William F Shughart

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This article is part of the Tobacco portal on Sourcewatch funded from 2006 - 2009 by the American Legacy Foundation.

Economics professor William F ('Bill') Shughart II was a major figure in the Cash for Comments Economists Network primarily run by Robert Tollison out of the libertarian think-tank, the Center for Study of Public Choice at George Mason University. The tobacco industry paid James Savarese and his staff (at James Savarese & Associates) to organise and oversee the operations and keep it at arm's length. This was a Tobacco Institute operation which went on for many years.

Its aim was to keep pressure on Congress and State Assemblies not to increase excise taxes on cigarettes - or to pass legislation that would ban cigarette advertising - and to stop them blocking sales via vending machines (mainly to minors). Because of the ad-ban threat, they had the tacit support of many media outlets in promoting this message. Their input was generally in the form of 1000-1200 word op-eds for a designated newspaper, or a letter to the editor on a subject the Tobacco Institute wanted promoted. They would be paid $700 to $1500 for each piece published, with a bonus if personal letters were sent to two local Congressmen.

About 130 professors of economics passed through this network over the years -- with close to 50 being available at any one time. They were ideally chosen from State Universities where they would have some local contact with the editors of major State newspapers, and where they could effectively lobby local Congressmen and State Representatives. Some were paid an annual $1000 retainer via the laundry channels of the GMU Center and/or James Savarese. However most of the payments depend on results -- which an astute editor might recognise as tobacco propaganda -- which presumably was the cause of the regular turnover of participants in each state, with many dropping out and needing to be replaced.

A core group (of which Shughart was one) were also given well paid speaking engagements, research projects, and book writing/editing and reviewing jobs and they often had some direct contact with the Tobacco Institute (the others were in the know, but largely insulated (by mutual consent) from direct contact with TI staff. The network economist also played a you-scratch-my-back/peer-review game where each would generate favourable "peer reviews" of each other's work.

In the mid 1990s there appears to have been a break up of the larger network with most of the non-core members joining William Shughart in working through the Independent Institute. Savarese and Tollision, however, continued to work through George Mason University.

Documents & Timelines

1984 Nov 20 Ogilvy & Mather PR (O&M) is organising for the Tobacco Institute the first economists forum at the Public Choice Society meeting in New Orleans, Feb 21-23. (Note: at this time James Savarese worked for O&M's PR division)

The topic would be "Public Choices About Tax Reform." William F. Shughart II, an economist from Clemson University, would chair the panel. Those who would present papers would be:

  • Thomas Borcherding, from Claremont Graduate School. Subject: "Tax Reform and Simplification: A Public Choice Perspective."
  • Harold Hochman, from City University of New York. Subject: "The Value-Added Tax: Do We Need Another Excise Tax?"
  • Fred McChesney, Emory University Law School. Subject: "Tax Reform in a Rent-Seeking Perspective: The Role of Interests."
  • Gary Anderson, an economist from George Mason University, would be the discussant.

Bob Tollison would be responsible for getting us on the program. He and Jim Savarese would work with each of the people to ensure that each paper contained a clear anti-excise tax message. Shughart and Anderson would also mention excises in their presentations. We will be obtaining CV s from Anderson and Shughart, who Jim and Bob Tollison know well. The other economists have all worked with us before.

Savarese's estimate of the costs for running this Economists' Forum project with the three papers at $2,000 each and Gary Anderson with $1000, plus travel, hotel, administration, etc. was $16,000. [2]

This appears to be the first operation of what was to become the Cash for Comments Economists Network

If there are any lingering doubts that these economist knew exactly what they were doing, it should be dispelled by a Tobacco Institute memo of June 3 1987. [3]. This shows that they knew that this work was unethical - that it needed to be done surreptitiously - and that they were working for the Tobacco Institute ... but in a way that was deniable since no formal contracts existed.

Apparently Prof. McMahon has " … reviewed and agreed to "author" an economic impact study on the effects of a smoking bill …"
The writer puts "author" in quotes
... leaving no doubt that the professor was being paid to put his name to a tobacco industry paper.

The same file has an letter from Professor K. Celeste Gaspari, an economist from the University of Vermont. She tells us that:
    • She had been contacted in Sep 1985 by the Center for Study of Public Choice at George Mason Uni (Tollison's think-tank)
    • She was offered an annual retainer of $1000 + paid work for the Tobacco Institute.
    • In 1986 she had been paid the retainer and had written a paper for them.
    • It was now March '87 and her retainer hadn't arrived. She'd complained but still hadn't received the retainer.
    • She has now been asked to do more work, but is on strike until her $1000 annual retainer is paid.

I am very disappointed with the Tobacco Institute's policies on making good on verbal agreements.
It is true I never had a written agreement with the Institute -- we only spoke over the phone. I did, however naively, trust that a verbal agreement with a prestigious institute was as good as a formal contract. I was evidently mistaken.
I am not interested in working with your group at this time if this is the way you do business.

Sincerely K. Celeste Gaspari


1985 William F. Shughart, II wrote a letter to the General Services Administration protesting a proposed rule to make all federal buildings 100% smoke-free. Shugart stated that the cost of such a rule would be excessively high due to lost work time if employees were not allowed to smoke at their desks, and that formal smoking breaks would have to be instituted for these employees.[4].

1995 William F. Shughart II testified in Mississipi tobacco litigation that the state should consider "medical expenses saved by the State because of the alleged premature mortality of smokers," and that the state take into account the medical expenses saved due to the early deaths of smokers. [5]

1994 Oct 14: David Theroux at the Independent Institute sends a copy of their proposal for a book to be called "Sin Taxes" to William Orzechowski at the Tobacco Institute. It implies that excise taxes are imposed on cigarettes simply because the tobacco industry is unpopular and an easy target.

It doesn't single out cigarettes (that would be too obvious) but raises the threat of Alcohol, Prohibition: The Ultimate "Sin", Gun Control, the War on Drugs, and the evils of 'Earmarking' such excises to prop up the health care system. Constitutional Liberties are also dealt up in the penultimate chapters.

The Institute is prepared to print and promote 810,000 books (cheap enough to be used as text-books) and there will be other benefits, such as "reprints in journals and magazines, syndication of Op-Eds and wire stories to major newspapers, media intereviews and government testimony by authors. Also lecture tours, etc. etc.

It will be edited by William Shughart under the direction of the Independent Institute's Research Director, Dr Robert Higgs, and have chapters written by the old Cash for Comment crowd.

William F Shughart, Uni of Mississippi
Adam C Gifford Jr, California State Uni, Northridge
Randall G Holcombe, Florida State Uni
Dwight R Lee, University of Georgia
Thomas J DiLorenzo, Loyola College in Maryland
Richard K Vedder, Ohio University
Mark Thornton, Auburn University
Bruce L Benson and David W Rasmussen, Florida State Uni
Richard E Wagner, George Mason University
Robert B Ekelund Jr and Paula A Gant, Auburn University
Bruce Kobayashi, George Mason University
Jonathan Macey, (Law) Cornell University
Gary M Anderson, Cailfornia State Uni, Northbridge
Donald J Boudreaux and Adam C Pritchard (Law) Clemson Uni
Gordon Tullock, Arizona State University. [6]
The book reached the drafting stages, and William Shughart sent his detailed Introduction along to the Tobacco Institute for their approval. [7]

1995 July: The remnants of the Cash-for-Comments Network has now transferred over to work through the Independent Institute. William F Shughart II (U of Mississippi is editing "Taxing Liberty and Other "Sins": Predatory Politics and Taxation" for the Tobacco Institute. It has chapters by:

(With the exception of a few new names this is the remnants of the old Cash for Comments Economists Network)

Hence, when David Theroux of the Independent Institute contacted me to ask whether I might be interested in putting together a volume that would explore the purposes and effects of tax policy in regulating consumption choices, I eagerly accepted . Let me here acknowledge the Independent Institute's financial sponsorship and David Theroux's encouragement along the way.

This draft was in Philip Morris files, and it has additions and corrections in handwritten form. For instance "politically incorrect" has been inserted before"products" and "excise" inserted before taxes. "Sin" taxes have been quoted. New chapter titles have been added. [8] [9]

1997 /E The Independent Institute published another tome edited by William Shughart for the tobacco industry: 'Taxing choice : the predatory politics of fiscal discrimination (edited by William F. Shughart II ; foreword by Paul W. McCracken). The list of Cash for Comments Economists Network members was slowly evaporating. (This was exactly the same line-up presented in the 199 Sin-Tax book proposal -- and even their chapter headings are remarkably similar. This book had chapters by:

Brenda Yelvinton (a new network member)
Adam Gifford Jr (new to the network but worked before for tobacco)
Randall G Holcombe
Dwight R Lee
Thomas J DiLorenzo
Gary M Anderson
Mark Thornton
Bruce L Benson and David W Rasmussen
Richard E Wagner
Paula A Gant and Robert B Ekelund Jr
Richard K Vedder
Jonathan R Macey
Bruce H Kobayashi
Donald J Boudreaux and Adam C Prichard (new members)
Gordon Tullock

This book had actually been printed. [10]

1997 June 20: The tobacco industry agreed with some of the State Attorneys-General to pay a penalty of $370 billion, curtail advertising that might affect children, and subject itself to FDA regulation. The 68-page "Proposed Resolution," (which later became the Master Settlement Agreement) reported that the industry would fund a variety of health programs, pay monetary damages, subject itself to FDA regulation, and restrict certain sales and marketing practices.

In return, tobacco companies will be exempt from all punitive damages for their past conduct and immune from new class action lawsuits. This was just the first draft of a long process.

2017: It appears that Shughart is now working through the Independent Institute for the oil industry in opposing subsidies for ethanol. See the article and exchange of emails between Marc J Rauch and Shughart at [11].

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