TWELVE

QUESTIONABLE MARKETING OUTPUTS

One of the great things about American capitalism and freedom is that our economy produces an extraordinary variety of products and services. Our stores are well stocked with food, appliances, furniture, electronics, and everything else you can imagine or wish for. We have few laws stopping any products from being made, even if they may be injurious to health or safety.

ARE OUR FOODS HEALTHY?

Consider that in the last few years, the following books appeared:

Salt Sugar Fat: How the Food Giants Hooked Us by Michael Moss (Random House, 2013)

The Blood Sugar Solution: The Ultra Healthy Program for Losing Weight, Preventing Disease, and Feeling Great Now by Mark Hyman (Little, Brown, 2012)

Grain Brain: The Surprising Truth about Wheat, Carbs, and Sugar—Your Brain’s Silent Killers by David Perlmutter with Kristin Loberg (Little, Brown, 2013)

These books assert two basic ideas: (1) A lot of the food we consume is unhealthy and (2) American and foreign manufacturers are ready to sell us anything that will make money for them. The irony is that the food industry is simply selling us the food we like. We happen to like salty, sweet, and fatty foods, and businesses are simply meeting our needs.

Isn’t this also true of Coca-Cola and McDonald’s, two of America’s iconic companies? A bottle of regular Coke contains six ounces of sugar. Research shows a direct relationship between consumption of sugary drinks and an increase in obesity, which in turn promotes diabetes, heart disease, stroke, and many other health problems. A typical lunch at McDonald’s includes a hamburger, French fries, and a Coke and is guaranteed to deliver a lot of salt and fat. The result is the rising level of obesity in the American and world population. But again, these two companies are not plotting to make us obese. They are only serving us what appeals to our taste buds. As long as we believe in producer freedom, we can’t tell these giant companies what to make.

What’s more, these companies are outstanding in their contributions to good causes. Coca-Cola not only sells us “happiness” but donates a lot of money to medical and community causes. As for McDonald’s, there are 322 Ronald McDonald Houses in fifty-two countries where families with hospitalized children can stay free of hotel costs. Most Americans love these companies and their offerings.

There are times in American history when the government tried to ban certain products and services. The government undertook to ban alcoholic beverages during Prohibition only to finally end the effort, having created many criminal gangs and much public harm. The government is still conducting a War on Drugs, which is producing drug gangs and cartels without reducing the use of hard drugs. We didn’t ban cigarette buying or smoking (although we’ve placed restrictions on where people can smoke), but we’ve put heavy taxes on cigarettes and limitations on their advertising.

WHAT ABOUT GUNS?

One of the most troublesome marketing outputs under capitalism is the widespread production and purchase of guns. Most nations have banned or curbed the public carrying of guns, with the glaring exception of the United States. The U.S. gun lobby (the National Rifle Association) is powerful, and most legislators are ready to accept the NRA’s financial support in exchange for their voting to block curbs on gun purchases. Americans are able to buy not only semiautomatic handguns, but rapid-firing assault weapons. In some states, it’s legal for gun owners to carry a gun into a mall, movie theater, or church. Gun owners claim a constitutional right to own and carry a gun on the grounds of the Second Amendment, which vaguely holds that citizens can bear arms. However, the constitutional intention was that members of a militia could carry arms, not individual citizens.

It is no surprise that as a result of the proliferation of guns, several tragic shootings have occurred, such as twenty-year-old Adam Lanza barging into Sandy Hook Elementary School in Newtown, Connecticut, on December 14, 2012, and killing twenty children and six adults and then killing himself.

One would think that the Sandy Hook outrage would lead to a flood of legislation to control guns. But since Sandy Hook, more pro-gun bills have been passed than those that were gun control bills. This is despite the fact that the American public is overwhelmingly in favor of gun control. Numerous organizations have been formed—the Educational Fund to Stop Gun Violence, Sandy Hook Promise, Moms Demand Action for Gun Sense in America, Mayors Against Illegal Guns, among others—to raise money and stop gun violence. They hope to be as effective as Mothers Against Drunk Driving (MADD) has been in bringing awareness to the tragedies caused by drunk drivers and helping to establish stricter policies on driving while under the influence. But legislators are afraid to vote for gun curbs, fearing the all-powerful NRA would use its money to defeat them in the next election.

THE ROLE OF ADVERTISING IN SHAPING OUR WANTS

Many influences shape our wants. Our family, nationality, social class, and genes are among the influencing factors. But the role of advertising should also be mentioned in turning our needs (say, for food) into wants (say, a steak).

One can say a lot of good things about the role of advertising. Advertising alerts us to a lot of products and services that we may need or enjoy. Advertising introduced us to the benefits of an electric refrigerator, when we used to spend time getting ice for our “icebox,” and it introduced us to the electric dishwasher, when we used to hand wash and dry every dish. In that sense, advertising gets us to part with some money but we end up with a higher standard of living. Advertising also gives us better training for judging claims and counter claims about product attributes and virtues. And advertising makes it possible to enjoy, at no direct cost to us, expensively made radio and TV shows, thanks to sponsors wanting a few minutes of our attention.

Advertising, however, has its array of critics, including Thorstein Veblen, John Kenneth Galbraith, Daniel Bell, Vance Packard, and others who argue that the advertising industry is too powerful and uses every trick in the trade to get us to buy things that we don’t need.

Here is a quote from an anonymous advertising man: “Having worked for years in the advertising industry, I can tell you that the manufacturing of envy, desire, and wantonness is in full swing. What are their fears? What are their hopes and dreams, their struggles? What makes them feel better?”

We are exposed to 5,000 or more advertising messages daily. We are shown shiny new cars, beautiful clothes, appetizing meals, and must-have electronics on a daily basis. We are told the subtle differences between products in the same category and often warned that something is on sale “for today only” if we act now. Thirty-second commercials are one-sided, never mentioning the downside of any product. Whole generations have been raised on the promises of the ad industry to make us more beautiful, more desirable, safer, and more satisfied.

The good news today is that the Internet and our cell phones have made it possible now to get two sides of the story. Our friends can share their preferences, experiences, and reservations about advertising claims. We can look up different reviews about products and brands on the Internet. We can even set up a personal blog and message our friends and others about vendors, products, and service quality. Books and information are readily available on sustainable living and sane consumption.¹

Defenders of advertising will insist that they aren’t manipulating us and that consumers have free choice. Here is the critic Benjamin Barber’s answer to them:²

One can easily argue that many people are making poor choices because they have been so deeply conditioned by advertisers. How can you justify spending 50K$ on a car, and replacing it when it is 3 years old when an inexpensive well-made car will fulfill the basic needs of transportation and may last 5–8 years instead? How can you justify spending money on bottled water when tap water in most areas is just fine? And how can you justify accumulating tens of thousands in consumer debt just to acquire all of this stuff?

Barber continues:

There is the paradigm that runs deeply through our society that having more money and having more material goods will somehow make you happier. The problem is that these desires can never be satisfied—there is always something more, and there is always someone else who has more. In the end all of this materialism leaves people feeling empty, and the only tonic that they know to try and fill the void is to go out and shop some more.

Barber goes further and breaks the process down into two stages. First, children are “consumerized” by ads directed at them and in their being included in frequent shopping trips. Second, adults are treated like children who need many products and who become defined by the brands that they choose. They see themselves as “I consume therefore I am.”

There is another problem that intense advertising creates—namely, it gets people to want more things than their income can buy. And the finance industry stands ready to make easy loans and sells the idea, “Buy now, pay later.” Everyone gets one or more credit cards and can quickly acquire a car, a new television set, and other “goods” by just signing on the dotted line. In 2008, a person with a $14,000 income was able to raise the money to buy a $708,000 home. College students now have a trillion-dollar debt incurred in getting their college education, where the tuition costs rise every year faster than inflation.

Banks don’t have to worry about their easy lending policies. They can always repossess the home or car when there is a default. The banks can expect the government to help with student repayment of tuition loans. Somehow we have been seduced by advertising and banking to become an “instant gratification” society that itself contributes to over-purchasing, high debt, and a bubble economy that eventually bursts and continues the business cycle story of boom and bust.

THE QUESTION OF THE QUALITY OF PUBLIC GOODS AND SERVICES

Until now, I’ve commented on the quality of private goods and services produced in the American economy. The question can be asked whether public goods and services in America are generated at a high enough standard. Let’s focus on two major areas: public education and public health.

First, consider public education. Public education in the United States is financed by local property taxes. The good news is that the local public can decide on what the educational needs are in its community, which may be very different from community to community. The bad news is that children living in communities that pay higher taxes will have access to better schools and schooling. Children living in poor communities, especially members of minority groups, are handicapped educationally. In the United States, only 38 percent of three-year-olds are enrolled in early education; in the Organization for Economic Cooperation and Development (OECD) nations, 70 percent are enrolled. The number of students in this country who are poor in math, science, history, and literature is appalling. A 2012 study measured the skills of Americans from the ages of 16 to 65 and found that they lacked the mathematical and technological knowledge, along with the literacy, of people in Japan and Northern European countries.³ Our younger citizens were close to the bottom of the twenty-three nations the study assessed.

Next consider the U.S. health system. The United States spends a great deal more money than other countries on the health of its citizens and has much less to show for it. The United States spends two-and-a-half times more on health expenditure per person than the average of thirty-four other advanced countries in the OECD. For example, it spends twice as much as France, a country that is generally accepted as having very good health services.⁴ Add the fact that before the Affordable Care Act was passed, over 45 percent of American citizens were without health insurance. When I shared this fact with a Swedish professor friend, he said: “Most Europeans are aghast at the American health system. The vast majority of Europeans consider basic health care insurance a human right and not as something for the free market. It is part of an infrastructure to make a country work, like roads.”

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What are the alternatives to getting healthier and safer products produced and consumed under capitalism? We have seen that bans don’t generally work.

The first alternative is suggested by the cigarette example, where putting higher taxes on cigarettes reduced their sales. We could put higher taxes on items that are harmful to health or safety. Such taxes would most likely be passed on to consumers. But they would accomplish the goal of reducing consumption of these items.

The second alternative is to apply a “nudging” strategy, which involves loading the choices in a way likely to lead customers to buy the healthier alternatives.⁵ Some studies show that high school students will end up eating healthier food if the healthier food items are put near the front of the cafeteria line. Students are usually hungry after classes and grab what they see first. Extending this idea further, we can imagine supermarkets such as Whole Foods giving better shelf positions to the healthier brands within each category. So, healthier cereals would be at eye level and cereals loaded with fat and sugar would be on the lower shelves.

A third alternative is to use “social marketing tools” to persuade people to make healthier choices.⁶ The 4Ps (product, price, place, and promotion) could be applied to convince people about healthier and smarter choices. Advocates of better eating would describe the benefits of eating the right foods and the bad effects of eating unhealthy foods. Mayor Michael Bloomberg of New York City was the kind of civic leader who “counter-marketed” by trying to get supermarkets not to carry 16-ounce or larger sizes of sweetened drinks and ordering cigarettes to be put out of the sight of consumers.

A fourth alternative is to educate children from the time of their early schooling about making healthy food choices and stressing the problems caused by diets heavy in salt, sugar, and fats. Hopefully, their food choices would evolve more to the healthier offerings. This is the approach Sweden has typically tried to help its citizens grow up with the right habits and attitudes toward healthy living.

Many health charts exist showing the ingredients of a well-balanced diet that delivers enough vegetables and fruits as well as proteins and carbohydrates. The charts recommend getting more needed protein from fish and chicken than from meat. Beef, in particular, is an expensive way to get protein because cattle have to be raised on grazing land that is growing scarcer. Proteins, vitamins, and minerals can be delivered at much less cost.