COLUMN -- Smoking bans have hurt individual businesses

Wednesday, December 21, 2005

Hans Lofgren of Eastside Beverage Distributors noted the obvious — there was not one smoker around the table. In addition to Lofgren and I, the smoke-free seven included Bob Pacyga, also of Eastside Beverage; Tim Tuuri, with Capitol Beverage Sales; Pat Fleury of Shamrock's Bar; Jim Farrell, executive director of the Minnesota Licensed Beverage Association; and Dan O'Gara, third-generation owner of O'Gara's Bar and Grill.

On the table the folded Pioneer Press blared "Smoking ban fears prove unfounded." But just whose fears were unfounded?

Not tavern owners like Fluery and O'Gara, who feared a smoking ban would hurt their businesses. Not service clubs with charitable gambling concessions that predicted the drop in receipts resulting from smoking bans. Not Lofgren, Pacyga and Tuuri, who forecast the falling volume seen by businesses supplying bars and restaurants.

My fears are not relieved. The most vital smoking ban issue still goes unaddressed — What are the neutral criteria that determine when a health issue rises to a level that necessitates government intervention? We might never get to that question.

With the ethics of a bus station pimp, smoking ban proponents are seducing honest business owners into whoring for a partial statewide smoking ban, a Faustian pact effectively avoiding supporters' accountability for the harm — civic and economic — caused by their advocacy. But I'm ahead of myself.

The over-eager Pioneer Press analysis used aggregate data to "prove" that smoking bans cause no individual economic harm. Aggregate data is a tool of economists and tyrants. Economists rightly use it to track macroeconomic trends; tyrants wrongly use it to hide microeconomic consequences on individuals within a larger group.

King Banaian, chairman of the Economics Department at St. Cloud State, obtained the raw data used by the Pioneer Press and noted that "it is indeed a set of totals for taxable sales of food and liquor by zip code, along with the number of establishments. That tells us nothing about individual harm."
The guys at O'Gara's got specific.

Eastview's total volume is off 8 percent in Hennepin County (total ban), off 4 percent in Ramsey County (partial ban) and unchanged in Anoka County (no ban). In Northeast Minneapolis, adjacent to Anoka County, Eastview's on-premise volume is off 40 percent.

"Folks up there aren't walking to the neighborhood bar to have a drink and a smoke with their buddies," said Lofgren. "They're driving over to Anoka." (Sit next to a smoker and drive after a few beers.)

In St. Paul proper, Capitol Beverage's volume is off 2 percent for the year. That's over the summer when outdoor patios minimized the effect of the Ramsey ban. Moreover for Capitol Beverage, October-November sales were flat — virtually no increase over last year when the hockey strike was a "crisis" for downtown bars and restaurants.

About 80 percent of Eastview's and Capitol's volume comes from taverns that today qualify for a smoking ban exemption. With a total ban, both are considering changes that will cost jobs.

Tavern owners like Fluery and O'Gara note they increased prices to compensate for lost business and the higher minimum wage. That raised prices for their customers, didn't put new money in their pockets, but did preserve tax revenue for government, as reported by the Pioneer Press.

Ahh! It was government's fear of losing revenue that proved "unfounded."

"Council members tell us to just raise prices," said O'Gara. "There's only so much you can charge for a bottle of beer."

And there's only so much a tavern owner can do. Paying public tribute to the courage of the business owners who testified in favor of the ban rollback in Hennepin County, Commissioner Penny Steele teared up recalling businesses closed, life savings gone, homes sold and jobs lost.

"Our politicians admit that bans hurt businesses," said O'Gara. "They don't care. We can argue. It doesn't matter."

At a council hearing, St. Paul City Councilman Dave Thune justified the start date for the full ban by acknowledging the hurt — March 1 the weather is warmer for outside smokers — as if winter never comes to Minnesota and a two-month delay constitutes caring.

Government shouldn't work like that. Nor should a compromise of principle be required to remain in business. Next week more from O'Gara's and a look at the push for a statewide smoking ban. When one makes a deal with the devil, one shouldn't be surprised when it goes to hell.

Category: Column, Smoking Ban, Local Politics

Update: Must Read -- David Strom's post on the court decision that the "health impact fee" on cigarettes was illegal and unconstitutional.