A Libertarian Perspective on Advertising

Advertising has long had a "bad press" among what passes for our liberal and intellectual community. The case made against advertising is detailed and seemingly compelling. It is claimed that advertising waylays people, forcing them to buy things they would otherwise not buy; that it preys on the fears and psychological weaknesses of people; that it is misleading, with its juxtaposition of beautiful women and the commercial product, fooling the gullible into believing that if they buy the product, the woman is somehow part of the deal; that it is silly, what with its contests, marching bands and jingles, and is an insult to our intelligence. The argument is then usually capped with an appeal to our selfish natures: advertising costs a lot of money. A minute of prime television time or a full page ad in a popular magazine or newspaper can run into thousands of dollars. The advertising industry as a whole is a multi billion dollar industry.

If we banned advertising, we could save all this money, it is alleged. The money could be used to either improve the product, or to lower its price, or to do both. The whole advertising industry could be supplanted with a governmental board which would substitute objective rating for motivational advertising. Instead of sexy misleading jingles, we would have product descriptions, perhaps summarized by a grade level, such as "grade A", "grade B" etc. In any case the nonproductive parasitical advertisers would be put out of business.

There is so much wrong with this view of advertising that one hardly knows where to begin. To put it in historical perspective, this is only one argument in a long line of arguments purporting to show that one or another industry is parasitical and unproductive. The Physiocrats thought all industries except for farming, fishing and hunting were wasteful. They reasoned that anything not connected up in some way with the soil was sterile and dependent upon these soil based industries. Other economists distinguish between goods (which they hold to be productive) and services (which they do not hold to be productive). Still others hold all goods but only some services to be productive; they do not allow that monetary services such as financial intermediation, brokerage, banking, speculation, etc. can have any value. In these modern sophisticated times, however, it is easy to see that a good need not come directly from the soil, nor a service be "tangible" like medical care for it to be productive. We now know that brokers get people together at a lower cost than what they themselves would have had to undergo to get together. We now know that the nontangible product of the insurance industry is to provide for the pooling and consequent lessening of risks. But even in these sophisticated times the advertising industry enjoys a widespread reputation as a parasite.

This bad reputation can be countered by a closer examination of the case against advertising. First of all, it seems clear that advertising cannot "waylay" or "force" people to buy what they would not otherwise buy. The distinction between coercing and convincing must be kept in mind. (Fraudulent advertising is another matter. This must be prohibited as it is logically equivalent to theft: if the seller advertises wheat but actually sells worthless rocks, it is just as if he stole the money price of the "wheat". In both the case of outright theft and the case of the fraudulent sale the buyer gives up value in return for nothing; and it is against his will.)

Subliminal advertising can also be considered coercive. Interspersing pictures of parched-dry desert scenery and pictures of soft drinks in between the regular frames of a movie can lead to increased sales; but if such unconscious motivation is caused without the will or even knowledge of those effected it can approach the coercive levels of various sciencefictionish "hypnosis machines" (one points them at a victim, pulls the trigger, and the victim follows all orders). Apart from fraudulent and subliminal cases, advertising is not coercive. It cannot be claimed that the ordinary type of advertising is coercive without completely obliterating the distinction between coercion and persuasion. If advertising is coercive in this sense, then so is every attempt at persuasion whatsoever.

Secondly, advertising does have an informational content. This is conceded even by its most fervent detractors. If for this reason alone it should not be banned, it is said unless it is assumed that the government can do a better job. But governmental action in the field of advertising is not without its own problems, as we shall see below.

Moreoever, advertising is no less advertising just because it is government advertising. If anything, any arguments against advertising apply even more strongly to government advertising. As the supposed "last resort", unencumbered by the usual necessity to make profits by pleasing consumers, if it gets out of hand, there is very little that can be done. Why should not governmental advertising for United States War Bonds, for the draft, or against littering be considered advertising—with all the drawbacks to which advertising is heir to?

Thirdly, advertising helps new firms as opposed to old established firms. If all advertising were prohibited, we would still remember the products of old firms somewhat; the products of new firms would have very little chance of being brought to our attention. To the degree that older firms are more likely to monopolize a given industry than are newer firms, this tendency for advertising to give a comparative advantage to the newcomers will lessen the degree of monopoly in the economy—a fervent desire of these liberal academics second only to their hatred for advertising. (And, as can be seen in chapter 10 of MAN, ECONOMY AND STATE by Murray Rothbard, just as misplaced as their desires concerning advertising.)

Fourthly, there is also the point that much if not all of the advertising that violates contemporary community standards of intelligence and decency can be traced to and blamed on governmental edicts in other areas. The government[1] does not allow airlines to compete on the prices of tickets. Consequently their competition is channeled into quality and advertising competition. We incessantly hear about early blue bird specials, new decor, different numbers of seats in an aisle, airplanes named after stewardesses, etc. ad nauseum. If airlines were free to compete with respect to price, we might be spared this constant reiteration about fripperies. The same holds true for banks. Banks are limited in the amount of interest they can pay to depositors (zero percent to demand depositors, 5½% to time depositors as of this date). So they compete with each other as to which can give the best pots, pans, radios, etc. as a prize for new depositors. (Note that since they can charge as much as the market will bear for loans, they seldom spend advertising money to try to convince anyone to borrow money from them. If there were a minimum interest for loans below which the lender could not charge, banks would then invest money in advertising.) Therefore the true blame for advertisements of this sort belong not to the advertising industry, but to the government.

Fifthly, I think that the above four arguments are all correct. And that when taken together, they constitute a valid defense against the critics of advertising. And yet they do not strike at the heart of the matter. They ignore the main fallacy of the critics. This fallacy assumes that, deep down, there is a distinction to be made between motivational advertising and informational advertising and that motivational advertising is "bad" in various ways while only the informational type of advertising is "good". The truth is, it seems to me, that getting information across to people and motivating them are so inextricably bound up in each other that it makes no sense to even distinguish between them.

In order to get a better perspective on this, let us consider several cases where it is not THEY who are trying to impart information and motivation to US, but where WE are trying to impart information and motivation to THEM. Most of US, for instance, have had occasion to apply for a job and go on a job interview. How do we prepare? Well, to begin with, we (WE) first write up an advertising brochure about ourselves. (This document is sometimes called a resume by those anxious to obfuscate and to hide the fact that each of us is, at almost all times, an advertiser.) What do we put on this advertising brochure? We put the facts of our employment life as it pertains to the perspective job on this advertising brochure. And in splendid advertising tradition, we try to make these facts appear as flattering as possible. We have the brochure printed on the finest paper in order to create an "erroneous impression" like a good advertiser should. We hire a professional typist in order to help "waylay" an employer into hiring us. Strictly speaking, we are only providing information on the brochure. It is "merely" informational advertising on the face of it, but the attempt to present the information in a favorable light involves us, willynilly, in motivational advertising. When we go on the actual job interview, we will try to "package" ourselves as best we can. Even though we might not every day, at the job interview we will make sure to dress well, to have shined shoes, to have taken a shower, brushed our teeth, taken especial care of our grooming.

Sixthly, this advertising of ourselves pervades our lives. We are constantly trying to portray ourselves in a good light. Even unconsciously we try to package ourselves well. From the very cradle our parents were busy advertising us or laying the groundwork for future advertising. How else can we explain all those ballet lessons, violin and piano lessons, visits to the orthodontist, to the skin doctor? The "jewish mother" with her constant exhortations about good posture (my mother would grab my shoulders back whenever I slouched), about good eating habits ("eat this, eat this, its good for you", "children are starving in Europe, and you're not eating") is the great unsung hero of the advertising business. And the jewish mother's bragging about her children? Just more advertising.

As we grow up we carry on the fine traditions of advertising. We wear clothing that flatters our figures. We diet, or try to. At least part of our expenditures on education, psychiatry, barber shops, clothing, beauty shops can only be understood as advertising expenditures. Later on we buy cars, houses, recreation, in large part as advertisements in ourselves. Incidentally, the greater expenditures (as a percentage of income) on "luxury" items like flashy clothing, cars, made by groups who are discriminated against, such as women and blacks, can be explained by advertising. They feel they must engage in greater advertising expenses in order to counteract the discrimination. The rest of us need not invest so heavily in advertising because WE are IN. (I owe this point to Ben Klein).

Seventh, those who have been called upon to give a speech where there was a distinct possibility of putting the audience to sleep will understand the difficulty of distinguishing between imparting information and packaging a speech. Consider a treasurer's report to a business. Or an economics class lecture. Surely, no more boring speeches can be imagined. The public speaker or teacher will engage in certain techniques like maintaining eye contact, telling jokes, posing rhetorical questions. These are sometimes known as public speaking techniques. But we know better. We know them as advertising techniques: packaging the product well, making it appear interesting, highlighting the talk, bringing points into focus, capturing the attention of the audience. These advertising techniques can have about as much to do with the subject of the talk as bicycling has to do with Coca Cola, deep throaty, sexy female voices have to do with shaving cream, or the sporting events of "the more than one beer men" have to do with beer. That is not the point. The point is that if one ever hopes to get information across even to people who are presumably well motivated (like the student in the economics class who has to stay awake to get a good mark) one must engage in advertising techniques. Imagine how very much more important it is to advertise information to be imparted to those who are not well motivated to begin with. We must interpret the advertising done on t.v. in the same manner that we interpret the advertising done by public speakers: as attempts to impart information by creating an interesting attractive message. Were we to consistently ban all advertising, we would have to prevent speakers and teachers (who lord knows, are quite boring enough as it is) from even trying to be interesting. They could not be allowed to tell jokes, maintain eye contact, discuss questions with the audience. For all these things are above and beyond the strict imparting of information, and like t.v. advertising gimmicks, "waylay the audience", "cause us to think and/or act in ways other than those we would have pursued in the absence of the talk".

Eighth, even members of the radical left, who are among the bitterest of the critics of advertising, engage in advertising themselves. (This should not be surprising, since we are defining advertising in its proper but broad sense of creative and interesting packaging.) Pretty much whenever the radical left has access to a bulletin board, the messages placed on it are at first, uniformly small, neat and similarly printed. After a while, in order to attract attention, some of the messages are printed in different colors, on different size placards. Eventually, in the competition to attract attention for the message, larger and larger placards are used, with more and more bold printing, coloring, and illustrations. In their attempt to spread information, they are led "as if by an invisible hand" to engage in motivational advertising. The reason radicals write things like "OFF THE PIG" or "FUCK THE STATE" on walls or buildings, in big red letters is not entirely out of a desire to shock. It is also out of a desire to impart the revolutionary message, by first attracting attention to it. If no one even reads it, informational however much it may be, it will impart no information. But as much can be said for the typical soap opera-type advertisement. (I owe this specific illustration as well as this whole radical way of looking at advertising, to Israel Kirzner).

Ninth. Let us consider the problems of banning motivational advertising while allowing informational advertising. It is important to consider this problem because while almost all "respected opinion" is against motivational advertising, almost none is against informational advertising. Suppose a new type of magic carpet is invented. The information to be gotten across is the flying speed, cruising range, upkeep costs, information on how to roll it up and store it while not in use, etc. Now, a regular t.v. announcer could not be permitted to just read off this information, because he will be very good looking, forceful, exuding confidence etc. He might well give viewers a false sense of security with regard to the magic carpet. Nor could there be music in the background, especially not music that "soars" or with any kind of celestial theme. This would be obviously motivational. As would be a demonstration film clip of the carpet in action with a pretty girl lying on it as a passenger. We wouldn't want to take a chance of fooling people into believing that if they bought the carpet they would get a copy of the inspirational music; or of the inspirational girl.

If we couldn't use a professional announcer, could we at least use a nonprofessional one, or just a "regular guy, off the street"? We could not. Some advertising companies with their low sneaking cunning, have already tried this type of testimonial from the man in the street. And with great success. Proving that this procedure has a motivational content. Evil. To be avoided at all costs. It seems that no one can read the message. So we'll print it. But what kind of type face can we use. Certainly not any kind that would HORRORS! induce someone to buy the flying carpet. It would have to be a pretty indecipherable type face so that people could hardly read it. Otherwise, at a low enough price, many people would be led down the garden path into making a purchase. The ad would have to be done in a purposely inferior manner so as not to attract any attention to itself. After all, we cannot have informational advertising attracting attention to the product; it is supposed to only impart information, not attract attention because of interesting packaging. Of course no ad can impart information if it attracts no attention. Hence the distinction breaks down.

Tenth. Does advertising add to the cost of the final product? No, it does not. Or more exactly, it in no way adds to the cost of the product, except insofar as does any other process necessary to bring the product to the consumer. In other words it does not unnecessarily add to the cost of the product; it adds to the product in much the same way that wrapping the product or transporting it or building it or growing it adds to the cost of the product. Let us return to the magic carpet case. Suppose that it costs $950 to manufacture the magic carpet, $10 to wrap it, and $40 to transport it. If customers want to take advantage of these wrapping and delivery services, they must pay the full $1,000. But they have the choice of coming in to pick up a wrapped carpet at $960, or of having an unwrapped one delivered to their homes for $990, or of picking up an unwrapped one for $950.

So is it with advertising costs. If it costs $100 to advertise the carpet, the customers have a choice between the advertised brand for $1100 and hunting and searching for an unadvertised brand for $1000. As the word gets out, more and more people will be able to find and buy less- or non-advertised brands for less and less than $1100. The manufacturer would be foolish to engage in any advertising at all if customers were beating down his factory doors. It is only when customers are reluctant to buy, whether because of lack of knowledge or of motivation, that manufacturers have incentive to add advertisement to their costs. But in this case, by this very assumption, people did not voluntarily choose to search out for the unadvertised brands at cheaper prices. They refused to buy at all! Could we say that if people refused to buy unwrapped undelivered magic carpets, but would buy wrapped delivered ones that wrapping costs and delivery costs were added to the total costs unnecessarily? No more than can we say that advertising "adds" to the cost of the product. Of course advertising adds to the cost of the product. But then so do raw materials, rent for the factory, labor costs, etc. etc. add to the cost of the product.

Paradoxically, there are many cases where advertising does not add to the cost of the product, not even as the payment for a necessary factor of production. Advertising may result in lower cost to the consumer by virtue of increased sales volume and decreasing marginal costs of production. In this case advertising would be economically indistinguishable from a factor of production like a machine which allows a new cost saving process to be introduced. To be sure, the machine and the process must be paid for, but if they cut costs enough, the price to the consumer will be lowered.

Eleventh. What of a governmental rating board for advertising? Before we rush pell mell into giving the government still another task because of alleged "imperfections" in the market, let us consider its dismal record to date. The graft and corruption unearthed by Ralph Nader and associates should alone give us pause for thought. It is a sordid mess where regulation agency after regulation agency such as ICC, CAB, FTC, FPC, etc. have been shown not to be regulating the industry for the benefit of the consumer, but for the benefit of the industry as against the consumer. And this is not just an accident. There is a reason for it. We are each purchasers of literally thousands of items; but producers of only one. Our ability to get favorable regulatory legislation passed by the state will be much more concentrated as producers than as consumers. Agencies will then always tend to not only regulate in favor of the industry, but also to be set up by the very industries to be regulated. Milton Friedman, in a positively brilliant chapter in CAPITALISM AND FREEDOM entitled "Occupational Licensure" showed the dismal record of allowing governmental rating agencies in the medical field. What evidence is there that a rating board for advertising will be any different? Rather, I would not be surprised if calls for governmentally regulated "objective", "informational" advertising began being made by some of the larger already established advertising firms as a way of slowing down the rising competition from smaller firms and newcomers.

The strongest argument against the governmental regulation board for advertising is not, I think, the empirical one showing its dismal record to date, strong though that be. It is the logical one. For the argument for advertising regulations is a downright self-contradiction! On the one hand it asserts that the American public contains people foolish enough to think that if they use the advertised after-shave lotion, they will end up with the girl in the ad; that there are none of us, no matter how intelligent, who are completely free from the misrepresentations of advertising. On the other hand the argument asserts that we boobs are somehow smart enough, and free enough from the guiles of the advertisers, to pick political leaders capable of regulating these sirens. Impossible.

In any case, if the public is sufficiently enamored of "objective" information on consumer products, it can avail itself of the services of firms like Consumers Union Reports, Good Housekeeping, Better Business Bureaus, commercial testing laboratories, and other private enterprise certification agencies. The free market is flexible. It can provide this kind of service too. (But the inability to distinguish between motivational and informational advertising still holds. When CONSUMERS REPORTS imparts information that Zilches Flakes are the best flakes for the money, it is necessarily motivating people to "buy Zilch" over and above the other flakes. It cannot provide information without any motivation to do anything.)

Twelfth. Nothing in this defense of free market advertising should be interpreted in support of advertising on the part of government, or on the part of its corporate-state-monopoly-capitalist big business support. In the case of government or government-big business advertising, none of the free market defenses hold. In this case people are forced to pay for the advertising whether they choose to buy the product or not. When the government advertises that "Uncle Sam Wants You" to kill or be killed in some east asian jungle, it is with money seized from people on an involuntary basis. TAXES.

It is strange that the liberal academics who complain so bitterly about free market business advertising so completely ignore fraudulent advertising on the part of the government. Imagine what would ensue were a private businessman to commit fraudulent advertising on even 1% of the scale committed by Roosevelt, Johnson, or Nixon, who ran on (advertised on) peace planks, and yet enveloped the country in foreign wars. How can we then entrust punishment of fraudulent advertising to the biggest fraudulent advertisers of all time—the government? Blank out.

Finally, advertising must be defended by libertarians on the grounds of free speech. Because that is all advertising is. Free speech. It is all too easy to defend the rights of free speech of those whose speech we favor in any case. If the rights of free speech are to mean anything at all, they must be defended especially for those who are not in public favor. I anxiously await the leadership of the American Civil Liberties Union in defending the free speech rights of advertisers. They were ominously quiet during the banning of cigarette commercials from t.v.

Walter Block is an economist in New York City who received a B.A. from Brooklyn College and a Ph.D. from Columbia University. He is an assistant professor of economics at Baruch College, City University of New York.

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NOTES AND REFERENCES

[1] For the view, correct I think, that it was not the government that initiated controls of this type in an effort to regulate business in the public interest, but that it was rather business in an effort to control the competition of newcomers that initiated these regulations see TRIUMPH OF CONSERVATISM by Gabriel Kolko.