New Reports on Food, Alcohol and Tobacco Marketing

In the last few months, government and advocacy organizations have released new reports on the impact of tobacco marketing, inequities in how grocery chains serve low-income neighborhoods, and the alcohol industry’s compliance with its own voluntary guidelines. To help readers keep up, we summarize some of this summer’s publications and provide links to the full reports.

 

As elected officials, public health researchers and advocates increasingly recognize that corporate policies and practices have a major influence on health, Corporations and Health Watch readers may have trouble keeping up with the many reports on the subject. Since these reports often appear in the “gray literature” and are not centrally indexed, it’s easy to miss information that could inform research or practice.  To assist readers in this task, CHW summarizes a few recent reports; we do not review their claims or assess their methodologies.

Bloomberg M. Press Release: Mayor Bloomberg and Shaquille O’neal Announce New Food Standards For City Agencies, September 19, 2008.

On September 19th, New York City Mayor Michael R. Bloomberg and NBA basketball player Shaquille O’Neal announced the launch of New York City’s new food standards designed to improve the nutritional quality of the 225 million snacks and meals served by City agencies each year. These standards make New York City the first major US city to establish nutrition standards for all food purchased or served by city agencies. The new standards cover snacks and meals served in places such as schools, senior centers, homeless shelters, child care centers, after school programs, correctional facilities, public hospitals and parks. The standards mandate City agencies to serve only healthier beverages such as skim or 1 percent milk (with exceptions for babies), phase out deep frying, include two servings of fruits and vegetables in every lunch and dinner, lower salt content and increase the amount of fiber in meals.

Blue Ribbon Commission on L.A.’s Grocery Industry and Community Health.  Feeding our Communities.  A Call for Standards for Food Access and Job Quality in Los Angeles Grocery Industry. Los Angeles, July 2008.  Available in [pdf]

The Alliance for Healthy and responsible Grocery Stores, a city-wide Los Angeles coalition of 25 community, faith-based, labor, and environmental organizations last July released “Feeding Our Communities: A Call for Standards for Food Access and Job Quality in Los Angeles’ Grocery Industry”. Based on public hearings in which residents, industry experts, academics, workers and clergy gave testimony regarding the practices of L.A.’s grocery industry, the report describes the growing disparities between the industry’s treatment of L.A.’s better off and poor communities.  The report presents evidence that LA supermarket chains ignore and mistreat the area’s low-income communities. The Alliance expects to propose citywide legislation that would establish uniform standards for grocery stores in Los Angeles, ensuring that low income neighborhoods receive more equitable treatment.

Federal Trade Commission. Marketing Food to Children and Adolescents A Review of Industry Expenditures, Activities, and Self-Regulation. A Report to Congress. Washington, D.C.: Federal Trade Commission, July 2008.  Available in [pdf]

From the FTC press release on the report:
“The Federal Trade Commission today announced the results of a study on food marketing to children and adolescents. The report, Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation, finds that 44 major food and beverage marketers spent $1.6 billion to promote their products to children under 12 and adolescents ages 12 to 17 in the United States in 2006. The report finds that the landscape of food advertising to youth is dominated by integrated advertising campaigns that combine traditional media, such as television, with previously unmeasured forms of marketing, such as packaging, in-store advertising, sweepstakes, and Internet. These campaigns often involve cross-promotion with a new movie or popular television program. Analyzing this data, the report calls for all food companies “to adopt and adhere to meaningful, nutrition-based standards for marketing their products to children under 12.”

Kolish ED, Peeler CL.  Changing the Landscape of Food and Beverage Advertising: The Children’s Food and Beverage Initiative in Action.  Arlington, VA: Council of Better Business Bureaus, July 2008.  Available at: www.nestle.com

From the Executive Summary:
During July through December 2007, the six companies scheduled to implement during this period, Campbell Soup Company, The Coca-Cola Company, the Hershey Company, Kraft Foods Global, Inc., Mars, and Unilever, successfully implemented their pledges in which they committed either to not engage in child-directed advertising or to feature only better-for-you products in child-directed advertising.

  • No child-directed advertising. Based on our review, Coca-Cola, Hershey and Mars did not engage in child-directed advertising as they had pledged.
  • Advertising only for better-for-you products. Based on our review, Kraft limited all, and Campbell and Unilever limited virtually all, of their child-directed advertising to better-for-you products as specified in their pledges.

Campbell reported, and the BBB separately observed, that during the initial start up period, it had overlooked removing, primarily on its child-directed company-owned websites, a relatively small amount of content that referenced or displayed products that do not (or did not then) meet its nutrition guidelines. These problems have been remedied. Its television advertising, which represented a substantially larger amount of its media expenditures, was otherwise compliant with its pledge.

  • The BBB found that Unilever, while otherwise fully in compliance, had overlooked removing a couple of products, out of many, from its child-directed company-owned website. It has corrected this issue.

During July through December 2007, Burger King Corp., Cadbury Adams, General Mills, Kellogg Company, McDonald’s, and PepsiCo began the process of implementing their pledges. Many of them, ahead of schedule, implemented their pledges to a significant degree by limiting or changing what they advertised to children, or by early implementation of other parts of their pledges, such as product placement commitments.

Langlois, A. and Crossley, R.    Proof of the Pudding: Benchmarking Ten of the World’s Largest Food Companies’ Response to Obesity and Related Health Concerns. New York: JP Morgan,  April 2008. Available in [pdf]

In April 2008, JP Morgan Limited released a report in which it evaluated ten major food companies against a best practice framework developed by Insight Investment and the International Business Leaders Forum ‘HEAL’ partnership, published in 2007: ‘A Recipe for Success’.

The report includes the key components of a comprehensive corporate response to consumer health and obesity challenges. All companies were initially evaluated on the basis of their public disclosure and assigned a score for the quality of reporting: sources used included annual reports, SEC filings, corporate responsibility reports or similar, websites.

Researchers offered to meet with managers of all the companies to discuss initial findings and provide a comprehensive explanation of their strategies and program. Seven companies took the opportunity to meet while Cadbury, Heinz and Kraft were not in a position to meet. Final analysis and score for performance completed on the basis of additional information provided in company meetings. Companies sent final provisional scores and offered the opportunity to review and provide additional information, which several did.

Marin Institute.  Why Big Alcohol Can’t Police Itself A Review of Advertising Self-regulation in the Distilled Spirits Industry.  Marin Institute, September 2008.  Available in [pdf]

In this September 2008 report, the Marin Institute analyzes the Distilled Spirits Council of the United States (DISCUS) Code of Responsible Marketing Practices reports from 2004-2007. The Federal Trade Commission relies upon a system of voluntary self-regulation to ensure responsible marketing practices by the alcohol industry. This report publishes for the first time a systematic review of the DISCUS oversight process, and concludes that the process is inherently biased and consistently fails to protect the public from irresponsible advertising.

National Cancer Institute.  The Role of the Media in Promoting and Reducing Tobacco Use.  NCI Tobacco Control Monograph Series. No 19.  Washington DC, National Institutes of Health, July 2008.  Available in [pdf]

src=”uploads/images/old_archives/img/clip_image012_0000.gif” alt=”Role of the Media in Promoting and Reducing Tobacco Use” hspace=”10″ vspace=”5″ width=”131″ height=”197″ align=”right” />Summarized from page vii of report:  This 684 page report is the most current and comprehensive distillation of the scientific literature on media communications in tobacco promotion and tobacco control. It synthesizes findings from the disciplines of marketing, psychology, communications, statistics, epidemiology, and public health and was compiled by five scientific editors, 23 authors, and 62 external peer reviewers. The report has six main parts. Part 1 frames the rationale for report’s organization and presents the key issues and conclusions of the research as a whole and of the individual chapters. Part 2 explores tobacco marketing—the range of media interventions used by the tobacco industry to promote its products, such as brand advertising and promotion, as well as corporate sponsorship and advertising. This section also evaluates the evidence for the influence of tobacco marketing on smoking behavior and discusses regulatory and constitutional issues related to marketing restrictions. Part 3 explores how both the tobacco control community and the tobacco industry have used news and entertainment media to advocate their positions and how such coverage relates to tobacco use and tobacco policy change. The section also appraises evidence of the influence of tobacco use in movies on youth smoking initiation. Part 4 focuses on tobacco control media interventions and the strategies, themes, and communication designs intended to prevent tobacco use or encourage cessation, including opportunities for new media interventions. This section also synthesizes evidence on the effectiveness of mass media campaigns in reducing smoking. Part 5 discusses tobacco industry efforts to diminish media interventions by the tobacco control community and to use the media to oppose state tobacco control ballot initiatives and referenda. Finally, Part 6 examines possible future directions in the use of media to promote or to control tobacco use and summarizes research needs and opportunities.

United Food and Commercial Workers International Union.  The Two Faces of Tesco.  Washington, D.C.: United Food and Commercial Workers International Union, June 2008. Available in [pdf]

From the press release for the report:
In June 2008, the United Food and Commercial Workers Union, a US union representing 1.3 million workers in the retail food market, launched a UK campaign to expose The Two Faces of Tesco. The report examines how Tesco operates in the United Kingdom, its home base, and the United States, and compares Tesco policies and rhetoric with its practices.

At a London press launch chaired by UK Member of Parliament Jon Cruddas the union said that it is stepping up a campaign already begun in the United States to shame Tesco to talks on union recognition and employee pay and benefits.

The UFCW seeks to represent some of the lowest-paid and least secure retail workers in the USA, more than half of whom are women, and has been seeking talks with Tesco for two years since the world’s third-largest retailer announced its entry into the US grocery market. All attempts have so far fallen on deaf ears, reports the UFCWU, and Tesco launched its chain of Fresh & Easy supermarkets in 2007 as non-union stores. UFCW says that it is seeking the chance for dialogue, to build the same constructive partnership that Tesco enjoys in the UK with the shop workers’ union USDAW.

EcoDriving USA The Auto Industry’s Response to Low Car Sales, High Gas Prices, Climate Change… and the 2008 Election Campaign Debates on Energy Policy

This month CHW profiles EcoDriving, an auto industry campaign launched over the summer when driving prices were at their highest. Our report describes the campaign, analyzes the auto industry’s motivation for launching it now and looks at the presidential candidates’ stance on energy policy.

The US Department of Transportation announced that Americans drove 53 billion fewer miles on US roads this year compared to last year,1 a record decline attributed to the soaring price of gasoline. To capitalize on this trend and to forestall or weaken new federal fuel economy standards, the Alliance of Automobile Manufacturers, the trade group of the American, auto companies and dealers, and two US governors are recommending drivers become individually responsible for their carbon emissions and start “driving green.”

EcoDriving USA, a new auto industry campaign, seeks to inspire consumers to get back into car showrooms and behind the wheel. California Gov. Schwarzenegger, a sponsor of the campaign, says “We hear a lot of ideas from politicians about lowering the gas prices and fighting global warming, whether it’s biofuels, offshore drilling or nuclear power. But none of those will affect the gas prices right now. Only you can do that.”  Ecodriving USA urges drivers to join the “ecodriving movement.”

Many agree that reducing demand for gas will help keep pump prices down, but as new evidence links carbon dioxide (CO2) emissions to health and environmental problems, will asking drivers to become responsible for their own fossil fuel emissions be enough?

EcoDriving USA

The campaign hopes to shift consumer habits from driving less, a trend that worries the auto industry, to driving with tactics that can reduce carbon dioxide (CO2) emissions. For example, EcoDriving suggests drivers avoid jackrabbit starts, maintain good tire pressure, leave excess cargo at home, and take advantage of synchronized traffic lights.  EcoDriving USA advocates staying on the road with a website full of fuel-saving checklists, a CO2 calculator and a ‘Virtual Road Test’ that allows users to try EcoDriving tips from their computer. Users can learn a few money saving tricks and will also have a chance to learn about the latest fuel efficient models being produced by EcoDriving partners, including BMW, Chrysler, Ford, General Motors, Mercedes-Benz, Mitsubishi, Toyota and Volkswagen. According to EcoDriving USA, their ecodriving tips can save consumers about 15% in fuel expenses.

Some critics are not enthusiastic about EcoDriving.  Motor Trend calls its website “redundant, as tips fall short of being revolutionary.”2 In fact, the campaign’s fuel-saving advice is virtually identical to recommendations made by several others, including the US Department of Energy, Environmental Protection Agency, and Energy Efficiency and Renewable Energy at www.fueleconomy.gov. Ecodriving, or hypermiling, was first introduced by the online fuel economy forum www.cleanmpg.com as a combination of driving techniques, that when followed can help to maximize fuel economy.

Human-generated CO2 emissions and health

In 2007 Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment report summarized the latest evidence that links human-generated greenhouse gases and global climate change. Other recent reports have spelled out the health implications. For example, a study published this year in Geophysical Research Letters shows a correlation between CO2 emissions and human mortality. The study’s principal investigator, Mark Jacobson says, “The study is the first specifically to isolate carbon dioxide’s effect from that of other global-warming agents and to find quantitatively that chemical and meteorological changes due to carbon dioxide itself increase mortality due to increased ozone, particles and carcinogens in the air.”3

The Environmental Protection Agency’s (EPA) newly released Analyses of the Effects of Global Change on Human Health and Welfare and Human Systems describes human health, settlement and welfare vulnerabilities in this country. The report, says that the US can expect health effects that are “very likely to accentuate the disparities already evident in the American health care system,” with the poor, elderly, disabled and uninsured to bear much of the global climate change burden.4

While the report does not respond to specific CO2 emission scenarios, much of the analysis is based on science showing health risks in specific areas and regions. Urban areas, for example, are known to have high CO2 emissions which increase health risks, but the report goes beyond by warning that “the impacts of higher temperatures in urban areas and likely associated increases in tropospheric ozone concentrations can contribute to or exacerbate cardiovascular and pulmonary illness.”4

Fuel economy standards, changes and ‘new’ plans

The US and other large emission polluters are often the target of proposed fuel emission standards change. And with good reason. Using the most current numbers available from the Energy Information Administration (EIA), the US is the largest importer and consumer of oil. For example:

  • In 2007, the US consumed over 9.2 million barrels of motor gasoline per day, almost three times more oil than any other country.
  • The US was responsible for the worlds most extensive tailpipe pollution, unloading about 1.9 billion metric tons of CO2 emission in 2004 (three times more than industry, electrical power, residential and commercial CO2 emissions combined) according to the Pew Center on Global Climate Change.

Changing this pattern, however, requires changing more than drivers habits. In the US, fuel economy is regulated by CAFE (Corporate Average Fuel Economy) standards which are enforced by a combined effort of the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA). While CAFE places the production of fuel efficient vehicles on automobile manufactures, CAFE standards themselves are determined on a federal level by the Secretary of Transportation.

The most recent changes to fuel efficiency standards came with the new energy bill in late 2007, which calls for a 40% increase (to 35 mpg) in CAFE standards to be realized by 2020. But the Union of Concerned Scientists says Bush administration proposals for achieving the new energy goal leave loopholes for the auto industry and fails to utilize new technologies. Jim Kliesch, a senior engineer with the Clean Vehicles Program said, “Automakers today have technology sitting on their shelves that could cost-effectively improve fuel economy… We could blow the doors off 35 mpg with conventional technology alone, but [the] proposal would leave us stuck in second gear.”5

Energy Policy and the 2008 Presidential Campaign

Policy change that would include reductions in CO2 emissions is a part of each major party Presidential candidates’ energy platform. Senator Obama’s ‘New Energy for America Plan‘ proposes a 4% per year increase in CAFE standards and an 80% reduction in greenhouse gas emissions by 2050. Senator McCain’s ‘Lexington Project‘ calls for enforcing existing CAFE standards and a 60% reduction in greenhouse gas emissions by 2050. While McCain’s plan calls for significant tax cuts for corporations, Obama’s plan seeks to penalize oil companies with a windfall profit tax. For an in depth analysis of industry influence in Obama and McCain’s energy plans see OpenSecrets ‘Power Struggle: Energizing the Presidential Race‘ and Center for American Progress ‘The True Cost of McCain’s Oil Industry Subsidies for Every State.’

Changing Energy Policies and Driving Habits?

While the Presidential candidates debate energy policy, auto makers and dealers are competing for fewer and fewer new car buyers.6 As the industry looks to regain momentum, EcoDriving USA, may be just the marketing technique needed to move customers into the showroom. The campaign’s main sponsor, The Alliance of Automobile Manufacturers (AAM), says it’s on board with the new energy bill. Dave McCurdy, AAM President and CEO says “Congress has set an aggressive, single, nationwide standard and automakers are prepared to meet that challenge. This proposal represents an important mile marker on the road to at least 35 miles per gallon by 2020.”7 Like other industries that have changed tactics after losing regulatory battles, the auto industry now seeks to reframe the debate on fuel efficiency and climate change to more individual terms.

As a blogger from the National Resources Defense Council, Roland Hwang, says the EcoDriving USA campaign is limited because it diverts attention from the need for a federal policy response. “It is clear that EcoDriving programs will never fully replace the need for stricter fuel economy or CO2 standards, especially since we need much deeper cuts in CO2 emissions to solve global warming and break our dependence on oil.”8

More broadly, Ecodriving illustrates the power of industry to mobilize its resources to frame health and environmental issues. Just as Coke and Pepsi propose more physical activity as an antidote to sweetened-beverage induced obesity, Philip Morris urges action against youthful smoking (making it more appealing to youth) and alcohol makers call for “responsible drinking”, the auto industry’s call for ecodriving puts the burden for change on individuals rather than corporations.

References

1. U.S. Department of Transportation. August 13, 2008American Driving Reaches Eighth Month of Steady Decline. Available at: http://www.fhwa.dot.gov/pressroom/fhwa0817.htm.

2. Evans, Scott. Auto manufacturers, government take up hypermiling, change name to EcoDriving. Motor Trend. Aug 19 2008. Available at: http://wot.motortrend.com/6285851/green/auto-manufacturers-
government-take-up-hypermiling-change-name-to-ecodriving/
index.html
.

3. Jacobson, MZ. On the causal link between carbon dioxide and air pollution mortality. Geophys Res Lett. 2008;35. Available at: http://www.agu.org/pubs/crossref/2008/2007GL031101.shtml.

4. Analyses of the Effects of Global Change on Human Health and Welfare and Human Systems. Environmental Protection Agency. 2008, p. 18. Available at: http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=175644.

5. New Fuel Economy Proposal Starts Strong, Then Puts on the Brakes: Pace Set in Proposal’s Final Years Would Cause Fleet to Fall Short of Legally Required Minimum, Science Advocacy Group Warns. Union of Concerned Scientists. Press Release. April 22, 2008. Available at: http://www.ucsusa.org/news/press_release/new-fuel-economy-
proposal-star-0111.html
.

6. Bunkley N. U.S. car sales fall sharply in August, but some see signs of respite. International Herald Tribune. Sept 3, 2008. Available at: http://www.iht.com/articles/2008/09/03/business/04auto.php.

7. Automakers respond to new nationwide fuel economy proposal. Alliance of Automobile Manufacturers. Press Release. April 22, 2008. Available at: http://www.autoalliance.org/index.cfm?objectid=7724C605-1D09-
317F-BB29B57A30F2D182
.

8. Hwang R. Saving Fuel Through “EcoDriving” Can Help Cool Off Oil Prices. Natural Resources Defense Council. Aug 18, 2008. Available at: http://switchboard.nrdc.org/blogs/rhwang/tags/showtag.php?tag=
ecodriving
.

Photo Credits:
1. futureatlas.com
2. Bitpicture
3. post406

Alcopops: State by State Battle to End Corporate Tax Fraud

Simon Rosen and Michele Simon from the Marin Institute describe how Alcopops, sweetened alcohol beverages, slip through a US corporate tax loophole, allowing the drinks to be marketed like beer. They call for the reclassification of alcopops as an alcohol spirit and provide an analysis of the potential health benefits of such a change.

Simon Rosen, MA, is a research analyst and Michele Simon, JD, MPH is the director of research and policy at Marin Institute, an alcohol industry watchdog group based in San Rafael, California

Alcopops are a relatively new product category in the United States. The alcohol industry labels the youth-friendly products “flavored malt beverages” to take advantage of more favorable tax rates for beer. Beer is taxed at much lower rates than are distilled spirits in the U.S. and is often sold in grocery and convenience stores, making it more widely available. Interestingly, in other countries, manufacturers do not call alcopops “malt beverages,” and indeed some companies proudly market their products as containing spirits. For example, while Smirnoff Ice is touted for containing vodka in the United Kingdom, the exact same brand in the U.S. is labeled as a malt beverage. No matter where they are sold, alcopops are sweetened, often bubbly and fruit-flavored, and designed to resemble soda pop or other soft drinks. Alcopops fuel the underage drinking epidemic by serving as a transition for young people from soft drinks to alcohol.

The proper regulatory classification in the U.S. for these products has become a matter of policy debate in recent years. Testing by the federal government in 2003 determined that the majority of the alcohol in alcopops is obtained from distilled spirits (1). Also, the drinks are often branded with spirit names, such as Smirnoff and Bacardi. Moreover, according to the U.S. Alcohol and Tobacco Trade and Tax Bureau (TTB), these drinks:

[E]xhibit little or no traditional beer or malt beverage character. … Brewers … remove the color, bitterness, and taste that are generally associated with beer. … This leaves a base product to which brewers add various flavors, which typically contain distilled spirits, to achieve the desired taste profile. (1).

Nevertheless, at the federal level, alcopops are classified as flavored malt beverages and taxed at the lower beer rate. A 2005 compromise ruling by TTB allows industry to make alcopops with up to 49 percent of the alcohol derived from distilled spirits, with the rest coming from beer, and still take advantage of the more lenient beer classification. (2) By making products that don’t taste or look like beer, and are not called beer, while still convincing regulators to classify alcopops as beer (making them more readily accessible to youth), the alcohol industry is engaging in a deceptive charade that can best be described as tax fraud. And that has sparked a national controversy.

Correcting the Deception:  Reclassifying Alcopops as Spirits

U.S. states have independent legal authority to classify alcohol products. Thus, all 50 states have their own laws that define the different categories of alcohol. Some state laws are in conflict with the federal ruling because in many states, the distinction between what can be labeled a beer and a spirit is clear, and the law does not allow for the 49/51 percent hybrid that the federal government has created.

Until recently, all states followed the federal government in classifying alcopops as beer. But thanks in large part to public outcry by advocates concerned with underage drinking, states have begun to reconsider this policy. Thus far, Maine, California, and Utah have decided to reclassify alcopops as distilled spirits and several other states are considering doing so. Essentially these states are correcting the error of regulators having misclassified alcopops for years.

Saving Lives and Money with Higher Alcopops Taxes

Because U.S. states tax distilled spirits at far higher rates than beer, correct classification would significantly increase the tax on the products. The exact change would differ considerably between states. In Oklahoma, for example, the increase would be $5.16 per gallon, but in others, such as South Dakota, the tax rise would be much smaller, only 65 cents per gallon. However in all states, taxes would increase, which could prove highly effective in reducing alcopops consumption, particularly among youth. (3) The academic literature shows that increasing taxes and prices causes drinkers to purchase and drink less alcohol. (4)

Germany, Switzerland, Denmark, France, the U.K., and most recently Australia have all significantly increased the tax on alcopops in the last few years, and other nations (such as the Netherlands and Finland) have considered proposals to do so.

For those countries for which data are available (Germany, the U.K., and Switzerland), the results suggest that alcopops consumption fell heavily after the taxes increased, and that decreased sales of alcopops were not substituted by other alcoholic beverages. (5, 6, 7)

Given the availability of these European consumption data, the Marin Institute research department undertook an analysis of each U.S. state to determine the cost savings, both in terms of lives and money. We determined the total impact nationally, if every state that could do so made the corresponding tax change. Assuming that drinkers in the U.S. respond similarly to tax increases as in other countries (and we have no reason to believe they wouldn’t), our results showed that taxing alcopops as spirits could significantly help curb underage drinking and its related costs. In New York for example, taxing alcopops as spirits could reduce consumption by 28 percent, saving 7 lives and $150 million in underage drinking costs annually. In the largest state, California, consumption levels would drop 35 percent and 21 lives and $437 million would be saved each year. Every state would see a significant impact.

While 29 states may be incorrectly taxing alcopops as beer instead of spirits, we limited our analysis to the 22 non-“control states” where the tax increase could be calculated. (About 18 “control states” have government monopolies over some alcoholic beverages, and in these states, a change in classification would be less predictable.) By excluding control states from our analysis, we are underestimating the potential national impact.

If alcopops were correctly taxed as spirits by all the states we examined, consumption would fall on average by 26 percent, and could prevent more than $1.5 billion in underage drinking costs, 72 deaths and more than 59,000 incidents of harm from underage drinking nationally (i.e., crime, high-risk sex, traffic collisions, etc.).

In addition, in the control states, reclassification to spirits would not only increase prices, but also greatly reduce distribution and availability of alcopops as they could be sold only through state-run liquor stores. Research suggests the impact of removing alcopops from convenience stores and supermarkets is likely to be highly effective in reducing both consumption and alcohol related problems. (8) Several control states are considering this policy change, with Utah leading the way by successfully reclassifying alcopops as distilled spirits in early 2008.

Racing Against a Powerful Industry

The policy reasons to correctly classify alcopops as distilled spirits are clear—underage drinking can be reduced, lives saved, and costs prevented. However, states have to act quickly because the alcohol industry is flexing its lobbying muscle to rewrite state laws. So far, under severe pressure from the alcohol industry, at least seven states that were incorrectly taxing alcopops as beer have passed laws to change the definition of alcopops to match the federal ruling allowing hybrid products, and therefore will maintain the status quo. The remaining states that can still make the correction must do so before the alcohol industry gets to the state legislatures to change the law in its favor. So we are engaged in a state-by-state race to protect youth.

In the spring of 2008, despite a valiant effort by advocates, a political battle over how to define alcopops in Maryland was lost. If industry continues on this path, the ability for the remaining states to reclassify alcopops will be severely threatened. At least twenty-one states currently have laws that indicate alcopops should be correctly classified as distilled spirits and not beer, and taxed and sold accordingly. These states must act now. Policymakers in Maine, California, and Utah have already demonstrated that the political will exists to make this critical change. Other U.S. states should waste no time in following their lead by stopping industry’s alcopops fraud.

References

(1) U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau. Federal Register, March 24, 2003. Notice No. 4. Vol.68, No. 56. Online: http://www.ttb.gov/alcohol/rules/ttbnotice_no4.pdf.

(2) U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau. Flavored Malt Beverage and Related Regulatory Amendments, 70 Federal Register 1 (January 3, 2005) (codified 27 CFR Parts 7 and 25).

(3) Grossman, M., Chaloupka, F.J., Saffer, H., Laixuthai, A., Effects of Alcohol Price Policy on Youth: A Summary of Economic Research. Journal of Research on Adolescence 4(2): 347-364. 1994.

(4) Chaloupka, F.J., Grossman, M., Saffer, H., The Effects of Price on Alcohol Consumption and Alcohol-Related Problems. Alcohol Res. Health 26(1): 22-34, 2003.

(5) Bundeszentrale für gesundheitliche Aufklärung [BZgA], Alkoholkonsum der Jugendlichen in Deutschland 2004 bis 2007 [Consumption of Alcohol by young people in Germany 2004 to 2007]. Bundeszentrale für gesundheitliche Aufklärung. 2007.

(6) Her Majesty’s Revenue and Customs, UK trade info Alcohol Factsheet. Crown Copyright. 2007.

(7) Swiss Alcohol Board, 2007

(8) Babor TF, Caetano R, Casswell S, Edwards G, Giesbrecht N, Graham K, Grube J, Gruenewald P, Hill L, Holder H, Homel R, Osterberg E, Rehm J, Room R and Rossow I (2003)  Alcohol and Public Policy: No Ordinary Commodity; Research and Public Policy.  Oxford University Press.

 

Photo Credits:
1. Cian O’Donovan

Restoring Scientific Integrity in Washington 2009

CHW covers the recent Washington conference, Rejuvenating Public Sector Science, where scientists, congress people, commissioners and others convened to address the need for scientific integrity in public policy development. This report covers the conference and takes a look at the presidential candidates’ plans to restore science to the national policy process and re-establish guidelines for ethical science.

Birmingham Steel Plant

One of the most alarming casualties of the last eight years has been the integrity of the science used by the White House and its agencies to guide public policy.  On issues from climate change to reproductive health, energy policy to endangered species, food protection to drug safety, this Administration has manipulated, covered up or censored the work of government scientists and government scientific advisory panels at the Food and Drug Administration, the Environmental Protection Agency, the National Marine Fisheries Service, the US Centers for Disease Control and Prevention, and the National Aeronautics and Space Administration.

At a recent Center for Science in the Public Interest’s (CSPI) conference, Rejuvenating Public Sector Science, Representative Brad Miller, Chairman of the Investigations and Oversight Subcommittee on the House Science Committee, noted that the Bush Administration “celebrates secrecy as a virtue”; muzzles global warming experts; overruled the FDA on emergency contraception; eliminated a scientific committee at Health and Human Services that did not align with the Administration’s ideology and replaced them with industry insiders; closed part of the Environmental Protection Agency’s library network; and censored the Surgeon General.

Several recent reports document the scope of the problem.  A survey of government scientists by the Union of Concerned Scientists found that of the 900 EPA researchers who responded, 60 percent reported at least one incident of political interference in the last five years and nearly 100 scientists reported direct interference from the White House. In a recent article in Mother Jones, Chris Mooney, author of The Republican War on Science, described the “pernicious neglect” of government science and the weakening of rules that limited industry influence on government scientists.

William Hubbard, former Senior Associate Commissioner at the Food and Drug Administration and a speaker at the recent CSPI conference, argued that our current system is “out of kilter.” He listed a litany of problems including weak congressional support, demands for an ever higher burden of proof, an increase in de novo decision making, non-scientists making science decisions, diminished credibility of scientists, and reduced morale among those who do want to restore a less politicized form of science.

Clean energy protester

A new Administration in Washington will have the opportunity to restore scientific integrity—and whoever is elected will have some assets to bring to this battle.   Multiple Senators and Congressmen have fought for public interest science—Senator Boxer has helped to create higher EPA standards, Senator Grassley has proposed rules to reduce conflicts of interest, and both Congressmen Dingel and Waxman have sought to document the Administration’s interference with science and the failure of Congress to follow science.

Moreover, Merrill Goozner, Director of CSPI’s Integrity in Science program, has noted how “greater exposure [to scientific manipulation] has led to greater disclosure.”  Oil companies are now advertising what they’re doing about global warming and Exxon recently announced that they are going to stop funding global warming deniers, Goozner stated.  “The tide is turning on scientific integrity”, he said, as “congressional oversight is making itself felt on Capitol Hill.” And it will be up to the next President of the United States to continue this restoration process. A new Administration, Congressmen Miller stated, “will not be the end for a need for vigilant protection of public sector science.”

Hubbard calls for decisions that are driven by science and made by scientists, congressional and public support for scientists, reduced political appointees at the agency level, support for whistleblowers, presidential leadership and a revisiting of rulemaking procedures.

The Candidates

In a recent National Public Radio All Things Considered interview, both presidential candidates said they will “restore integrity to federal science agencies.” Senator Obama’s adviser called the Bush Administration’s years a “war on science” and vowed that his Administration would have increased transparency.  McCain’s adviser stated how, “He [McCain] has always felt that sound science is a foundation of good public policy,” and that “He believes deeply that the science should be the science.”

Their presidential campaign websites reveal some additional general information on government oversight.

Sen. Obama

Senator Obama’s website lists three ethics problems, two of which relate to scientific integrity:

  1. Lobbyists Write National Policies: For example, Vice President Dick Cheney’s Energy Task Force of oil and gas lobbyists met secretly to develop national energy policy.
  2. Secrecy Dominates Government Actions: The Bush administration has ignored public disclosure rules and has invoked a legal tool known as the “state secrets” privilege more than any other previous administration to get cases thrown out of civil court.

His plan to fix these problems includes specific actions to shine the light on Washington lobbying and federal contracts, tax breaks and earmarks, to bring Americans back into their government and to free the Executive branch from special interest influence.

Sen. McCain

Senator McCain’s website has government reform sub-sections entitled:

  1. Seal the Pork Barrel
  2. Stop the revolving door and restore ethics
  3. Democracy is Not for Sale

The website claims that, “As President, John McCain would shine the disinfecting light of public scrutiny on those who abuse the public purse, use the power of the presidency to restore fiscal responsibility, and exercise the veto pen to enforce it.” It also states that, “As President, John McCain will see to it that the institutions of self-government are respected pillars of democracy, not commodities to be bought, bartered, or abused.”

Looking Ahead

As a relatively unchecked issue for the past eight years the bar for scientific integrity is at an all time low.  It will be up to the public and to the government oversight committees to hold the next Administration accountable for their words and actions.   With an unprecedented climate crisis, high childhood obesity rates, many approved drugs found to have unexpected and serious side effects and an increase in health disparities between the better off and the less well off, it is crucial that both the public and policy makers receive accurate science.  Scientific integrity is crucial to a sound policy process.  As Congressmen Miller reinforced at the CSPI conference, the “manipulation of science is fundamentally incompatible with a democratic debate.”

 

Photo Credits:
1. NARA/EPA via pingnews
2. teamaskins
3. jurvetson
4. jim.greenhill

Tracking on Corporations and Health

Those seeking to modify corporate practices that harm health often have to track changes in corporate or government policy to assess their progress. Here, Corporations and Health Watch describes a few databases and websites useful for tracking local and nation policy and the social responsibility performance of major corporations.

Tracking local policies:

Looking for policies to propose to solve a local problem related to food industry practices that reduce access to healthy food? Visit Prevention Institute’s Local Policy databasean online resource of local policies that can improve opportunities for healthy eating and physical activity. For example, a search for policies on unhealthy foods located 21 specific local policies, mostly in California, enacted to reduce promotion of unhealthy foods.

 

Tracking federal legislation:

Open Congress tracks legislative proposals and bills on various issues and industries. Its website explains different ways to use the site. For example, OpenCongress bill pages bring together news coverage, blog buzz, insightful comments, and more. Linking to OpenCongress thus gives readers access to the big picture as well as the official details on specific legislative proposals. If you write a blog post about a bill and include the official title (for example, H.R.800), then a link to your blog post will appear on that bill page. Another section shows the most-viewed bills, or hot bills by issue area. The site includes one-click sharing to Digg, StumbleUpon, Facebook, e-mail a friend, and more. It also allows visitors to find their members of Congress and to track their actions and what people are saying about them.

To illustrate topics of interest to Corporate and Health Watch readers, visitors can track legislative proposals on the following topics, among many others:

Alcohol taxes
Automobile industry
Firearms
Food industry
Pharmaceutical research
Tobacco industry

 

Tracking corporate responsibility:

Several organizations have ranked corporations on their social responsibility.

Fortune Magazine ranks 100 of the Fortune 500 on business responsibility.

The Ethics & Policy Integration Centre provide a user-friendly resource for tracking US and emerging global standards in corporate responsibility. It includes sections on environmental and human righs standards, but not health or consumer protection standards.

Corporate Responsibility Index The British group Business in the Community’s CR Index is the United Kingdom’s leading benchmark of responsible business. It helps companies to integrate and improve responsibility throughout their operations by providing a systematic approach to managing, measuring and reporting on business impacts in society and on the environment. Each year the CR Index lists and rates the top 100 companies in the UK.

 

Stuffed and Starved: The Hidden Battle for the World Food System, an Interview with Raj Patel

Raj Patel is currently a researcher at the University of KwaZulu-Natal in South Africa and a visiting scholar at the Center for African Studies at the University of California at Berkeley. He has degrees from Oxford, the London School of Economics & Cornell University and has worked for the World Bank, interned at the World Trade Organization, consulted for the UN and been involved in international campaigns against his former employers. His new book, Stuffed and Starved tells the story of the global food system that has created one billion overweight people and left 850 million going hungry and about the millions of people who are fighting back to create a different food system. In June 2008, Corporations and Health Watch staffer Alex Lewin interviewed Raj Patel. An edited transcript follows.

Transcript also available in [pdf].

CHW: I enjoyed reading your book, Stuffed and Starved, and listening to you on NPR. Some themes emerged from your book that I’d like to ask you about today and I hope we might discuss some of the challenges and potential hopes for our food system.

One of the over-arching themes in your book is corporate control, whether it’s companies consolidating, control of knowledge, or bio-piracy issues. In your view, what might be some of the negative consequences for consumers with having such a small number of companies controlling such a large part of our food system?

PATEL: Well as a consumer your range of choice is restricted; the kinds of things that are put before you are things that were designed to be profitable rather than good for the environment or for farmers or anyone else other than food system executives. And I think that the surrendering of our knowledge and control of the food system to these corporations is anti-democratic as well. There’s something profoundly wrong when we are reduced to mere consumers as opposed to richer kinds of people and induced only to change the world through shopping habits.

CHW: In that same vein, around company consolidation there were a lot of examples that you gave in your book about umbrella companies buying out seemingly contradictory companies. So for example, Nestle owns Jenny Craig, Unilever, the owner of Ben and Jerry’s, is also the owner of Slim Fast. How do you wrestle with this contradiction?

PATEL: There’s no contradiction there. These are companies that are in the market not to make us better people or in any way improve our lives other than insofar as their ventures are profitable. So there’s absolutely no contradiction. You know if they’re in the business of smashing something and then they’re in the business of selling you something that will fix it, that’s just good sense. Monsanto does it with its biotech crops, to engineer something to withstand a broad-spectrum herbicide and sell you the herbicide too. And here a company is doing exactly the same thing, where at the end of the day the bottom line is profit.

CHW: And do you think there’s any way for them to incorporate more of a public health model into their financial bottom line, or do you think that changes that they’ve made are merely rhetoric and don’t really even tackle any part of the food system that needs improvement?

PATEL: The only way that a public health model or any other model gets integrated into a corporation’s bottom line is if it helps that bottom line. So for example Diet Coke Plus helps Coke’s bottom line because it offers a product range that allows them to cater to people who are mad enough to think that the way to achieve some nutritional goals is to buy Diet Coke Plus and therefore drink their vitamins at the same time as they drink their Diet Coke. That looks like complete compliance with the idea of public health goals together with a company making money. But of course that’s an example of the insanity that such pining for corporate generosity and charity in a food system reaches. The idea of Diet Coke Plus with added vitamins is insane. I saw Snickers Charged the other day, which is a regular Snickers bar with caffeine and taurine and a few other ingredients.

The only way that systemic change has ever happened is from outside. The history of social change is about conflict. One needs to be very suspicious of corporations that are seeking to transform the food system by rebranding and remarketing, because at the end of the day any CEO of any corporation who does anything to weaken their bottom line will be out of a job. And that’s not anything other than an inherent feature of the way that capitalism is structured. Now the problem here is that actually the way that we get our food today is entirely implicated in capitalism. In my view, capitalism is the problem here. Tempting though it is to say well we must be in partnership with corporations, I think that’s entirely wrong-headed. If you’re in partnership with corporations, you’re in partnership with the people who are profiting from the current situation.

CHW: That makes me think of your distinction between choice and instinct in the book. How do we as consumers learn how to navigate a food environment that’s full of health claims, full of what seems like choice to the average consumer, to help create a more healthful food environment? Or are we just in the dark?

PATEL: Well I think mistrusting labels is a good idea. Packaging is already a sign that you’re staring at unhealthy food in some way. If it comes in a packet the chances are its not going to be as healthy for you as something that doesn’t come in a packet. That’s not something that’s terribly complicated and yet I think it is a nice way of educating oneself and reconnecting with certain kinds of food. I do see education as having a role here. I don’t want to suggest something as simple as saying Don’t eat anything that comes in a packet or don’t go into a supermarket. That’s a fairly straightforward thing, but I don’t want to underestimate how hard that is.

CHW: As consumers are starting to demand healthier food items and becoming more aware of the food system, companies are clearly realizing this and the buzzwords are flying. So you walk into a store and all you see is environmentally friendly green fair trade healthy etc, etc. How in the world does one know what’s legitimate?

PATEL: We don’t. We’re in an era where there’s a battle over the epistemology of food, you know a way of knowing if something is legit or not is the main domain of the certification business. Different kinds of certification are battling over whether they can gain your trust. And that’s why there was such a big fight over the USDA organic standards, which at the end of the day turned out not to be very stringent and quite watered down as opposed to the other private labeling standards. So labels are a window, but the problem is that they are always a very small window—a window the size of a postage stamp. And that restricts your line of sight quite considerably.

CHW: Is it then about restoring the balance between corporate power and government oversight? Where does corporate accountability come into the picture? Do we need local food, organic and sustainable standards set by the federal government? Is the answer in restoring power to the government?

PATEL: Yes, but that means there does need to be a more active model than you see right now. But yes, more governmental control and regulatory authority over our food system can’t be a bad thing because the government has for a very long time been involved in regulating food. It is only now, since the rollback of government involvement in the regulation of food, that we’ve seen the outbreak of all kinds of disease, the obesity epidemic. I’m not saying that the obesity epidemic is directly because the government isn’t regulating food but I’m certainly saying that it’s a symptom of the fact that corporations are far more powerful than they should be.

CHW: Your book also touches upon the need for a more collective responsibility for the public’s health. I would ask you how we can start to move away from this notion of individual choice, individual responsibility, and freedom into one where the government is responsible for the public’s health and isn’t called the food police or a nanny state.

PATEL: We are held responsible for our food choices because there’s been a rollback of the government and a rollback of the idea that we can collectively do something. It is important for government as an impartial and not corporate owned body to weigh in with the best available science; the best science money can buy, and go with the best kind of public science. I feel that the government does have a role in taking care of our food system, but that only goes together with a role in taking care of our government.

CHW: And what would you suggest we do as consumers or as citizens?

PATEL: That’s the distinction, right? Because I think that we are more than consumers, we are citizens. As consumers, all we can do is shop. But as citizens we can do a lot more and I think we should be at the very least writing to our elected representatives, organizing within our school districts to change the purchasing policies of our schools, organizing local food policy councils at the municipal level so that can we again institute certain kinds of food policies that are not amenable to being bought by corporations.

CHW: Do you know of national examples where there was enough political leverage to shift away from personal responsibility?

PATEL: Not yet, no. In Britain, however, the model of personal responsibility was important but the Achilles heel was around school dinners. Jamie Oliver’s work around school dinners was a very interesting example of how public policy and the idea of individual choice was rolled back a bit. Not a perfect example, but it is one of the examples that shows that things can be done even at a national level. But it’s like climate change, where there isn’t really a country on earth that’s doing a good job on climate change but you’ll see more and more cities, more and more local and regional organizations and government bodies taking a very aggressive stance on climate change. We have to make that happen from below because the government has been so completely bought by corporate interests.

CHW: Do you think it’s worth engaging industry in this debate?

PATEL: I think it’s a waste of time. If you’re serious about effecting change, talking to Nestle or Monsanto or whoever is an entire waste of time. They’ve got an infinite amount of money; they can soak up as much time as you care to give them with committees and protests and other stuff like that. The proper way to engage with them is democratically through democratic organizations in which their voices should count for nothing because they are not human. These are corporations, they’re not real people, they’re legal people. And they shouldn’t belong and they don’t belong in a government process that’s about people, about real people.

CHW: Is there a way in your mind to make their practices more transparent to everyday citizens who might be unaware of corporate practices?

PATEL: I was reading a very good article that was explaining the idea of transparency and the need for it. It’s a strange delusion that there are crazy things going on behind the scenes and they’re very dark and nasty, whereas most of the crazy things are happening completely in the open. As one critic put it, the Bush Administration, wasn’t elected to commit crimes so much as to make the crimes that were being committed legal. And I think that that is a nice way of thinking about how the food system is operating. It’s not like there are dark people sort of spiking our food. Rather, through legal and open government processes we’re being utterly kept in the dark about how the food system works. The answer has to come through taking back our government.

CHW: Where would you draw the distinction between, say a retailer like Whole Foods who has a good reputation on the surface at least and, say McDonald’s or Coke? Are they all part of the same system?

PATEL: Yes, they are. Whole Foods is most successful in portraying itself as a friend to the farmer. But they use exactly the same practices as Wal-Mart. I mean if you look at the geography of your local Whole Foods, just as with Wal-Mart, the milk is always at the back.

CHW: It makes you go through the entire supermarket.

PATEL: And that’s Whole Foods, right? That’s the people-friendly chain. Yet there’s nothing that demonstrates so much as that Whole Foods really is in the same business as Wal-Mart. And they are in the business to ship as much stuff as they reasonably can into your car.

Sustainability involves communities making the decisions themselves, and not about some guy deciding what is or isn’t good. And I think that the real comparison is between Whole Foods and a regular farmers’ market. Because at a regular farmers’ market farmers get a much bigger share of the profit, it is a more open place, it is more public, and certainly in most farmers’ markets food is cheaper than at Whole Foods. That’s the kind of production and consumption system that I’m more tilted towards than Whole Foods.

CHW: It seems like a great idea but at the same time it may be difficult for people who, especially in poorer areas, lack the ability to shop elsewhere or who have the time to go to the farmers’ market. Are they just at the whim of other people changing their practices?

PATEL: No, I think historically the things that people in working communities have always done is banded together and organized. We have to be in that business of organizing and mobilizing. If we’re serious about shifting away from this ethical, this personal responsibility paradigm into a sort of social, governmental responsibility paradigm then that does mean getting organized. It’s not like there’s going be some saint elected to the White House, for example, who will suddenly bring good things. It’s all about communities everywhere getting involved. And that’s why I like the Italian Communists , for example, a party of socialist origins involving unionism and organizing around the length of the working day and these sorts of things. These aggressive working class militant approaches.

CHW: As we’ve seen with other social issues and social problems over time. Obesity is one of those issues where as local governments, states and communities do more and as the policies and programs become increasingly fragmented, there’s a chance that policy change can trickle up to the federal level.

PATEL: Yes. There’s also an interesting example that I’ve been reading recently in a book by Mark Shapiro called Exposed. He makes a very interesting argument about toxic chemicals, but it also works for obesity. He notes that the levels of permitted chemicals in the European Union is far, far lower than in the U.S. and that many more products are banned in the European Union than in the United States. He wonders why, for example, cosmetics that are sold in the United States and contain things that are known to cause cancer are banned in Europe. Why is that allowed to happen? And the conclusion that he comes to is that in Europe, because there is universal health care, the government has a financial interest in reducing the incidence of cancer; otherwise they’d have to pay the bills for treating people with these kinds of exposure related diseases.

A government in Britain can announce a ban on advertising to children, a ban on advertising of food to children, for example. Now in the U.S. you would have corporations howling about First Amendment rights, whereas in Britain there’s none of that. I mean you still have corporations howling, but you also have, the government standing up for itself. We’re very clear that we don’t want to be paying the bills for an obesity rate of 50% among children. So just deal with it.

I think that is another dynamic that is absent in the United States which makes things a little harder. The government doesn’t have to bear the cost of unhealthy practices because healthcare is privatized here too.

CHW: We’ve been talking a lot about corporate behavior and corporate decisions, and their contribution to these negative health consequences that we’ve seen, be it hunger or obesity. To what extent do you think that the rise in childhood obesity rates or the rise in food insecurity is actually due to corporate behavior?

PATEL: Quite a lot. There’s no other natural explanation for why Americans have so much corn or high fructose corn syrup in their diet. That has everything to do with government policy and with a few corporations begging for support for their particular pet project. You can certainly trace the obesity epidemic to changes in diet and you can trace those changes in diet to a shift towards food that is more profitable for a few corporations. And while I understand that there’s an impulse to say well of course people will have the choice not to eat these things, when you have billions of dollars spent on advertising, all of a sudden those choices kind of recede. That again is something that is a result of corporations, so I think that there’s a lot of responsibility on the corporations.

CHW: Is there one final success story that comes to mind?

PATEL: Los Angeles has some interesting stuff going on there. They banned Coke in the schools and they’re working on a comprehensive program with the Los Angeles unified school district and they’re doing some very exciting stuff.

CHW: Thanks so much for your time.

 

Image Credits:

1. mccord
2. nataliemaynor

The Perils of Short-term Profiteering: U.S. Automakers Focus on SUVs Hurts Their Profits and Our Health

With record high gas prices dominating the news, Americans are finally facing the music. The big SUVs and pick up trucks that the US auto industry relentlessly promoted in the 1990s are now economically unsustainable, as well as more accident-prone and polluting than the sedans and compacts that have allowed the European and Asian auto industries to prosper. Though environmentalists have long argued that these vehicles are environmentally unsustainable, for more than a decade, SUVs and trucks had been the top selling vehicles in America. Of course, U.S. consumers shoulder some of the blame for the SUV and large truck craze that has left vehicles languishing in used car lots or drive ways as drivers shy away from a fill-er-up that can top $100. But in the 1990s, the US auto industry spent more than $9 billion on advertising to convince Americans the highly profitable SUVs were safer, more convenient and more manly than the alternatives. In this report Corporations and Health Watch examines how the US auto industry’s desire for short-term gain has led to plummeting profit margins and jeopardized the industry’s future viability while condemning American consumers to unsafe and polluting vehicles.

On the heels of the housing crisis and a declining economy, gas prices have set record highs this spring and summer, with the average price per gallon increasing by more than a dollar since February. As fuel prices rise, Americans are finding ways to cut back on fuel costs by walking and biking, taking public transportation, carpooling, limiting errand trips and curtailing summer travel plans. The Federal Highway Administration estimates that in April, the number of miles traveled on U.S. roads was down 1.8% compared to April of 2007, a reduction in miles traveled on public roads for the sixth month in a row. In March, the number of miles was down 4.3% as compared to a year ago and was the greatest decline in travel on public roads since 1979. At the end of June, MasterCard reported its ninth consecutive week in declining gas sales with overall annual gasoline declining for the first time in over 17 years.

Changes in US auto market

But U.S. consumers are making other changes too: they’re no longer buying as many SUVs and trucks, looking instead for smaller, fuel-efficient cars, a move Ford VP of marketing Jim Farley called “breathtaking.” In April 2008, one in five cars sold in the US was a compact or subcompact car, compared to one in eight a decade ago when SUV sales were booming. Pickup truck sales were down 5% overall from last year and Chrysler saw a 22% drop in SUV sales this year. In May, GM reported that overall sales plunged by nearly 28%. Marketing firm J.D. Power & Associates estimates that annual motor vehicle sales will be the lowest since 1995, with a decline of 1.2 million vehicles since last year.

Meanwhile, Japanese manufacturers report booming sales in many of their lines as hybrid vehicles and other fuel-efficient cars are in high demand. The Toyota Prius was the ninth best selling car in the United States in 2007, selling more than 64,000 of the hybrid vehicles and Toyota has now sold 1.5 million hybrid vehicles around the world and plans to sell one million a year after 2010. In May, Honda passed Chrysler in U.S. sales for the first time and Toyota became the number two American seller. In a first, during the same month, Detroit’s Big Three, GM, Ford and Chrysler, together held only 44.4% of the market share as compared to 48.1% held by Asian manufacturers. Toyota is close to passing GM as the world’s top auto seller.

To encourage sales of large trucks and SUVs, some automakers are offering incentive programs: Chrysler has offered buyers the opportunity to lock-in gasoline prices at $2.99 a gallon for three years and Ford announced it would offer “employee pricing” on their F-Series truck, which had previously been the most popular line of vehicles in the country for two decades. Past promotional sales of this kind have led to increased sales but lower profits, another example of the short-termism that has undermined the US auto industry. The Big Three of U.S. auto manufacturers have also cut back on production, with GM announcing it planned to close four North American plants to focus on bringing fuel-efficient vehicles to market.

New marketing and production strategies

U.S. automakers are also shifting their marketing and production strategies. For the last two decades, the SUV and the large truck were marketed to the U.S. public as all-around vehicles used for for hauling large or heavy items, for a quick trip to the store and for the family vacations. These oversized vehicles have also been painted as representing safety, security, power and prestige. Realizing the gravity of declining sales, analysts predict that manufacturers will have to reframe the way SUVs and large trucks are marketed, portraying them as supplemental and used for specific purposes, like hauling heavy loads and work. Manufacturers are currently highlighting SUV hybrids, trying to sell them as more fuel-efficient and environmentally sound. Finally, automakers are boosting production of “small crossovers,” or vehicles that look like SUVs but are built on car underpinnings. These moves suggest the U.S. auto industry is desperate to hang onto that sector of new vehicle sales that brings in the most profit, even as other auto makers have adapted to changing conditions.

However, Detroit’s Big Three are also diversifying their offerings, bringing more hybrids and smaller, fuel-efficient cars to the market. Alan R. Mulally, Ford’s chief executive, explained that current shifts are not temporary, but rather “structural in nature.” While some vehicles are new to the market, others are imported from overseas. General Motors and Ford, for instance, are adding smaller vehicles, such as the Saturn Astra and the Ford Ka, sold in Asia and Europe, to its United States offerings. Officials at Ford see the small car market as a growing one and estimate that global car sales will hit 38 million in 2012, up from 23 million in 2002. In the United States, Ford predicts 2012 small car sales of 3.4 million, up 25% from a decade ago. Manufacturers are also developing a number of new hybrid, ethanol-based and electric vehicles for the market. To compete with the Japanese manufacturers that dominate hybrid car sales and are developing electric cars, in 2010 GM plans to begin production of the Cheverolet Volt, a battery-powered vehicle with a small gasoline engine that allows for recharging.

While some are declaring the era of the SUV and large truck over, US manufacturers, as we have seen, are not ready to let go of the big-ticket items for the domestic market. G.M. plans to manufacturer large trucks and SUVs with diesel engines, claiming that this switch can increase the mileage of large trucks by up to 70%. Japanese maker Toyota remained confident in the recovery of the large-scale truck market, with group VP Bob Carter noting that those who needed larger vehicles would not be willing or able to make the switch to smaller cars.

Surprise or closed eyes?

Although auto analysts and environmentalists have been criticizing the US auto industry’s reliance on SUVs for more than a decade, Detroit’s Big Three seem unified in their shock and surprise at the rapidly declining sales in large trucks and SUVs. George Pipas, Ford’s market analyst stated, “This seismic shift in the marketplace has definitely taken us and everybody else by surprise.” Kelley Blue Book executive market analyst Jack Nerad suggested that top U.S. manufacturers saw a shift toward smaller, more fuel-efficient cars coming in years, not in months. Unlike the gas shocks of the 1970s and 1980s, automakers now hold that high oil prices are here to stay and that the shift toward smaller, fuel-efficient vehicles will be a permanent one.

But how much of a surprise is this shift? In Europe, the use of diesel engines has been standard as they are more fuel-efficient than those based on gasoline and new technology has reduced pollution through the development of cleaner burning engines. Given the current state of oil prices and auto sales, European manufacturers are increasingly looking to the U.S. as a market for the newer diesel engine cars. Japanese manufacturers, meanwhile, have long dominated the production and sale of hybrid vehicles, with Toyota introducing the hybrid in 1997. These manufacturers continue to develop new fuel-efficient and hybrid cars for the market. Nissan plans to introduce an electric car by 2010. European automakers are also shifting production toward even more fuel-efficient vehicles. French maker Renault has partnered with the California-based Project Better Place to produce electric cars for markets in Denmark and Israel with the Israeli government promising to cut taxes on the sale of these vehicles to promote their sale.

The Role of Government

But the decisions of U.S. vs. Japanese and European automakers also needs to be seen in light of the different relations between automakers and government. After the oil shocks of the 1970s and 1980s, European governments sharply raised fuel taxes and promoted the use of diesel by taxing gasoline at higher rates. After the crisis, European governments purposefully retained high fuel taxes to discourage consumption, thus encouraging the design and purchase of smaller, fuel-efficient vehicles as well as the use of public transportation – something more heavily supported by European governments that in the United States.

During the oil shocks, the United States witnessed the first ever fuel economy standards and reductions in speed limits. Small car sales in America increased temporarily with an attendant rise in fuel economy. When gas prices dropped, however, larger vehicles sales increased, due in part to heavy promotion. The United States was the only major developed nation to increase oil consumption during this period and not until this past spring, after 32 years, did Washington lawmakers again pass new energy laws requiring new cars and trucks, as an average, to meet a standard of 35 miles per gallon by 2020. With some of the lowest gasoline prices, lowest energy taxes and most fuel inefficient vehicles in the developed world, “about a quarter of the world’s oil goes to the United States every day, and of that, more than half goes to its cars and trucks,” reports the New York Times.

And in Japan, where fuel taxes resemble those of Europe rather than the United States, making small cars more popular, lawmakers have encouraged the sale of hybrid vehicles over the last decade by offering buyers a $3000 rebate for choosing the more fuel-efficient cars. Seven years before the United States pushed through stricter emission standards, Japanese regulators required manufacturers to achieve gas mileage of 35.5 miles per gallon by 2010. During the mid 2000s, sales of larger vehicles declined in Japan due to the passing of stricter diesel emissions standards that prompted Japanese manufacturers to shift away from the production of trucks or to look to the U.S. for markets. By and large, Japanese and European auto manufacturers who have not relied on big-ticket, large vehicles for the bulk of their profits are now not in the position of dealing with plummeting sales and growing inventories of vehicles. Currently, four out of ten of the fastest-selling vehicles in the U.S. are hybrids, with the Toyota Prius moving quickest with sales occurring, on average, just four days after arriving in dealers’ showrooms.

The China Solution?

Rather than taking a lesson from Europe and Japan, U.S. automakers are turning to China as a new market for big, gas-guzzling vehicles. According to the International Energy Agency (IEA), the world’s demand for energy will increase by 65% during the next twenty years with petroleum remaining as the top energy source. While the United States remains the top energy consumer, the IEA predicts China’s oil demand will double by 2030, with much of this increase being due to the increasing demand for cars. Between 1990 and 2006, the number of vehicles in China increased sevenfold and China now represents the second largest car market in the world and may overtake the largest market, the United States, by 2015. Given this, U.S. and other automakers are looking to China as a strong market for the SUVs and large trucks that Americans are now refusing to buy. During January and February of this year, sales of SUVs in China rose 38% as compared to one year ago. At a spring auto show in Beijing, executive VP of Shanghai General Motors – a partnership between GM and a Chinese partner – Robert Scocia stated “we’re all trying to get into this market.” Looking increasingly toward Chinese markets for growth, GM plans to sell and export over $1 billion in vehicles to one if its Chinese partners while Ford plans to sell over 30,000 vehicles plus transmission components in its own joint venture. However, China does not present an entirely rosy picture for manufacturers committed to producing these high-ticket, gas guzzling vehicles: the Chinese government is increasingly demanding that automakers increase fuel economy, including by producing electric and gasoline-electric hybrid cars. China also recently imposed vehicle taxes based on engine size. Despite these measures, however, China sets price controls on the price of fuel which helps increase demand for larger, fuel-inefficient vehicles associated with prestige as has been the case with the United States.

The World Health Organization reports that 800,000 people die each year from the effects of air pollution. A variety of diseases including cancer, asthma, cardiovascular disease and stroke have been attributed to air pollution. Under pressure from automakers, U.S. lawmakers, particularly under the Bush Administration, have lagged behind European and Japanese governments in passing stricter fuel economy standards and promoting the use of smaller, fuel-efficient cars by raising gasoline taxes. For almost two decades, U.S. automakers focused on the production and marketing of big-ticket, gas guzzling vehicles, contributing to increasing health and safety problems and contributing to global warming. The result: plummeting sales, massive lay-offs of workers and a serious threat to the future viability of the auto industry, previously a central force in the US economy.

In the last 30 years, US businesses have led a concerted and largely successful campaign to get government “off its back” and allow its executives and market forces to solve any economic and social problems that arise. The current plight of the US auto industry may lead some observers to question the wisdom of this strategy and to ask whether the US auto industry, its shareholders, US drivers and the environment would be in better shape today if government had provided more forceful oversight of its business decisions.

Tracking the Effects of Corporate Practices on Health