Artificial Demand And Too Much Supply In U.S. Economy
In a recent newspaper article entitled "Homeless Workers Paid With Pizza," the account was given of one Peter Schoeff, a 20-year-old homeless man living in Portland, Ore., who is paid pizza and soda to hold a sign which reads "Pizza Scmizza paid me to hold this sign instead of asking for money." The article goes on to state that this sort of tactic brings to mind the use made of unemployed men during the Great Depression, who were often paid to wear sandwich board advertisements. The latest tactic of using homeless people as living advertisements also calls into question just how far the U.S. economy has eroded for companies to stoop to such a level.
The A.P. article observed, "From the sandwich board to cigarette girls to aerial banners, companies are forever searching for creative means to reach customers," adding that the "search has become more frenetic lately as advertisers try to break through what is known in the industry 'ad clutte' -- the way people are bombarded by commercial messages from all sides."
For example, an ad agency in London, Cunning Stunts Communications Ltd., has recruited students to wear temporary tattoos on their foreheads while hanging out at bars or trendy stores. Sony Ericcson, the cell phone company, has hired models to lounge at tourist attractions and play with a mobile phone to make the gadget look attractive. Beach N' Billboards Inc. of New Jersey used a steamroller-like machine to imprint ads for Snapple iced tea on the beach. Schmizza has also tried handing out fake parking tickets with pizza coupons, and putting up fake election placards reading "Elect Schmizza for Dinner"
In light of all of this, have you ever stopped to consider just how much commercial advertisement the average person living in America is subjected to these days? The first thing that comes to mind is the annoying and ever-present form of advertisement known as Internet "spam." Then there is the growing form of advertisement involving placards placed in public restroom, even in the bathroom stalls. There is billboard advertising along every road, television and radio advertisement (mostly for automobiles and some type of loan). There is classical "junk mail." There is Internet advertising aplenty. And it's getting to where you can't even go to the beach for an "escape" from the commercialism of the everyday world without seeing advertisements imprinted in the sand (see the above reference). I even recall a few years back that McDonalds wanted to launch a giant version of its corporate logo (the famous golden arches) into space that would be made of a reflective mylar material. That way people all around the world who looked up at the night sky on a moon-lit night would always see the flying McDonalds sign no matter where they were! (Fortunately, this proposal was nixed by the government.) If this isn't proof-positive that we live in a consumer-driven, commercial society then what is?
Another indication that the U.S. consumer-based service economy will continue and even accelerate its downward trend due to top-heaviness is the extraordinary (one could say unprecedented) number and array of new products to hit the market in recent months. Every major consumer sector company seems to have at least two or three new spin-offs of their flagship product or service. This is a classic case of too much supply hitting the market at a time when the consumer dollar isn't strong enough to absorb it. Most of these new products were developed during the late '90s when the market and economy was running hot and when the "New Product Development" was the major corporate fad. But by the time production of these new ideas had been finalized the economy had already peaked and started to decline, and now all of these new products and services are hitting the market at the same time in the face of a contracting economy and a much softer consumer market.
But of course, as companies have spent untold millions developing these new and (and unnecessary) new products, they must justify the investment by spending millions on advertisement to try and persuade the consumer to buy these products. You can see this in the frenzied effort at all different kinds of commercial advertisement that only seems to become more intrusive by the month. Saturation advertisement has become a major stimulus toward getting the consumer to spend money he otherwise would save or else put to more productive purposes. Thus the average American continues to be stripped of his wealth, first by stock market losses and now by "hypnotic consumption" (a term coined by Lawrence Patterson, editor of Criminal Politics magazine). This artificially stimulated demand can only lead to greater problems for the individual consumer as well the broad economy down the line, especially when coupled with the overwhelming supply of useless products and services glutting the market.
Gary Ruskin, director of Portland-based Commercial Alert, was quoted in the A.P. article mentioned above as saying that, "People don't want to get hammered with an ad every time they turn their head,"' he said. "Most advertising is either somewhat of a lie or deceptive, and it's an assault on our attention." I've never quite heard anyone frame it this way, but Ruskin is right, commercial advertising is rapidly degenerating into outright sensory assault.
Let's take the observation a step further: Why the exponential increase in commercial advertisement of all forms (including "creative" forms of advertising that are constantly being invented, such as paying students to wear forehead tattoos)? Because the U.S. economy is based primarily on services, which require constant advertising in order to generate revenues. Moreover, since the U.S. is a service-based economy, then theoretically anyone can compete in services since it generally involves minimal capital outlays when compared with industry and manufacturing. So what we have are the ingredient for hyper-competition for an ever-shrinking public purse. This explains the almost manic increase in commercialism, not to mention commercial audacity. In the end, this type of economic competition is self-destructive and will lead to economic implosion. And to what do we owe this state of affairs? To the de-industrialization of America and the transformation of the country from industry-based to service-based.
In the June 11 issue of Dow Theory Letters, Richard Russell noted that "On top of everything else the U.S., in a report just released, must deal with unfunded liabilities (Social Security, Medicare, Medicaid) of over $44 trillion. There's no way this can be paid off except via drastic cuts in Social Security and health care plus an increase in taxes plus massive creation of additional dollars. It's obvious that none of this will be addressed until AFTER the coming election. Tomorrow's expenses represent a disaster that has been built into the U.S. future. This is the shameful legacy that you and I and the Congress and the President are leaving for our children."
Russell then asks how the U.S. can get itself out of its monstrous debt and invites his readers to offer their ideas. Well I'd like to add my two cents on this subject, especially as it pertains to the things I discussed earlier in this article. Instead of suggesting a top-down approach to solving the country's economic problems, I propose a bottom-up plan. I argue that the answer to the country's economy mess MUST come from the American people. The American public must do their part by doing their utmost to get out of debt, and above all, stop their mindless "hypnotic" consumerism. To this end the federal government (the FCC in particular) can play a big part. I propose a government-enforced prohibition on certain forms of consumer-focused advertising, particularly television advertising. For instance, automobile makers have been heavy advertisers in the past couple of years and have used tactics such as "Zero Down" and "0% Financing" to lure consumers into taking on loans for expensive new vehicles. Why not make it illegal for any auto manufacturer to advertise on the airwaves who does not have most or all of their production facilities here in the United States? This would not only encourage growth in the U.S. industrial base but would be a means of preventing unnecessary consumption on big ticket items at a time when the country's financial state cannot allow it. Encouraging patronage of domestic producers can only strengthen the country's economic position, but allowing U.S. consumers to spend money on items produced overseas only encourages capital flight. I would also propose a ban on any form of debt-focused advertising, such as ads for mortgages and other consumer-type loans. Advertising for money loaned at interest is one of the major reasons why we have financial bubbles in real estate and automobiles right now. This is just one small suggestion, but in my opinion it would be a step in the right direction.
The way to improve the economy is a double-sided coin -- on one side is the urgent need to increase manufacturing and investment in basic industries, including mining, drilling and mineral exploration. On the other side is the need to get the average American to do his part to help the economy along by spending and saving responsibly. To this end, the consumer must be protected again the aforementioned "sensory assault" of intensive, saturation advertisement designed at putting the consumer into greater and greater debt as he loads up with non-essential items. This suggestion may sound extreme and perhaps even dictatorial in nature, but to quote the old saying, "drastic circumstances call for drastic measures."