April 13, 2010

It's the Vocabulary, Stupid!


By Clay Gordon

What do politicians, religious leaders, con artists, and members of the advertising profession all have in common?

Since before recorded history they have all known that if they can get people to talk about issues using their words loaded with their meanings - instead of the competition's - they can control the way people not only act but the way they think. Sometimes, locutions are coined to create issues, but more often than not, they are used to divert attention away from the core of an issue in a deliberate game of sleight-of-tongue.

Nowhere is the linguistic shell game employed more cynically, and with the greatest potential for lasting harm, than in public political discourse. As this is one of the most interesting political seasons in decades, it seems to make sense to look at how some words have been used to change the very nature of public debate.

Example 1: Surge

The word surge carries connotations of power as well as timeliness; surges, for example tidal surges, are both powerful and temporary. From a political standpoint it is far more palatable than the Vietnam-era term escalation, which suggests raising something (such as the number of troops on active duty in a war zone) to a higher level - without implying that such a rise is temporary. For that we must resort to using de-escalation.


Example 2: Red Menace, Commie Pinko Bastard, Evil Empire, Axes of Evil, Where's the Beef, Swiftboating

I have no doubt that the late Senator Joe McCarthy would have had difficulty in prosecuting people if the only way to refer to them was Marxist-Leninist sympathizers. The same is true of our perception of the Cold War. It's far easier to get people up-in-arms about something that is deemed evil than it is something that is cold - especially when it has been going on for thirty years or more.

Words (and images) have incredible power to change public opinion. Who could foresee the impact that the lifting of an advertising phrase created for a fast food chain might have on a national election? Or that the image of a presidential candidate sitting in a tank wearing a helmet would derail his campaign? And how many people's confidence in a sitting president was undermined when he asked us to ponder the meaning of the word 'is?'

Example 3: Free trade, Fair trade, Free Markets, Globalization, Privatization

Of all the words that have been used by elected officials in the past forty years, perhaps the most insidious is the word privatization and the underlying idea that "free" markets, unfettered by government oversight are more efficient and therefore intrinsically better.

This may be because the use of privatization is focused on one narrow meaning, which is to take a company or industry that is owned/controlled/regulated by the government and turn it over to private industry.

However, if you look closely you will see that privatized industry rarely ever actually are; the businesses and industries in question are just too large for any one private individual or private company to pay for and own. Instead, they are turned into public companies (construed narrowly as companies with stock sold on "public" exchanges) or sold to companies that are themselves publicly traded.

More often than not, this gives rise to unintended or unanticipated consequences, and it is usually the little guy, the middle-class taxpayer, who shoulders the brunt of those consequences. It is not entirely likely that the tax cuts initiated by the present administration were purposely intended to widen the gap between those who have and those who don't have, or that they truly understood the impact that "free" trade agreements would have on the American job market, or that the deregulation of utilities would lead to the Enron debacle or the energy crisis in California several summers ago.

At least, I hope not.


Example 4: Health Care "Reform"

In this election perhaps no issue is being subjected to verbal manipulation more than "Health Care Reform." Health care costs in the US have been a nearly constant victim of unintended consequences over the past twenty years and it's got so bad that something really has to be done about it.

If you look very closely at what the candidates are saying about the issue of "Health Care 'Reform'" you quickly realize that not one of them ever talks about changing the way health care is actually practiced and delivered. Instead, what they are talking about is "Health Insurance Reform," as is evidenced by the fast that all of the discussion is focused on finding ways to pay for health insurance coverage to those who cannot currently afford it.

This sounds great until it dawns on you that real reform in health care has to include examining why both health care and health insurance are so expensive to begin with.

The answers to questions of how to bring about true reform are very complicated. Examining the situation through the lens of the principal of unintended consequences is quite informative and includes a lesson for the advertising industry.

The notion of a government-run health care system is anathema to both major political parties, but for very different reasons. However there is the public perception that because health care is not run by the government, it is private.

This is not actually the case, as many companies involved in the health care industry are publicly traded and the expectations of both investors and the stock markets is that the health care "sector" must deliver returns equivalent to riskier investments in order to be "worth" investing in. The market pressure exerted on health care companies to not only be profitable but to provide unrealistic returns leads to pricing manipulation on a number of levels.


One kind of manipulation is cooking the books to give the impression that the company is performing better than it is. The more insidious effect is that it creates an inflationary cost spiral directly related to the number of public companies involved in the supply chain.

For a moment, let's consider a publicly traded chemical company that makes a glue that goes on surgical bandages and tape. If the cost of the raw materials used to make the adhesive rises, the chemical company has to pass those costs along to their customers in order to stay profitable and to keep their earnings and gross margins within the range of expectations of Wall Street analysts - even if those analysts' expectations are not reasonable. If the chemical company fails in this critically important aspect of their business and misses by as little as a penny, their stock gets hammered.

So the chemical company passes the inflated cost of the adhesive off to the company who makes the bandages and tape. Because the bandage-making company is also a unit of a public company, they are forced in turn to pass along the now compounded increased cost their bandages to their customers.

That might not be too bad if the bandage company sold directly to the person who was going to actually apply the bandage to their body, but the customers of the bandage company are often publicly traded entities that act as wholesale distributors who sell to other public companies whose job it is to "manage costs" who in turn sell the bandages to the place where the actual care is to be provided. Ironically, because these care providers (e.g., hospitals) are also likely to be entities of public companies, they are also charged with making a profit.

In the end, the fraction of a cent increase in the unit cost of adhesive for a bandage has ballooned into a very large increase in the cost of the bandage to the ultimate consumer. And this happens for virtually every product or service provided by the health care industry including and especially the health insurance industry.


So, one reason for the increase in the cost of health care (but by no means the only one), is the unintended consequences of the influence of the free market motivation to maximize the ROI of investors - especially institutional investors.

Recently the CEO of a Health Care company was fined for improper business practices. In the end, he turned over more than $200 million dollars from his personal accounts to settle the accusations. Something is seriously wrong with the "Health Care" industry if a single individual has $200 million under his personal control that he can relinquish. How much health care would $200 million have purchased?

More importantly, how much was the cost of the services provided by the company inflated so that this one person had $200 million in the first place? And how did that affect the cost of insurance?

Now multiply this by hundreds and thousands of senior executives of companies in the health care, insurance, and financial services sectors and you begin to see the magnitude of how just one element of the cost of providing health care can have enormous impact on the entire cost structure of providing health care.

But what about the impact of medical malpractice claims on the cost of health insurance, you (and many elected officials) say? While there is undoubtedly an impact, it is only one of the factors compounding cost escalations. Note that I did not say cost surge because there is no implication that the cost will ever come down. Perhaps more to the point, it is easier to demonize lawyers than it is to address the structural issues that lead to the frustration health care consumers have that make them feel like victims that lead them to want to lash out at those whom they perceive are benefiting at their expense.

Madison Avenue is complicit in the escalation of the cost of health care, which is why this discussion is relevant to this forum and this article.

Big pharma is one industry that is closely watched by Wall Street. Expectations for blockbuster drugs delivering billions of dollars in sales annually are the holy grail of the companies, their investors, and the financial services companies who monitor, analyze, and promote their activities. This influence is so pervasive that pharmaceutical companies invent chronic "diseases" so they can market drugs to cure them. And market them they do. Relentlessly. In multiple media with multi-million dollar budgets.


Is restless leg syndrome (RLS) really a major medical problem or is the drug to combat it a solution in search of a problem? It really doesn't matter in the end. What matters is that the pharmaceutical company probably spent hundreds of millions if not billions developing and testing the drug, and Wall Street has been told to expect that the drug will deliver hundreds of millions if not billions in sales to the bottom line - annually. In order to make this happen, the pharmaceutical company compounds its costs by enlisting Madison Avenue as an unwitting accomplice. The ad agency taking on the account is also probably part of a public holding company and so needs to be mindful of Wall Street pressure on the price of its stock. So there is no hesitation in taking the business with its tens of millions of dollars spend on creative and media.

Much of that ad spending is directed at consumers who were probably not aware they had a chronic "disease" that needed treatment until they saw a television commercial where they were exhorted to ask their doctor about it in order to take advantage of the offer of a "free" trial sample of the drug being hawked. Or, if they can't afford the drug, take advantage of an industry-subsidized partnership that will help pay for the drugs.

Not being an RLS "sufferer" myself, I don't have a lot of sympathy for those who have been convinced that they are. But I have absolutely no sympathy or affection for the members of the ad community whose actions - unintended I am sure - increase the cost of health care for all Americans.

Is RLS (just one example) actually worthy of the hundreds of millions of dollars used to develop, test, market, advertise, and subsidize it? Given everything else there is to worry about, the answer is probably, "NO!" Instead, I wonder how much actual health care could be delivered for those hundreds of millions of dollars, or how much the cost of health insurance could be reduced.

There are no simple answers to solving the challenges of the increased cost of health care and health insurance. I do know that the power of "free" markets and the people who control them, and by extension, our political processes, make meaningful "reform" (by which I mean any change that threatens the profits of the companies who make money on health care), vanishingly small.

The question is - and always has been and will be - what is Madison Avenue going to do with its power to persuade? In this election year how that question is answered is critically important. I know that words and images can be agents of change for good as well as for not-good. I also know that Madison Avenue has a long history of creating and delivering powerfully compelling words and images that touch and change the lives of billions of people daily around the world and hundreds of millions of people here in the US.

So, what can Madison Avenue do this election year to be a change agent? Sadly, probably very little. But maybe I've given a few Mad Ave execs cause to really think about their ability as non partisan agents of meaningful change.


About the author

Clay Gordon is a graduate of Rhode Island School of Design, published author, accomplished lecturer, gourmet cook, and co-inventor on four granted and one pending patent. Clay Gordon has been at or near the leading edge of several waves of new technologies since 1983. He became interested in chocolate professionally in 1994, and is now considered to be one of the world's leading independent thought leaders on the subject of chocolate. For more information about Discover Chocolate, please contact Clay directly by email at clay@discoverchocolate.com.

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