Detroit casinos sway Lansing lawmakers against smoking ban with suspect studies

Economist is a fellow at think tank funded indirectly by Phillip Morris and R.J. Reynolds

[COMMENTARY] Pressure from the MGM Grand, Greektown and MotorCity casinos is working to swing the Democratic House leadership against the popular smoking ban bill.

On May 22, in deference to pressure, Speaker of the House Andy Dillon, D-Redford Township, began pushing for a substitute bill exempting the three Detroit casinos and cigar bars from the smoking ban bill, and Wednesday the House voted 65-39 in favor of it. The bill conflicts with an earlier Senate version that would not exempt the casinos. Proponents of the House bill are worried prioritization of the casinos’ concerns could augur the scrapping of the entire bill.

But the research that casino lobbyists are using to claim that a smoking ban would damage the cash-flow of three commercial casinos is tainted by affiliations with anti-regulation think tanks and even, distantly, Big Tobacco money, the influence of which is possibly suffusing through the studies like secondhand smoke lingering in an expensive sweater.

Not only are the studies suspect, but House lawmakers seem to have given them more weight than the preponderance of academic research offered by universities that insist that the overall impact of smoking bans in other states have not hurt the revenues of bars, restaurants and casinos.
Studies distributed by casinos and other pro-smoking lobbies are authored by anti-regulation economist

Lobbyists against the public health bill last week distributed a newish study purporting to show that a citywide smoking ban in Columbia, Mo., set the bars and restaurants there back 5 percent in revenues. In addition, a lobbyist for the Michigan Licensed Beverage Association cited a different study linking smoking bans in Delaware with lost casino revenues, in a comment posted on the earlier published Michigan Messenger article, writing:

“It is simply a fact that research shows smoking bans hurt the gaming business. After Delaware passed its Clean Indoor Air Law in 2002, state racinos [slot machine venues at racetracks] suffered losses of between 8.9 percent and 17.9 percent, and the statewide revenue decline was 14.9 percent!”

It’s no coincidence that both studies circulated by supposedly different anti-smoking ban interests were authored by Michael R. Pakko.

Pakko publishes his studies via his day job as a research officer at the St. Louis Federal Reserve Bank, lending them an air of dispassionate officialdom. However, when asked, Pakko admits readily that he is not a government employee. Federal Reserve Banks are private corporations.

Also not likely marketed by the casino lobbyists in Lansing is another, more political, job title held by Pakko.

As a research fellow at a libertarian think tank, the Show-Me Institute, economist Pakko is a free-market advocate almost always opposed to government intervention, including public health regulations.

The Show-Me Institute is funded primarily by its co-founders, former financial-industry CEOs who sit on its board of directors, but it has also received money from the Cato Institute, a larger libertarian think tank that critics say has accepted money from Phillip Morris and R. J. Reynolds.

According to SourceWatch, an encylopedic wiki covering “groups shaping public agenda”:

R.J. Reynolds (RJR) in a September 2000 document also names Cato Institute as an organization the company could rely upon to help the tobacco industry “shift the debate and framework under which cigarette-related issues are evaluated in the future.”

Also according to SourceWatch, the Cato Institute’s annual report shows that it donated $50,000 to the Show-Me Institute.

Pakko, the author of eight different studies and articles that fly in the face of academic research on the topic, says that he has never been paid by the tobacco industry. “They have never even contacted me,” he added. He also says that he has never published through the Show-Me Institute and his fellowship there is unpaid.

Authors of peer-reviewed articles on smoking bans say Pakko’s studies are flawed and invalid.

For example, Pakko wrote his Delaware study in direct response to a peer-reviewed study funded by the National Cancer Institute and co-authored by Dr. Stanton Glantz, a University of California San Francisco professor of medicine who also teaches statistics at the school. That study concluded that the gaming industry did not lose revenues due to a smoking ban there.

Glantz recently published a complaint about Pakko’s Missouri study, calling it “unreliable.” Glantz and co-author Benjamin Alamar (a Ph.D. in economics who is currently a professor of Management at Menlo College) also dismissed Pakko’s Delaware study as one that, among other issues they cite, failed to take into account inclement weather at the racetracks.

Further illuminating Pakko’s potential bias, his Ph.D. in economics is from the University of Rochester, which in his own words “is related philosophically to the Chicago school of economics,” the intellectual birthplace of modern libertarianism.

In a phone interview, Pakko described his views as “economic perspectives, not political.”

Lansing lawmakers could ask themselves if the words in the two indented paragraphs below read like those of a scientist discussing his findings or those of an activist with a pro-tobacco, anti-regulation agenda.

The quotes are from a podcast interview on the Federal Reserve Web site:

“The important thing to recognize here is that when you have a smoking ban imposed by a government authority, you’re changing the nature of the business in the community in such a way that they could have changed themselves. So a bar or restaurant always has the option of prohibiting smoking to begin with. So if it was profitable for them to do so, they would do so. As a starting point, the market-based outcome of business owners selecting their smoking status gives us a baseline and an imposed smoking ban on top of that can’t really make anything better off but only worse off in terms of revenues.“

Pakko distanced himself somewhat from the larger politics that his studies are being used to defend. “My studies do not deal with the effect of passive smoking or health care costs,” he said. But in the podcast interview, he says that he does not believe it is a right for nonsmokers to breathe clean indoor air.

“I don’t see it as a matter of rights. I don’t think that either smokers’ or non-smokers’ desire to smoke or be away from smoke really rise to the level of rights as enshrined in our Constitution or Bill of Rights for instance. What we’re really looking at are competing sets of preferences. And when you have conflict among preferences … the free-market system is probably the most efficient way of resolving those disputes.“

Pakko’s supervisor at the St. Louis Federal Reserve Bank, Howard J. Wall, confirmed that Pakko is paid to conduct the smoking-ban studies, but that each study published in the name of the Federal Reserve has a disclaimer that the views expressed are strictly those of the author.

When asked about potential conflict of interest or bias, Wall defended Pakko, saying the Show-Me Institute was a “free-market” think tank, not a libertarian think tank, and he stood by the results of Pakko’s studies, while admitting that he personally is for the implementation of smoking bans.

Everyone who breathes in Michigan should hope that House lawmakers will decide not to put this important public health issue into the hands of restaurant, bar and casino owners, or, as Pakko refers to them, the free market.

The smoking ban is a statewide health issue, and casinos, in a time when jobs and growth are such political hot buttons, are saying the sky is falling and presenting potentially compromised research to back up their claims.

Will Michigan lose its statewide smoking ban at the 11th hour because of the clout of a special interest or more narrowly, because of a St. Louis economist’s ideological “preference” for the free market as a solution for workers, families and patrons who have a right to clean indoor air?