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[McTraveller]

So many conversations in other threads end up talking about economics.  It's probably about time we have a dedicated thread for it.

Minimum wage, UBI, everyone-owns-everything, nobody-owns-anything, monetary theory, employment, AI, tax theory, cash is king, but barter is ace!  Have at it, for this one low-low price!


EDIT: I guess I should have proposed an initial discussion... how about this one, from reading some other recent threads:


Under what conditions is advertising a net economic benefit and/or when does it become a detriment?  Some alternative phrasing: is all advertising bad, or can it be good?  I'm personally astonished that some of the biggest companies today by revenue are simply advertising companies.

[WealthyRadish]

Under what conditions is advertising a net economic benefit and/or when does it become a detriment?  Some alternative phrasing: is all advertising bad, or can it be good?  I'm personally astonished that some of the biggest companies today by revenue are simply advertising companies.

I think originally the most apparent argument in favor of permitting the existence of commercial advertisement is that it can be used to stimulate consumption of new products, giving companies greater power and incentive to create new markets.

The more obvious argument today in favor it would be that it facilitates a massive new digital market in services that are free to the user but paid for by advertisement.

Personally I think both these justifications are a crock of grade A horseshit, and it should be banned or restricted to purely local physical spaces.

[Loud Whispers]

What do you guy think of the Jevons paradox? I learned about it when I encountered 3 dozen Chinese men named Jevon who didn't know why they were named Jevon. It took much searching and the Jevon's paradox was the only thing close to explaining the Jevonspiracy.

Basically the paradox goes that when technological advances make power output of machines more efficient, thus reducing consumption of fuel/electricity, it stands to reason that consumption goes down. Yet the consumption increases, because the owner of the new efficient machines reduce their costs by consuming less, and thus use their new funds to expand operations & make more money.

So how do you get investors to stop expanding operations within a capitalistic model, given that "green" innovations which increase efficiency or renewable energy production will not stop human investors from increasing absolute output & absolute consumption? And if the paradox cannot be resolved within a capitalist model, what modifications or changes are to be made?

[MrRoboto75]

So how do you get investors to stop expanding operations within a capitalistic model, given that "green" innovations which increase efficiency or renewable energy production will not stop human investors from increasing absolute output & absolute consumption? And if the paradox cannot be resolved within a capitalist model, what modifications or changes are to be made?

Capitalism wants infinite growth to please investors with new short term profits.

[MetalSlimeHunt]

it's almost as if capitalism is bad

[McTraveller]

Eh, I'd say the goal of "profit above all else" is what's bad, not the mechanism to achieve it.  Capitalism is a method, not a goal.  Or, the original meaning of it was at any rate.  And capitalism, being a very efficient mechanism, is really good at "profit above all else."  There's nothing inherent to capitalism that says that "individual profit" needs to be the goal instead of, say, collective profit.

[feelotraveller]

Um, to quote the opening line from wikipedia
"Capitalism is an economic system based on the private ownership of the means of production and their operation for profit."
I take it that's pretty uncontroversial, even around here. 

As to Jevons, the answer to that paradox is to shift the focus from production to consumption.  If nobody is consuming production will drop. 

Advertising can be thought of as a way to supercharge consumption, only succeeding where something is purchased that would not have been otherwise.  Yes is it 99% evil. 

[Loud Whispers]

I'd be really intrigued to see what happens if advertising were to be banned. Black market advertising, a switch wholly to sponsored "influencers," streets free of burgerpunk aesthetic, Facebook finds new ways to sell your information... Maybe a reduction in consumption?

[Reelya]

Under what conditions is advertising a net economic benefit and/or when does it become a detriment?  Some alternative phrasing: is all advertising bad, or can it be good?  I'm personally astonished that some of the biggest companies today by revenue are simply advertising companies.

I think originally the most apparent argument in favor of permitting the existence of commercial advertisement is that it can be used to stimulate consumption of new products, giving companies greater power and incentive to create new markets.

The more obvious argument today in favor it would be that it facilitates a massive new digital market in services that are free to the user but paid for by advertisement.

Personally I think both these justifications are a crock of grade A horseshit, and it should be banned or restricted to purely local physical spaces.

There was an interesting outcome when tobacco advertising was banned in the UK. The tobacco companies made more money.

If you think in terms of game theory and the prisoner's dilemma then it makes perfect sense:

There are a limited number of smokers, and companies advertise so that they'll get a bigger share of this market. However, if no company advertised they'd each get about the same number of smokers as if every company advertised, assuming each company has "optimal" advertising. It's the same as the "Prisoner's Dilemma" because if all tobacco companies agree not to advertise then they save money, however, the "don't advertise" state is unstable because no matter whether the other company chooses (advertise / don't-advertise), it's in your personal interest to choose "advertise", and even if all the big firms enter into a "don't advertise" pact then that only leaves them vulnerable to a new market entrant coming in.

Effectively, the law change of banning the advertising forced all tobacco companies into the "don't advertise" option, which is effectively "forced cooperation" in game theory / Prisoner's Dilemma terminology. But, at the same time, banning advertising means that new entrants into the market have literally zero chance of getting off the ground.

Personally I'm on the fence about whether it should be banned. There are several possible down-sides.

First, it would be very hard for new players to enter a marketplace if there was no advertising allowed. Traditional brand-recognition would be everything. It would benefit the largest players in the market, similar to how the UK's ban on tobacco advertising actually helped the established tobacco firms.

Second, it would be impossible to enforce. They would sneak it in with paid endorsements, so while there would be no "overt" advertising, it would just massively boost the "advertorial" market. So you no longer have "advertising", you have "advercontent" and that's all the content you have, because nobody can afford to make anything else.

Third, if you're using a free service and are annoyed that there are adverts, so you want to ban them, then, hello, welcome to the new improved world where this service just doesn't exist in the first place.

EDIT: fourth, if it applied to something like video game advertising, then that would mean the types of games that cost a lot to produce just aren't economically viable anymore. No more GTA V type games, and massive layoffs. The same with filmmaking. But it'll also crash the indie market.

[Naturegirl1999]

PTW, I don’t have much to add right now

[WealthyRadish]

...

Personally I'm on the fence about whether it should be banned. There are several possible down-sides.

First, it would be very hard for new players to enter a marketplace if there was no advertising allowed. Traditional brand-recognition would be everything. It would benefit the largest players in the market, similar to how the UK's ban on tobacco advertising actually helped the established tobacco firms.

Second, it would be impossible to enforce. They would sneak it in with paid endorsements, so while there would be no "overt" advertising, it would just massively boost the "advertorial" market. So you no longer have "advertising", you have "advercontent" and that's all the content you have, because nobody can afford to make anything else.

Third, if you're using a free service and are annoyed that there are adverts, so you want to ban them, then, hello, welcome to the new improved world where this service just doesn't exist in the first place.

EDIT: fourth, if it applied to something like video game advertising, then that would mean the types of games that cost a lot to produce just aren't economically viable anymore. No more GTA V type games, and massive layoffs. The same with filmmaking. But it'll also crash the indie market.

I've thought about these things as well, but ultimately I don't think it's worth it compared to the harm and expense advertisement creates (not just for the companies as you mentioned, but also the collective burden of wasting social product wasted on industry together with the personal harm inflicted on people by the industry).

For the first point, since the general tendency under industrial capitalism in most sectors is toward domination by a cartel or monopoly, with or without an advertisement ban, I think there's something bigger at stake than just one more marginal factor that slows or accelerates that. This is why in my mind that argument reduces to whether or not advertisement is worthwhile for the sake of encouraging new markets, which would depend on how a person feels about unsustainable growth, artificially induced demand for crap people don't need, and our ramshackle economic structure that falls apart if the rent-seeking rich holding the world hostage don't earn their 4% per annum or whatever (weighed against the genuine benefit of new products toward overall well-being).

With enforcement, I don't think it would be very difficult. All that would really be required is framing the law in such a way that advertisement is considered an anti-competitive practice vulnerable to litigation from other firms in the industry. I think the international copyright and patent regime makes a good comparison; it's a completely artificial and unnatural creation impossible to maintain without imposing the threat of state punishment, with complicated and blurry as hell legal definitions that often get enforced arbitrarily, but it more or less works (for its purpose) because the rights can be enforced with weaponized litigation from the companies themselves.

...

The free digital service thing is another interesting point. You mention this:

Third, if you're using a free service and are annoyed that there are adverts, so you want to ban them, then, hello, welcome to the new improved world where this service just doesn't exist in the first place.

-- and I have to wonder, is that actually a bad thing? Should things like youtube, facebook, etc exist? Hindsight is 20/20, and it's a stretch to say that we should have banned advertisement so that these things never formed, but really, I think things would be better without them.

I think youtube is maybe the best example to consider. The question is really a technical one: is there any compelling reason why we should do all of our video sharing over the internet through a single centralized multinational corporation's monopoly? Do we need their servers to do this? I don't think we do.

If advertisements were banned and the "user-created content platform" model was basically impossible to make profitable, people would still want to share videos over the internet. The incredible usefulness of the internet would have still stimulated increases in bandwidth and networking technology. The difference is that instead of a monopoly or cartel buying up obscene amounts of server space so they can control everything, we'd probably instead have a decentralized system for these "user networks" like youtube, facebook, etc. We would probably have improved peer-to-peer protocols written and improved by academics and non-profits with the sole aim of improving usefulness (with no profit motive required), rather than closed-door research done by Google or whoever to ever expand their control and entrench their userbase which is conditional on their profit from doing so.

But again, hindsight is 20/20, and it would be outrageous to think that we should have anticipated this and banned advertisement of all things as the solution, and obviously it's too late to ever happen anyway. But I still think things would be better without it.


Edit:
Really though, what gets me when thinking about advertisements is imagining life without them. The world be be a much less physically ugly place to live in, it would be easier to enjoy and take part in cultural work, and I think the market itself would have a better chance of standing on merit. It's particularly damning in my mind to think that the primary purpose of advertisement isn't even to communicate any useful information, but only to impart a psychological impression that creates superficial recognition and the illusion of trustworthiness. What seems to me to be many dubious economic effects along with this is just a complement to the personal harm I think it creates.

[Reelya]

The free digital service thing is another interesting point. You mention this:

Third, if you're using a free service and are annoyed that there are adverts, so you want to ban them, then, hello, welcome to the new improved world where this service just doesn't exist in the first place.

-- and I have to wonder, is that actually a bad thing? Should things like youtube, facebook, etc exist? Hindsight is 20/20, and it's a stretch to say that we should have banned advertisement so that these things never formed, but really, I think things would be better without them.

I think youtube is maybe the best example to consider. The question is really a technical one: is there any compelling reason why we should do all of our video sharing over the internet through a single centralized multinational corporation's monopoly? Do we need their servers to do this? I don't think we do.

If advertisements were banned and the "user-created content platform" model was basically impossible to make profitable, people would still want to share videos over the internet. The incredible usefulness of the internet would have still stimulated increases in bandwidth and networking technology. The difference is that instead of a monopoly or cartel buying up obscene amounts of server space so they can control everything, we'd probably instead have a decentralized system for these "user networks" like youtube, facebook, etc. We would probably have improved peer-to-peer protocols written and improved by academics and non-profits with the sole aim of improving usefulness (with no profit motive required), rather than closed-door research done by Google or whoever to ever expand their control and entrench their userbase which is conditional on their profit from doing so.

Sure, but then nobody could afford their internet providers charge for bandwidth, so you couldn't actually allow streaming on your own personal site. The reality would instead be that some economy-of-scale provider like Youtube would still have all the videos, except it would also charge subscriptions and charge for upload space, meaning that only cashed-up people could upload.

What I think you're missing is that it's not just digital services that grew because advertising was a thing, it's pretty much every single 20th century medium of communication as well. TV is the best analogy. You have the choice of free-to-air TV, supported by advertising, or you have the walled-garden of the cable TV companies, supported by subscriptions. Remove advertising, and traditional broadcast radio for one would be an immediate casualty, because there's no real way to charge subscriptions for broadcast radio. I guess you could argue poor people would be better off if free TV wasn't a thing, but I'd argue otherwise. TV is social literacy for a lot of uneducated people. Without free broadcast TV, then things may be even more backwards than they are now. You really think they'd be reading books if they didn't have TV? Nope. Mostly, they'd be drinking more alcohol, and driving around more looking for foreign-looking types to beat up.

Also, newspapers without advertising would face immediate collapse. To avert that, they'd raise prices a lot, which would drive down circulation numbers, but they'd focus on articles that appeal to a more wealthy select number of readers. You might argue that this collapse in readership would lead to more "small" publications taking off, but it really wouldn't. If they can't afford the New York Times, but want to read the New York Times, they're not going to throw equivalent money at some local socialist zine that's been xeroxed at your local copy shop.

The reality of an advertising ban would mean the collapse of the mediums supported by advertising and a massive shrinking of the number of creatives who can get ahead in the market. This would not lead to somehow boosting the number of progressive voices that get heard: they're generally unprofitable but are supported for the sake of diverse voices. The thing is: the fringe voices will be the first to go in a world of walled gardens and where all content needs to be profitable. The people who'd actually thrive in such a world are right-wing billionaires with deep pockets who are able to print newspapers and upload videos at a loss, but it's paid back because there's a strong editorial bent in all their "articles" that supports whatever they're trying to manipulate the populace to believe.

Sure, you could still stick your stuff up on blogspot, but they'll start charging subscriptions too, and you'll get all of 3 readers for your content. That's why those sorts of writers go work for advertising-supported sites like the Huffington Post writing about social justice issues rather than a personal blog - because they get heard.

[Urist McScoopbeard]

We should go back to a barter economy and artisans. Important industry/resource extraction operations should be performed by public servants drawn from a pool of mandatory 2 to 4 year civil servants that all citizens are required to at one time be a part of.

[Naturegirl1999]

We should go back to a barter economy and artisans. Important industry/resource extraction operations should be performed by public servants drawn from a pool of mandatory 2 to 4 year civil servants that all citizens are required to at one time be a part of.

This sounds interesting, thow3 who haven’t done this kind of stuff (probably lots of people, including myself) can be trained by this3 who have done this stufff before, and can h3lp train new people

[McTraveller]

Barter is terribly inefficient, but it does always work as a last resort*.

Artisan society sounds cool, but then it gives rise to guilds.


*

Spoiler (click to show/hide)

BARTER IS ACE YO!