Advertising leads to useless purchases because it often persuades consumers to have needs instead of satisfying existing desires. This leads to excessive consumption of resources and materials and thus damages the environment.
Let the advertising die!
It's right to turn off neon signs - but this should only be the first step in limiting expensive and nonsensical advertising in general.
by Christian Kreiß
[This article posted on 9/27/2022 is translated from the German on the Internet, https://www.rubikon.news/artikel/lasst-die-werbung-sterben.]
"If you don't advertise, you die," goes a business rule. Accordingly, companies spend billions each year on often embarrassing forms of self-promotion. Now, you might say, "So what? After all, that's necessary to draw attention to products, and good for business." But it's not quite that simple. Since every euro can only be spent once, the advertising budget either comes at the expense of those who create actual value in a company - or it leads to higher prices. Advertising harasses passers-by in public spaces or consumers on television and the Internet with annoying self-congratulation without being asked. Advertising leads to useless purchases because it often persuades consumers to have needs instead of satisfying existing desires. This leads to excessive consumption of resources and materials and thus damages the environment. The advertising industry represents a waste of human creativity for profit purposes and stimulates cut-throat competition among supplier companies. When the news now reports on the banning of nocturnal neon signs in the wake of the gas crisis, there are many protests from the business community. This also annoys the author, but for different reasons. He thinks there is still far too much advertising, so it urgently needs to be limited.
In Switzerland, there has already been discussion since July about switching off illuminated advertising when there is a shortage of electricity (1), and in Germany it has been ordered by decree since September 1, 2022: Luminous advertising must be switched off between 10 p.m. and 4 p.m. (2). This is an extremely sensible measure.
As expected, the lobby association of the advertising industry has protested loudly: The German advertising industry considers itself "in danger because of the new federal energy-saving requirements. The measures adopted threatened the very core of the out-of-home media industry" (3). If this threat became reality, it would be a stroke of luck for our country.
Because in reality, no one needs out-of-home media, i.e. outdoor advertising such as billboards or illuminated billboards in public spaces. On the contrary, they are a disruptive factor in the market economy, annoying people and misleading us.
We should therefore not only switch off illuminated advertising, but like Sao Paulo for almost two decades or four U.S. states for many decades, we should stop outdoor advertising altogether. Outdoor advertising makes as much sense as a crop. This applies not only to outdoor advertising, but to almost all advertising (4).
Facts, figures and data (5)
The Central Association of the German Advertising Industry (ZAW) put advertising spending in Germany in 2020 at 45 billion euros, or 1.3 percent of gross domestic product (GDP), generated by around 900,000 employees (6).
However, these figures are likely to be significantly too low, as many advertising and marketing activities, for example by executives, are not or only partially included in this calculation. Moreover, these figures do not include sales employees. A more realistic order of magnitude for advertising expenditure is at least 2 percent of GDP, which would currently correspond to about 66 billion euros (7). If we use the concept of the total marketing rucksack, i.e. the measure of "the difference between production costs and sales price", which goes back to Günter Faltin (8), we even arrive at estimates of 10 to 20 percent of our consumer spending, i.e. 160 to 330 billion euros per year (9).
These high macroeconomic costs are not matched by any real benefit: Advertising does not feed us, does not clothe us, does not put a roof over our heads.
David Graeber therefore calls them bullshit jobs, which essentially only bring costs to society as a whole and frustration for those affected (10). Advertising provides us with snappy slogans and colorful pictures of beautiful things instead of the things themselves. Advertising therefore directly increases the price of the advertised items. Every cent of advertising is paid for by us customers in the product price. Advertising usually does not inform about products - and according to advertising professionals it is not supposed to inform - but is normally structurally misleading. Advertising is supposed to sell, nothing else (11).
Leading economists have therefore been saying for more than 100 years that competitive advertising, i.e. advertising that is merely about market share, is pointless. Well over 90 percent of all commercial advertising by for-profit companies is considered competitive (12). Thus, Alfred Marshall already spoke of social waste in the case of advertising and referred to it as "social waste" (13). Arthur Pigou also considered competitive advertising to be simply a waste of energy or resources (14). For Kenneth Galbraith, through advertising, companies first artificially create the needs that they then satisfy. Companies therefore fill a void that they themselves have created in the first place (15).
In short, advertising is a waste of energy from a macroeconomic point of view and should therefore be reduced as much as possible.
The arms race of brands
"The economists thus state that marketing, which is so popular with business economists, is a waste of resources inherent in the system in two ways: in the redistribution of market shares between companies, and in the artificial awakening of new needs. Both are nonsensical and expensive, both lead to a waste of resources for which society and the environment have to pay dearly. And all this just so that a few companies can emerge as winners from the advertising competition, who put on the more splendid fireworks, the cleverer forms, the catchiest sounds, the most colorful effects; in short, who pull out all the stops to throw the money out of the window at the top so that they can pocket it again at the bottom with profit.
This has nothing to do with the efficiency that economists like to uphold. While the economic principle taught to every freshman preaches the water of economical use of scarce resources, the uneconomic principle of marketing drinks the wine of boundless waste. And, like many drinkers, it no longer manages to escape addiction by its own efforts" (16).
That is why we need such measures as a ban on illuminated advertising.
Advertising drives economic growth, energy waste and environmental destruction
Much worse than the immediate waste of energy, however, is the impact of advertising on our overall interaction with people and nature. Advertising hammers us with 3,000 to 10,000 advertising messages per day (17). And virtually all of them have a single message: buy! Advertising drives us into greed and economic growth and thus into more and more and more energy consumption. The question "To have or to be," posed by Erich Fromm more than three decades ago (18), is clearly answered by advertising with hundreds of billions of messages every day: To have instead of to be.
Our omnipresent advertising culture sends us into a materialistic culture of "more and more." Greed is preached incessantly instead of contentment or even humility. This materialistic, egoistic view of the world also causes planned wear and tear, for example. Advertising hammers into us that the old is no longer good enough, but that we need the new, the fashionable. All varieties of psychological planned wear and tear only work because of the massive advertising drum that is constantly beating. Just because of planned wear and tear, we spend three weeks a year working completely pointlessly and uselessly, but extremely wasting resources and energy (19).
As an aside, it should be noted that the systematic dishonesty of advertising is questionable from an ethical point of view, that advertising purposefully undermines the health of our children by advertising almost only unhealthy foods, and that it undermines our freedom of the press because the media must try to report as positively as possible instead of objectively about their advertising backers (20).
Societal countermeasures to conserve energy: reduce advertising as much as humanly possible
Advertising is a classic example of the so-called prisoner's or prisoners' dilemma problem: What is individually rational and beneficial for the individual is irrational and detrimental for the aggregate. According to the true motto "he who does not advertise dies", practically every major company must advertise. But if everyone does this, it triggers a nonsensical avalanche of advertising that harms everyone together and, in particular, the general public as well as the environment.
It's a kind of arms race: "Those who do more marketing gain a temporary advantage, but force their competitors to follow suit - until one of them starts the next round of escalation. And since the first to do so gains an advantage, there is always someone to ring the bell" (21).
Such dilemma situations cannot be solved individually, but only together. And for this purpose, there are various conceivably simple measures that could be taken in addition to the ban on illuminated advertising.
Abolish tax deductibility of advertising revenues
At the moment, companies in Germany can claim their advertising expenses as tax-reducing. So ultimately, advertising expenditure is currently subsidized in our country by being tax-exempt. So all it would take is to abolish the tax deductibility of advertising expenses, and advertising would become more than a third more expensive for companies.
This simple tax measure would have two advantages at once. First, it would initially generate tax revenues of perhaps 13 billion euros per year (22). Second, and this would be the main effect actually intended, it would make advertising significantly more expensive. This should significantly reduce advertising expenditure in the medium term. And that would be precisely the purpose of making advertising more expensive: to curb today's nonsensical advertising arms race and thus save energy.
Tax on advertising expenditure
However, abolishing the tax deductibility of advertising expenses alone will not be enough in the long run to really reduce advertising dramatically. A systematic increase in the cost of advertising should therefore be introduced in a step-by-step plan, for example a tax on advertising expenditure or an extra tax on advertising, which increases from year to year until advertising, following the example of tobacco or alcohol tax, finally becomes so expensive that only the most necessary advertising is actually placed.
Bans on advertising to children and on advertising harmful products
In addition, we should abolish advertising to children, as in Scandinavia, and stop advertising harmful products such as alcohol, tobacco, gambling and so on.
Conclusion
These advertising restriction measures, which go far beyond a ban on neon signs, should and would lead in the medium term to a sharp reduction in the senselessly high advertising expenditures. As a result, enormous amounts of energy could be saved directly, but above all indirectly. In addition, the market economy and the functioning of the markets would be strengthened because there would be less consumer misleading and less misdirection of energy and resources (23).
Moreover, if we succeeded in largely eliminating commercial advertising for profit, we would have at least one more week of vacation per year without having to go without a single product or service. But above all, we would then have a realistic chance to finally get away from the dogma of constant economic growth that consumes more and more energy.
In our society, greed and the desire to have more and more could finally become weaker and weaker. In the long term, this would enable us to arrive at a humane and environmentally compatible way of doing business that treats not only people but all of nature with respect and reverence. Then we would also be a big step further on the way to permanently saving energy.
Christian Kreiß "Advertising - no thanks: why we could live much better without advertising"
Sources and notes:
(1) https://www.tagblatt.ch/wirtschaft/notfallplan-des-bundes-leuchtreklamen-abloeschen-sauna-verbieten-lifte-abschalten-dieser-plan-tritt-in-kraft-wenn-strommangel-herrscht-ld.2312608
(2) https://www.n-tv.de/politik/Aussenwerber-koennen-so-schnell-nicht-abschalten-article23561306.html
(3) https://www.handelsblatt.com/dpa/werbung-licht-aus-fuer-leuchtreklame-werbewirtschaft-schlaegt-alarm/28655644.html
(4) Compare Kreiß, Christian: Werbung - nein danke. Why we could live much better without advertising, Europa Verlag, Berlin and Munich 2016.
(5) The following statements follow very closely, in part verbatim, my essay: Wie Marketing unserem Planeten einheizt from August 31, 2021: https://www.heise.de/tp/features/Wie-Marketing-unserem-Planeten-einheizt-6178252.html
(6) https://zaw.de/branchendaten/wirtschaft-und-werbung-2019/
(7) Kreiß, Advertising - no thanks.
(8) Faltin, Günter: David vs. Goliath. Wir können Ökonomie besser, Haufe, 2019, page 182 and following.
(9) Gürtler, Detlef; Kreiß, Christian: Der teure Schein. On the limits of marketing growth
und den Weg zu einer vernünftigeren Ökonomie A study commissioned by the Stiftung Entrepreneurship, published June 5, 2021: https://www.entrepreneurship.de/wp-content/uploads/2021/06/Studie_Der-teure-Schein-1.pdf.
(10) Graeber, David: Bullshit Jobs. The Rise of Pointless Work, and What We Can Do About It, Penguin, February 2019.
(11) Compare Kreiß, Advertising - No Thanks.
(12) Compare Kreiß, Advertising - No Thanks.
(13) Marshall, Alfred: Industry and Trade A Study of industrial technique and business organization; and of their influences on the condition of various classes and nations, Cambridge, 1919, http://socserv2.socsci.mcmaster.ca/econ/ugcm/3ll3/marshall/Industry&Trade.pdf, page 195 and following: "7. Advertising which is mainly competitive always means social waste."
(14) Compare Pigou, Arthur C.: The Economics of Welfare, first published in 1920, New York, by Palgrave McMillan,1920, http://www.econlib.org/library/NPDBooks/Pigou/pgEW20.html, II.IX.22: "For, clearly, if each of two rivals makes equal efforts to attract the favor of the public away from the other, the total result is the same as it would have been if neither had made any effort at all. (...) In these circumstances the curve representing the social net products of successive increments of investment will indicate negative values throughout."
(15) Compare Galbraith, John Kenneth: The Affluent Society, Fourtieth Anniversary Edition, New York, Houghton Mifflin, 1998, page 124 and following.
(16) Gürtler/Kreiß, June 5, 2021, The Expensive Appearance.
(17) Kreiß, Advertising - no thanks.
(18) Fromm, Erich: Haben oder Sein? 6th edition, Munich, dtv, 1980.
(19) Compare Kreiß, Christian: Geplanter Verschleiß. Wie die Industrie uns zu immer mehr und immer stärkeren Konsum antreibt und was wir dagegen tun können, Europa Verlag, Berlin und München, 2014.
(20) Compare Kreiß, Werbung - nein danke.
(21) Gürtler/Kreiß, June 5, 2021, Der teure Schein.
(22) Official advertising expenditure in Germany of 45 billion euros times 30 percent profit tax yields 13.5 billion euros in additional tax revenue.
(23) Compare Kreiß, Advertising - no thanks.
Christian Kreiß, born in 1962, is a Bundestag candidate for dieBasis. He studied economics and earned his doctorate in Munich on the Great Depression of 1929 to 1932. After seven years working as an investment banker in various commercial banks, he has been teaching as a professor of finance and economic policy at Aalen University since 2002. He is the author of several books. For more information, visit www.menschengerechtewirtschaft.de.
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"People doing important work are being punished by our economic system" Economist Tim Jackson believes that focusing exclusively on reducing growth is not the answer.
[This interview posted on 3/14/2022 is translated from the German on the Internet, https://www.woz.ch/2211/der-oekonom-tim-jackson/unser-wirtschaftssystem-straft-leute-die-wichtige-arbeit-leisten.]
WOZ: Mr. Jackson, the new German government under Olaf Scholz, the EU or even the US want to invest trillions in the fight against climate change. Is this policy going in the right direction?
Tim Jackson: Yes, certainly. If we want to make the transition to a net-zero carbon economy by 2030, we need to completely transform our infrastructures, production processes, supply chains and lifestyles. This will require huge investments. Private investment capital is flowing into the wrong places today, it's acting like a gambling casino: Money is put in somewhere in the sole hope that it will yield as much profit as possible. Those who invest, however, should feel much more committed to our future.
Governments want to use their policies to channel some of the investment money in the right direction.
The consulting firm McKinsey estimates that the world needs to invest nine trillion U.S. dollars a year to get us anywhere near the net-zero target. At the very least, the EU's Green Deal is the biggest step taken in this direction in Europe to date.
Isn't there a danger that this will push ahead with supposedly green growth, which in the end will emit even more CO2?
That's not necessarily the case: what matters is where the money is invested. However, many politicians actually want these investments to boost growth - simply in green. They say green growth is even faster than brown growth. However, the faster the economy grows, the more needs to be done, in turn, to "green" it. It's like going up an escalator in the wrong direction, and the faster you try to run up, the faster it comes at you. This problem is not included in this naive green growth belief.
As early as 2009, you wrote in your book "Prosperity without Growth" that the hoped-for decoupling of CO2 emissions from growth is simply not happening.
There is still no evidence that this is happening. In fact, in my work for the 2016 update of the book, I found that we had moved even further away from this goal in the meantime. The highest decarbonization of the economy was achieved by the so-called developed countries during the second oil crisis in 1980, when CO2 emissions per U.S. dollar of economic output fell by three percent. Today, that rate is lower than it was then. However, to achieve the net-zero target by 2030, around fifteen percent reduction would be needed. The CO2 intensity of the global economy is only falling thanks to China, which is investing heavily in reductions. The idea that with today's economic growth we can reduce our CO2 emissions thanks to green technologies is a myth - pure wishful thinking. This is contradicted both by the figures and by our current economic system, which points in the opposite direction.
What do you mean?
We live in an economic system in which private investors strive solely for profit. They do this by increasing productivity and doing everything they can to ensure that material consumption increases - thus driving economic growth ever further. This is simply incompatible with the net zero target.
But don't the initiatives of Germany, the EU or the U.S. follow this myth?
To a certain extent, yes. But the EU has taken a more progressive position. Since the pandemic, it certainly recognizes that the economy needs to change structurally.
So we have to stop driving growth; at the same time, the oil crisis in particular shows that this results in unemployment, because to produce the same amount it takes less and less labor. So what to do?
First of all, we have to realize that our economies are growing more and more slowly anyway. And not just since the 2008 financial crisis, but since the 1960s. The problem is that labor productivity growth is fading. In the UK it's close to zero percent, and even in China it's falling. Everyone talks about artificial intelligence, robots, and digital technologies; and in fact, labor productivity in manufacturing and supply chains continues to rise - Amazon, for example, needs fewer and fewer staff because of its use of drones. However, our economy is also largely made up of services, where productivity cannot grow much: Nursing and care work, for example, can hardly be increased through automation.
This is precisely one of your main responses to the climate crisis: You call for much more investment in services such as care.
Exactly, because firstly, these services are much less resource-intensive, they pollute the environment much less than the production of consumer goods. And secondly, they are crucial for the quality of our lives, for our prosperity. Interestingly, moreover, the well-being of workers in these occupations tends to be higher than in the production industry - if the working conditions are right. We need an economic system in which these, economically speaking, less productive activities are expanded: Health care, nursing, culture, education for our children.
They argue that these services increase the quality of our lives even much more than the production of more consumer goods, which is used to fuel growth.
That our health care is more important than many consumer goods is, after all, the most obvious insight from the corona pandemic. Of course money is important - you can only afford to talk about less money if you have enough of it. But if you ask people about the basis of their prosperity, they are quick to cite things like health, social embedding, culture, in addition to food and decent housing. Economists like John Stuart Mill pointed this out as early as the mid-19th century. Our economic system, however, is geared to increasing wealth, which is why the expansion of social services is difficult to achieve.
Private capital invests too little in these sectors?
When it does invest, it leads to sometimes perverse results. In the United Kingdom, privatization of the health care system has been a disaster for both the people who need care and the workers who work in the sector. Since the work can hardly be automated, the only way to make more profit is to depress wages, extend working hours or worsen working conditions. These people who do important work are punished by our economic system. We need forms of economic organization that do not constantly seek even more productivity in order to increase their profits.
In addition to expanding such services, you also propose reductions in working hours as a response to the climate crisis.
Increasing labor productivity in manufacturing means that it takes fewer and fewer people to produce the same economic output. In order to keep all people in work, attempts are being made to constantly produce more. The alternative is to simply have everyone work less. British economist John Maynard Keynes wrote this as early as 1930 in his essay "The Economic Opportunities of Our Grandchildren": in the future, we would all enjoy more leisure time.
In fact, working hours in industrialized countries have been continuously reduced for decades; only recently has the trend reversed.
For the past twenty years or so, many governments have been trying to push economic growth with longer working hours. After all, when labor productivity growth tends toward zero, increasing the number of hours worked is the only way to increase growth - either you bring people in from other countries, or you make people work longer. However, I am now convinced that there will still be a need for a lot of labor in the future: not in production, but - as I mentioned earlier - in social services such as care.
You say that private capital will not create this work, however. So the state will have to step in and invest more in health, culture or education?
Yes, but not in the style of total nationalization. The central state must certainly play a decisive role in providing care. But the public sector also includes the municipalities or civil society. We need to find ways to build a care sector that is not profit-driven.
The elephant in the room is private capital, which you have to get first through taxes, for example, if you want to invest it elsewhere.
This is where the big power struggle lies, exactly. I don't claim to have the easy solution to this problem. Of course, the deep change that is needed challenges the interests of private capital. This is building a whole defense against that change, such as the rhetoric around supposed green economic growth. The World Economic Forum in Davos has proclaimed the "Great Reset" in the pandemic - the reboot toward green capitalism. The same people responsible for the architecture of the growth-driven global economy of the last fifty years now claim to stand up for the interests of the poor and the planet? They adopt the green and social arguments to pass themselves off as the newfangled good capitalists.
Is this exclusively greenwashing, or does this rhetoric also bring a piece of movement?
Of course, it's good if these people understand that something has to change. And indeed, social and environmental criteria are gaining importance in investments. There are more and more funds that invest according to ethical guidelines, there is a withdrawal of investments from fossil energies. At the same time, the whole thing is reminiscent of the royal succession: Capitalism is dead - long live capitalism! Without clear rules for the financial market, too little will change: Without them, people who invest according to ecological criteria will always be at a disadvantage compared to others. We cannot avoid this power struggle against large profit interests, a struggle that the liberal economist Adam Smith warned against as early as the mid-18th century.
What exactly was he warning about?
Of the danger of capital accumulating to such an extent that it could determine policy - in order to accumulate even more capital. We are now in a situation in many countries where large investors can influence political debate and, accordingly, laws too much. The only answer to the power of private capital opposing the public interest is the countervailing power of the state.
The powerful influence of investor:ing on policy is one way that rising inequality torpedoes climate policy. But for you, inequality hurts for other reasons as well ...
Another problem can be seen, for example, in the attempt to reduce oil and fuel consumption: Poorer households spend a much larger proportion of their total expenditure on fuel than rich families - partly because they live in poorly insulated houses. A tax that aims to reduce consumption has a correspondingly degressive effect: It falls back on poorer people - which exacerbates inequality. Mechanisms are needed to counteract this. And inequality creates many other problems ...
What are they?
It creates a society in which everyone aspires to the lives of the rich: their lifestyle, their wealth, and the material things that come with it. This makes it difficult to engage ordinary people in environmental change. With all the greenwashing, people with money and power even manage to make their lives seem green.
Almost ten percent of the world's population cannot meet their basic needs. They have every reason to strive for more material prosperity.
Clearly, we in the industrialized countries have a much greater responsibility to ensure that the net zero goal is achieved than people in poorer countries who do not yet have a decent material standard of living. We have to do more! Research I have done shows: In poorer countries, additional economic growth leads to a much greater increase in the quality of life than in rich countries. Infant mortality decreases, life expectancy, education levels and happiness in general increase. Above about ,000 per capita per year, the increase in quality of life begins to level off. Individual colleagues criticize me for not being categorically against growth. However, when people live in filthy shacks with contaminated water and poor food, it is difficult to be against more material wealth.
You talk about "post-growth" in contrast to the "degrowth" movement, which explicitly opposes growth.
Yes, however, the degrowth community agrees with me on many things I say - and vice versa. I believe that the perspective of moving away from growth leaves more policy options open than the focus on reducing growth. The poorest could still grow some, while the richest should reduce their growth all the more.
For nearly a billion people to lift themselves out of poverty without greatly increasing CO2 emissions seems an almost impossible undertaking.
It is difficult, but there is no alternative but to try. If people free themselves from poverty, this can sometimes even have a positive effect on the CO2 balance. This is called leap-frogging: When people heat with solar energy instead of fuel or garbage, it's also good for the climate.
In a globalized economy, how much can a single country do to combat climate change?
You can change a lot even as a single country. Where cooperation among countries is needed is in the control of multinational corporations, which today operate to a certain extent outside of state legal structures. This is where the great power struggle of the future lies.
The post-growth economist
Tim Jackson (64) is Professor of Sustainable Development at the University of Surrey in England. The Briton gained worldwide fame in 2009 with his book "Prosperity without Growth," which he originally wrote as a report commissioned by the British government. Jackson also outlines the model of a post-growth society in his book, "How Do We Want to Live?" published last year.
Original: Let the advertising die!