The Power of Advertising


Lynn Stuart Parramore has an article at Reuters about a whole bunch of medical scams that are sold as miracle health products without a shred of evidence to back them up. And I think she’s absolutely right to point out that it is dishonest marketing that makes them so popular:

As consumers, we like to think of ourselves as savvy and rational. But marketers have always known better. The health food and dietary supplement industries, in particular, have long made a mockery of the rational consumer.

They delve into our wounded hearts with evangelical calls to detox and purify. They bend our minds with pseudoscientific drivel and armies of so-called experts who tell us that instead of fresh, nourishing food, we need supplements and specially treated products.

Never mind that mounting evidence suggests the contrary. Our self-control is subverted by clever ads and our rationality crumbles when everything from upscale health stores to 7-Elevens stock pills, powders and products that would make a snake oil salesman blush.

While we may be alert to crude promises of miraculous results, we’re not so good at sussing out the more insidious distortions and oversimplifications – especially when it comes to something as intimate as our bodies. Human emotions and self-delusion tendencies get in our way.

Let me apply this to a seemingly disconnected issue: This is also why the libertarian idea that the market will correct for all the bad stuff because consumers will refuse to buy products or services from a company that mistreats its workers or harms the environment or any other externality that we use government regulation to prevent is a fantasy. We can call this the Myth of the Rational and Informed Consumer. As I wrote a few months ago:

The libertarian argument is that in a free market, consumers would choose not to do business with a company that caused a large amount of pollution and, because the company knows that, it will have an incentive not to pollute. This is so absurd that I consider it a utopian fantasy. It fails on several levels. First, most consumers have no knowledge of what any company has done to damage the environment, and when they do know, the overwhelming majority simply doesn’t care.

How many people are now refusing to buy gas at BP stations because of the Gulf oil spill? That was the probably the most widely covered environmental disaster in American history, perhaps in world history (Chernobyl is probably up there too). There was a massive amount of negative press aimed at BP. The next year, 2011, they had a profit of $25.7 billion. Even the most widely publicized environmental disaster did almost nothing to hurt the company responsible for it.

Has the company responsible for the Love Canal disaster been punished by consumers for their behavior? Hell, could more than 1% of the public even identify that company? I had to look it up myself. It was Hooker Chemical, now called Occidental Petroleum. It made more than $10 billion in profits last year. Is there even a single major company that has gone out of business or even had a serious dent put in their profits by being responsible for an environmental disaster? I can’t think of one.

I still can’t think of one. Corporate bad actors have little to fear from even those few consumers who are informed enough to know that they’ve done something horrible and nothing at all to fear from the overwhelming majority who are completely unaware of it. In the end, dishonest marketing wins almost every time and it’s because the vast majority of people are ignorant, apathetic or both.

Comments

  1. D. C. Sessions says

    To anyone who believes in the rational consumer, I have three words:

    “Multi-Level Marketing.”

  2. cafink says

    I live on the Gulf Coast. I was in Biloxi recently and was surprised and a little saddened to see a BP gas station on the beachfront road.

  3. Kevin Kehres says

    I stayed away from Exxon after the Exxon Valdez disaster — because there was a Mobil station right across the street. And then when they merged — I moved to BP.

    Sigh.

    That’s the problem. If you only did business with the “right” kind of company, you’d be sitting in your unheated hovel, eating home-made gruel from crops you fertilized with compost made from your own shit.

  4. says

    Kevin Kehres “If you only did business with the “right” kind of company, you’d be sitting in your unheated hovel, eating home-made gruel from crops you fertilized with compost made from your own shit.”
    I did that, but had to boycott myself because it wasn’t certified organic, free-range, fair trade dooky.

  5. busterggi says

    Hey now, this doesn’t include those new ‘copper-infused’ flexible braces does it because there are actual people (or actual actors anyway) who swear they work.

  6. mx89 says

    Didn’t Patriot Coal and Freedom Industries either declare bankruptcy or have to restructure recently because of their environmental destruction? Let taxpayers take the bill if it’s too big, and start over with a new business!

    “If you come to grief, and creditors are craving,
    (For nothing that is planned by mortal head
    Is certain in this Vale of Sorrow saving
    That one’s Liability is Limited),
    Do you suppose that signifies perdition?
    If so you’re but a monetary dunce
    You merely file a Winding-Up Petition,
    And start another Company at once !”
    – Gilbert and Sullivan, Utopia, Limited

  7. says

    The important, yet overlooked, issue is that if we abolished regulations, there would be no need for regulators. How would a company pouring toxic waste into a river be identified. Who would be responsible to ensure safe working conditions. There is no need for a company to adhere to any particular rule because no one would be designated to ensure adherence, ignoring the fact that there would not be a rule in the first place.

  8. Pierce R. Butler says

    Is there even a single major company that has gone out of business or even had a serious dent put in their profits by being responsible for an environmental disaster?

    Union Carbide took a big hit from their boo-boo at Bhopal (which killed ~10K people and injured hundreds of thousands more), but all that did in the long run was drop their stock price enough to facilitate buy-out by Dow Chemical. Disaster capitalism can profit from even capitalist disasters.

  9. pocketnerd says

    Thus Spake ZaraLorax, #7:

    The important, yet overlooked, issue is that if we abolished regulations, there would be no need for regulators.

    I assure you, this isn’t “overlooked” by the big financial interests pushing neo-feudalism libertarianism. It’s not a bug, it’s a feature.

    How would a company pouring toxic waste into a river be identified. Who would be responsible to ensure safe working conditions. There is no need for a company to adhere to any particular rule because no one would be designated to ensure adherence, ignoring the fact that there would not be a rule in the first place.

    Oh, it’s simple! All those people downriver of toxic waste dumping can just file civil lawsuits and sue for damages! They’ll surely be able to afford legal representation on par with a multi-billion-dollar company. And anyway if a river doesn’t BELONG to anybody, how can it be immoral to dump toxic waste into it? It’s not YOUR river, so stop whining about your bogus “right” to have it unpolluted, you moocher.

    And “safe working conditions”? Why, the Invisible Hand of the Free Market will magically nudge the price of labor upward until it’s cost-effective for the business owner to keep his workers safe! It’s not like history is full of examples of laborers being economically coerced into unsafe and inhumane working conditions. And anyway if such examples DO exist they don’t count because obviously they weren’t Real True Libertarian™ societies.

  10. vmanis1 says

    The Rational Consumer myth is demonstrably false on so many levels.

    * Car companies sell us vehicles on the grounds that they will get us dates, or allow us to drive through night-time cities at suicidal speeds (Professional driver on closed course. Do not attempt.), or, in the case of Jaguar, that movie villains drive them.

    * Surveys show that consumers can tell the difference in taste between fast-food chains. Yet, in a recent consumer survey, the most poorly-rated chain is actually #1 in sales.

    * U.S. drug advertisers flood the airwaves with calls to consumers to ask their doctors to prescribe specific medications. Yet these ads would be totally unnecessary if the doctors naturally prescribed the drug being advertised forthe patient requesting it. (Drug advertising to doctors is a different kettle of fish; and Canada more tightly regulates the advertising of prescription drugs to consumers than does the U.S.)

    * In North America, most jurisdictions have lottery corporations or similar authorities. While presenting a $2 lottery ticket as a harmless flutter is honest advertising, promoting big-ticket lotteries by asking what you will do with all your wealth, without displaying an indication of the odds, is dishonest. Yet consumers don’t rise up and demand an honest assessment of their chances of winning.

    I could go on and on. My point is that all of us, as consumers, do irrational things. One could argue that the market will drive bad actors out. In fact it doesn’t, as is attested to by the longevity of some restaurants where everyone agrees that the food and service are terrible.[*] Government regulation is what levels the playing field, and protects all of us from some of the consequences of those irrational things.

    [*] In Vancouver, there is a Greek restaurant that gets almost universal mediocre-to-terrible reviews. Yet there is always a lineup to go in.

  11. vmanis1 says

    Lest my previous comment be misinterpreted, let me say that government regulation should prevent us from disastrous consequences such as predatory loans, or misprescribed drugs, or food poisoning.

    If people want to eat at a restaurant that is terrible, let them.

  12. dogmeat says

    I would suggest that the industry that experienced actual businesses failing due to their damage to customers and the environment would most likely be the asbestos manufacturers. Unlike the oil industry, the product was ultimately banned. Unlike the chemical industry, some of those companies were limited to asbestos production, so the combination of lawsuits and the ban did lead to the end of the company. Of course most of them declared bankruptcy and managed to avoid paying for most of the damage that they did.

    I always point to the tobacco industry and the oil industry as examples of how an unregulated market would be far, far worse than even the limited regulations we have. In both cases the industries in question spent years undercutting the regulations and spent millions trying to refute the evidence of the damage their products caused.

  13. says

    I stayed away from Exxon after the Exxon Valdez disaster — because there was a Mobil station right across the street. And then when they merged — I moved to BP.

    At most, you hurt the mom and pop who owned the gas station.* Oil however is a fungible commodity. Exxon can always sell their oil to BP. So as long as you’re buying it from somewhere, Exxon makes money. If you really want to stick it to them, the only solution is to use less.

    *The trend over the last 20 years or so has been to stop naming retail gas stations after oil companies precisely because the oil companies are so universally loathed. But that aside, it makes no difference what they’re called or who owns them.

  14. JPS says

    re @14, gas station branding:

    I read a couple of years ago that the gasoline you buy from your favorite gas station comes from the same refinery spigot as the gas station down the block. The gas differs only in the additives which are introduced as the taker truck is loaded, about three quarts per truck load. Each “major” brand has its own additives, then there’s a generic additive for the rest.

  15. says

    “Fungible Commodities” was an album my band released during our Electronic period. “Electronic Period” was, too. Everything was. We released a lot of albums.

Leave a Reply