Posts tagged ‘advertising’

The Seen and Unseen

I am thinking about renaming the Chevy Volt the Chevy Bastiat.  Because the entire vehicle concept is based on the hope that people will ignore the unseen.  Specifically, those pushing the vehicle are hoping that buyers will just assume the electricity for the vehicle is free (after all it is not separately metered) and that the CO2 footprint is zero (despite the fact that in states like Michigan, an electric car is essentially powered by coal combustion.  From autobloggreen

We often, though sometimes incorrectly, assume that it's cheaper to operate an electric vehicle than a comparable gasoline auto. Hey, who hasn't? While this assumption generally holds true, electrical rates vary widely across the nation and can throw off the numbers. In some instances, like when Inside Line's engineering editor, Jason Kavanagh, drove the Chevrolet Volt out in sunny California, one discovers that operating a vehicle powered by electricity can indeed cost more than running it with the liquid fuel that pours from a pump.

Earlier, I took down the absurd initial advertising that the Volt got 230 MPG.

Ex Post Facto Law

Ex Post Facto law, meaning law retroactively criminalizing past practices, is explicitly banned in the Constitution.  But big government folks have found a way around this prohibition through the massive government regulatory bureaucracies that have been created over the last half-century.

Here is a great example.  In short, an online site accepted advertising from a company that the FTC later went after for deceptive advertising.  Note, the online site was not involved, they just ran the add, just as your web site may be running ads or Google adwords right now.  The FTC actually settled the case with the company accused of wrongdoing for $0.  So obviously, they were not that worked up about the ad.  But in order to establish a new legal principal that sites that run advertising can be liable for the entire liability for a deceptive ad, they went after the web site for $6 million!

Forget for a moment what bad policy this is -- can you imagine being fully liable for any fraud involved with any company that runs an add on your site?   But beyond that, the basic approach -- of legislating from the administrative branch, abuse of power to cow small companies and individuals through threat of bankrupting legal costs, and ex post facto rule-making -- is just staggeringly scary.

This is why I cringe every single day whenever the phone rings in my small business.

My suspicions were confirmed when I looked up the law the FTC said I had violated, a law that was vague and didn't seem to have much to do with what the FTC was accusing me of. And it certainly did not say that the FTC was entitled to the amount of money it wanted. My lawyers explained that the amount the FTC was suing for was based not on laws that Congress had passed but seemed to be based on what judges had awarded in previous cases over the years.

Moreover, in our case, the FTC was now trying to go beyond what previous judges had awarded. What lay behind their actions seemed to be this: they were trying out a new legal theory. They wanted to establish a new principle "“ that a person who was in any way connected to the advertising at issue, no matter how trivial their involvement, was liable for the entire amount of all purchases of the product by consumers. I felt as if I had been struck by lightning. I was the sacrificial lamb. I had the rotten luck to be chosen, of all people, to be the test of their novel legal theory. [...]

I'm all for getting tough on deceptive advertising, including Internet fraudsters. But what seems terribly wrong is the FTC playing Goliath where they just outspend everyone they go after, regardless of whether there was any wrongdoing. Unfortunately, that appears to be the direction in which they're going. David Vladeck, the new head of the Bureau of Consumer Protection (the person I met with), advocates pursuing test cases "even if the legal theory has not been accepted by the court prior to that time." (see In other words, you may be violating a law that doesn't exist yet. That is downright scary. The only thing the FTC is going to "prove" by "winning" these cases is that they can establish their new principles by bankrupting anybody but the very wealthiest Americans "“ the only people who could afford to take them on.

You Can Bet on 36 Red, But Not Angel Shares

I thought this was an interesting irony of our growing corporate state:

In my post "Attention Gov't: This Is How Businesses Are Created" I brought up the point that government regulations keep the average American from investing in ground floor business opportunities with rules specifying how much money someone must have before they can invest in start-ups (unless the start-up is being done by a friend or family member).  Government regulations also prevent start-ups from advertising their investment opportunity.  If you need ground-floor investment (as opposed to loans) to bring your business to the proverbial next level, there is a wall of regulation that keeps you from asking for it from the general public and specifies what "sophisticated investors" (the already rich) you can approach and how.

Those rules are there to protect us middle class rubes from being taken in by crafty and ill-intentioned businessmen.

I contrasted this protection the government so thoughtfully provides us"“keeping us from making possible bad investments"“with it's promotion of lotteries and acceptance of casino gambling.

Now these people who will not allow an entrepreneur to advertise or promote his start-up in order to get voluntary investment money from people willing to take a risk on the business idea or invention are looking at legalization of online gambling in the USA.

Awful DISCLOSE Act Passes House

No time today to comment, so I will direct you over to John Stossel who has more on this really awful piece of legislation.

Update: More in the Washington Examiner.  And here is a rare bit of honesty, where a Democratic Congressman admits the law is about keeping Republicans from being elected.  Team Coke wants to keep Team Pepsi from advertising.

Speech and Spending

I had a dinner conversation last night with my Massachusetts mother-in-law.  She is pretty interesting to talk to because she is a pretty good bellwether for Democratic talking points on most issues.  She was opposed to the recent Supreme Court speech decision removing limits on third party advertising near an election  (I think she misunderstood the scope of that decision but that is not surprising given the shoddy reporting on it, up to and including Obama getting it wrong in his State of the Union).   She advocated strict campaign spending restrictions (both in terms of amount of money and length of the campaign season) combined with term limits.

We could have gone a lot of places with the discussion, but we ended up (before we terminated the conversation in the name of civility) discussing whether restrictions on money were equivalent to restrictions on speech.  She of course said they were not, and said under strict monetary controls I still had freedom of speech - weren't we still talking in the car?

It is hard to reach common ground when one person is arguing from a strict rights-based point of view while the other is arguing from a utilitarian point-of-view.   Essentially she knows in her heart that she is restricting speech, but wishes to do so to reach a better outcome.  I made a couple of utilitarian arguments, including:

  • I pointed out that when the stakes of government are so high, money and influence never goes away.  Just as in any economy, when you ban money, a barter economy arises.  So if we ban large campaign spending, then the quid pro quo becomes grass roots efforts and voter mobilization.  Groups like the UAW become more powerful (we are seeing that already).  They are trading their member's votes for influence.  Connected companies like GE are doing the same thing, trading their support for legislation that is generally hostile to commerce for specific clauses in said legislation that exempts GE and/or makes the laws even more punishing on their competition.  The problem with all this activity is it is hard to see and totally unaccountable -- at least with advertisements we see people out in the open with their agendas.
  • I observed that it was smart to add term limits to her plan, as otherwise her recommendations would be the great incumbent protection act.  But by limiting money, immediate advantage is given to people who already have name recognition and celebrity.  Think we have too many actors and athletes running for office?   Well be prepared for a flood with stricter campaign finance restrictions

However, I tend to shy away form utilitarian arguments.  The best arguments I have against the notion that money can be restricted without restricting speech are:

  • Her comment that I still had freedom of speech (ie I am talking freely in the car) with strict campaign cash restrictions ignores the actual wording of the First Amendment, which reads "Congress shall make no law ... abridging the freedom of speech."  Her test, which is "Am I still able to speak in some forum even if I can't in others" is not a valid test for conformance to the First Amendment.  Otherwise, speech could be restricted at will as long as there was some narrow safe harbor where one could express his opinion.    The better test is whether the proposed law, ie a restriction on how much and when a person can spend money advertising his or her opinions, abridges or reduces freedom of speech.  And I think it is hard to deny that everyone has less freedom, in the form of fewer options and reduced scope, after such legislation.
  • One interesting test is to broaden the question -- Does restricting spending on something (in this case speech) constitute a restriction on one's underlying right to the activity (e.g. speaking freely).  I was tempted to ask her (she is a strong and vocal abortion rights supporter) whether she would therefore consider the right to abortion to be untouched by Congress if a law were passed to limit each person's spending on abortion to $5 a year.   Abortion would still be entirely legal  -- all government would be doing is putting on some spending restrictions.   Obviously one's scope and options to get an abortion would be limited -- only those who happened to have a doctor in the family could perhaps get an abortion -- just as under her speech plan only those who had a large newspaper in the family could speak fully and freely before an election.

A Few More Thoughts on Citizen's United

A friend of mine from Princeton days writes:

... and you seem in favor of the Supreme Court decision in Citizens United vs the FEC, I was wondering how you feel about being a customer or supplier or competitor of large businesses who can spend far more than your business to influence the rules of the game.

From what I read, I am sure you have a compelling answer, but I would be scared to death. (Maybe that's why I work for a large corporation [Target] instead of attempting to run my own business.)

I thought this was a pretty good question, and I answered:

  1. I try hard not to make utilitarian arguments to Constitutional and rights issues.  As an example, I am sure we might have less crime if the police were empowered to incarcerate anyone they wanted without trial, but we don't do it that way.
  2. I worry most about corporate lobbying (e.g. by Immelt at GE) and this is unaffected by this ruling - it was legal before and after.   This decision allows corporate advertising, which is public and visible, which I can at least see and react to, as opposed to back room deal making.
  3. Libertarians certainly worry about your question, and why many of us fear that what we are creating in this country is a European-style corporate state, rather than socialism.  To a libertarian, the answer is not less speech, but less government power to pick winners and losers in commerce.

Really, Really, Really Bad Idea

Just what we need, the government choosing winners and losers in media like they do earmark recipients.  Since government ownership of GM was politicized in Congress before the ink on the court agreements was dry, I wonder how fast Congress will find a way to use a government media bailout to punish the critical and reward sycophants.

A top Democratic lawmaker predicted on Wednesday that the government will be involved in shaping the future for struggling U.S. media organizations.House Energy and Commerce Committee Chairman Henry Waxman, saying quality journalism was essential to U.S. democracy, said eventually government would have to help resolve the problems caused by a failing business model.

Waxman, other U.S. lawmakers and regulators are looking into various options to help a newspaper industry hurt by the shift in advertising revenues to online platforms.

Waxman continues:

"Eventually government is going to have to be responsible to help and resolve these issues,"

Why?  You mean like when the US government stepped up in the 19th century to bail out pamphleteers and failing broadsheet publishers when the market moved to new media?  Or when it moved to bail out network television under assault from new cable channels?  Remember that?  Neither do I.

Next steps:

At the Federal Communications Commission, officials are embarking on a quadrennial review of the state of U.S. media. The study, which is mandated by Congress, seeks to determine whether current rules should be changed to allow for a more vibrant media industry serving a diverse audience.

We have that.  Its called the Internet.  It emerged entirely free of government action (save some funding of some original infrastructure).  Go away.

Great Suggestion

Brad Warbiany has a great suggestion in response to new FTC rules requiring that

Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides "“ which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as "results not typical" "“ the revised Guides no longer contain this safe harbor.

Brad has suggested this disclosure is in order:

Barack Obama, Sept 12, 2008
And I can make a firm pledge: under my plan, no family making less than $250,000 will see their taxes increase* "“ not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes.

* Results not typical. Families making less than $250,000 can expect to see rises in cigarette taxes, increased energy costs through cap and trade and/or gasoline taxes, soda taxes, and mandates to buy costly insurance plans they can't afford. They can expect to pay all the taxes levied on "corporations", as well as the cost of new regulations, who will pass those on in the cost of goods. Families can expect taxation through the form of inflation, eating away at the buying power of their paychecks. Firm pledges have not taken Viagra and should not be expected to last more than 4 hours.

Update: From Ann Althouse, couldn't have said it better myself:

The most absurd part of it is the way the FTC is trying to make it okay by assuring us that they will be selective in deciding which writers on the internet to pursue. That is, they've deliberately made a grotesquely overbroad rule, enough to sweep so many of us into technical violations, but we're supposed to feel soothed by the knowledge that government agents will decide who among us gets fined. No, no, no. Overbreath itself is a problem. And so is selective enforcement.

Three Quarters of A Million Americans Arrested For Marijuana Possession in 2008

In the US last year, 754,224 people were arrested for possession (not dealing or production) of marijuana.  By the logic of US drug laws, all of these folks are better off with an arrest record and possible incarceration that they are from the nominal negative effects of smoking marijuana (FBI report here, via Radley Balko).  These numbers are just insane.  And while the report only gives race numbers for total drug arrests rather than for just marijuana offenses, a hugely disproportionate number are black (over 1/3 of arrests).

And speaking of equal protection, the arrest numbers for gambling are eye-opening (table 43).  75% of all people arrested for gambling last year in the US were black, including 90% of the arrests of those under 18 for this offense.  It seems it is A-OK for whites to play poker at home for money (I'm guilty) or to bet in Super Bowl pools (guilty again) or to clad themselves in polyester and head to the casino boat, but blacks who choose to compete with the state gambling/lottery monopoly will get arrested.  As an aside, I have always laughed at the government piously suing tobacco companies for targeting minorities with their advertising and then using the same techniques themselves to target minorities for their lottery sales.

Regulation as Incumbent Protection

This is a great example of a point I often make about regulation aiding incumbents and large companies against smaller companies and upstarts.  From the DC Examiner, via Radley Balko

Philip Morris, openly and without qualification, backs Kennedy's and Waxman's bills to heighten regulation of tobacco.

Philip Morris stands to benefit from this regulation in many ways. First, all regulation adds to overhead, and thus falls more heavily on smaller firms. Second, restrictions on advertising help Philip Morris' Marlboro, a brand everyone already knows, by keeping lesser-known brands in the shadows. (Existing restrictions on advertising have already helped Philip Morris in this regard, with an added benefit spelled out in Altria's annual report: "Marketing and selling expenses were lower, reflecting regulatory restrictions on advertising and promotion activities. "¦ ")

Finally, if the bill passes and the FDA gets added control over the industry, Philip Morris, more than any of its competitors, will have access to those bureaucrats and agency heads making the decisions. For all these reasons, RJ Reynolds and other tobacco companies oppose the bills Kennedy and Waxman are pushing.

Regulation is About Protecting Incumbents

Darin Morely sent me this.  Woe be it to the upstart competitor with a new business model who challenges an incumbent with political connections.  This goes double when the incumbent is the government itself:

One of the great things about the web, obviously, is that it allows for much more efficient communication that opens up new and useful offerings. For example: the web offers the ability to find other people traveling to the same general place you're heading and to set up a convenient carpool. It's good for the environment. It's good for traffic. It just makes a lot of sense. Unless, of course, you're a bus company and you're so afraid that people will use such a system rather than paying to take the bus. That's what happened up in Ontario, as earlier this year we wrote about a bus company that was trying to shut down PickupPal, an online carpooling service, or being an unregulated transportation company. TechCrunch points us to the news that the Ontario transportation board has sided with the bus company and fined PickupPal. It's also established a bunch of draconian rules that any user in Ontario must follow if it uses the service -- including no crossing of municipal boundaries -- meaning the service is only good within any particular city's limits.

All of us in the states need to be prepared for more of this corporate economy thing in the US.  I saw last night on Sunday Night Football that NBC is really going hard on some green initiative, including having a green peacock.  GE (parent company of NBC) is a smart company and sees the writing on the wall.  It understands the new administration and Congress seem hell-bent on moving us to a more European model.  In that model, there are 10-20 corporations per country that insinuate themselves into government and get the opportunity to help run the country to their own benefit.  GE wants to be one of these chosen few.  The push is going on not just at NBC, but in light bulbs (betting on Congressional action to provide regulatory support for a new type of bulb they have invented) and in power systems (who are making large bets on wind that will not pay off without a government subsidy program).

In the near term, GE may need a bailout in its financial arm.  GE must have seen that GM made a huge public push for its Chevy Volt over the last 6 months, spending hundreds of million in advertising on a car that does not exist yet. Why would a company near bankrupcy do this?  We now know the advertising was aimed at Congress and the Administration, not consumers, trying to burnish their green image to give Democrats enough political cover to vote for the bailout their UAW supporters so desperately need  (any chapter 11 would likely result in enormous restructurings of union contracts).

So We Can't Have Even One Candidate Who Truly Understands Free Speech

I stand by my no-McCain vow I made years ago after his role in campaign speech limitation.  But Obama does not look like a very promising alternative:

The Obama campaign disputes the accuracy of the advertisement, which is
fine. It has also threatened regulatory retaliation against outlets
that show it, which isn't fine. Instead of, say, crafting a response
ad, Obama's team had general counsel Robert F. Bauer send stations a
letter [pdf]
arguing that "Failure to prevent the airing of 'false and misleading
advertising may be 'probative of an underlying abdication of licensee
responsibility.'" And, more directly: "For the sake of both FCC
licensing requirements and the public interest, your station should
refuse to continue to air this advertisement."

In particular, I would love to see Obama actually say what positions that are ascribed to him on gun control are false, and what his actual, specific positions are.  A vague, gauzy support for the second amendment does not necessarily mean he has walked away from his earlier positions.  In fact, I am sure that McCain would say he supported the First Amendment but I would certainly feel comfortable pointing out how he fails to do so in the details.

Sorry for the Advertising Spam

The Arizona Republic has taken to embedding the code for their on-site advertising in the middle of sentences, sometimes in between two letters of a word.  This means that sometimes when I copy snippets from their web site, I end up with popups and spam on the blog, particularly since this stuff does not show up on the post preview, only when it goes to the site.  Sorry.

Government-Think in Marion County, Florida

I just encountered an absolutely classic bit of government think.  Here is the background.

In Florida, on each night stay in the campgrounds we run in Marion County, we collect a 6% state sales tax, a 0.5% county sales tax, and a 2% tourist development tax, for a total of 8.5%.  Until this month, we reported and paid all three taxes to the state of Florida on one simple return.  The state then divvied the money up to the counties.  Apparently, this latter process could take up to 90 days before the County got their tourist development money.

The County commissioners of Marion County did not like waiting 90 days for their tourist development money.  Remember, this is not general revenue money, but supposedly trust fund money that must be spent on tourist advertising and the like.  Also, recognize that 90 days for a government body to disperse money is pretty normal - I find I often have to wait as long as 6 months to get a check out of the feds.

Anyway, the County wanted its money faster.  So it decided to collect the money itself.  First this involved more staff hours and designing a new online collection system, costs that are completely incremental because the state of Florida was performing these functions before (and still are performing them).  Today, it now requires two systems and clerical staffs to collect money that was once required by just one. 

Already, this seems like idiocy to any business person.  Is adding a whole new staff and systems really worth getting money 90 days faster?  I guess it is possible, but even if one could argue this point, we now get to the real government-think.  Because there is no way anyone in whatever cost-benefit trade-off they ran considered the time and effort that would be required of individual taxpayers.  Even in my small company, this will now require extra clerical labor each month as well as an initial system reprogramming to add the extra tax authority.  If one considers thousands of other businesses in the exact same position, the amount of investment is enormous.

But in my experience, when running cost-benefit trade-offs, the government never, ever considers investment and time required of the citizens who must comply.  I have seen governments make changes designed to save a few man-hours a month in their own clerical departments that cause thousands or millions of man-hours of extra work among taxpayers.   A year or two ago, Mono County, California forced us to go from one to twelve reports each month for our lodging tax payments just to save auditors a few hours work every three years.   And do you know why?  Because the government treats us all as serfs.  As far as they are concerned, our labor is free, because they have the power to compel us to do whatever they ask without compensation.

Postscript:  Here is my other Florida county tax collector pet peave.  All the tax collectors in Florida put their own personal name all over everything.  Their web site is not "marion county tax collector"  but "George Albright, Marion County Tax Collector." Their stationary has this man's name all over it.  When I right a check to them, I am supposed to include this man's name.  I hate this kind of public employee self-aggrandizement.  It is a blatant use of taxpayer money to try to aid one's next election chances, and it is a waste of money when a new person comes in office because every piece of printed material must be thrown out and reprinted.  This seems to be fairly unique to Florida.  Look at the Marion County links for other states in the same search and you don't see the same thing going on in those states.

Can't Anyone Solve Problems Without the Government?

Here is today's lament in the Arizona Republic:

Government plans to more than double the size of Petrified Forest
National Park appear to be in jeopardy because Congress has failed to
come up with the cash to buy surrounding properties.

The upshot: An irreplaceable treasure of dinosaur bones and Indian
ruins may be lost as ranchers sell off their properties for subdivision
and development.

And Petrified Forest is not alone. A study to be released April 8 by
the non-profit National Parks Conservation Association, says 56 federal
historic and recreation sites "could lose
land inside their borders to developers this year." Others on the list
range from Gettysburg National Military Park near Philadelphia to
Golden Gate National Recreation Area in San Francisco.

Here is an idea:  All you folks who are worried about these "treasures" can pool your money and buy the properties yourselves.  That way you can either take charge of the preservations or donate the land to the government to do so.  This is how many public parks came into being in the first place, from private donations.

Of course, this was back in the days when environmental groups actually spent their money on the environment.  Today, they spend their money instead on lobbying.  The more modern approach is not to spend your own money on the environment, but to lobby the government to force other people to spend their money on the environment.  That is why people have apparently donated $300 million dollars (!) to Al Gore to create an advertising campaign dedicated to trying to spur government action on CO2.  Rather than donating money to help solve the problem, people now donate money to push for government coercion.

Besides representing the modern approach to environmentalism  (ie don't work the problem, just lobby the government to force other people to work the problem), Gore's campaign also represents a new frontier in rent-seeking.  He has managed to get people to donate $300 million dollars to advocate government action that will likely have very little actual impact on the climate, but may have a huge impact on Al Gore's managed $5 billion investment fund.  Congrats, Al.  Even the kings of rent-seeking at ADM would not have had the cojones to ask folks to donate to a charitable advertising fund to support their subsidy requests.


Spam Call of the Day

Me:  Hello?
Caller:  I represent your local yellow pages and need to update our information on your account

BIG RED FLAG:  There are many scam artists out there who take your business information and then treat it like a "buy" order for advertising and bill later.  Beware people calling saying they are just trying to "update your listing."   I have also had folks who actually cut and pasted recordings of my phone calls to paste my answers to questions that have not been asked.

Me:  What city are you representing?
C:  we're local
M:  Local where?
C: here
M:  I have 200 locations across the country, what local area are you representing?
C: we're worldwide -- everywhere.
M:  CLICK (me hanging up)

Wow, telemarketing scripts by Kafka.  Unbelievably, they called again 10 seconds later

M: Hello
C:  We represent Phoenix
M:  OK, Phoenix.  I don't have any operations in Phoenix, just my HQ.  I don't want to be listed in Phoenix
C:  You are already listed
M:  Well that explains why I get calls at my accounting office looking for a camping space.  Please remove me.
C:  Can I have your name please
M:  No you may not.  You said I had an account already.  You should know my name  CLICK

Incredibly, my new favorite Indian pitbull telemarketer calls again

M:  Hello
C:  blah, blah, something, blah blah.
M:  Look, please take this down.  I do not want a yellow pages listing in Phoenix.  I would like my Yellow Pages listing removed in Phoenix.  I do not want to pay you any money.  I do not want to give you any information.  I do not want you to call me any more.  CLICK

I do not want it sam I am.  I do not want green eggs and spam. 

I probably still will get a bill.

Self-Aggrandizement at Public Expense

A while back, I complained about County Attorney Andrew Thomas's self-promoting billboard campaign to impose extra-legal additional punishment on convicted drunk drivers.  Thomas, by the way, teamed with Sheriff Joe Arpaio in a shameful government legal attack on a newspaper that had been critical of him in the past  (fortunately, that case has since been dropped).

Well, now it appears that Thomas has used public funds to send out thinly-veiled advertising for his re-election.

Maricopa County supervisors are questioning County Attorney Andrew
Thomas' use of public money to produce and distribute hundreds of
thousands of slick booklets that feature his name and smiling portrait.

County administrators on Tuesday said the 45-page pamphlets,
distributed in local newspapers, were paid for through the county's
general fund.

They believe more than 500,000 copies were produced. Most supervisors
said they were astonished to see that Thomas spent the money on
booklets that they said were "self-serving" and "self-promoting."

The only other comment I would make is that, knowing out board of supervisors, they are probably mad only because they did not think of this approach for their own re-election.

Good Sense Prevails

Every once in a while, good sense prevails, as in the case of a silly Arizona law intended to prevent people from using the names of dead soldiers as part of a criticism of the war.  As I wrote then,

This theory is absurd.  Printing it on a T-Shirt and selling it for
money no more converts this into commercial speech than printing
Maureen Dowd's column on paper and selling it for money makes her
editorials unprotected.

I wondered at the time if this would make Pat Tillman football jerseys (very popular here) illegal.  Fortunately, a preliminary court ruling seems to bring some good sense to the table.

The T-shirts don't fit within the "commercial speech" doctrine,
under which commercial advertising gets reduced First Amendment
protection "” the T-shirts aren't advertising (except insofar as the
cover of any work, such as a book or a magazine, advertises itself),
but rather speech sold for money. And the fact that speech is sold for
money doesn't strip it of protection (whether it's a book, a movie, or
a T-shirt). Even the advertising for the T-shirts is fully protected,
the court concluded, because it is advertising for fully protected
speech, rather than just for a nonspeech product.

The Pepsi Challenge

Many of us remember the old Pepsi challenge commercials, where blind taste tests vs. Coke showed people preferring Pepsi.  One of the interesting results of these commercials was that Pepsi gained market share, but Coke did not lose it -- much of the Pepsi market share gain came from other brands.  In essence, the commercials established in consumer's minds that the cola choice was Coke or Pepsi, and so it did as much for Coke as it did Pepsi.

So now take this experience to anti-smoking commercials.  It turns out that they may backfire:

The more anti-smoking ads middle schoolers see, the more likely they are to smoke, according to a study in the August issue of Communication Research.
Hye-Jin Paek, an assistant professor at the University of Georgia's
College of Journalism and Mass Communication, and Albert Gunther, a
professor of life sciences communication at the University of
Wisconsin at Madison, analyzed data from surveys that asked middle
school students about their exposure to anti-smoking messages and their
intention to smoke:

They found that, overall, the
more the students were exposed to anti-smoking messages, the more
inclined they were to smoke. The exception"”where exposure to
anti-smoking ads correlated with a reduced intention to smoke"”occurred
among students who said their friends were influenced by anti-smoking

In the context of other advertising research, such as the old Coke/Pepsi campaign, this is not surprising.  It is even less surprising for this type of ad, where a certain amount of anti-authoritarian response can be expected.  In fact, I have seen a number of ads that use this anti-authoritarian streak and distrust of the government as a feature.  Ads that say "The government doesn't want you to know about X" or "What the oil companies don't want you to know."

I wonder when the first member of the plaintiff's bar will initiate a lawsuit against the tobacco companies for promoting teenage smoking by running... anti-smoking ads.

Mutual Self-Interest

One of the most fundamental premises of economics is that in a free society, an exchange or transaction only takes place when it benefits both the parties.  Unfortunately, given how simple this axiom is and how easy it is to prove, it is either not accepted or not understood by a huge number of Americans.  Thus we get any number of variations of the zero-sum wealth fallacy, and we get this, from Overlawyered:

A reader writes: "Am I wrong to believe that businesses and
consumers are natural enemies in that their economic interests are
diametrically opposed?"

Yes, you're wrong. Transactions don't occur unless both parties are
better off. Businesses thus only profit if they can create consumer
surplus"”the ability to sell a product at a price that is less than what
a consumer values the good or service. Businesses' interests are thus
aligned with consumers who seek consumer surplus. Businesses more often
prosper by creating satisfied consumers who become repeat customers who
promote the business's reputation rather than trying to extract every
last ounce of wealth from them in a single transaction. This is why
brand names and advertising are so important, because they are market
signals of long-term commitment to customer satisfaction. It's not
profitable to invest in creating a brand name if one intends on having
a bad reputation. (Note the key word "intends" there; no doubt one can
intend to have good customer service and fail to achieve it, and I'm
looking at you, Comcast.) And one will note that businesses that tend
not to have repeat customers or rely on word of mouth are more likely
businesses that have reputations of indifference about customer
satisfaction: tourist traps, traveling carnivals, etc.

A while back a made a purchase of a number of modular cabins for one of the campgrounds we operate.  After the delivery, the sales person called me to thank me for my business.  My reaction was "Thank me?  I should be thanking you."  The cabins are a huge boost to my business -- already I am getting great customer feedback -- and the modular technology saved me a ton of money on construction.  See?  Both the buyer and the seller were thrilled, because we were both better off.

Licensing Protects Incumbents, Not Consumers

Scott Gustafson's Arizona Economics blog points to another example of a local regulatory body, in this case the Structural Pest Commission, bravely protecting incumbent competitors from new competition.  As background, you should know that though we don't have nearly as many pests as most places, the ones we do have (e.g. scorpions) are essentially unkillable with legal chemical technologies.  The best you can hope for is to tighten up your hose to keep them out.  And we have these lovely rodents called roof rats, sort of like squirrels on steroids who are not cute, who like to come in and take up residence in attics and walls.   So a lot of pest control here is about putting up screens over vents and setting traps rather than spraying chemicals.

As retirees go, Rich Hanley seems like a decent enough guy. He's a former cop who came to town a few years ago. He obeys the law. He pays his taxes. In 2004, he started up a little business, repelling roof rats.

Specifically, he covers vents with steel mesh so the little fellas can't come calling. 

Once, we would have applauded such enterprise. Now, we issue cease-and-desist orders. 

Yep, it's true. My favorite state bureaucrats over at the Structural Pest Control Commission have decided that Hanley has violated the law... 

"The problem is his advertising," says Lisa Gervase, executive director of the agency... 

The pest-control cops launched a seven-week probe, concluding that Hanley can do the work. He just can't tell people why he's doing the work. Thus, his sales pitch - "Keep birds and rodents from invading your home" - has to go. 

Gervase said the state would have no problem if Hanley says he's covering vents to keep leaves out. "But if he's advertising that he can keep pests from invading your home, that's pest control, and you need a license for pest control."

Its nice, I guess, when you trade group can get the government to use its coercive power to do you work for you.  Much more on licensing as anti-competitive behavior rather than consumer protection.

Coyote Sees the Future

James Dean, reader of both my blog and my book BMOC, sent me a great article about several companies that are pursuing business models surprisingly close to the one I made up for BMOC in my book.

Quick background:  In my novel, I imagined that the company BMOC had recruited the most popular kids at a number of high schools -- kids who were true social opinion makers, so to speak.  I posited that BMOC monetized these relationships by 1) Helping clients of BMOC in the same school become more popular and 2) Seeding these kids with free products (video games, cosmetics, etc.) which would cause other kids who followed their example to go out and buy the same products.  The free products both paid the popular kids for their consulting work helping to make BMOC clients more popular, and acted as a guerrilla marketing tactic for the companies that sell these products.  (The section of the novel explaining the business model in detail is here).

Well, I have not seen anyone pursuing part 1, but apparently a number of companies are pursuing part 2:

Shoppers will be given the opportunity to test products or
services, share them with their friends and, all being well,
recommend them to a wider audience - without a cent being spent on
traditional advertising.

One company, Yooster, predicts it will have 50,000 "influencers"
- the marketing moniker for trendsetters and mavens - on its books
by June, ready to spruik a client's wares solely for the social
kudos of getting the product before it hits the shelves.

The chief executive and founder of Yooster, Piers Hogarth-Scott,
said: "If you are a 20-year-old girl at university and you get the
latest lipstick from Gucci months before it is out on the shelves
and you are able to give it to your friends then you are going to
look good. That gives you immense [social] currency."

You can buy BMOC at Amazon.

A Super-Suggestion for the NFL

Every year about this time, the NFL earns itself some bad press for busting some small bar or local group for using the word "Superbowl" rather than that catchy phrase "the big game on the first Sunday in February down in Miami."  This year, the bad press honor goes to the NFL for shutting down a party at a church in Indianapolis for having a screen too large.  (Hey NFL!  I am breaking the law!  I have a 110" front projection TV, twice the "legal" 55-inch limit, and I am showing the game on it at my party.  HA HA HA!).  And by the way, what lapdog legislator wrote this law for them, and did he get Superbowl tickets for life?

Now, I understand the situation with copyrights - if you don't defend them vigorously and even-handedly, you can lose them.  I seem to remember Exxon or some other chemical company lost the rights tot he name Formica when they let it be used too generically for counter-top materials.  And the NFL PR people use this defense every year, saying "we really don't want to shut down these folks, but we have to." 

I don't agree that individual words should be copyrighted such that their use in a broad range of contexts should be illegal.  I am fine saying that I can't create another peanut butter and call it "Jif."  I will accept P&G has some sole right in this country to that use.  However, I don't think P&G can tell me that I can't advertise a "Jif party" feature their peanut butter.  In the same way, I am willing to grant the NFL exclusive use of "Superbowl" to describe a sporting event, but I don't think that should restrict me from advertising that people should come to my bar to watch the Superbowl.  And just to add one more example so I have a "threepeat," I don't think Pat Riley should have any ownership in that word.   However, since copyright law is not going to change tomorrow, I will offer up a more modest change.

So here is my suggestion.  The NFL needs to offer a one time use license each year for a bar or other establishment to hold a Superbowl party and actually use Superbowl in the promotion.  The license would of course be non-exclusive, and would carry a myriad of restrictions on how you use the name, etc.   The license could be purchased for a price that would be cheap for a business, maybe $200, and could be purchased right over the web.  It would actually be easier, I think, to go after violators because the NFL could point to the existence of a legal licensing program the violator could easily have participated in.  I would think they could easily bring in a couple of million dollars, not to mention saving them enforcement money and PR headaches.

PS-  Welcome to the NFL intellectual property department.  I presume I included enough verboten uses of "Superbowl" to catch your search engine's attention.

PPS-  My Firefox spell checker (which I love!) does not have "Superbowl" in it.  I wonder, would the NFL consider it a copyright violation for a program to use the word "Superbowl" in its dictionary?

Our Bodies, Ourselves

Perhaps the central touchstone of the women's movement has been the ownership and decision-making for one's own body, starting of course with the freedom to choose an abortion, but extending into a number of other health and sex-related issues. 

What amazes me, though, is how quickly all this is chucked out the window when it comes to having the government take over health care.  Because many of the exact same people who have campaigned for the primacy of a person's decision-making for their own body are also strong supporters of government funded universal health care.  And I can't think of anything less compatible with individual decision-making for one's own body than having the government run health care. 

The demands for universal health care general come from two complaints:

  1. Health care is too expensive and is more than I can afford
  2. Health care quality is low.  In this category, by far the most common complaint is that "my insurance won't pay for X procedure that I want, or Y level of care, etc."

Neither is a surprising complaint, given how our health care system is currently set up, and both are highly related to one another.  The key problem in the US health care system is that, unlike just about any other product or service you and I purchase, the typical individual is not presented with a cost-quality tradeoff.   Since most of us have a fixed price insurance plan, we couldn't care less how much anything costs, and in fact, like an all-you-can-eat buffet, our incentive is to use as much as possible. 

This puts the insurance companies in the odd position of having to make cost-quality tradeoffs for us, via their coverage and treatment rules.  But when they try to cut costs by narrowing or limiting certain treatments, consumers tend to get the government involved to remove these limitations.  They either do this though legislation (many states now have onerous requirements on what procedures insurance companies must pay for in that state) or through litigation (the threat of lawsuits pushing doctors into expensive defensive medicine, asking that every conceivable test be conducted).  In other words, people take their dissatisfaction with #2 above to the government, who acts, pushing up costs and making problem #1 worse.

Until we find ourselves in a Strossian post-scarcity world, someone is going to have to make this cost-quality tradeoff for our health care.  Even if it is never discussed, this is the most important design factor in any health care system.  There are only three choices:

  • Individuals make these choices for themselves, paying for their health care and making their own decisions about whether certain procedures are "worth it".  - OR -
  • Insurance companies make these choices for us.  (I am not sure this is even a choice any more, as government micro-management seems to be pushing this de facto into the next choice). - OR -
  • The government makes these choices for everyone

So, folks that are pushing for government-funded universal health care are in fact saying "I want the government to take over decision-making for my body."  Yuk!  Where are the feminists when we need them?

Beyond just ceding to the government decisions such as whether its really worth it for dad to get his new hip joint, there is another chilling factor, which I have written about a number of times.  Government health care will act as a Trojan Horse for nanny fascism.  Because, you see, if the government is paying to fix your body, then you can't be trusted to do whatever you want with your body.  By paying for your health care, the government has acquired an ownership interest in your body.  You want that Wendy's cheeseburger?  Sorry, but the government can't allow that if it is paying for your health care.  Likewise, it is not going to allow your kid to play dodge ball at all or to play soccer without a helmet -- can't afford to fix all those broken bones.   And no swing sets or monkey bars either!

Already, when its only affects us as individuals, the government is poking its nose into micro-managing our lives.  Just think what will happen when the government has a financial incentive, in the form of health care costs, to do so!  Eek! In fact, it is already happening:

People who are grossly overweight, who smoke heavily
or drink excessively could be denied surgery or drugs following a
decision by a Government agency yesterday.  The National Institute for Health and Clinical Excellence (Nice) which
advises on the clinical and cost effectiveness of treatments for the
NHS, said that in some cases the "self-inflicted" nature of an illness
should be taken into account.

Or here in the US:

New York City is at the forefront of this new public health movement. In
January, city health officials began
that medical testing labs report the results of blood sugar tests for all
the city's diabetics directly to the health department. This is first time
that any government has begun tracking people who have a chronic disease.
The New York City Department of Health will analyze the data to identify
those patients who are not adequately controlling their diabetes. They will
then receive letters or phone calls urging them to be more vigilant about
their medications, have more frequent checkups, or change their diet....

So what could be wrong with merely monitoring and reminding people to take
better care of themselves?  New York City Health Commissioner Thomas Friedan
has made it clear that it won't necessarily end there. If nagging is not
sufficient to reduce the health consequences of the disease, other steps
will be taken. Friedan
that "modifications of the physical environment to promote physical
activity, or of the food environment to address obesity, are essential for
chronic disease prevention and control." Friedan envisions regulations for
chronic disease control including "local requirements on food pricing,
advertising, content, and labeling; regulations to facilitate physical
activity, including point-of-service reminders at elevators and safe,
accessible stairwells; tobacco and alcohol taxation and advertising and
sales restrictions; and regulations to ensure a minimal level of clinical
preventive services."

Read that last paragraph.  That's just the starting point for where the government will go when it starts paying for all our health care.

Postscript:   This is a very hard topic to discuss with people, because they are so ingrained with the way the market is set up today.  When I started working for myself, I told my wife that we needed a high-deductible medical plan, to protect us from a health disaster, but we would just self-pay for dental costs.  "What?"  She said.  "You can't pay for your own dental - you need insurance.  We can't go without insurance.  That's all you hear on TV, the problem of not having insurance.  We'll be one of those people!"  I patiently explained that it was almost impossible for us to face a dental problem that would bankrupt us, and that for any conceivable level of dental care, it was cheaper to just pay the bills than get dental insurance.  Eventually, she relented.

We have been paying our own dental bills for years now, and have saved thousands vs. the quotes I got for insurance.  The other day we had an issue that perfectly highlights why 3rd party payer systems cause problems.  My wife chipped a tooth.  She was presented with two choices:  To file it down for nominal cost, or to do a major repair which would cost $500.  She asked me my advice on which to do, and I said "its your mouth.  You know what else we might use $500.  You make the tradeoff."  I am not even sure what decision she made.  It is simply impossible to make this kind of decision for someone else.  Everyone will make it differently.  A government-payer system would only have two options:  1)  don't allow anyone to get the expensive fix or 2)  force taxpayers to pay for everyone to get the expensive fix.  Both solutions are wrong.  Such is the problem with all single-payer systems.


Good News

Via Captains Quarters:

The fundamental attack on free speech that McCain-Feingold foisted upon America has finally received recognition
from the federal judiciary. Portions of the BCRA got struck down today
in a lawsuit filed by a right-to-life group, as a judge ruled that the
campaign-finance restrictions violated the First Amendment...

It's not for nothing that many have termed the BCRA the Incumbent
Protection Act. The restriction on political speech that keeps groups
from buying advertising that names politicians violates the fundamental
reason for the First Amendment -- to allow Americans to criticize their
elected officials. While the court did not recognize the entire
egregiousness of this BCRA provision, it did recognize that the idea of
never being able to name elected officials in advertising within 60
days of an election regardless of the nature of the reference is a
ludicrous standard.