WARNING: This site deals only with the corporate corruption of science, and makes no inference about the motives or activities of individuals involved.
    There are many reasons why individuals become embroiled in corporate corruption activities - from political zealotry to over-enthusiastic activism; from gullibility to greed.
    Please read the OVERVIEW carefully, and make up your own mind.

OPINION ONLY

Professor Mark Pauly was one of the original coterie of economists who joined a nation-wide network of academic propagandists working for the Tobacco Institute. However he appears to have dropped out almost immediately and is included here mainly for completeness. His name may have stayed on their lists for longer, simply because he was relatively well-known as a specialist Health Economist ... and, as such, he would have been highly prized.

The network was put together by tobacco lobbyist James Savarese and Professor Robert Tollison of George Mason University who collaborated in the 1980s to provide the tobacco industry with academics willing to write propaganda material ... always provided their names were not linked to the industry or to any of the cigarette companies.

The idea was simply that the academic 'sleepers' would be available on a cash-for-services basis when needed to counter attempts to increase excise taxes, or to ban public smoking, or just to appear as independent experts at Congressional hearings and promote the industry causes.

Economist were by far the most useful academics to the tobacco industry because the distinction between economics and politics was never clear: so support of the cigarette companies could always be claimed as support for free-market economics ... the rights of individuals to make public choices ... small government ... or even the first Amendment to the Constitution.

The economist always claimed to be 'independent', 'professionals' and they wre recognised 'academics' from some credible university. They never revealed the source of their funding in their op-eds or letters-to-the-editor.

If ever put under cross-examination, they must be able to claim with weasel-word precision, that they had never received a penny from the tobacco industry. Therefore all payments were laundered, either through tobacco industry lawyers (usually Covington & Burling), the principle organisers, James Savarese & Associates, or through Bob Tollison's Center for the Study of Public Choice at George Mason University.

The aim was to have, in each State, at least one academic economist, one academic lawyer, and one academic from a business management, business law, marketing or advertising discipline willing to jump into action and write op-ed articles for their local newspaper, or to appear at local ordinance or legislative hearings. Copies of these articles were always to be sent to a local Congressman who sat on some important (to the tobacco industry) committee.

The academics were always expected to wave their own and their university's credentials vigorously, and loudly proclaim their "independence' from any crass-commercial motives. And those who could boast of being 'non-smokers' were especially prized — since without this addiction, their non-dependent-on-tobacco status was thought to be proved beyond any doubt!

The foundation document for the network still in the tobacco industry archives is the Draft plan (below) dated 30 April 1984

This 109 page DRAFT Tobacco Institute "Cigarette Excise Tax Plan" was aimed at countering the Reagan Administration's "Packwood Tax Plan" and the list of economist involved includes Mark Pauly.

Some key documents

• Professor of Economics, Wharton School, University of Pennsylvania

1973: The Economics of the Military Draft A pamphlet written by Robert Tollison, Ryan Amacher, J. Miller, Mark Pauly, and TD Willett) (Morristown, NJ.: General Learning Press, 1973).
[Tollison and Amacher were both key operatives in the cash-for-comments network, and Willett was a close associate of Tollison]

1984: The international Journal of Health Economics (published three times a year) has Mark Pauly as one of the Associate Editors. It publishes smoking articles, but there appears to be nothing dubious about the journal.
[He appears to be considered an expert on containing hospital costs.]

1984 Apr 30: This 109 page DRAFT Tobacco Institute "Cigarette Excise Tax Plan" was aimed at organizing against the Reagan Administration which they suspected was about to extend the life of a temporary excise tax on cigarettes (16¢ per pack). They had an immediate requirement for some 'independent' experts to lobby on their behalf:

• One public finance economist for 10 days @ $1,000, [Total $ 10,000] including meetings with coalition members and/or the Governor's staff; research and preparation; and testimony.
• One economist for a union workshop on the tax issue, [Total $5,000] including 3 or 4 training sessions over the course of a convention.
• Six economists @ $5,000 and one senior economist @ $20,000 for a tax symposium, including publishing of the proceedings at $3,000. [Total $53,000] The senior economist would play an oversight/organizational role and would be responsible for editing the proceedings. Such a symposium would be staged for regional or national impact.
• One economist provided to a public employee union to do original research on the need for adequate services to be funded by broad-based taxes; this would include the final report and testimony. [Total $ 25,000]

Potential Economic Consultants
    Following is a list of economists in key states who might assist us as consultants. We have begun contacting them to ensure their willingness and expertise. We are asking each about past experience; work with similar issues; previous work with the industry; published articles or research; and speaking availability.

    As discussed in the body of this program, our intent is to have a group of individuals who we can call upon regularly to testify, conduct special research projects, and discuss their research and/or views on excise taxes with the media.

• California, Thomas Borsherding, Claremont College
• Connecticut, William McEachern, University of Washington
• Florida, Richard Wagner, Florida State University
• Georgia, Fred McChesney, Emory University Law School
• Illinois, James Heins, University of Illinois
• Massachusetts, Harlan Platt, Northeastern University
• Minnesota, Thomas Stimson, University of Minnesota (St. Paul Campus)
• New York, Harold Hochman, City University of New York
• Ohio, David Klingaman, Ohio University
• Pennsylvania, Mark Pauly, University of Pennsylvania
• Texas, Charles Maurice, Texas A&M University
• Washington, Yoram Barazel,[sic Barzel] University of Washington
• Washington, D.C. Robert D Tollison, George Mason University
• Wisconsin, Burton Weisbrod, University of Wisconsin

    Tollison is the most influential and prestigious on this list; he was hired to consult on federal tax issues, to publish books promoting the cigarette industry's position, and to oversee efforts of the other cash-for-comments economists throughout the country.

See last page

The Tobacco Institute's July 1984
Cigarette Excise Tax Plan.

The plan augments our basic lobbying efforts by relying on groups outside the industry — some not regularly associated with the industry — to argue against excise taxes for us.

    It is an ambitious program, based on the notion that many of the most effective protests against tobacco taxes will come from groups philosophically distant from The Institute. Many such groups agree with us on the excise issue, even though they disagree with us on other matters.

    At the federal level, supporting Congressional members from the tobacco states is essential to our lobbyists. The tobacco members consistently vote as a unified group — something that is rarely seen in Congress today. They are our lobbyists' most important resource.

    The program recommends that economic and other consultants assist us in developing, "packaging," and presenting our anti-excise arguments in legislative testimony or meetings with coalition members.

Resources:
Economic consultants with different areas of expertise will conduct research and act as spokespersons for The Institute and organizations supported by The Institute. Specific activities with economists are discussed throughout the tactics.

Tactics:

• Stimulate reputable public finance economists at key state universities to determine the validity of state revenue forecasts, perhaps on behalf of state business organizations and present arguments against excise taxes in various forums; e.g., meetings with potential coalition members or budget officials.
• Encourage economists to make the case against regressive taxation in meetings with potential coalition members and legislators.
• Retain public finance economists affiliated with non-profit organizations to research the subject and use their findings in forums such as:
  • Private meetings with state legislators or staff ;
  • formal testimony before government bodies ;
  • targeted media appearances;
  • speeches before business, civic, labor, and other groups ;
  • tax symposia in key states where the proceedings could be published for use in other states ; and
  • articles which raise the visibility of key arguments in the business, academic, and popular press.

Strategies:

• Presenting specific members of the House Ways and Means and Senate Finance Committees with arguments prepared by economists with whom they share some common interest; e.g college affiliation, service on the same commission.
• Gaining the support of Citizens for Tax Justice (CTJ), the most influential labor/liberal tax reform group in the country, in opposition to excise taxes.
• Relying on the AFL-CIO — via The Bakery, Confectionery, and Tobacco Workers Union — to ensure that the labor/liberal tax package that emerges in the next session of Congress does not include tobacco.

Appendix: A list of economists in key states who may be willing to act as industry and third-party spokespersons on the tax issue.

Following is a list of economists in key states who might assist us as experts receiving honoraria. We have begun contacting them to ensure their willingness and expertise. We are asking each about past experience; work with similar issues; previous work with the industry; published articles or research; and availability.

Cash-for-Comment Economists
State	Economist
California	Thomas Borsherding, Claremont College
Connecticut	William McEachern, University of Washington
Florida	Richard Wagner, Florida State University
Georgia	Fred McChesney, Emory University Law School
Illinois	James Heins, University of Illinois
Mass.	Harlan Platt , Northeastern University
Minnesota	Thomas Stimson, University of Minnesota (St.P)
New York	Harold Hockman, City University of New York
Ohio	David Klingaman, Ohio University
Penn.	Mark Pauly, University of Pennsylvania
Texas	Charles Maurice, Texas A&M University
Wash.DC.	Robert D Tollison, George Mason University.
Wisconsin	Burton Weisbord, University of Wisconsin
[This was the core group which established the cash-for-contents network. Over the years the numbers reached over 100.]

[The only change from the last list is that Yoram Barzel from the University of Washington, has dropped out.]

    Our intent is to have a group of individuals whom we can call upon as needed to testify, conduct special research and discuss their research projects and/or views on excise taxes with budget officials, potential coalition members, legislators and the media.

1988: Pauly is the Director of the Leonard Davis Institute of Health Economics at the Wharton School at the University of Pennsylvania. He has just co-authored An Analysis of "Medigap" Enrolment: Assessment of Current Status and Policy Initiatives," which is published as Chapter 7 of Lessons from the First Twenty Years of Medicare (Eds. Mark V. Pauly and William L. Kissick), University of Pennsylvania Press,

1989 July 5: James Savarese advises the Tobacco Institute (TI):

Attached is a revised version of Bob Tollison and Dick Wagner's Phase II research project. They have incorporated Tl's changes and revisions.

1991 Feb 5: James Savarese writing to Carol Hrycaj at the Tobacco Institute.

I've enclosed a final draft copy of Bob [Tollison] and Dick [Wagner]'s book, Economics of Smoking: Getting It Right. Let me know if you have any questions.

1991 Mar: /E Robert Tollison and Richard Wagner publish "The Economics of Smoking" written by themselves to counter the "Social Cost" arguments:

Chapters:

1. Tobacco Warfare In America: An Overview
         [A Battlefield Tour]
2. Welfare Economics, Public Policy, and Smoking
3. The Taxation And Regulation of Smoking:
         [Principle vs. Expediency]
4. Smoking and the Economic Cost of Lost Production
         [Absenteeism isn't a problem!]
5. Markets, Insurance, and the Medical Costs of Smokers
6. Medicare, Medicaid, and the Social Cost of Smoking
         [Principle, Expediency, and Wealth Transfers]
7. Smoking, Business Costs, and Social Cost
8. ETS And Governmental Protection Of Consumers And Workers
         [An Alternative Explanation]
9. Advertising, "Addiction," And The Denial Of True Choice
         [Consumer Sovereignty or Health Fascism?]
10. Self Interest, Public Interest, and Legislation
11. Interest Groups And The Public's Health
          [Self Interest in Public Interest Organizations]
12. Principle And Expediency In Public Policy

[T]here are several ways in which non-profit hospitals can serve as vehicles for advancing the interests of physicians who staff the hospitals.

    This was demonstrated by Mark Pauly and Michael Redish (1973), who explained how the non-profit hospital can be used as a vehicle far profit maximization by the physicians who effectively owned the hospitals. The hospital would have no net income to show. But this does, not indicate non-profit status, but only shows that what could alternatively have been shown as income and then distributed to shareholders was captured directly by the physicians in the first place.

    Pauly and Redish showed that it would be misleading to treat non-profit hospitals us independent, charitable agencies. While they may be organized on a non-profit basis, they are also essentially owned by the physicians who staff them. Pauly and Redish explained how physicians could use the hospital as an input in their own profit-maximizing activities.

    Something similar might be said about the public-health bureaucracy, including such private components of that bureaucracy as the Cancer, Lung, and Heart Associations. For instance, the American Lung Association might be seen as an agency that increases the aggregate demand for pulmonary services, just as the American Cancer Society operates to increase the demand for oncological services.

1991 Mar 14: A press release from The Health Technical Panel,, appointed by the Advisory Council on Social Security (Wasnington DC),

The panel has completed its report on Medicare projections and submitted it to the Council.

    As part of the Council's review of the status of the Hospital Insurance (HI) and the supplementary Medical Insurance (SMI) Trust Funds in relation to the long-term commitments of the Medicare Program, it convened this group of eminent economists and actuaries to provide an independent evaluation.

    The Panel was chaired by Dr Judith Lave, from the Graduate School of Public Health of the University of Pittsburgh. Other economists were: Mark Pauly, University of Pennsylvania and Kenneth Thorpe, University of North Carolina School of Public Health.

1991 May 9: The New England Journal of Medicine (NEJM) publishes
    a 'Sounding Board' section:

Avoiding Bias In The Conduct And Reporting Of Cost-effectiveness Research Sponsored By Pharmaceutical Companies

Because of the growing focus on containing health care costs, pharmaceutical companies are trying to demonstrate the cost effectiveness of their products relative to alternatives. In Europe and Australia, economic analyses are often required for government approval and pricing of new pharmaceuticals.

Academic researchers — especially young, unestablished investigators — eager for new sources of funding.

    At the same time, pharmaceutical marketing benefits from the imprimatur of research published by respected independent academic researchers.

    We have performed 33 economic analyses for 15 pharmaceutical companies since 1978. Our experience indicates that the partnership between academia and industry in this research is often exemplary, generating important and valid new information.

    Sometimes, however, we have encountered difficulties that threatened to bias the conduct and results of an analysis. These problems represented potential conflicts of interest, because the sponsors of the studies benefit most from favorable results.

• Doctors: Alan L. Hillman, MD, MBA and John M. Eisenberg, MD, MBA.
• Economist: Mark V. Pauly, PhD. Leonard Davis Institute of Health Economics, University of Pennsylvania
• Others: Bernard S. Bloom, PhD., Henry Glick, MA., Bruce Kivosian, MD.
      J. Sanford Schwartz, MD.

1991 Apr: (Spring) Health Affairs published "A Plan for 'Responsible National Health Insurance'" by Mark Pauly and three others. The preface harkens back to a 1975 hearing by the House Subcommittee on Health and Environment which was considering a national health insurance scheme.

How to provide universal access to medical care to all Americans at a politically, acceptable cost?

    During that fifteen-year period, the confidence in the capacity of government to effectively administer a national health plan has diminished, thus giving proposals that rely on alternative approaches greater weight.

    One such proposal is that offered by

• Mark Pauly and Patricia Danzon, both of whom are economists at the Wharton School and the Leonard Davis Institute of Health Economics, University of Pennsylvania,
• Paul Feldstein, an economist at the University of California, Irvine, Graduate School of Management; and
• John Hoff, a lawyer in private practice in Washington, D.C.

Their plan is based on a belief that the allocation of resources to health care should rest on individuals' choice of insurance

The approach to national health insurance we have outlined has emphasized responsible choice at several levels. It emphasizes the responsibility of all Americans to obtain insurance, and of nonpoor citizens to pay for medical care services to the extent of their ability to do so. It emphasizes as well the responsibility consumers have to choose whether they want to buy more comprehensive medical care and medical insurance or whether they want to save more to spend on other goods.

1992: He was actively promoting a tax credit plan for health care, similar to that of the Heritage Foundation.

The Heritage Foundation would require all Americans to buy insurance and would end the tax exclusion for company-based insurance plans in favor of a system of tax credits. The amount of the credit would be based on the income consumed in paying for insurance or out-of-pocket expenses. Heritage's approach would "provide portability of benefits and put consumers in the driver's seat of the health care system." says Edmund Haislmaier, Heritage's health care policy analyst.

    Like Heritage, economist Mark Pauly of the University of Pennsylvania Wharton School of Economics has offered a plan that would replace the tax exclusion with tax credits and would require individuals to obtain coverage. Those who failed to obtain coverage would automatically be enrolled in a "fallback" plan.

    Under the Bush plan, low- and middle-income people who are not covered by other federally subsidized programs would get tax credits or deductions of up to $3,750, depending on household size and income.

    The lowest-income would get vouchers, while higher-income families would get deductions. All the subsidies would be reduced by any employer contributions toward a policy.

    The Bush plan differs in two important ways from those advanced by Pauly and Heritage. First, Bush would not mandate consumer purchase of insurance. Second, the President would retain the exclusion for employer-paid insurance; both Pauly and Heritage would repeal it, and would use the new revenue to extend coverage to the uninsured.

    Pauly argues that everyone should be required to have health insurance for the same reasons that many states mandate that all drivers have liability insurance. Unless everyone is required to have insurance, those who don't have it will shift their costs to those who do. And he says doing away with the tax exclusion is "the main cost control feature of the plan," Pauly says. "If you choose to purchase a more economical policy, you get to keep the savings."

    HHS Deputy Secretary Kevin Moley says the debate over an insurance mandate is ideological. "It is a deeply held, strongly principled view that we don't have nationalized things in this country...If a state wants to do that, I don't think we would have a problem. But we like decisions to be made further away from Washington."

Independent Institute

2013: The Independent Institute, which is itself a component of the Atlas Group of ultra-free-market think tanks with links to the Alexis de Tocqueville Institute [all heavily dependent on commissioned corporate funding] appears to have taken over the role of administrator of the Tobacco Institute's cash-for-comments network at the end of the 1990s.     Their research director and journal editor, Robert Higgs, was already a member of the network. Tobacco funding continued to flow to the Independent Institute which appears to have taken on the role of 'warehousing' these academic supporters to insulate them from discovery. The Institute acquired the bulk of the cabal of cash-for-comments economists who were still operating, and some who had been retired: Senior Fellows Bruce L Benson, Florida State Robert Higgs, Independent Institute William Shugart, Utah State Richard Vedder, Ohio University Research Fellows Burton Abrams, Uni of Delaware Gary Anderson, California State at Northridge Dominick Armentano, Uni of Hartford Peter Boettke, George Mason Uni Thomas DiLorenzo, Loyola College, Maryland Robert Ekelund, Auburn Uni Lowell E Gallaway, Ohio Uni Randall Holcombe, Florida State Dwight Lee, Southern Methodist Uni Cotton 'Matt' Lindsay, Clemson Uni Fred McChesney, Northwestern Uni Mark Pauly, Uni of Pennsylvania Richard Stroup, Montana State Mark Thornton, Ludwig von Mises Institute Richard Wagner, George Mason Uni Bruce Yandle, Clemson Uni Also dozens of other academics and writers who provided independent contract services to the tobacco industry — like Richard Epstein, John Goodman, Peter Huber, Paul Craig Roberts, Paul Rubin, Peter Samuel, S Fred Singer. Russell Sobel, etc.

2013: He is still at Wharton with the Health Care Managmeent Department, University of Pennsylvania as Professor of Health Care Management and Professor of Business Economics and Public Policy.

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