What would the Hoosier economy look like if tobacco did not exist in Indiana? That’s the question answered by a study authored by Patrick Barkey, formerly the director of Economic and Policy Studies at Ball State University’s Bureau of Business Research.
The study, released a few years ago, examined how the removal of tobacco would affect the performance of the state economy by creating an artificial scenario where all tobacco production, distribution, sale and consumption, and all health consequences from tobacco use were eliminated only from Indiana.
Imagine that consumer spending on tobacco is reallocated to other products; medical expenditures of individuals, government, and business for treating tobacco-related diseases are eliminated; the resources dedicated to the production and sale of tobacco are shifted to other commercial activities; and the productivity of the Indiana workforce increases.
Certainly, part of the Indiana economy is supported by tobacco. Tobacco is a $17 million cash crop. The processing, sale, advertisement and distribution of tobacco products add to our economy. More than $2.3 billion are spent on tobacco consumer products each year by over a million Hoosiers; taxation of tobacco products adds millions of dollars to our state budget; and, tobacco use supports our health-care industry by creating nearly $2 billion in excess demand for medical services. The federal government provides an additional infusion of nearly $400 million into the Indiana health-care industry because of tobacco-related illness.
But the study calculated the upsides from the existence of tobacco are overly counterbalanced by the negative effects on our economy:
When tobacco is eliminated consumers have more money, now spent on tobacco products ordinarily produced in other states, to buy other goods and services produced in Indiana.
With the elimination of tobacco-related diseases there is another $640 million for consumers to spend on other goods and services rather than on medical care. Businesses pay about $600 million less a year in health-care costs for their employees, thus lowering labor costs, and increasing capacity, investment, employment and profits. And state and local governments save $329 million yearly in health-care costs that would now be available to pay for more public goods or lower tax rates for individuals. The health-care industry, while initially contracting, eventually expands to meet the demands of a healthier, yet older and larger population.
Información publicada originalmente en: http://www.indystar.com/article/20130715/OPINION13/307150061/Without-tobacco-Indiana-would-more-prosperous?nclick_check=1
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