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Sunday, May 8, 2011

Regulating Smoking in China: An Ethical Conflict of Interest

Government ownership and control of a (or the) means of production is socialism. It can applied to an entire economic system or to particular enterprises. Socialism involves a structural conflict of interest for government when it seeks to regulate that which it owns. Specifically, where a government as owner enjoys the benefit of profit from the enterprise, that government has a financial interest that is antithetical to the restriction of the produced product. Such a restriction could be warranted by public health or safety, for example. In short, the public good can be opposed to a government’s own financial interest even as that government is charged with acting in the public interest. It is the incorporation of a private interest into a government, which is inherently in the public interest, that sets up the conflict of interest. Public health in China provides a case in point.

Three hundred million Chinese smoke. This number is roughly equivalent to the entire U.S. population in 2000. The addiction kills an estimated 3,000 people a day in China. In 2010, there were 1.2 million tobacco-related deaths. One out of three cigarettes smoked worldwide is smoked in China. It is estimated that smoking will kill about a third of Chinese men under 30. On May 1, 2011, the Chinese government banned smoking in indoor public places. However, the law contained no penalties. According to Time magazine, the law is not likely to have any effect.

The reason for the lenient regulation may come down to the powerful China National Tobacco corporation. In 2010, taxes and profits from the state-owned monopoly were roughly 7% of the government’s revenue. That gave government officials a disincentive to issuing regulations that could be expected to reduce the consumption of cigarettes in China.

Even if the government’s expense in covering health-care costs for the 3,000 Chinese a day who die of smoking exceeds 7% of the government’s total revenue, even a partial loss of revenue would likely be resisted by government officials.  Aside from the possibility of kick-backs related to the revenue, attention to revenue can dwarf that to costs where there is no market competition.

Ethically, the government officials otherwise tasked with regulating so as to protect the public health in China and thus prevent deaths from smoking suffer from the structural conflict of interest wherein the government’s financial and public health interests are in conflict. That is to say, the officials not only have their own ethical dilemmas to resolve; there is also a larger institutional problem akin to a house being designed to be at odds with itself. 

As Lincoln said in 1863, a house divided against itself cannot stand. This truth pertains not only to a psyche, but also to an institution (as well as to a system of institutions, such as a political economy). Lest the structural or institutional conflict of interest be ignored or relegated by advocates of “ethical decision-making,” rectifying an institutional conflict of interest can obviate any related individual dilemmas. In contrast, even the person who comes to a conclusion regarding his or her own ethical position within the overview of an ongoing institutional conflict of interest still suffers from the tensions inherent in the larger conflict until it is resolved.


“A Smoking Ban without Teeth,” Time, May 20, 2011.

See related essay: Socialism Where You Might Least Expect It.