Tullock on Advertising
By David Henderson
I’m at a Liberty Fund conference on bureaucracy in Brunswick, Maine and I found an interesting passage in one of the readings, Gordon Tullock’s The Politics of Bureaucracy. It’s an aside on advertising. Tullock writes:
Due to the ubiquitousness of advertising in modern life, we sometimes overestimate its importance. It may be forgotten that the method is important to business firms only when products advertised are almost identical in quality. “There ain’t no difference in soap,” and hence the soap company with the biggest campaign sells the most soap. But shortly after World War II there was a difference in soaps; the detergents were introduced. At that time none of the old companies, experienced and skilled in advertising techniques, tried for long to sell old-fashioned soap in competition with the new detergents.
The last two lines are reminiscent of Joseph Schumpeter’s “creative destruction.”