Global Strategy - blog

You do not have to spend much time in the USA to note how effortful companies (and sometimes also authorities, parties, and media) are in using academic research results in their political activities. Since political strategies of corporations are a topic of major research interest in GloStra (see e.g. the research area on Corporate Strategy & Society as well as Lamberg et al.'s article, and Mantere et al.'s article) let me present an illustration, an example which I ran into tonight.

The example is conveyed by a news story on CNN's website. In brief, the story describes a  new study (by a research group in University of Florida) that tracked alcohol-related deaths in Alaska over 28 years. During this period of time, alcohol taxes were raised two times in Alaska, and the researchers found that after both of these tax raises, there was a reduction in the number of alcohol-related deaths. The conclusion is: "Each time the state of Alaska raised its alcoholic beverage tax, fewer deaths were caused by or related to alcohol". Or, even more simply: "Higher taxes on alcohol can... save lives".

Interestingly, the evidence from the study is, in closer examination, actually not very compelling. For instance, the 2002 tax increase was followed by an 11 percent reduction in deaths, which really is not that much if you think about it. Anything like statistical significance is not discussed at all and, frankly, I don't even know what it means that there were "21 fewer deaths per year after a 2002 [tax] increase".

But what the heck, who cares about scientific details, the overall impression is most important! As CNN is a fairly objective, well-meaning medium - not badly driven by corporate interests - the story has clearly chosen to educate Americans in welfare issues. Perhaps CNN hopes, by reporting about the study, to make public attitude more favorable (or less unfavorable) towards alcohol tax increases.

Indeed consistent with this objective, the story continues by presenting additional evidence -- this time admittedly a bit more compelling, from Finland! It is reported that in Finland, the lowering of alcohol taxes in 2003 led to 20 percent increase in alcohol-related deaths.

As a conclusion, the story cites the authors of the Finnish study: "Raising alcohol tax level has low costs and is effective in reducing alcohol consumption and thus alcohol-related harms." Simple and clear. Period.

The first lesson of this example is, thus, a general one: Academic research results can be effectively utilized in shaping public opinion. Even if the results per se are not very compelling, what matters is to present a compelling story. Also, if the latest study closest to you does not provide impressive evidence, try searching for another study from the past, perhaps even from a far-away country. (Yet be cautioned, like CNN in this story: It is careful not to remind Americans about the fact that Finland is basically a "socialist" country -- unlike one TV channel recently commented Sweden, see More about national 'competitiveness'. Such a reference would immediately make the study irrelevant in the eyes of the American audience.)

The second lesson of the example becomes clear when one reads the end of the article. There, the author of the story reports how representatives of the alcohol industry react to the study. The industry representatives come to present rather strong opinions against the conclusions of the study.

"Based on historical evidence, raising taxes on alcohol beverages would have a highly negative impact on the economy", says one industry representative. (Note the use of word "evidence", without specifying what evidence).

 "Raising taxes would penalize more than 100 million responsible alcohol consumers and would not deter the few abusers, who don't cut back when price fluctuates", says another. (Note the use of a attention-grabbing figure, "100 million", as well as the addressing of Joe-the-Sixpacks, the "responsible consumers", with a fear appeal, "penalize"). 

"Any across the board tax increase would not target the problem drinker but would simply penalize those who enjoy wine and spirits and drink responsibly," says a third one. (Note how the tax increase is presented as ineffective, on one hand, and again "penalizing" to normal people, on the other.)

The second lesson is, then, that the activities of these kinds of industry representatives are, in fact, the very life blood of the large corporations in the US.

Indeed, corporate lobbying activities in US media and, ultimately, among state and federal regulators are so tremendous in scale and scope that a European "outsider" is simply overwhelmed.

When the initial feeling of overwhelm passes, managers of e.g. Finnish firms have, of course, extremely lot to learn from their American counterparts when it comes to political strategies. When doing business in Europe, effective political strategies might provide considerable competitive advantage for a multinational corporation. If business in the US is pursued, effective political strategy will be a necessity for survival.

How will the alcohol taxation issue eventually evolve, then? If you ask my guess -- it will be the corporate lobbyists who will, once again, get what they want. That is, there will be no significant tax raises on alcohol. Actually, a partial, corporate victory has already been realized: in November, "Maine voters overwhelmingly rejected a state law that would've increased the excise tax on alcoholic beverages".

Jaakko Aspara

P.S. The welfare implications and ethicality of effective corporate lobbying will be another story.