Fundamental to what I am about to say is the concept of a free market. Governments and special interest groups hate free markets and do everything they can to make them seem evil in the "public" mind. Why are free markets hated so much by such people? I'll answer that at the end of this piece but there is a good chance you will have guessed it before then. The propaganda against free markets has been churned out by the ton for more than a hundred years so it would be surprising to find many people who could give a straight definition of what one is.

We probably all know what a market is. A place where we can buy and sell goods and services. A "free" market is where we are free to buy and sell amongst each other without any kind of coercive interference. That sounds complicated. It means if you and I can reach an agreement about what each of us is willing to exchange with the other then we can make that exchange without paying any attention to what anyone else thinks about our transaction and without paying anyone else for the "privilege" of allowing us to make the transaction. A trade is where you give me what you have in exchange for receiving from me what I have and we are both willing to go ahead. Because we are both willing to make the exchange it follows that we must both gain by the trade or there would be no reason to do it. So a free trade is a trade where both parties win. It is not a trade where one party wins at the expense of the other. If that were true then why would the losing party make the trade?

If everyone were allowed to be fully responsible for their own actions and could trade anything we cared to trade with anyone willing to trade with us we would have a true free market. We don't have one in the UK and there are very few places in the world where such a thing truly exists.

Nevertheless there are still some other principles of economics that are always in play even in the absence of a true market. The ones we are interested in here are;

1. The desire to profit through providing products or services

2. The desire to profit through purchasing products or services

3. Competition amongst suppliers of products and services

4. Consumer choice

Profit Through Provision

It doesn't matter whether or not we are in business. We each desire to gain through whatever actions we do to earn money. In fact it is obvious that if we did not consider we were gaining from what we did then we would not do it.

Gain, or profit, is not only measured in money. We may do some things out of a sense of duty or just for fun or for some other reason that has nothing to do with receiving cash but, whatever it is we must be gaining it or there is no point to the activity. To keep this on subject let's say that Bill and Ethel run a pub called The Smoker's Inn. They certainly want to profit from this financially as they want to eat and clothe themselves and they want many other things too. But they also enjoy running a pub and providing a great place for their local customers to come to and have a good night out. They have a profitable business.

Profit Through Purchasing

The people who go to The Smoker's Inn do so because they like the way Bill and Ethel run the place. They like the range of food and drink that is available and the atmosphere of the place. They like that they can smoke there too. At the end of a night they have spent some money. They consider they had a good deal and that is why they are regulars at The Smoker's Inn.

Competition Amongst Suppliers

Tony and Dave are the owners of another pub called The Smoker's Out. They just opened the place and they are confident they are going to make a lot of money. Why are they confident? Because they have been told there are lots of non smokers in the area that would love to go to a pub but don't because they don't want to go home smelling of tobacco. Tony and Dave have bought an old pub and have renovated it and made it look like a cross between a gym and a clinic. They are sure it will be a success. It has only been open for three months and the word just hasn't gone out enough yet but they are sure it will. They have spent thousands on the renos and hundreds on advertising and they were advised by the best people so they are very confident.

The Smoker's Out is busiest on Friday nights. Last week they had seven people between 7:00 and 8:00 pm who stopped by for a quick mineral water before going to the theatre. Tony and Dave kept winking at each other. They also gained their first "regular" this week. Robert Ash came in on Wednesday and Saturday. He sat in a corner where he could see the door and scowled at anyone who opened the door just to let them know that this was a no smoking pub.

Consumer Choice

I wrote about competition between suppliers before consumer choice but in reality consumer choice comes first. The owners of pubs are always interested in how they can make their customers happier. If the customers are happier they will tend to become regular customers and they will tend to bring new customers with them. So it is good for business to provide what customers want. No customer has told Bill and Ethel that a smoke free area would be nice. So Bill and Ethel haven't created one. Bill and Ethel have also been advised by the experts on TV and in the newspapers that there are crowds of non smokers who will stream in to their pub in droves if they were smoke free. Bill and Ethel haven't had any of these non smokers come to their pub and ask about a smoke free area. Bill and Ethel do have a lot of customers who like the pub just as it is.

Conclusion

If there were really a market for non smoking pubs then the owners of pubs and clubs would have created such pubs because such an unfulfilled need represents an opportunity to make a good profit by supplying what customers want. Many have done so on very poor advice. Some may even have succeeded. Many have failed.

So the smoking ban will be bad for pubs and bingo halls that currently have a large part of their customer base made up of smokers.

Have you figured out why free markets are so hated by governments and special interest groups? It is because a free market is composed of free people doing what they prefer to do as free people and making trades with those they choose to trade with. There is no coercion. The only things that governments are capable of is making regulations (coercion) and taxing ("you pay whether you want to or not because we say so" coercion). Special interest groups are those groups who have no respect for others. They will not use reason and persuasion when they can use the force of government.