Government Regulation and “Moral Tracing”

by John Klar

Vermont’s recent $28 million windfall from years of wrangling with the tobacco industry offers insights into the role of government regulation in society. Regardless of one’s view of the appropriate degree of governmental regulatory control, this payment raises a completely different set of issues — what is government’s “place” when redistributing collected funds.

In accounting terminology, there is a concept of “tracing” funds. This can apply literally, as for instance with illegal or fraudulent transfers, or fictionally, as in LIFO and FIFO systems, where we pretend to “trace” an individual unit of inventory and its related economic value. We do the same thing as individuals when we save money in a piggy bank for a vacation, or to pay off a debt — we “trace,” or allocate, those specific funds to a specific cause.

The State of Vermont actively “traces” its citizens’ funds along moral channels. For example, it advertises the Vermont lottery for ticket sales, and also how much money the lottery has diverted to the education fund. I here term this “moral tracing.”

Our state is collecting $28 million (in addition to the $22-$29 million it already receives annually) for the pain and suffering of cigarette smokers, and has immediately announced that $14 million will be used to combat the opioid crisis. This is moral tracing, and appears to be as unchallenged as creating a government-run lottery racket (that causes profound addiction and preys on the poor) to ‘fund’ education. But in truth, that $28 million, along with those lottery receipts, could as easily go into the general budget and then be considered in the normal course of legislative wrangling. The idea that the money is “set aside” is a tracing gimmick, not an actuality. “Moral tracing” is a political fiction.

If Vermont recovers moneys from the pharmaceutical industry that seeded our opioid crisis, will those funds be applied to lung cancer treatment for cigarette smokers? To education? To our growing tax crisis? Perhaps it would be sensible “moral tracing” to apply some of these state “windfalls” from citizens’ illness to pay down some debt — maybe the 2017 Series A and B General Obligation Bonds, which exceeded $105 million. Less debt would enable us to respond more effectively to future challenges, whatever their caliber.

It is one thing for government to regulate to protect citizens from improper predatory business conduct: quite another to act as class-action recipient for a segment of the population. By what authority, and by what process, does our legislature decide to foist its moral tracings on us? Who decided that $14 million of this windfall would be used to fight the opioid crisis? Perhaps that is an appropriate allocation, but by what democratic process was it determined? And by what process will that other $14 million be allocated? Whether it goes to farmers, school security, special needs children, or paying off debt, it should perhaps be a matter of public discussion, for it is our morals the legislature is tracing.

– Attorney John Klar farms, and writes, from his family land in Brookfield.


{ 4 comments… read them below or add one }

Jeanne Norris March 30, 2018 at 1:05 am

As I have said before, Vermont has not seen a lawsuit or a Government handout it did not like! Which I find pretty embarrassing and disgusting at the same time! When you tax your citizens to death as a matter of fact, they see this as a way to add to the state coffers .. It would be nice to have a say about where this “free” money is spent. The way things are decided in this State, we are lucky we still get to vote on anything!

Do I sound bitter? Yes I am, I am sick of getting the shaft from the State I call home!


William Hays March 31, 2018 at 5:25 am

I don’t quite understand how our ‘pharmaceutical industry’ seeded the “opioid crisis”, if there is indeed one. Pharma researched, and provided pain-killing drugs. Good for them. The drugs are a boon to those that NEED them. Unscrupulous doctors and mindless citizens abused the prescribing and misuse of these drugs, eg. OxyContin, in addition to illegal drugs.. That is not “pharma’s” fault. Sorry, Progressives.
Opioid abusers should be required to treat their addictions on their own, if they so desire.
The state has no business in aiding them. “Free Stuff”, from the taxpayers, should not be given to these loons. If they expire, from their stupidity, it just cleanses the gene pool.
After major surgery, I was given three ‘pain pills’. I took two, and trashed the other. Stupid move, upon reflection. I could have sold that pill!


JOhn McClaughry March 31, 2018 at 2:24 pm

An early example of moral tracing: In 1992 the tobacco PAC lobbyist in Vermont sent $100 checks to both candidates for Governor. I politely returned mine, explaining that I couldn’t very well accept tobacco money and be a credible participant in the health care debate. Gov. Howard Dean accepted the check, called a news conference, denounced the tobacco industry, and defiantly announced he was donating the check (which he had accepted) to the Vermont Lung Association.
Guess who won the election? Howard Dean, big time.


John Klar April 2, 2018 at 9:01 pm

Numerous revelations have surfaced that Big Pharma deliberately deceived physicians and regulators about the extreme addictiveness of oxycontin specifically. If that is true, there should be accountability: if not, we may dismiss it as an example and still consider this concept of tracing. But then, this is how I posited the discussion: “If Vermont recovers….” which presumes the proof of culpable conduct. I’m glad that you did not become addicted to pain killers — I too threw mine out, but that has nothing at all to do with the price of tea in China.


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