and beyond the FDA’s regulations also allows them to demonstrate that they take underage use seriously.

Yet regulation, whether imposed by the government or as part of a business plan, comes at a price. This is particularly true in the field of public health. In other health areas, the FDA is beginning to recognize that it needs to balance regulatory prudence with the risks of delaying innovation. For example, by decreasing red tape in medical product development, the FDA aims to help people access novel treatments for conditions that are notoriously difficult to treat. Unfortunately, this mindset has not expanded to smoking.

Good policy, whether imposed by government or voluntarily adopted by private actors, should not help one group while harming another. Perhaps the question that should be asked, then, is not whether these new FDA regulations and self-imposed restrictions will decrease underage use of e-cigarettes, but whether they decrease underage use enough to offset the harm caused by creating barriers to access for adult smokers.

The FDA’s new point-of-sale policy restricts sales of flavored products (not including tobacco flavors or menthol/mint flavors) to either specialty, age-restricted, in-person locations or to online retailers with heightened age-verification systems. JUUL, Reynolds and Altria have also included parts of this strategy in their proposed self-regulations, sometimes going even further by limiting sales of flavored products to their company websites.

To many people, these measures may not seem like a significant barrier to purchasing e-cigarettes, but in fact, online retail is a luxury that many cannot access. Heightened online age-verification processes are likely to require most of the following: a credit or debit card, a Social Security number, a government-issued ID, a cellphone to complete two-factor authorization, and a physical address that matches the user’s billing address. According to a 2017 Federal Deposit Insurance Corp. survey, one in four U.S. households are unbanked or underbanked, which is an indicator of not having a debit or credit card. That factor alone excludes a quarter of the population, including many adults, from purchasing online. It’s also important to note that the demographic characteristics of people who lack the items required to make online purchases are also the characteristics most associated with smoking.

Additionally, it’s likely that these new point-of-sale restrictions won’t have much of an effect at all on the target demographic — those who are underage. According to a 2017 Centers for Disease Control and Prevention study, of the 9 percent of high school students who currently use electronic nicotine delivery systems (ENDS), only 13 percent reported purchasing the device for themselves from a store. This suggests that 87 percent of underage users won’t be deterred by prohibitive measures to move sales to specialty stores or online. Moreover, Reynolds estimates that only 20 percent of its VUSE sales happen online, indicating that more than three-quarters of users — consisting mainly of adults — purchase products in brick-and-mortar retail locations.

Existing enforcement techniques, if properly applied at the point of sale, could have a bigger impact on youth access. Interestingly, a recent analysis by Baker White of FDA inspection reports suggests that the agency’s existing approaches to prevent youth access may be lacking — meaning that there is much room for improvement. Overall, selling to minors is extremely low-risk for stores. The likelihood of a store receiving a fine for violation of the minimum age of sale is once for every 36.7 years of operation, the financial risk is about 2 cents per day, and the risk of receiving a no sales order (the most severe consequence) is 1 for every 2,825 years of operation. Furthermore, for every $279 the FDA receives in fines, it spends over $11,800. With odds like those, it’s no wonder some stores are willing to sell to minors: Their risk is minimal.

Eliminating access to flavored products is the other arm of the FDA’s restrictions. Many people have suggested that flavors are designed to appeal to youth, yet fewer talk about the proportion of adults who use flavored e-cigarettes. In reality, flavors are an important factor for adults who switch from combustible cigarettes to e-cigarettes. A 2018 survey of 20,676 US adults who frequently use e-cigarettes showed that “since 2013, fruit-flavored e-liquids have replaced tobacco-flavored e-liquids as the most popular flavors with which participants had initiated e-cigarette use.” By relegating flavored products to specialty retailers and online sales, the FDA has forced adult smokers, who may switch from combustible cigarettes to e-cigarettes, to go out of their way to initiate use.

It remains to be seen if new regulations, either self- or FDA-imposed, will decrease underage use. However, we already know who is most at risk for negative outcomes from these new regulations: people who are geographically disadvantaged (for instance, people who live far away from adult-only retailers), people who might not have credit to go through an online retailer, and people who rely on new flavors as an incentive to stay away from combustible cigarettes. It’s not surprising or ironic that these are also the people who are most at risk for using combustible cigarettes in the first place.

Given the likelihood that the new way of doing business will have minimal positive effects on youth use but negative effects on adult access, we must question what the benefits of these policies are. Fortunately, we know the answer already: The FDA gets political capital and regulatory clout; industry gets credibility; governments get more excise tax revenue from cigarette sales. And smokers get left behind.

Over the past few weeks, Truth on the Market has had several posts related to harm reduction policies, with a focus on tobacco, e-cigarettes, and other vapor products:

Harm reduction policies are used to manage a wide range of behaviors including recreational drug use and sexual activity. Needle-exchange programs reduce the spread of infectious diseases among users of heroin and other injected drugs. Opioid replacement therapy substitutes illegal opioids, such as heroin, with a longer acting but less euphoric opioid. Safer sex education and condom distribution in schools are designed to reduce teenage pregnancy and reduce the spread of sexually transmitted infections. None of these harm reduction policies stop the risky behavior, nor do the policies eliminate the potential for harm. Nevertheless, the policies intend to reduce the expected harm.

Carrie Wade, Director of Harm Reduction Policy and Senior Fellow at the R Street Institute, draws a parallel between opiate harm reduction strategies and potential policies related to tobacco harm reduction. She notes that with successful one-year quit rates hovering around 10 percent, harm reduction strategies offer ways to transition more smokers off the most dangerous nicotine delivery device: the combustible cigarette.

Most of the harm from smoking is caused by the inhalation of toxicants released through the combustion of tobacco. Use of non-combustible nicotine delivery systems, such as e-cigarettes and smokeless tobacco generally are considered to be significantly less harmful than smoking cigarettes. UK government agency Public Health England has concluded that e-cigarettes are around 95 percent less harmful than combustible cigarettes.

In the New England Journal of Medicine, Fairchild, et al. (2018) identify a continuum of potential policies regarding the regulation of vapor products, such as e-cigarettes, show in the figure below.  They note that the most restrictive policies would effectively eliminate e-cigarettes as a viable alternative to smoking, while the most permissive may promote e-cigarette usage and potentially encourage young people—who would not do so otherwise—to take-up e-cigarettes. In between these extremes are policies that may discourage young people from initiating use of e-cigarettes, while encouraging current smokers to switch to less harmful vapor products.

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International Center for Law & Economics chief economist, Eric Fruits, notes in his blog post that more than 20 countries have introduced taxation on e-cigarettes and other vapor products. In the United States, several states and local jurisdictions have enacted e-cigarette taxes. His post is based on a recently released ICLE white paper entitled Vapor products, harm reduction, and taxation: Principles, evidence and a research agenda.

Under a harm reduction principle, Fruits argues that e-cigarettes and other vapor products should face no taxes or low taxes relative to conventional cigarettes, to guide consumers toward a safer alternative to smoking.

In contrast to harm reduction principles,  the precautionary principle as well as principles of tax equity point toward the taxation of vapor products at rates similar to conventional cigarettes.

On the one hand, some policymakers claim that the objective of taxing nicotine products is to reduce nicotine consumption. On the other hand, Dan Mitchell, co-founder of the Center for Freedom and Prosperity, points out that some politicians are concerned that they will lose tax revenue if a substantial number of smokers switch to options such as vaping.

Often missed in the policy discussion is the effect of fiscal policies on innovation and the development and commercialization of harm-reducing products. Also, often missed are the consequences for current consumers of nicotine products, including smokers seeking to quit using harmful conventional cigarettes.

Policy decisions regarding taxation of vapor products should take into account both long-term fiscal effects and broader economic and welfare effects. These effects might (or might not) suggest very different tax policies to those that have been enacted or are under consideration. These considerations, however, are frustrated by unreliable and wildly divergent empirical estimates of consumer demand in the face of changing prices and/or rising taxes.

Along the lines of uncertain—if not surprising—impacts Fritz Laux, professor of economics at Northeastern State University, provides an explanation of why smoke-free air laws have not been found to adversely affect revenues or employment in the restaurant and hospitality industries.

He argues that social norms regarding smoking in restaurants have changed to the point that many smokers themselves support bans on smoking in restaurants. In this way, he hypothesizes, smoke-free air laws do not impose a significant constraint on consumer behavior or business activity. We might likewise infer, by extension, that policies which do not prohibit vaping in public spaces (leaving such decisions to the discretion of business owners and managers) could encourage switching by people who otherwise would have to exit buildings in order to vape or smoke—without adversely affecting businesses.

Principles of harm reduction recognize that every policy proposal has uncertain outcomes as well as potential spillovers and unforeseen consequences. With such high risks and costs associated with cigarette and other combustible use, taxes and regulations must be developed in an environment of uncertainty and with an eye toward a net reduction in harm, rather than an unattainable goal of zero harm or in an overt pursuit of tax revenues.

 

Dan Mitchell is the co-founder of the Center for Freedom and Prosperity.

In an ideal world, the discussion and debate about how (or if) to tax e-cigarettes, heat-not-burn, and other tobacco harm-reduction products would be guided by science. Policy makers would confer with experts, analyze evidence, and craft prudent and sensible laws and regulations.

In the real world, however, politicians are guided by other factors.

There are two things to understand, both of which are based on my conversations with policy staff in Washington and elsewhere.

First, this is a battle over tax revenue. Politicians are concerned that they will lose tax revenue if a substantial number of smokers switch to options such as vaping.

This is very much akin to the concern that electric cars and fuel-efficient cars will lead to a loss of money from excise taxes on gasoline.

In the case of fuel taxes, politicians are anxiously looking at other sources of revenue, such as miles-driven levies. Their main goal is to maintain – or preferably increase – the amount of money that is diverted to the redistributive state so that politicians can reward various interest groups.

In the case of tobacco, a reduction in the number of smokers (or the tax-driven propensity of smokers to seek out black-market cigarettes) is leading politicians to concoct new schemes for taxing e-cigarettes and related non-combustible products.

Second, this is a quasi-ideological fight. Not about capitalism versus socialism, or big government versus small government. It’s basically a fight over paternalism, or a battle over goals.

For all intents and purposes, the question is whether lawmakers should seek to simultaneously discourage both tobacco use and vaping because both carry some risk (and perhaps because both are considered vices for the lower classes)? Or should they welcome vaping since it leads to harm reduction as smokers shift to a dramatically safer way of consuming nicotine?

In statistics, researchers presumably always recognize the dangers of certain types of mistakes, known as Type I errors (also known as a “false positive”) and Type II errors (also known as a “false negative”).

How does this relate to smoking, vaping, and taxes?

Simply stated, both sides of the fight are focused on a key goal and secondary issues are pushed aside. In other words, tradeoffs are being ignored.

The advocates of high taxes on e-cigarettes and other non-combustible products are fixated on the possibility that vaping will entice some people into the market. Maybe vaping wil even act as a gateway to smoking. So, they want high taxes on vaping, akin to high taxes on tobacco, even though the net result is that this leads many smokers to stick with cigarettes instead of making a switch to less harmful products.

On the other side of the debate are those focused on overall public health. They see emerging non-combustible products as very effective ways of promoting harm reduction. Is it possible that e-cigarettes may be tempting to some people who otherwise would never try tobacco? Yes, that’s possible, but it’s easily offset by the very large benefits that accrue as smokers become vapers.

For all intents and purposes, the fight over the taxation of vaping is similar to other ideological fights.

The old joke in Washington is that a conservative is someone who will jail 99 innocent people in order to put one crook in prison and a liberal is someone who will free 99 guilty people to prevent one innocent person from being convicted (or, if you prefer, a conservative will deny 99 poor people to catch one welfare fraudster and a liberal will line the pockets of 99 fraudsters to make sure one genuinely poor person gets money).

The vaping fight hasn’t quite reached this stage, but the battle lines are very familiar. At some point in the future, observers may joke that one side is willing to accept more smoking if one teenager forgoes vaping while the other side is willing to have lots of vapers if it means one less smoker.

Having explained the real drivers of this debate, I’ll close by injecting my two cents and explaining why the paternalists are wrong. But rather than focus on libertarian-type arguments about personal liberty, I’ll rely on three points, all of which are based on conventional cost-benefit analysis and the sensible approach to excise taxation.

  • First, tax policy should focus on incentivizing a switch and not punishing those who chose a less harmful products. The goal should be harm reduction rather than revenue maximization.
  • Second, low tax burdens also translate into lower long-run spending burdens because a shift to vaping means a reduction in overall healthcare costs related to smoking cigarettes.
  • Third, it makes no sense to impose punitive “sin taxes” on behaviors that are much less, well, sinful. There’s a big difference in the health and fiscal impact of cigarettes compared to the alternatives.

One final point is that this issue has a reverse-class-warfare component. Anti-smoking activists generally have succeeded in stigmatizing cigarette consumption and most smokers are now disproportionately from the lower-income community. For better (harm reduction) or worse (elitism), low-income smokers are generally treated with disdain for their lifestyle choices.  

It is not an explicit policy, but that disdain now seems to extend to any form of nicotine consumption, even though the health effects of vaping are vastly lower.

It is a truth universally acknowledged that unwanted telephone calls are among the most reviled annoyances known to man. But this does not mean that laws intended to prohibit these calls are themselves necessarily good. Indeed, in one sense we know intuitively that they are not good. These laws have proven wholly ineffective at curtailing the robocall menace — it is hard to call any law as ineffective as these “good”. And these laws can be bad in another sense: because they fail to curtail undesirable speech but may burden desirable speech, they raise potentially serious First Amendment concerns.

I presented my exploration of these concerns, coming out soon in the Brooklyn Law Review, last month at TPRC. The discussion, which I get into below, focuses on the Telephone Consumer Protection Act (TCPA), the main law that we have to fight against robocalls. It considers both narrow First Amendment concerns raised by the TCPA as well as broader concerns about the Act in the modern technological setting.

Telemarketing Sucks

It is hard to imagine that there is a need to explain how much of a pain telemarketing is. Indeed, it is rare that I give a talk on the subject without receiving a call during the talk. At the last FCC Open Meeting, after the Commission voted on a pair of enforcement actions taken against telemarketers, Commissioner Rosenworcel picked up her cell phone to share that she had received a robocall during the vote. Robocalls are the most complained of issue at both the FCC and FTC. Today, there are well over 4 billion robocalls made every month. It’s estimated that half of all phone calls made in 2019 will be scams (most of which start with a robocall). .

It’s worth noting that things were not always this way. Unsolicited and unwanted phone calls have been around for decades — but they have become something altogether different and more problematic in the past 10 years. The origin of telemarketing was the simple extension of traditional marketing to the medium of the telephone. This form of telemarketing was a huge annoyance — but fundamentally it was, or at least was intended to be, a mere extension of legitimate business practices. There was almost always a real business on the other end of the line, trying to advertise real business opportunities.

This changed in the 2000s with the creation of the Do Not Call (DNC) registry. The DNC registry effectively killed the “legitimate” telemarketing business. Companies faced significant penalties if they called individuals on the DNC registry, and most telemarketing firms tied the registry into their calling systems so that numbers on it could not be called. And, unsurprisingly, an overwhelming majority of Americans put their phone numbers on the registry. As a result the business proposition behind telemarketing quickly dried up. There simply weren’t enough individuals not on the DNC list to justify the risk of accidentally calling individuals who were on the list.

Of course, anyone with a telephone today knows that the creation of the DNC registry did not eliminate robocalls. But it did change the nature of the calls. The calls we receive today are, overwhelmingly, not coming from real businesses trying to market real services or products. Rather, they’re coming from hucksters, fraudsters, and scammers — from Rachels from Cardholder Services and others who are looking for opportunities to defraud. Sometimes they may use these calls to find unsophisticated consumers who can be conned out of credit card information. Other times they are engaged in any number of increasingly sophisticated scams designed to trick consumers into giving up valuable information.

There is, however, a more important, more basic difference between pre-DNC calls and the ones we receive today. Back in the age of legitimate businesses trying to use the telephone for marketing, the relationship mattered. Those businesses couldn’t engage in business anonymously. But today’s robocallers are scam artists. They need no identity to pull off their scams. Indeed, a lack of identity can be advantageous to them. And this means that legal tools such as the DNC list or the TCPA (which I turn to below), which are premised on the ability to take legal action against bad actors who can be identified and who have assets than can be attached through legal proceedings, are wholly ineffective against these newfangled robocallers.

The TCPA Sucks

The TCPA is the first law that was adopted to fight unwanted phone calls. Adopted in 1992, it made it illegal to call people using autodialers or prerecorded messages without prior express consent. (The details have more nuance than this, but that’s the gist.) It also created a private right of action with significant statutory damages of up to $1,500 per call.

Importantly, the justification for the TCPA wasn’t merely “telemarketing sucks.” Had it been, the TCPA would have had a serious problem: telemarketing, although exceptionally disliked, is speech, which means that it is protected by the First Amendment. Rather, the TCPA was enacted primarily upon two grounds. First, telemarketers were invading the privacy of individuals’ homes. The First Amendment is license to speak; it is not license to break into someone’s home and force them to listen. And second, telemarketing calls could impose significant real costs on the recipients of calls. At the time, receiving a telemarketing call could, for instance, cost cellular customers several dollars; and due to the primitive technologies used for autodialing, these calls would regularly tie up residential and commercial phone lines for extended periods of time, interfere with emergency calls, and fill up answering machine tapes.

It is no secret that the TCPA was not particularly successful. As the technologies for making robocalls improved throughout the 1990s and their costs went down, firms only increased their use of them. And we were still in a world of analog telephones, and Caller ID was still a new and not universally-available technology, which made it exceptionally difficult to bring suits under the TCPA. Perhaps more important, while robocalls were annoying, they were not the omnipresent fact of life that they are today: cell phones were still rare; most of these calls came to landline phones during dinner where they were simply ignored.

As discussed above, the first generation of robocallers and telemarketers quickly died off following adoption of the DNC registry.

And the TCPA is proving no more effective during this second generation of robocallers. This is unsurprising. Callers who are willing to blithely ignore the DNC registry are just as willing to blithely ignore the TCPA. Every couple of months the FCC or FTC announces a large fine — millions or tens of millions of dollars — against a telemarketing firm that was responsible for making millions or tens of millions or even hundreds of millions of calls over a multi-month period. At a time when there are over 4 billion of these calls made every month, such enforcement actions are a drop in the ocean.

Which brings us to the FIrst Amendment and the TCPA, presented in very cursory form here (see the paper for more detailed analysis). First, it must be acknowledged that the TCPA was challenged several times following its adoption and was consistently upheld by courts applying intermediate scrutiny to it, on the basis that it was regulation of commercial speech (which traditionally has been reviewed under that more permissive standard). However, recent Supreme Court opinions, most notably that in Reed v. Town of Gilbert, suggest that even the commercial speech at issue in the TCPA may need to be subject to the more probing review of strict scrutiny — a conclusion that several lower courts have reached.

But even putting the question of whether the TCPA should be reviewed subject to strict or intermediate scrutiny, a contemporary facial challenge to the TCPA on First Amendment grounds would likely succeed (no matter what standard of review was applied). Generally, courts are very reluctant to allow regulation of speech that is either under- or over-inclusive — and the TCPA is substantially both. We know that it is under-inclusive because robocalls have been a problem for a long time and the problem is only getting worse. And, at the same time, there are myriad stories of well-meaning companies getting caught up on the TCPA’s web of strict liability for trying to do things that clearly should not be deemed illegal: sports venues sending confirmation texts when spectators participate in text-based games on the jumbotron; community banks getting sued by their own members for trying to send out important customer information; pharmacies reminding patients to get flu shots. There is discussion to be had about how and whether calls like these should be permitted — but they are unquestionably different in kind from the sort of telemarketing robocalls animating the TCPA (and general public outrage).

In other words the TCPA prohibits some amount of desirable, Constitutionally-protected, speech in a vainglorious and wholly ineffective effort to curtail robocalls. That is a recipe for any law to be deemed an unconstitutional restriction on speech under the First Amendment.

Good News: Things Don’t Need to Suck!

But there is another, more interesting, reason that the TCPA would likely not survive a First Amendment challenge today: there are lots of alternative approaches to addressing the problem of robocalls. Interestingly, the FCC itself has the ability to direct implementation of some of these approaches. And, more important, the FCC itself is the greatest impediment to some of them being implemented. In the language of the First Amendment, restrictions on speech need to be narrowly tailored. It is hard to say that a law is narrowly tailored when the government itself controls the ability to implement more tailored approaches to addressing a speech-related problem. And it is untenable to say that the government can restrict speech to address a problem that is, in fact, the result of the government’s own design.

In particular, the FCC regulates a great deal of how the telephone network operates, including over the protocols that carriers use for interconnection and call completion. Large parts of the telephone network are built upon protocols first developed in the era of analog phones and telephone monopolies. And the FCC itself has long prohibited carriers from blocking known-scam calls (on the ground that, as common carriers, it is their principal duty to carry telephone traffic without regard to the content of the calls).

Fortunately, some of these rules are starting to change. The Commission is working to implement rules that will give carriers and their customers greater ability to block calls. And we are tantalizingly close to transitioning the telephone network away from its traditional unauthenticated architecture to one that uses a strong cyrptographic infrastructure to provide fully authenticated calls (in other words, Caller ID that actually works).

The irony of these efforts is that they demonstrate the unconstitutionality of the TCPA: today there are better, less burdensome, more effective ways to deal with the problems of uncouth telemarketers and robocalls. At the time the TCPA was adopted, these approaches were technologically infeasible, so the its burdens upon speech were more reasonable. But that cannot be said today. The goal of the FCC and legislators (both of whom are looking to update the TCPA and its implementation) should be less about improving the TCPA and more about improving our telecommunications architecture so that we have less need for cludgel-like laws in the mold of the TCPA.

 

Fritz L. Laux is a Professor of Economics at Northeastern State University in Tahlequah, Oklahoma.

The puzzling lack of economic impacts

One focus in the analysis of smoke-free air (SFA) laws has been on measuring the impact smoking bans have on the restaurant and hospitality industries. The overwhelming or “consensus” result of this research is that bans impose no adverse impact on industry revenues and employment levels (Scollo et al., 2003; Scollo and Lal, 2008; Hahn, 2010; CDC Fact Sheet, 2014).

What’s puzzling about this literature is that the “no-statistical-significance” result is presented as a neutral or, “this takes the issue off the table” result. I would suggest that the robustness of this finding should be presented as “shocking” and highly significant (if not “statistically significant”).

The economic model for the behavior of profit-maximizing firms would indicate that any restaurant or hospitality venue that could benefit from a smoking ban would already have implemented such a ban. Thus, the imposition of smoking bans should never help and should always hurt such industries. While our model predicts that bans can never help restaurants and can only hurt them, our finding shows that bans tend to have no impact, and may slightly help the average restaurant. This should be viewed, if not highlighted, as surprising.  

Clearly, we understand why the result might be presented with the “no adverse economic impact” headline. Restaurant and hospitality industry groups are important constituencies that can influence policy, and estimates of the business impacts of SFA laws can motivate or placate policy activists. If the laws have, on average, no adverse impact on the members of a local restaurant association, then that restaurant association should have no incentive to oppose SFA ordinances.

My suggestion, however, is that we should give more attention to the strangeness of this result and to the investigation of how this result can be occurring. Where is the market failure that prevented more restaurateurs from implementing SFA policies of their own accord, without need for SFA ordinances? Can efforts to bring more publicity to these market failures help restaurateurs and the public better to understand why SFA policies can make good policy?

Sources of market failure

The obvious (if not tautological) explanation for this weird result is that restaurateurs have somehow been consistently misestimating the business impact of SFA. There are several possible reasons for why this would happen and the most likely of these, it seems, is that social norms play a role in defining how restaurant employees and customers respond to a ban (Leibenstein, 1950). Before imposition of a ban, if the norm is to allow for smoking, then politeness dictates that we will expect restaurants to allow smoking. After a ban (and the resulting change in norms), just as nobody expects to smoke at a fitness club, smoking customers experience reduced desire or expectation of smoking in restaurants. Thus, if the ban changes the norm in ways that restaurateurs do not anticipate, we see empirical results such that industry impact is positive or zero instead of negative.

Borland (2006) with coauthors from the International Tobacco Control project provide evidence of just this kind of an effect. In a survey of current smokers, they found that for those U.S. smokers reporting that they lived in jurisdictions where restaurant smoking was not banned, only 17.5% supported bans on restaurant smoking. For smokers who reported total bans on restaurant smoking in their jurisdictions, 65.5% supported bans on restaurant smoking. Not surprisingly, it seems that expectations and preferences are affected by changes in norms.

With over three-fourths of the U.S. population now living in jurisdictions covered by 100% smoke-free restaurant laws, such shifts in norms within the U.S. are well underway. However, in communities where restaurant smoking is still commonly accepted, complaining to a restaurant manager about another customer’s smoking might seem a bit strange and confrontational. In these situations, patrons and employees may also not be as aware of the health consequences of secondhand smoke. After the publicity of a smoke-free air ordinance heightens awareness and after having experienced eating in a smoke-free restaurants, the value patrons place on smoke-free air may go up. Similarly, restaurant employee may acquire increased preferences for work in smoke-free establishments (Tang et al., 2004).

Although this argument seems less convincing (given the large percentages of restaurants that did go smoke-free well in advance of SFA law implementation), another possible explanation for how restaurateurs could have so consistently misestimated the business impact of smoke-free air policies is that they may have been influenced by incorrect or biased information. From the 1980s through the early 2000s, restaurant managers would have received lots of communication from various state and national industry associations arguing either that smoking restrictions would hurt business or that improved ventilation, rather than going smoke free, would be the correct industry response. As can be seen in online archives of tobacco industry documents, the Tobacco Institute was actively working with hospitality industry associations to promote such an “accommodation strategy” (via improved ventilation and smoking sections) for restaurants during these years when most smoke-free air legislation was passed (Dearlove et al., 2002). This industry-funded analysis, as intended, did likely have some influence the decisions made by restaurateurs.

Implications

From those who oppose SFA laws, the primary argument has been that, if bans do not hurt the restaurant and hospitality industries, why do they need to be imposed on these industries? Would not any restaurants and bars that could benefit from smoking bans have already implemented such bans of their own accords? My suggestion is that, in any advocacy for SFA, it may be appropriate to try to answer these objections more directly. Using research like the Borland et al. (2006) article, we can suggest why it is that restaurateurs, who would benefit from SFA implementation, don’t implement SFA policies of their own accords. Then, after having offered theoretical explanations, we can present our empirical analyses of the economic impact on the restaurant and hospitality industries with more credibility. The idea is that, just as good empirical work gives credence to theory, intuitive theoretical explanations give credence to empirical results.

Carrie Wade, Ph.D., MPH is the Director of Harm Reduction Policy and Senior Fellow at the R Street Institute.

Abstinence approaches work exceedingly well on an individual level but continue to fail when applied to populations. We can see this in several areas: teen pregnancy; continued drug use regardless of severe criminal penalties; and high smoking rates in vulnerable populations, despite targeted efforts to prevent youth and adult uptake.

The good news is that abstinence-oriented prevention strategies do seem to have a positive effect on smoking. Overall, teen use has steadily declined since 1996. This may be attributed to an increase in educational efforts to prevent uptake, stiff penalties for retailers who fail to verify legal age of purchase, the increased cost of cigarettes, and a myriad of other interventions.

Unfortunately many are left behind. Populations with lower levels of educational attainment, African Americans and, ironically, those with less disposable income have smoking rates two to three times that of the general population. In light of this, how can we help people for whom the abstinence-only message has failed? Harm reduction strategies can have a positive effect on the quality of life of smokers who cannot or do not wish to quit.

Why harm reduction?

Harm reduction approaches recognize that reduction in risky behavior is one possible means to address public health goals. They take a pragmatic approach to the consequences of risk behaviors – focusing on short-term attainable goals rather than long-term ideals—and provide options beyond abstinence to decrease harm relative to the riskier behavior.

In economic terms, traditional public health approaches to drug use target supply and demand, which is to say they attempt to decrease the supply of a drug while also reducing the demand for it. But this often leads to more risky behaviors and adverse outcomes. For example, when prescription opioids were restricted, those who were not deterred from such an inconvenience switched to heroin; when heroin became tricky to smuggle, traffickers switched to fentanyl. We might predict the same effects when it comes to cigarettes.

Given this, since we know that the riskiest of behaviors, such as tobacco, alcohol and other drug use will continue—and possibly flourish in many populations—we should instead focus on ways to decrease the supply of the most dangerous methods of use and increase the supply of and demand for safer, innovative tools. This is the crux of harm reduction.

Opioid Harm Reduction

Like most innovation, harm reduction strategies for opioid and/or injection drug users were born out of a need. In the 1980s, sterile syringes were certainly not an innovative technology. However, the idea that clean needle distribution could put a quick end to the transmission of the Hepatitis B virus in Amsterdam was, and the success of this intervention was noticed worldwide.

Although clean needle distribution was illegal at the time, activists who saw a need for this humanitarian intervention risked jail time and high fines to reduce the risk of infectious disease transmission among injection drug users in New Haven and Boston. Making such programs accessible was not an easy thing to do. Amid fears that dangerous drug use may increase and the idea that harm reduction programs would tacitly endorse illegal activity, there was resistance in governments and institutions adopting harm reduction strategies as a public health intervention.

However, following a noticeable decrease in the incidence of HIV in this population, syringe exchange access expanded across the United States and Europe. At first, clean syringe access programs (SAPs) operated with the consent of the communities they served but as the idea spread, these programs received financial and logistical support from several health departments. As of 2014, there are over 200 SAPs operating in 33 states and the District of Columbia.

Successes

Time has shown that these approaches are wildly successful in their primary objective and enormously cost effective. In 2008, Washington D.C. allocated $650,000 to increase harm reduction services including syringe access. As of 2011, it was estimated that this investment had averted 120 cases of HIV, saving $44 million.

Seven studies conducted by leading scientific and governmental agencies from 1991 through 2001 have also concluded that syringe access programs result in a decrease in HIV transmission without residual effects of increased injection drug use. In addition, SAPs are correlated with increased entry into treatment and detox programs and do not result in increases in crime in neighborhoods that support these programs.

Tobacco harm reduction

We know that some populations have a higher risk of smoking and of developing and dying from smoking-related diseases. With successful one-year quit rates hovering around 10 percent, harm reduction strategies can offer ways to transition smokers off of the most dangerous nicotine delivery device: the combustible cigarette.

In 2008, the World Health Organization developed the MPOWER policy package aimed to reduce the burden of cigarette smoking worldwide. In their vision statement, the authors explicitly state a goal where “no child or adult is exposed to tobacco smoke.”

Using an abstinence-only framework, MPOWER strategies are:

  1. To monitor tobacco use and obtain data on use in youth and adults;
  2. To protect society from second-hand smoke and decrease the availability of places that people are allowed to smoke by enacting and enforcing indoor smoking bans;
  3. To offer assistance in smoking cessation through strengthening health systems and legalization of nicotine replacement therapies (NRTs) and other pharmaceutical interventions where necessary;
  4. To warn the public of the dangers of smoking through public health campaigns, package warnings and counter advertising;
  5. To enact and enforce advertising bans; and
  6. To raise tobacco excise taxes.

These strategies have been shown to reduce the prevalence of tobacco use. People who quit smoking have a greater chance of remaining abstinent if they use NRTs. People exposed to pictorial health warnings are more likely to say they want to quit as a result. Countries with comprehensive advertising bans have a larger decrease in smoking rates compared to those without. Raising taxes has proven consistently to reduce consumption of tobacco products.

But, the effects of MPOWER programs are limited. Tobacco and smoking are often deeply ingrained in the culture and identity of communities. Studies repeatedly show that smoking is strongly tied to occupation and education, smokers’ self-identity and also the role that tobacco has in the economy and identity of the community.

As a practical matter, the abstinence approach is also limited by individual governmental laws. Article 13 of the Framework Convention on Tobacco Control recognizes that constitutional principles or laws may limit the capabilities of governments to implement these policy measures. In the United States, cigarettes are all but protected by the complexity of both the 1998 Master Settlement Agreement and the Family Smoking Protection and Tobacco Control Act of 2009. This guarantees availability to consumers – ironically increasing the need of more reduced-risk nicotine products, such as e-cigarettes, heat-not-burn devices or oral Snus, all of which offer an alternative to combustible use for people who either cannot or do not wish to quit smoking.

Several regulatory agencies, including the FDA in the United States and Public Health England in the United Kingdom, recognize that tobacco products exist on a continuum of risk, with combustible products (the most widely used) being the most dangerous and non-combustible products existing on the opposite end of the spectrum. In fact, Public Health England estimates that e-cigarettes are at least 95% safer than combustible products and many toxicological and epidemiological studies support this assertion.

Of course for tobacco harm reduction to work, people must have an incentive to move away from combustible cigarettes.There are two equally important strategies to convince people to do so. First, public health officials need to acknowledge that e-cigarettes are less risky. Continued mixed messages from government officials and tobacco use prevention organizations confuse people regarding the actual risks from e-cigarettes. Over half of adults in the United States believe that nicotine is the culprit of smoking-related illnesses – and who can blame them when our current tobacco control strategies are focused on lowering nicotine concentrations and ridding our world of e-cigarettes?

The second is price. People who cannot or do not wish to quit smoking will never switch to safer alternatives if they are more, or as, expensive as cigarettes. Keeping the total cost of reduced risk products low will encourage people who might not otherwise consider switching to do so. The best available estimates show that e-cigarette demand is much more vulnerable to price increases than combustible cigarettes – meaning that smokers are unlikely to respond to price increases meant to dissuade them from smoking, and are less likely to vape as a means to quit or as a safer alternative.

Of course strategies to prevent smoking or encourage cessation should be a priority for all populations that smoke, but harm-reduction approaches—in particular with respect to smoking—play a vital role in decreasing death and disease in people who engage in such risky behavior. For this reason, they should always be promoted alongside abstinence approaches.