The big cowboy will be watching you

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The Independent Online
What have cigarettes in America, failing schools in Britain and BMWs got in common? The answer is that in all of them the link between the producer and the consumer is changing from a simple sale towards a longer-term contractual relationship.

Cigarettes first: it looks as though an historic agreement will be reached between the tobacco companies and the US authorities which will give the companies a large element of immunity from being sued for damages by people whose health has been impaired by smoking, in return for a series of payments by the companies towards the health-care of such people. Fierce haggling has been going on over the details, but it is possible that by tomorrow an agreement will be passed to the White House for approval.

The idea is a sensible one. Instead of the companies paying out an uncertain amount of money which would be distributed in a random way by the courts, it will give a known figure which could then be allocated in an orderly manner.

The American media is presenting it as "tobacco giants to pay out billions", and in literal terms that is indeed what will happen. But this idea that the tobacco companies will be punished for their wickedness is naive. The money will not come out of thin air. In the short term there will be some loss to shareholders, but in the longer term the money will be paid by the people who continue to buy the cigarettes. So what is really happening is this: the present and future flow of smokers will pay more for their cigarettes to compensate (or at least help pay for the health- care costs of) people who smoked 20, 30 or more years ago. It is a transfer of funds between different generations of smokers.

This inevitably brings the tobacco companies into a different relationship with their customers. There is an implicit bargain: pay more for cigarettes now and there will be funds to help look after you if you become ill later - though the funds will have to come from the next generation of smokers then, for like state pensions this is a pay-as-you-go plan, not a funded one.

This bargain has further implications. The tobacco companies now have an interest in the health and general lifestyles of their customers. If their customers smoke only moderately, go to the gym every day, eat up their greens and generally lead blame-free lives, they will presumably be healthier in old age and therefore be less of a charge on the health- care authorities. As the marketing gurus would put it, the tobacco companies are not just selling a product; they are entering into a relation- ship with their customers.

Now think about schools. Until recently you went to school, passed or failed your exams and that was the end of it. Not any more. As my colleague Jack O'Sullivan reported last month, more and more parents (and former pupils) are suing their schools for the alleged shortcomings in the education they received. A ruling in 1995 in the House of Lords cleared the way for people to take schools to court and there is a rash of cases coming up. Whether this will become a substantial trend will depend on the way the courts are seen to treat such cases, and it may be tough to prove that the reason someone failed his or her exams was the result of poor teaching rather than not doing the homework.

But you see the point: schools have to assume that they are not simply providing a service which begins and ends with the time the pupil is at the school. They too are entering into a relationship, for if former pupils fail in later life, they may end up taking part of the blame.

Indeed places of learning may find themselves involved even when the would-be student does not enter the portals. I was told yesterday by the head of an Oxford college that it had been threatened with legal action because it had failed to offer someone a place. In this case the person thought that the attempt to "buy" the service was enough to start a relationship, even though no transaction took place.

This idea that a sale is not a simple one-off thing is now being used as a marketing tool by manufacturers. Perhaps the best example is BMW. The company boasts that a high percentage of its cars can be recycled: that at the end of their long lives they can be brought back, taken to pieces, the various metals and plastics sorted, and then used as raw materials for another car. Also, perhaps more than any other manufacturer, BMW has thought about ways the car might "tell" the manufacturer about its needs. The cars already "tell" the driver - via coloured warning lights - when they need to be serviced. The next obvious stage would be to pass this information directly via a radio signal to the dealer who could then book the car in for the work to be done.

Many manufacturers are eager to do this, and it has great commercial attractions. For a start the manufacturer gets to know a lot more about the way the customer uses the product. It also cements the long-term relationship, making it more likely that the customer will come back for a replacement model.

As technology advances, the machine will be able to contact the maker even without the owner needing to know. A microchip in a washing machine could tell when it needed more water-softener and get it delivered. Or, take this example told to me by an acquaintance in Japan about his elderly mother's high-technology loo. This now analyses her urine and sends that results back to her doctor over the telephone; if there is any abnormality her medication can be adjusted appropriately, without her needing to travel to the clinic.

In all these cases - the cigarette, the education, the BMW - the key point is that the purchase is not a one-off affair, but the start of a relationship. But relationships go both ways. If the seller is taking on an obligation which goes beyond the actual sale, it will want to be sure that the purchaser is living up to his or her obligations too.

The tobacco company will, in theory at least, want to be sure that someone who claims that an illness was caused by smoking was not, say, a drug abuser too. The school will be able to require of its pupils proper attendance and attentive behaviour, for otherwise it will be released of its obligation to make sure that they learn properly. The manufacturer will, again in theory at least, know so much about how its product has been used that when you take your BMW back with a broken automatic gearbox, it will absolve itself from blame because the box will have radioed back that it was always being jammed into reverse when the car was still moving forward.

Result: a world which heaps more obligations on producers of goods and services becomes a world which will also place more obligations on purchasers of those goods and services. That means a more earnest, bossy and legalistic world. Do we really want that? It is easy to see why it is happening, but it does not sound a bundle of fun.