WEBVTT NOTE 22. The Economics of Here to There 1 00:00:00.000 --> 00:00:08.000 Chapter 22. The Economics of Here to There. January 17, 2007. 2 00:00:08.000 --> 00:00:24.000 Not being a television watcher, I was amazed to discover from watching an hour or two of commercials this weekend that there is a little pill you can take that will turn your body from portly and weak to thin and strong in a matter of months, if not weeks. 3 00:00:24.000 --> 00:00:29.440 and how much better will be the eventual results if you acquire this thing called 4 00:00:29.440 --> 00:00:34.440 the bean which looks like a blow-up pool toy but is really the key to flattening 5 00:00:34.440 --> 00:00:40.000 your belly and giving you abs of extraordinary beauty also there is this 6 00:00:40.000 --> 00:00:44.160 cream that will triple the amount of moisture in your hands and there is a 7 00:00:44.160 --> 00:00:49.480 gel that will stop hair loss and also it turns out I would have a greater 8 00:00:49.480 --> 00:00:53.640 ability to concentrate if I ate a good breakfast that included frosted 9 00:00:53.640 --> 00:00:59.680 Mini Wheats, each of which talks and has a charming personality. And there is this nose 10 00:00:59.680 --> 00:01:04.880 spray that will help me breathe better and play trumpet like a pro, which will thereby 11 00:01:04.880 --> 00:01:11.840 earn my son's admiration, just like on TV. Such are the claims we encounter minute by 12 00:01:11.840 --> 00:01:18.080 minute on the tube, advertisements on which millions and billions are spent, just so that 13 00:01:18.080 --> 00:01:21.160 But we will buy this instead of that. 14 00:01:21.160 --> 00:01:25.560 And the socialist says, what a ghastly waste it all is. 15 00:01:25.560 --> 00:01:31.720 They ask, what is wrong with the economic system as it exists, that vast sums of wealth 16 00:01:31.720 --> 00:01:38.040 are consumed to get us to believe the improbable when, at the same time, whole populations 17 00:01:38.040 --> 00:01:44.580 around the world suffer without access to clean water and enough food to feed children. 18 00:01:44.580 --> 00:01:50.820 And so, they propose a global regime to expropriate the capitalist class. 19 00:01:50.820 --> 00:01:56.260 And yet, it is not as if the capitalists welcome the chance to spend vast sums on television 20 00:01:56.260 --> 00:01:58.100 advertising. 21 00:01:58.100 --> 00:02:03.080 How great it would be if all a capitalist had to do was to create something, and that 22 00:02:03.080 --> 00:02:07.300 alone would cause the multitudes to flock to the warehouse and buy. 23 00:02:07.300 --> 00:02:11.220 Alas, that is not the way the world works. 24 00:02:11.220 --> 00:02:15.260 There are multiple competing ends for how we spend our money. 25 00:02:15.260 --> 00:02:20.420 The first step that is required to persuade those resources to be used in one way as versus 26 00:02:20.420 --> 00:02:25.540 another is to have the knowledge that a particular product exists. 27 00:02:25.540 --> 00:02:31.340 The second step is to persuade the potential buyer to make a choice in favor of a particular 28 00:02:31.340 --> 00:02:32.620 product. 29 00:02:32.620 --> 00:02:37.660 It is the necessity of human choice in a world in which information is scarce that makes 30 00:02:37.660 --> 00:02:41.100 advertising a feature of our world. 31 00:02:41.100 --> 00:02:46.000 If they knew in advance that the millions they spend this way would be for naught, they would 32 00:02:46.000 --> 00:02:48.900 use the resources in other ways. 33 00:02:48.900 --> 00:02:51.380 The boss could increase his own salary. 34 00:02:51.380 --> 00:02:56.540 The company might lower its prices to undercut the competition or attract better workers 35 00:02:56.540 --> 00:02:58.340 through higher pay. 36 00:02:58.340 --> 00:03:02.820 The resources it requires to promote your product are some of the most painful ways 37 00:03:02.820 --> 00:03:04.780 to spend a buck. 38 00:03:04.780 --> 00:03:08.740 It is pure speculation as to whether there will be a payoff. 39 00:03:08.740 --> 00:03:13.100 Even a temporary payoff says nothing about the future. 40 00:03:13.100 --> 00:03:18.820 What the entire critique of advertising misses is the crucial and even decisive economic 41 00:03:18.820 --> 00:03:23.200 issue that is solved by the principle of marketing. 42 00:03:23.200 --> 00:03:29.100 How does a product or a service go from being a good idea or even a physical possibility 43 00:03:29.100 --> 00:03:33.620 to being available for people and available for consumption? 44 00:03:33.620 --> 00:03:39.280 Here is the major issue that has never been solved by any other system but capitalism. 45 00:03:39.280 --> 00:03:46.060 And capitalism solves it in a way that is wealth generating and leads to constant improvements. 46 00:03:46.060 --> 00:03:50.900 Thanks to the advent of mass blogging, many more people are acquainted with this issue 47 00:03:50.900 --> 00:03:53.500 than ever before. 48 00:03:53.500 --> 00:03:59.500 Let's say you take what is for most people a big and exciting step of creating a blog. 49 00:03:59.500 --> 00:04:02.420 There are so many sites now that make it easy. 50 00:04:02.420 --> 00:04:08.780 you sign up, you fiddle around with the look and feel, you add links, and the all-important 51 00:04:08.780 --> 00:04:13.220 About Me page, you are ready to go. 52 00:04:13.220 --> 00:04:19.260 You write your first post, thoughts you find funny, profound, insightful, or otherwise 53 00:04:19.260 --> 00:04:23.840 compelling in some way, submit, and voila! 54 00:04:23.840 --> 00:04:28.340 You are published in a medium that is accessible to the entire world. 55 00:04:28.340 --> 00:04:30.680 Who can believe it? 56 00:04:30.680 --> 00:04:35.520 The thrill doesn't last long because you suddenly realize something that had not yet 57 00:04:35.520 --> 00:04:43.320 presented itself. Only your family is reading this. Maybe. It's true that anyone in the 58 00:04:43.320 --> 00:04:49.040 world can access it, but why should anyone want to? How are people ever going to find 59 00:04:49.040 --> 00:04:55.840 out about it? How can you be sure that people are going to come back again and again? This 60 00:04:55.840 --> 00:05:00.120 is a striking problem mainly because it is something that hadn't actually occurred to 61 00:05:00.120 --> 00:05:07.760 You created a beautiful product, you could create a profound post, but you must then 62 00:05:07.760 --> 00:05:11.080 persuade people to read it. 63 00:05:11.080 --> 00:05:15.960 You might have read somewhere that the key to blogging is to do it often, so you blog 64 00:05:15.960 --> 00:05:21.020 and blog, you post three times or even ten times per day. 65 00:05:21.020 --> 00:05:23.880 You keep this up for weeks, even months. 66 00:05:23.880 --> 00:05:27.240 Exhausted, you check your stats. 67 00:05:27.240 --> 00:05:32.620 They show no increase in readership. Still, only your family is reading. Or at least they 68 00:05:32.620 --> 00:05:38.280 claim to be reading. You then turn to other means. You link. You 69 00:05:38.280 --> 00:05:45.400 beg for links. You turn on trackbacks. You try boosting your search engine ranking. Finally, 70 00:05:45.400 --> 00:05:52.480 you take the step. You buy a spot on Google Ads. Then things begin to happen. And then 71 00:05:52.480 --> 00:05:56.560 Can you marvel at how much time you have spent on this project? 72 00:05:56.560 --> 00:06:01.280 It seems that you have spent ten times as much time promoting than you ever spent writing 73 00:06:01.280 --> 00:06:02.680 your blog. 74 00:06:02.680 --> 00:06:07.480 And yet, what is the point of writing if you have no readers? 75 00:06:07.480 --> 00:06:12.020 In this way, average people are beginning to see the great hidden cost of capitalist 76 00:06:12.020 --> 00:06:15.580 production getting from here to there. 77 00:06:15.580 --> 00:06:20.800 And take note that with blogging, the problem of distribution is already solved. 78 00:06:20.800 --> 00:06:24.640 The final product is delivered via a click. 79 00:06:24.640 --> 00:06:30.560 Imagine if you had a book or a tire or an air conditioner part to sell. 80 00:06:30.560 --> 00:06:33.060 That presents all sorts of new problems. 81 00:06:33.060 --> 00:06:35.380 You must produce something physical. 82 00:06:35.380 --> 00:06:36.440 How many? 83 00:06:36.440 --> 00:06:37.700 You must have a warehouse. 84 00:06:37.700 --> 00:06:38.860 How big? 85 00:06:38.860 --> 00:06:43.800 You must be prepared to process credit cards, do the accounts, meet a payroll. 86 00:06:43.800 --> 00:06:49.440 And you must do all of this, not after you have the revenue, but before. 87 00:06:49.440 --> 00:06:56.120 It all seems like a wild act of faith. It is indeed. And keep in mind that the costs 88 00:06:56.120 --> 00:07:01.840 of distribution are not only a problem that faces the capitalist class, it also confronts 89 00:07:01.840 --> 00:07:08.160 the charity worker. What if I made a massive dinner and set it on the table and proclaimed 90 00:07:08.160 --> 00:07:13.960 that it was reserved for the poor of the world? Well, there were a few steps missing, aren't 91 00:07:13.960 --> 00:07:19.240 there? No matter what your ideology, the reality that you must do something to get the food 92 00:07:19.240 --> 00:07:25.300 to those who need it is inescapable. The costs of promotion and distribution are far more 93 00:07:25.300 --> 00:07:30.880 vast than the costs of production alone. In order to be willing to undertake such a thing 94 00:07:30.880 --> 00:07:36.080 and bear such high costs, you must really believeology in your product, or at least 95 00:07:36.080 --> 00:07:41.400 believe that you have entered into some kind of sustainable undertaking. The prospect of 96 00:07:41.400 --> 00:07:47.880 bankruptcy looms large and relentlessly. Am I saying the inventor of the bean really believes 97 00:07:47.880 --> 00:08:17.880 Capitalism is based upon the idea that it can give you fabulous abs? Most certainly. And if used correctly, it probably does. The same goes for the hand cream company, the mini wheats maker, and the stop hair loss capitalist. These people are indeed believers. There are such things as hoaxes to be sure, but capitalism tends to discourage them by imposing the cost of promotion and distribution entirely on the producer while the choice to buy or not buy lies solely on the 98 00:08:17.880 --> 00:08:32.880 Business Propaganda must be obtrusive and blatant. It is its aim to attract the attention of slow people, to rouse latent wishes, to entice men to substitute innovation for inert clinging to traditional routine. 99 00:08:32.880 --> 00:08:36.320 Business Propaganda must be obtrusive and blatant. 100 00:08:36.320 --> 00:08:42.920 It is its aim to attract the attention of slow people, to rouse latent wishes, to entice 101 00:08:42.920 --> 00:08:48.940 men to substitute innovation for inert clinging to traditional routine. 102 00:08:48.940 --> 00:08:55.200 In order to succeed, advertising must be adjusted to the mentality of the people courted. 103 00:08:55.200 --> 00:09:00.000 It must suit their tastes and speak their idiom. 104 00:09:00.000 --> 00:09:06.360 Advertising is shrill, noisy, coarse, puffing, because the public does not react to dignified 105 00:09:06.360 --> 00:09:08.000 illusions. 106 00:09:08.000 --> 00:09:13.240 It is the bad taste of the public that forces the advertisers to display bad taste in their 107 00:09:13.240 --> 00:09:15.960 publicity campaigns. 108 00:09:15.960 --> 00:09:21.680 The art of advertising has evolved into a branch of applied psychology, a sister discipline 109 00:09:21.680 --> 00:09:23.540 of pedagogy. 110 00:09:23.540 --> 00:09:28.260 Like all things designed to suit the tastes of the masses, advertising is repellent to 111 00:09:28.260 --> 00:09:42.260 A Sister Discipline of Pedagogy? Yes, indeed it is. It is also art. And those with delicate feeling need to learn to appreciate it for what it is. 112 00:09:42.260 --> 00:09:50.260 They don't have to believe a word of it. Decline to drink the potion to make you thin. Refuse the breakfast that will make you concentrate. 113 00:09:50.260 --> 00:09:58.180 Eschew the hand-cream that will restore moisture. Be as sceptical as you want and, instead, 114 00:09:58.180 --> 00:10:04.100 save every penny. Turn off the television if you hate it and sit in your perfect environment 115 00:10:04.100 --> 00:10:10.480 and listen to Gregorian chant. But don't push for a system that would deny producers 116 00:10:10.480 --> 00:10:15.040 the right to persuade others, and don't deny others the right to make a choice for 117 00:10:15.040 --> 00:10:15.880 themselves.