By tovarichpeter follow 2012 Dec 2, 2:33am 517 views 2 comments
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Economists have been debating this topic for a century now, and a couple of broad camps have formed. Many argue that ads are ultimately beneficial, giving people more information about products and boosting competition. Others suggest that ads are essentially a psychological ploy, persuading people to buy things they wouldn’t otherwise want or need. And a few economists, notably Arthur Pigou, have argued that there’s too much advertising in the world, with rival companies merely bludgeoning each other to a standstill.
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Here's a point to be counted against advertising, re. this massive deception by omission:
Ads are a substantial fraction of 'information going by', which contributes to this deception by doing the omitting. Call it the "I never heard of that!" effect.
Advertising is a zero-sum game. Only a tiny bit of resources is necessary to allow people to find out what goods and services are available, a single electronic library of such goods is sufficient. Anything past that is a zero-sum game in which any attention one company gets comes at the expense of another company.
Advertising ads nothing to the GDP. It is neither a capital good nor a consumer good. It is, at best, overhead and should be minimized as such. Unfortunately, it is actually maximized due to the Tragedy of the Commons.
This tragedy wastes enormous resources in our society that could be spent to provide real goods and services improving the quality of life or investing in capital goods and infrastructure for future growth.
Furthermore, advertising actually prevents competition, innovation, and the free market from working because small businesses and startups are at monumental disadvantages when competing for advertisements with slow, cumbersome, giant corporations. Advertisement becomes a barrier to entry for new businesses and ideas. It harms the free market more than government ever could.
Finally, advertisement is self-defeating. We have long passed the point where ads increase communication with perspective customers even against the customer's will. As more ads are produced, each becomes less effective because human beings are forced to ignore them as noise. It is mathematically impossible for humans to listen to all the ads they are exposed to on a daily basis. Any "subconscious" benefits for the advertiser are also washed out by all the conflicting noise.
It's come to the point where the mere presence of an ad is likely to turn off the potential buyer. I refuse to buy from any company that sends postal or email spam to me even once. I've done business with companies who latter send postal ads to me only to never do business with them again, whereas I would have been a regular customer had they not.