> All of that should be matched by new jobs in the> industries which were previously paying to support> the vanished industries, or the owners of those> industries will become richer and spend more> themselves. The money that was paying for the> vanished industries doesn't vanish with them; it has> to go somewhere, and whereever that somewhere is,> it will generate new jobs to replace the ones that had > been lost. But this doesn't magically happen overnight, even if people's skills were directly transferable. You also assume that removing advertising, removing demand, will actually encourage growth. Why would it? If the industries were the sort that needed to advertise, then clearly their sales will suffer from lack of advertising, which means that whatever savings they make (how much do you think advertising actually costs, incidentally? ) from stopping advertising will be cancelled out from their reduced revenue. No new jobs would be created. The turnover the dead companies were producing WILL disappear - it will no longer be on the GDP balance sheet for the country in question, and you'll probably find that the government is having to increase spending on re-training and unemployment.> Radio would have to be state funded; magazines and> newspapers would simply be priced according to their> real cost of production (which we currently pay> anyway, by buying the things advertised in them). I> expect there'd be a massive rise in popularity for > online information (another thing that needs to be > changed; bandwidth should be paid for entirely by the> user, not by the content provider). Oh goody, more state funded media empires. More expensive newspapers because they can no longer sell advertising space to subsidise production costs. Fewer sales, fewer newspapers, more job losses. Going well. Massive rise in demand for on-line information? How do you think free-information sites fund themselves? Yes, you've guessed it, advertising. Even I try and use a bit to subsidise my overheads! Plus, now you're going to make it more expensive for the consumer to get content in the first place! The burden you're placing on consumers here is massive...> I'm beginning to think that it might not be possible to> gradually introduce bits of rational socialism without> triggering the collapse of the unstable capitalist> system. But if we take this argument further... what if> some other industry collapses? Does that inevitably> lead to the collapse of the whole economy?Ah, but you're missing something there. You say that a capitalist system is "unstable". But critically, it's dynamically unstable. Over time, it will re-establish an equilibrium if disturbed, just like natural systems do. So, there will be times where some industries are doing better than others. When an entire industry collapses, it does cause an economy problems - take the steel and coal industries here. It's taken 20 years for regeneration to take place, and it's still ongoing - there's still high unemployment in some areas, still a need for retraining. Business may not do that, so it's down to the government - so at the same time as commercial revenues fall, government spending needs to increase. That's why we need taxation at all - the government is able to act as a security blanket and to some extent can help ease recession, if it gets things right.Hence, just suddenly coming along and ripping out several industries at a time with all the after effects that would bring could actually be catastrophic, yes. Most industries decline over time if they're going to. After all, if you take the biological example, we might survive the loss of a finger, a toe, but lose a leg and although we might survive it'll take a lot of adaptation to return to something like the state you were in before. So if you're arguing for the social good, rapid and drastic change is seldom a good idea.> If you're interested in computer games, you should> read computer game magazines or web sites to keep> you informed on new developments. Both of which would be heavily reliant on, yes, you guessed it, advertising revenues to exist. So maybe they'd be too expensive for me to buy. ####, if you can't advertise at all, then maybe they don't even get review copies of the game! So the cost of their buying the game gets passed on to me!> Medicine shouldn't be advertised; it should be > reported in independent medical journals, so doctors> can stay informed and prescribe the best option for> their patients.Yes, there's nothing I like better on a quiet Sunday afternoon than smoking my pipe and reading through the latest independent medical journals to see if there's a cure for my athlete's foot! I don't know how it works abroad, but I don't have to see my doctor - or a pharmacist - to buy certain medicines. Oh, and doctors often can't afford to prescribe the best option available - so I might want to know about other options. This in a publically funded health service, incidentally.> You really think most people watch ads by choice?Perhaps not. Do you really think all people turn into zombies when they see ads, immediately walk out the door and start buying everything that was advertised? Some might do, I'm sure. I also know of some people who actually *gasp* turn the sound off during ads! Or just watch BBC! If you feel that society is being brainwashed by ads, well, perhaps that's more of an educational issue! You are talking about this in terms of mind control by using the term propaganda:> Removing advertising merely lets them make a more > free choice as to what they spend it on. Information> (as opposed to propaganda) regarding purchasing> options should be easily available (as opposed to> being forced upon them).Consumers aren't forced to buy anything. Advertising presents them with choices, which they may not even be able to action if the store/good isn't local to them. All that advertising is doing is either a) making out goods to be cheaper than others (if they weren't the advert would get pulled) or b) making goods look more desirable than others. Being a reasonably rational individual, I do shop around quite a lot as most people probably do. I'm not convinced that advertising has the level of impact you describe. In fashion-led industries, perhaps, because there the quality issue is paramount and can be quite notional. Hey, there's another industry gone from lack of advertising...! Advertising actually keeps a lot of very smart, inventive people in work as well if you think about it - it'd be a shame to see those talents be wasted. I don't know, perhaps advertising is heavier elsewhere than in Britain?> Depends on your point of view. Perhaps it raises the> cost of each item by half a penny.It doesn't depend on your point of view at all. It's an objective measurement. If it isn't, you can't prove your case one way or another. Basically, all consumer facing businesses will advertise either by having big signs, or whatever. I imagine that, as with all the supermarket's other costs which it needs to cover, an advertising budget will be a factor affecting what the supermarket needs to charge at to break even. Even the low-priced supermarkets over here advertise. If it's so expensive, how can they afford to do it and still remain low-priced? Simple. Advertising lets people know they're low-priced, so more people come to buy from them. More people buy from them, their ability to supply goods increases and the average price of the goods can stay low - and more people get goods at lower prices. Plus more revenue to get taxed on. Advertising might be an "evil" but it's a necessary one for efficiency. Oh, and you don't really thing check-out staff would see the benefit of cost cu
tting on advertising do you? Even if there were any? > Only in order to put competition out of business, build> customer loyalty, etc, in order to allow them to charge> more later. You can't generally loss lead long enough to put similar competitors out of business. Customer loyalty is certainly a reason they do it - but if they then started ripping people off do you really think people would hang around? Smart shoppers would take advantage of whatever the best deal at the time was - assuming it was advertised, of course
> I want market forces to be given more freedom to> operate, not less. But we'd be dealing with different> curves: Demand would be the same, but without the> profit motive to push supply up as price increases, > supply would be a function of quantity and production> costs, sloping in the _same_ direction as demand> (because per unit price increases as quantity drops). Well, if the supply curve sloped in the same way it'd never meet the demand curve so there'd be no way of determing a price. You say you want market forces to be given more freedom, but the profit incentive is the fundamental market force. Note that quantity isn't quantity produced in demand graphs, it's quantity SOLD at the MARKET price. Hence the supply curve is a hypothetical of what would be produced, for a given price level. So that's a critical difference. You're right in that it's very costly to produce few a few units, which is why there's little incentive to do it. However, the supply/demand graph is a behaviorual thing.If you want to remove the profit element then you have to decide how much you're going to supply without reference to profit. Hence the price is irrelevant and you supply a fixed amount at whatever price. What THAT gives you isn't a curve, it's a vertical line. This is the classic communist set-up incidentally - market forces be damned, you take a best guess at how much people want and you supply that many regardless of the cost.This can causes difficulties for a number of reason. An example will help. Suppose I guess that 100 cars will be demanded by people. I build a factory and employ enough people to meet that demand and set a price. Unfortunately demand for motorbikes goes up. There's only demand for 80 cars at my price. But hey, that's OK, I've got 100 made and I'm not bothered about profit so the other 20 will just rust because all I want to do is meet demand. If I did sell them at a cheaper price, I'd make even more of a loss than I did on the first 80.If the guy was responding to market forces, he'd only supply 80 cars and his workforce, raw material costs etc would be lower - and he might make what's known as "normal" profit - the profit required to keep resources where they are.The next year I make 100 cars again. Motorbikes turn out to have a bad safety record. People want cars again. The people ask for 120 cars. Oh dear. I only have 100. I'm sold out. But as I don't care about profit, I don't make any more, even though my factory is standing idle along with my workforce.If the guy was responding to market forces, there'd be no shortage of cars because he'd expand his factory and workforce. Because demand has gone up, he can earn more for each car too. If, at this point, he earns abnormal profit - profit above "normal" profit, then other businessmen will be encouraged to start making cars. Supply will increase, reducing prices again as the businessmen compete for business.So you see, if you ignore profit, your ability to supply is very rigid. A surplus may not be a problem (although it's not economically efficient because you're probably not maximising economies of scale) but a shortage could be if you're trying to produce something vital and don't have the spare production capacity. The profit incentive causes players to enter the market when prices rise and leave it when prices decrease - the benefit being that supply increases with demand whilst prices remain within a reasonable range.This is not without its problems, obviously. If a firm becomes able to block competitors from entry, then it can exploit high demand and keep making abnormal profits. Production costs may not be minimised due to diseconomies of scale, so that's not healthy for the overall use of resources, which is why governments monitor monopolies closely.This sort of thing would have been great revision for my A-Level economics years back... Oh, and hey, if we want to talk about uplifts on consumer goods - consider how much government taxes add to prices across the board. The government distorts prices far more than advertising costs, but of course they need that revenue to produce "public goods" as opposed to "private goods". Which actually brings us back to the beginning again - this whole debate has revolved around whether entertainment should be treated as a "private good" made by private firms with profit incentives or a government-supplied tax funded "public good" because it's non-diminishable and of some notional benefit to society.Incidentally, just to close up the economic argument - in either of the economic situations where the fixed supply doesn't meet demand there's wastage. In the first example the factory was too big, the work force was too big and too many raw materials were used. In the second example, the resources to make the cars were probably there but weren't employed meaning that the fixed and average costs (factory maintenance, wages) which could have been met by selling more cars, weren't. So in example one, the government has to subsidise the plant because it isn't self-sufficient. In example two, the government fails to meet demand and the factory doesn't operate as efficiently as it could do because manpower goes to waste.In these examples I assume that the cars wouldn't be sold at cost - that at least most of the cost of production would be covered by 100 cars being sold. Consider that in your state-funded DVD model, only the materials costs were being covered by the sale price. None of the manpower in terms of actors, directors, editors, DVD creators, or fixed costs like buildings, set design, props etc were being cost. If the demand for your entertainment is not high, then the demand curve is way off to the left and your supply curve, being vertical, might not even meet the foot of your demand curve. So, you'd certainly meet demand, but you'd have the equivalent of a skyscraper of unwanted cars - all of which would have to be funded from taxation. There's a reason communist states ran into financial difficulties...> I'm not sure that would work very well... for media, it> could prevent the release of high-quality versions, > since the original masters wouldn't be available. And> it doesn't prevent piracy of new items. For books,> publishers would be tempted to let books go out of > print quickly, so they can re-release them later> without having to pay royalties - not good for the> writers.On the first point - why shouldn't the masters be available? It's something of a moot point for digital media anyway, one copy's as good as another. For physical media, the masters could be placed in what's called escrow - effectively archived until needed in a central storage area. It might not prevent piracy of new items (what would? ) but it would allow enthusiasts to reproduce items at cost later - which is relevant in the context of video CDs of shows like Star Fleet of course (yes, dragged it back on-topic)!On the second topic - unless the book was massively popular, interest in it would probably decrease over time. I've no idea what the shelf-life of an average book is, but I would think the author would get the bulk of their royalties pretty quickly. However, it's a good point. Books are unusual of course in that it's generally a private individual making them. Items produced by companies
are group efforts, and of course it's the company that would tend to reap the benefits because it owns the copyright. So perhaps where a company has dissolved and no other company has picked up the rights, or where a company hasn't made any use of them at all, there'd be an argument for reduced copyright. It's actually an interesting legal question that I'm not sure of the answer to - I would guess that company media rights ownership passes to an administrator for sale when the company is wound up, but if no-one takes it up it might revert to joint ownership amongst the surviving authors. Mmm. Tricky.