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Insurers Should Weigh In On The Tobacco Talks

Readers Report


Your apt commentary notes that the wrong parties are negotiating society's best chance to nail down tobacco's responsibilities to its past and present consumers ("Tobacco: Don't jump at this deal," Legal Affairs, May 12). Notably missing in action are insurers of Big Tobacco. For decades, tobacco makers have crafted ways around every constraint society has attempted to place on them. If insurers do not weigh in on these negotiations, the tobacco companies will negotiate a liability scenario aimed at tapping their insurers for a portion of the damages and defense costs of future consumer litigation.

Reports on these negotiations already indicate the manufacturers' efforts to limit future lawsuits to cases of fraud or negligent misrepresentation, not product liability. Insurers have long excluded product liability for tobacco, but they may find themselves defending and indemnifying tobacco companies for other liabilities that survive the current global settlement negotiations. With estimated annual legal defense costs of $600 million, tobacco manufacturers have plenty of incentive to look to their insurers for contribution.

John R. Cashin

Executive Vice-President

Willis Faber North America Inc.

New YorkReturn to top


Your article ("A nest of software spies?" Legal Affairs, May 19) about CEO Joseph B. Costello fighting to protect Cadence Design Systems' intellectual property is a good read. It takes strong people, seeing right from wrong, to set an example. With today's fast-moving technology developments, too few incidents based on high principles are reported. The article is a reminder of our responsibility to stand up for right and reject the passive point of view. I wonder just how quickly those who copy the ideas of others would react if someone were to copy their ideas and years of hard work?

Alan Wilhite

Bellevue, Wash.Return to top


Miller Brewing's decision to disband its ethnic marketing department ("United colors of Miller," Marketing, May 19), is ill-advised--particularly when it comes to reaching the Hispanic market. With more than $220 billion in purchasing power, this is the nation's fastest-growing ethnic consumer market. Unlike other ethnic markets, Hispanic consumers crave imagery that addresses their culture and heritage directly.

Hispanic Americans especially tend to tune out marketing imagery that is too politically correct or ethnically balanced. Miller's strategy to develop ads that seek to cut across all cultural groups ignores the whole point: Know your target market.

Robert Hernandez, President

RBH Direct

Austin, TexasReturn to top


It is universally recognized that the tax structure provides an "automatic stabilizer" ("How long can this last?" Cover Story, May 19). For example, during a downturn, tax revenues decline as income drops, and government spending rises as transfer payments, such as unemployment compensation, rise. Note that the last recession, in 1990, resulted in annual deficits that peaked at about $300 billion.

The opposite is also true. A growing economy is universally recognized to cause the deficit to drop, and indeed, most analysts recognize that the current low deficit of about $75 billion is the result of economic growth. Again, the tax structure is such that stronger growth increases federal revenues fast enough to reduce the deficit. And lower transfer payments reduce the growth of federal spending. What is overlooked is that this, too, is an automatic stabilizer. Deficit reduction has a contractionary bias, just as an increasing one has an expansionary bias. The economy expands until the deficit is small enough to cause the next slowdown.

Warren Mosler

West Palm Beach, Fla.Return to top

The Aging of Abercrombie & Fitch
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