Taxes

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Ad Nauseum: Addressing America’s Advertising Problem

Published by Anonymous (not verified) on Fri, 24/06/2022 - 12:41am in
by Haley Mullins

One of the biggest roadblocks to achieving a steady state economy is advertising. While seemingly innovative solutions to consume conscientiously are becoming more prevalent, most people aren’t Marie Kondo-ing their way through each purchase, stopping to question whether the item in their shopping cart will “spark joy.” But how much blame can we really assign consumers when they’ve been dropped onto a hamster wheel of coupons, cash-back credit cards, and “consumer confidence” indicators?

We live in the age of the internet, where we can purchase anything with one click on Amazon. Websites track our movements and preferences as we surf the web, offering us personalized advertisements so we can discover and buy more of what interests us. To put into perspective how expansive advertising is in the USA, China is the second-largest advertising market in the world, yet its ad expenditures are estimated at less than half the amount calculated for the USA.

Advertising and Growth

Super Bowl promotions in a grocery store, featuring doritos advertising.

Super Bowl Sunday might be better named National Advertising Day. (CC BY 2.0, JeepersMedia)

In 1941, right before a baseball game between the Brooklyn Dodgers and Philadelphia Phillies, the first legal TV commercial aired in the USA. It was just ten seconds long and only cost the company nine dollars. Forty years later, the standard for prime-time TV was 9.5 minutes of ads per hour; today, it’s up to 14–17 minutes per hour. The cost of advertising has skyrocketed, too, but marketers are still willing to pay big bucks to make buyers aware of the “Next Big Thing.” In 2020, advertisers spent an average of $5.6 million for a 30-second spot in Super Bowl 54.

Firms advertise to create demand and promote consumption. (I don’t know about you, but I didn’t want socks with my cat’s face on them until I saw a Facebook ad for it.) While firms compete against each other for our business, they rally around the goal of GDP growth. Wall Street and Madison Avenue aren’t far apart—figuratively or politically—and both have skin in the growth game.

Americans have a love-hate relationship with ads though. A typical American might understand the role of advertising in economic growth, yet—apart from Super Bowl Sunday—we detest ads and go to great lengths to avoid them. By 2021, 27 percent of U.S. internet users used ad blockers on their connected devices. Younger generations are particularly put off; 48 percent of Gen Z consumers and 46 percent of Millennials prefer to pay a premium than watch advertisements on streaming video services.

First Things First

Steady staters have some significant hurdles to overcome in the degrowth of the American ad industry, the first of which is the First Amendment.

Advertising falls under the First Amendment right to free speech and free press, the most cherished of our constitutional rights. However, even the sanctity of the First Amendment doesn’t guarantee the freedom to say anything. The circumstances are important, too. Reasonable restrictions of free speech are imposed most notably when public safety is concerned. The classic example of unprotected speech is yelling “Fire!” at the movie theater when no fire exists, as the welfare of people supersedes your right to yell “Fire!”

While advertising isn’t as directly harmful as in this example, the prevalence and effects of advertising—unnecessary consumption, growth, and environmental impact—have become increasingly harmful to public welfare. Advertising restrictions already in place substantiate our cultural awareness of advertising as a danger to the public. Under the law, claims in advertisements must be truthful, and cannot be deceptive or unfair. Additionally, there are restrictions on promoting harmful products like tobacco and alcohol, as well as advertising to children, who can’t interpret ads with a critical lens.

Society understands the power of advertising and the dangers it poses when used manipulatively. Thus, it’s poor reasoning to use the First Amendment as an excuse for “anything goes” in the advertising industry. So, what policies could we enact to moderate advertising, slow consumption, and (in the process) improve wellbeing?

Ad-equate Policies

Defenders of advertising argue the importance of the practice in aiding competition, a fundamental facet of a capitalist system to keep prices low and fair. As American economist Lester Telser once described, “If sellers must identify themselves in order to remain in business, then formally unless they spend a certain minimum amount on advertising their rate of sales will be zero. Regardless of price, buyers would not know of sellers’ existence unless the sellers make themselves known by incurring these advertising outlays.”

1960 Budweiser advertisement with four Black men holding beers and chatting in a kitchen.

Advertising: framing the consumption of market goods as raising one’s quality of life. (CC BY-NC 2.0, ChowKaiDeng)

Touché, Telser. Eliminating the practice of advertising isn’t practical, as people would struggle to discover necessary goods and services. But billions of dollars are spent annually on advertising, far surpassing the optimal scale of the industry. In 2020, U.S. firms spent $240 billion on advertising; all of it tax deductible, as it’s considered a necessary business expense to generate or keep customers. Herman Daly and Joshua Farley argue for advertising taxes in Ecological Economics (Second Edition), declaring it appropriate to tax advertising as a public bad because production should meet existing demand rather than create new demands for whatever gets produced.

But if we’re truly to curb overconsumption of market goods, merely reducing the quantity of advertising will only do so much in the aggregate. To change consumer habits, an alternative to market goods must be introduced. Thus, in addition to taxation, Daly and Farley suggest making media information flows more symmetric so that the public is equally exposed to nonmarket goods as they are to market goods. Essentially, we need a sort of nonprofit advertising to balance out the advertising of firms.

Nonmarket goods, things that are neither bought nor sold directly, do not have a readily quantifiable monetary value. Some examples include visiting the beach, birdwatching, or going for a walk. Perhaps, with more attention given to nonmarket goods, consumer culture might shift to better appreciate our planet and better understand the true cost of frivolously consuming market goods that come from the Earth and return to the Earth as waste. Our resources might then be reallocated to the preservation of invaluable nonmarket goods, a shift that may aid in transitioning to a steady state.

Redefining Ethical Advertising

Cartons of cigarettes with several different warning labels making it clear that smoking is hazardous to people's health.

Full disclosure: unchecked consumption kills people and planet. (CC BY 2.0, kadavy)

The U.S. Federal Trade Commission (FTC) defines “ethical advertising” as “truthful, not deceptive, backed by evidence, and fair.” The FTC assesses the adherence of these principles through the lens of a “reasonable consumer” to determine whether an ad meets the requirements. However, some argue that the FTC has a responsibility to protect the ignorant consumer to the same extent as the reasonable one.

If the last several decades of celebrated economic growth are considered, I’d say the vast majority of consumers fall into the ignorant category—ignorant to limits to growth, at least. Is it not within the scope of ethics, then, to make the true cost of consumption for advertised market goods evident? Is it not deceptive for ads to display a price tag that fails to factor in the environmental costs of production? We have warning labels on tobacco and alcohol products that consumption may lead to adverse effects, so why aren’t we warning buyers of the consequences of consuming other goods?

If we don’t restrict the amount or reach of advertising, the least we can do is demand full-disclosure advertisements that detail the environmental cost of producing and purchasing the product. This would, at minimum, include estimated life-cycle emissions, quantity of natural resources extracted, and the energy required to produce each unit. Such disclosures would, over time, raise awareness of limits to growth and could, perhaps, be the catalyst that converts our culture of conspicuous consumption to one of careful conservation.

Haley Mullins, managing editor for CASSEHaley Mullins is the managing editor at CASSE.

The post Ad Nauseum: Addressing America’s Advertising Problem appeared first on Center for the Advancement of the Steady State Economy.

Maine Took on Big Box Stores, and Won

Published by Anonymous (not verified) on Mon, 09/05/2022 - 10:00pm in

Big retailers have launched an effort to promulgate dark store theory because they have the time and resources for a long fight that pays off in the long term, unlike the communities that are seeing property tax revenues plummet in the here and now....

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A new book documents the scale and mechanism of the looting of Africa.

The Film Tax Credit Sequel Stinks

Published by Anonymous (not verified) on Sat, 16/04/2022 - 10:00am in

Illustration: toonstyle / Shutterstock.com There’s a new sequel coming out, and let me tell you, it is terrible. No, I’m...

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Cartoon: Your taxes' holiday

Published by Anonymous (not verified) on Sat, 09/04/2022 - 7:50am in

Tags 

Comics, Police, Taxes

Follow me on TwitterFacebookInstagram, or at my website.

Why Taking on Turbotax Matters

Published by Anonymous (not verified) on Sat, 09/04/2022 - 4:00am in

Source image: Julio Ricco / Shutterstock.com Tax Day 2022 is almost here, so it seems like a good time to...

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Colonial Taxes Built Britain. That Must Be Taught in Lessons on Empire

Published by Anonymous (not verified) on Sat, 02/04/2022 - 12:55am in

UK government ministers want the British Empire benefits to be taught in schools. Don’t let them ignore the death and destruction it inflicted

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Published by Anonymous (not verified) on Tue, 22/03/2022 - 8:55pm in

How the growth of a billionaire class is the result of policy choices.

Building a State One Step at a Time: Evidence from France

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What are taxes actually for?

Published by Anonymous (not verified) on Thu, 16/08/2018 - 3:06pm in

We need to talk about taxation. I do not think it means what you think it means.

(This piece was originally published on Patreon)

While some of us are pretty conscious of the importance of using the correct terminology when it comes to issues of social justice, race, gender and sexuality, when it comes to addressing inequality, we are still using language straight out of the neoliberal handbook.

We need to be honest about how the tax system works and what it is for. To do so isn’t radical, or even progressive. It is simply the economics of reality.

What are taxes for?

In countries whose governments issue their own currencies, taxes do not pay for federal services.

Governments like those of the US, UK, China, Australia, Canada, etc run spend & tax economies, not tax and spend. They do not need your taxes to pay for anything. You might be angered to know that, actually, your taxes are not used for anything after you pay it. Not at a federal level. Your taxes are essentially destroyed upon receipt. Taxation is the act of taking currency out of the economy. Using your taxes to pay for public services would keep that money in circulation, thus serving the very opposite of its purpose.

There are some exceptions here which are important to underline: Taxes pay for services at state and local levels, but that is only because they are themselves inadequately funded by federal governments and therefore raising taxes becomes necessary to make up the revenue shortfall. Taxes also nominally pay for spending in countries whose governments adopt foreign currencies (most EU member states, for example), or peg their gold to a foreign currency.

So why pay tax at all?

Taxes are important. Just not for the reasons that are often talked about.

Taxes exist for a number of reasons:

- To maintain the value of the currency.

- To stabilise aggregate demand.

- To manage growth and distribute wealth. and, depending on what you think government is for and who it exists to serve, ensure prosperity and equality of opportunity for their constituents.

- To discourage bad behaviours (taxation on cigarettes, for example, are designed to discourage smoking and reduce the burden on health systems) & encourage good behaviours, (like promoting sustainability through a tax on carbon and investment in renewable energy).

- It also exists to accurately cost public spending requirements: infrastructure, education, health, public safety: police, fire, ambulance, defence, intelligence etc.

As economist, Professor Randall Wray recently pointed out: Governments do not need a single dime from the wealthy to address inequality. That is not how taxes operate, or what they are for.

“Taxes on the rich might take ‘resources’ from people who have too much — in that their demand deposit account is debited,” he writes for Naked Capitalism. “But taxation does not ‘give resources’ to people who have too little.”

“Rather, government spending directed to those who ‘have too little’ is what gives the poor access to resources. (They can use their demand deposit credits to buy food, clothing and shelter, etc). They are functionally two separate entities.

“Government can spend to help the poor without taxing the rich or anyone else.”

Buying into the myth

Nonetheless, the idea that taxes pay for government spending persists as an inaccurate bipartisan consensus, one of the greatest collective myths of modern capitalism.

When you hear politicians or pundits squawking about workers’ hard-earned tax dollars paying for this or that, you can almost certainly guarantee they have no idea about how taxes work either.

Our acceptance of this lie is, to quote anthropologist David Graeber, “collectively acquiescing to our own enslavement.”

The continuation of the status-quo depends upon the public’s ignorance or blind consensus as to the true nature of banking, finance, government spending, job creation and the nature of work itself.

The very myth that the vast majority of us have settled on is the very thing preventing full and gainful employment, and guarantees a future (and a present) where the only way to buy our way out of public squalor is through rising private debt.

In his recent book, Bullshit Jobs, Graeber describes modern day capitalism as a system of ‘Managerial Feudalism’, a form of social and political control achieved through corporate bureaucracy: the proliferation of middle-managers, supervisors, administrators all employed to ‘appropriate labor through usury’, stealing wealth, resources, opportunity and power from the working and middle class and transferring ownership to the political and elite classes and the idle rich.

“Marx appears to have been right when he argued that ‘a reserve army of unemployed’ has to exist in order for capitalism to work the way it’s supposed to,” he writes.

“…we are identifying with our rulers when, in fact, we’re the one’s being ruled.”

To truly address inequality and abolish austerity politics, we must start being honest about how taxation works and what it is for.

Language is important. You can be as woke as you like about gender and racial politics, but using the wrong terminology for taxation is kryptonite for social justice. We cannot subvert the neoliberal playbook while continuing to use the very same language invented to ensure a permanent economy of inequality and austerity.

Thank you for reading. I couldn’t afford to continue my research, or write this book, were it not for the support of my generous sponsors. Support independent journalism, sponsor me on Patreon, starting at $3 a month, or throw some money at my PayPal.

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