Satisfaction Guaranteed:: Life and Death of a Sales Nation

By Ernst G. Frankel

This book is a critical review of the problems that caused America's decline in economic, strategic, and cultural leadership.


How American Salesmanship and Marketing
Doomed Its Economy and Leadership Role
By Encouraging Unfettered Consumption and Debt while
Undermining Growth and Social Justice

• Language: English
• Publisher: AuthorHouse
• Release date: Jul 15, 2013
• ISBN: 9781481776660

Ernst G. Frankel

Ernst G. Frankel is Professor Emeritus of MIT and has worked in senior positions for the U.S. Government, the World Bank, the Governments of China, the U.K., Israel, Singapore, and others. He is a member of the board of shipping companies, Panama Canal, and others. He authored 21 books and over 700 refereed papers. This book is a critical review of the problems that caused America's decline in economic, strategic, and cultural leadership.

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© 2013 by Ernst G. Frankel. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

Published by AuthorHouse 07/10/2013

ISBN: 978-1-4817-7668-4 (sc)

ISBN: 978-1-4817-7667-7 (hc)

ISBN: 978-1-4817-7666-0 (e)

Library of Congress Control Number: 2013912524

Any people depicted in stock imagery provided by Thinkstock are models, and such images are being used for illustrative purposes only.

Certain stock imagery © Thinkstock.

Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

CONTENS

Preamble

Introduction

America’s False Reality

America—Where Nearly Everything and Everybody is for Sale

American Advertising

America’s Self-Immolation and Indulgence

America’s Charity Marketing

America’s Obsession with Marketing, Sales, and Consumption

America: Land of Opportunity

Social Networking

America’s Corrupting Political System

Political Salesmanship

Marketing and Advertising Legal Services

American Advertising Effectiveness

Effectiveness of Advertising Communications

Cyber Ads and False Advertising

America Has Become a Country where Nothing and Nobody Works in the Public Interest, Particularly in Sales

Over-pricing to Make Buyers Feel They are Getting a Bargain

American Marketing and Made in America

America’s Customer Disservice

America’s Production

America’s Super Rich Shopping and Spending Epidemic

America’s Drinking Water Sales

American Diet Marketing

American Sales Inventiveness and Technology Development

America’s Innovation and Inventiveness in Marketing

Consumption as an Economic Locomotive

Elderly Marketing

Typical Drug User Notice

The American Gift Card Business Racket

Groupons and Other Electronic Marketing Tools

Costs of American Marketing and Advertising

Making Advertising, Marketing, and Sales All Social

Additional Social Media Drawbacks

Selling Life Insurance

Big Brother is Watching You

Costs of Social Media

Marketing Insurance

Marketing Education

Class Action and Legal Services

Pharmaceutical and Healthcare Marketing

Debt and Assumed Debt Collection

Financial Services and Investment Marketing

Sales of Sub-prime Mortgages and Other Government Approved Instruments

Selling America to Itself

A Casualty of the Sales Nation Might be Free Journalism

America’s Tax System

Too Big to Exist

Jobs and Marketing

No Bonus for Albert Einstein

When Working for a Living and Producing is Outmoded

Why America Needs a National Consumption Tax

Impact of Sales and Marketing on U.S. Economy

People’s Rights and Properties

Protecting Privacy and Personal Information

Banking System for the Poor

Selling National Assets

Merchant Nation

Buy American Preference—Rebuilding our National Pride

American’s Government for Sale

Coming Back to Reality

The Unsuccessful War on Drugs

Prisons in America

Selling America in Congress (Congressional Rotating Doors)

Making People Proud of America—Again

Cures for America’s Ills

American Support for Arts and Culture

Sales, Advertising, Economic Growth and Health in America

Misleading Pricing

American Gun Sales and Sales Organizations

American Political Salesmanship

Government Role and Economic Impact

Total Tax Revenue as a Percentage of GDP

Immoral Politics in America

New Ownership Challenges

Making a Difference and Contributing to the Common Good

APPENDICES

Manufacturing and Other Outputs

American Advertising

Government Waste

The Hypocrisy of America’s Value System

Health Care Protection Agency

America’s Wealth Gap

Advertising by Medium

Major Areas of Want Not Supported by Need

The Consumer as an Economic Driving Force Myth

Sale of Excessive and Unhealthy Living

Patient, Health Care Provider Protection, and Drug/Health Care Service Sales and Advertising

Medicare Sales

Impact of American Advertising and Marketing on Personal Intelligence

Preamble

Marketing has become increasingly invasive and intrusive and now affects many aspects of our physical, social, and personal lives. Not only are the bulk of our mail, phone calls, and entertainment driven by marketing, but also the Internet service and social networking are largely controlled or invaded by marketing. This is increasingly intrusive, as many of these services collect data and information for their own use and also make it widely available.

Privacy, therefore, is largely a thing of the past and many people are apparently unaware or forget that what they say in their social intercourse is now often mined and stored. As a result, people are sometimes reminded of an interest they expressed some time ago. Often personal information and opinion exposed supposedly privately becomes public and part of a database that can and may be used by marketers or others. Social networking exposes us to many new threats that may haunt or expose us in the future.

Marketing, similarly, has become a very wasteful activity. Nine out of ten mail pieces are junk and immediately disposed of. A huge percentage of phone calls are unsolicited marketing calls, and much entertainment time on TV, radio, and now Internet are taken up by advertising.

While some advertising is constructive, most does not provide useful information nor is it designed to educate and guide the public. As a result, it is more slogan than advertising. This is particularly true in America, which seems to have lax rules on truth and effectiveness of advertising. For example, few advertisers give detailed guidance on how to obtain some services, get satisfaction, make claims or benefit from a guarantee. In fact, the word or concept of guarantee is more often than not just a marketing trick instead of a commitment.

Few, if any ads, specify what or how a guarantee can be invoked or failure of performance can be corrected. Marketing has been increasingly outsourced and is now increasingly automated with recorded, computerized messages and unresponsive announcements that waste recipient’s time and often fail to provide useful information.

Introduction

There was tremendous excitement in New York City when the initial public offering (IPO) of Facebook, the popular social networking program, was announced. People stood in line surrounding the hotel where Mark Zuckerberg, the founder and CEO of Facebook, was staying and expected him to emerge to attend various pre-IPO meetings with various financial institutions.

A few days later Bloomberg announced that Eduardo Saverin, the billionaire co-founder of Facebook Inc., announced his decision to renounce his U.S. citizenship to escape the onerous American tax implications. This is a curious development as the Facebook saga and its development was only possible in America.

As a result, having one of its founders leave America after pocketing billions is unfortunate. The Facebook IPO is expected to bring in between $60-97 billion, and Zuckerberg as well as Saverin will have obtained billions of dollars from the sale of shares of a company that produces nothing and lives on advertising, mainly in the U.S.

It is astounding that U.S. tax laws and regulations allow the sale of shares of such a company and freedom to export the untaxed sales revenues. Not only will a huge amount of the U.S. economy be spread on unproductive assets such as a social network, but also much of the money invested may now escape abroad. The U.S. taxpayer will therefore be hit twice, once by sucking $60-97 billion out of the economy and then by having a major part of that leave the country without being taxed.

The whole concept of advertising based/financed social networking is a drag on the U.S. economy, and now we find that the billionaire owners of Facebook Inc. cashed in without paying even a paltry capital gains tax.

The Facebook saga is only the latest example of the American economy gone seriously wrong in committing its resources increasingly on non-producing, unproductive, often wasteful activities that contribute negligibly or negatively to our U.S. economy and general wellbeing. A once mighty leader in manufacturing, agriculture, and other productions is becoming one big marketplace or Sales Nation.

We must also recognize that much of the advertising which supports social networking is devoted to the sale of mainly foreign made or imported goods and services, making the problem even more acute. It largely generates income for a non-American firm’s economy. Social networking is largely an entertainment that wastes public assets and produces nothing of value for markets here or abroad.

America has become a social networking and sales nation with no need to talk or meet in person or work to produce anything. All that’s required is texting, using Facebook, Twitter, or otherwise wasting one’s time with minutia comments, hoping that lots of people will be interested in your activities or accomplishments. Wasting time producing something of value or use would be antisocial.

Social networking has not only become a preferred means of interpersonal communication but also a major advertising venue and personal information depository which can be and is being used or generated for marketing, publicity, and other purposes. Most users seem to ignore or be unaware that their information, including pictures, social, and other data, are being mined for a variety of purposes.

While use for marketing may not bother many users, there are many more sinister mining operations going on. Advertising is the revenue source that sustains social networking, search engine, and other Internet sites. In a way it is curious that advertising on social networking sites now tops all other advertising costs. In fact, the market value of social network sites from Facebook to Twitter, etc. outweighs the market value of the major U.S. manufacturing companies.

Total advertising expenditures continue to grow and may soon exceed some manufacturing costs in the U.S., making America truly a Sales Nation which spends most of its national product on services, government, and marketing.

In 1998, I published a book¹ entitled America’s Institutional Dilemma which describes how an increasing percentage of GDP in America was spent on education, health care, law enforcement, and government and how within 30 years America would do nothing else, produce nothing, and just live on borrowed money and resources. Now adding marketing, we may reach this state even earlier and truly become a nation that only sells but does not produce.

This is a dangerous situation because it makes America wholly dependent on others who may pull the rug out from under us at any time. We are rapidly moving in this direction, and China may before long demand that we turn over ownership of major national assets unless we can service our ever-increasing debt. The Greeks are already in this situation and may be forced to turn over islands, antiquities, and more to service their debts. We may be next in line.

Sales and advertising has become an increasingly onerous activity and a stone around America’s economic neck. As so little is produced in America, advertising and marketing is primarily for services² or foreign made goods or produce, further damaging the American economy.

As shown in the table below, Internet advertising accounted for 15 percent of all advertising globally in 2011. Total advertising is growing now at a 4-5 percent rate globally and nearly twice as much in America. Internet advertising in America is expected to surpass manufacturing outlays within 10-20 years, with the market value of Internet companies exceeding those of major