The Sharblog

Scare Tactics

Have you seen the new warning labels for cigarettes that the FDA is rolling out? You can’t get any more graphic than some of these. They will go into effect next year.

I remember when the first warning labels on cigarettes came out in the 1960s. They were a rather mild statement of “Cigarettes may be hazardous to your health.” Then in the 1980s, the warning got upgraded to “Smoking can cause lung cancer, heart disease and other illnesses.” These warnings took up a tiny portion on each pack of cigarettes. You really had to look hard to see them. 

Now the FDA has taken the warning labels to Def Con Level 5. First, these new warning labels are big – they take up the entire top half, both front and back – of each pack of cigarettes. And they are not just a written phrase. They are actual pictures of things like rotting teeth and gums, diseased lungs, smoke coming out of the tracheotomy of a man’s neck, and a sewn-up corpse of a smoker. You would have to be pretty dense to not get the message “Smoking will kill you.”

I am not opposed to trying to make sure people understand the dangers of smoking. But do you really think the majority of people don’t know that smoking is bad for them? I think our schools have worked pretty hard at delivering that message to kids. Talk to any young children about smoking and they will immediately repeat a mantra to you about its ill effects.

These new warning labels remind me of those films they used to make us watch in high school that showed all the graphic pictures of car wrecks, trying to convince us that we should not speed and drive like crazy people on the highways. Based on my experience, I don’t think they worked very well. Most teenagers – especially boys – think they are invincible, and we convinced ourselves that the dead people in the films probably were not as good a driver as we were.

Most people who still smoke are probably not going to be deterred by these warning labels. They are either physically addicted to cigarettes/nicotine, or they have convinced themselves that dying of cancer isn’t going to happen to them. Let’s be serious, if you are willing to pay the going rate for a pack of cigarettes (in New York City, it is around $11 a pack) you must really enjoy them or be hooked. And for full disclosure, I did smoke when I was in my 20s and the cost is what did me in – thank goodness.

I won’t hold my breath that these warning labels are going to work. But if it would deter just a few people, it is worth a try since it is estimated that smoking is the leading cause of preventable and premature death in the U.S. (one in every five deaths) and costs us around $200 billion annually in diminished productivity and medical costs, according to the Centers for Disease Control and Prevention. Those are sobering and scary facts in themselves. 

Irrational Debt

It’s been a busy few weeks since my last blog. During that time, I have had the opportunity to hear a number of great speakers.

First, we kicked off our new TSCPA year with our Leadership Day program in Dallas on May 18. Our keynote speaker was Rom Brafman, a psychologist and co-author (with his brother) of several books, including Sway – The Irresistible Pull of Irrational Behavior and Click – The Magic of Instant Connections. Brafman shared key points with the audience from both books.

Brafman discussed a number of unconscious biases and decision-making mistakes that can lead to irrational behavior. One is the phenomena of overreaction to loss (versus gain), which can lead people to hold onto stocks or other investments for too long in the hopes their values will rise once again and instead they ride them into the ground. Brafman was an enjoyable speaker, and I look forward to a new book he has coming out later in the year.

Last week, I had the pleasure of attending the Dallas CPA Society’s Education Conference where the luncheon speaker was David Walker, former head of the GAO, a CPA, and currently the president and CEO of Comeback America. I have heard David speak several times in the past and also had read his book last year called Comeback America, so I knew what his message was likely to be and he did not disappoint. In an energized and informative presentation, he laid out the case that the U.S. is going broke and that we are rapidly approaching a tipping point to take corrective action to set the country back on a proper financial course. He estimated we have no more than five years to find real solutions to our debt problem or we may reach a point of no return. 

Walker had plenty of slides and data to back up his key points. One statistic that was very telling is that the U.S. is currently spending about $1 billion a day more than we are taking in. With that information, it doesn’t take a rocket scientist to figure out we are behaving irrationally and are on a pathway to financial destruction. If you are interested, you can get lots of information and statistics on this issue by going to the Comeback America website at: www.tcaii.org.

 Walker also pointed out that the debt problem we are facing is the product of both political parties (sorry partisans). He showed that our spending and debt issues have been created by actions taken when either party has been in control of our government. So unfortunately, our debt creation may be one of the few bi-partisan actions we have seen in our country.

On the positive side, he said he was guardedly optimistic that the current Congress would get a deal done on the debt ceiling issue and that some of the recommendations of the Presidential Debt Commission would probably find their way into the solution. Let’s hope our elected officials are thinking rationally as they deal with this major issue and avoid the decision-making mistakes that Rom Brafman discussed. The stakes are too great for our country.