Advertising works by persuading people to spend money. It has been shown that this even works somewhat beyond the point where there is no money left, into credit card debt. But at some point the credit card is at its limit. A consumer with no money left, and with his credit card getting refused already, becomes more or less immune to advertising. He might still *want* to buy stuff, but he can't.

We have data for that. McDonald's sales have been falling, globally. In other news, Tupperware filed for bankruptcy. There have been a ton of stories like this in 2024. And if you zoom out a bit, you notice that a lot of the companies that aren't doing so great are those that are targeting low- to median-income households as customers. But after a spike on inflation, in which prices (and profits) grew a lot faster than wages, the financial situation of many average families is pretty bad.

Henry Ford, who admittedly did have a lot of bad up to downright nasty ideas, at least understood one aspect of capitalism a lot better than most capitalists of his time, and even today: If you want the product of your company to be sold to the type of people that are your employees, you need to pay your employees enough so that they can afford your product. It's a win-win situation: The workers got their wages more than doubled from $2.34 to $5, and Henry Ford solved his problem of too much employee turnover, and gained a bunch of customers. It wasn't altruism, it was business acumen. Modern companies have lost that insight, and are hell-bent on screwing both their employees and their customers out of their last cent. But if every company does that, who will they sell their products to? The problem with inequality, from a capitalistic point of view, is that the rich are a lot fewer than the poor, and they spend a lot less of every dollar they earn. Different countries have repeatedly shown that raising the minimum wage is good for the economy, no matter the complaints from the business owners. Strong unions are good for the economy too. Trickle-down economics don't work.

Advertising doesn't generate wealth, like manufacturing does. If people had vast piles of unused money, advertising could accelerate the velocity of money, the speed at which money flows through the economy. But once the reserves are gone, advertising becomes a zero sum game: A consumer persuaded to buy product A now can't afford product B as well. Advertising remains a necessity, because nobody wants to be company B here; but thinking that AI or other technology could have a huge positive impact on the economy by improving advertising is a pipe dream. Firing Don Draper and replacing him by AI might be good for the bottom line of the company in the short term, but is a net negative for the overall economy.