Taking this one step further, I see that perhaps I should reevaluate a profession which I have disparaged.
The first step is assumed by Hanauer, which is: a consumer society is good or, at least, more beneficial than harmful. He makes the second step that the large majority in the middle class drive the consumer society by…consuming. And what drives the vast middle class majority to consume, given that taxes are high enough on the rich that they don't have to pay a disproportionate amount? It's the marketers!…the salesmen…the advertisers!
First of all, there's nothing all that new here. The great insight of John Maynard Keynes was that an economic slump was caused by a lack of demand, and the way to get an economy moving again was to increase demand.
Second, I'm not sure that anyone is arguing that this lack of demand is caused by a failure of advertising to convince people that they need to buy more things. I think of all my high ticket items: home, home improvements, college tuition and none of these purchases were based on ads. People spend more when they have more. For example, the GI bill suddenly improved the earning power of lots of people and demand went up and we had the prosperous 50's and 60's.
I'm not arguing that this lack of demand in an economic slump is caused by a failure of advertising. I am only recognizing that marketing drives the demand. There are other factors such as the lack of disposable money, which, in this case, Hanauer is partially blaming on the over burden of the middle class for taxes which should be paid by the wealthy.
Of course your desire to spend money on your home and college tuition is based on marketing. Look at societies which don't have the same marketing structure. Once people are convinced that better homes or better education will make them happier, they will purchase.
Perhaps Hanauer's next venture capital investment will be a new college or home improvement enterprise, but I suspect he is looking at other consumer goods as well. As Bill once recognized, it is not advertising a specific item that drives you to buy that item as much as the general noise of advertising convincing us that we should be making money in order to spend it so that we will become happier.
3 comments:
Duh?! But he does crystalize the mechanism.
Taking this one step further, I see that perhaps I should reevaluate a profession which I have disparaged.
The first step is assumed by Hanauer, which is: a consumer society is good or, at least, more beneficial than harmful. He makes the second step that the large majority in the middle class drive the consumer society by…consuming. And what drives the vast middle class majority to consume, given that taxes are high enough on the rich that they don't have to pay a disproportionate amount? It's the marketers!…the salesmen…the advertisers!
First of all, there's nothing all that new here. The great insight of John Maynard Keynes was that an economic slump was caused by a lack of demand, and the way to get an economy moving again was to increase demand.
Second, I'm not sure that anyone is arguing that this lack of demand is caused by a failure of advertising to convince people that they need to buy more things. I think of all my high ticket items: home, home improvements, college tuition and none of these purchases were based on ads. People spend more when they have more. For example, the GI bill suddenly improved the earning power of lots of people and demand went up and we had the prosperous 50's and 60's.
I'm not arguing that this lack of demand in an economic slump is caused by a failure of advertising. I am only recognizing that marketing drives the demand. There are other factors such as the lack of disposable money, which, in this case, Hanauer is partially blaming on the over burden of the middle class for taxes which should be paid by the wealthy.
Of course your desire to spend money on your home and college tuition is based on marketing. Look at societies which don't have the same marketing structure. Once people are convinced that better homes or better education will make them happier, they will purchase.
Perhaps Hanauer's next venture capital investment will be a new college or home improvement enterprise, but I suspect he is looking at other consumer goods as well. As Bill once recognized, it is not advertising a specific item that drives you to buy that item as much as the general noise of advertising convincing us that we should be making money in order to spend it so that we will become happier.
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