Faces of Economic Death

Dec. 27, 2010

midnight

If you've turned on the tube these last few weeks, you've probably been a collateral casualty of the biggest televisual war of attrition in recent memory. No, I'm not talking about the scripted skirmishes between cable channels, nor am I referring to the Battle of Zombie Talking Points that ate most of our brains during the election. I'm talking about the now never-ending throwdown between two of the most in-your-face salespeople our mediascape has ever manufactured: Geico's unnamed gecko and Progressive Insurance's chipper saleswoman, Flo.

No doubt, you know them boththe green lizard's smile and cockney accent feign earnestness while the aproned Flo goes for the same effect through the saccharine enthusiasm of an "Office Space" character. It's mildly cute, but don't be fooled: As the best-known avatars of the insurance industry, these two are aggressively competing for our cash through re-education-camp levels of repetition, hoping to harass us into buying their product.

Certainly, there's nothing new about hard sells from TV charlatans. But these two represent something different, something apocalypticand I say that not merely because their maddening ubiquity has driven me to the brink of insanity. I say it because they are peddling the kind of commodity that offers little tangible worth, waging a fight that promises no valuable innovation, and representing a larger insurance and finance sector that's hollowing out our economy.

Think about it: The gecko and Flo do not embody the capitalist vision of private competition fostering innovations that serve the greater good. They are not, say, two private manufacturers grabbing for customers in an entrepreneurial competition that will result in major technological advances.

Instead, the gecko and Flo front an insurance and related banking sector that is a government-supported endeavorcar and health insurance are mandated and/or subsidized by the state, and deposits are federally guaranteed. This sector, which pools collective resources for (theoretically) collective benefits, provides services that are crucial to an economy, but that produce little added value beyond their baseline functionsand that's why the sector was once regulated like a utility.

Of course, such regulations were eviscerated in recent years, with the promise that competition would encourage self-regulating safeguards and value-added innovation. But as the AIG collapse, the Wall Street meltdown and periodic insurance premium increases exemplify, the effect has been the opposite. Rather than building real wealth for society, unregulated competition between the geckos and the Flos in the insurance and finance sector has often meant fine-print terms like "recission," esoteric maneuvers like "securitization" and acronym-cloaked schemes like CDOsthat is, ever-more complex "innovations" to reduce customer payouts, increase fees, maximize private profit and limit executive liability, all under the TV-commercial guise of allegedly lower prices and better consumer returns.

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In the global economy's increasingly fierce fight for genuine value and better living standards, this might not be so problematic if America's wealth-creating sectors (i.e., making things or providing valuable services) remained substantially larger than wealth-cannibalizing sectors like insurance and finance. But since the 1980s' decline of manufacturing, the insurance and finance sector has doubled its share of gross domestic product, hitting 8 percent last year. That's twice as large as both the construction and information sectorsand ongoing taxpayer bailouts promise to exacerbate the asymmetry even more.

This is certainly great for insurance companiesfor example, it provides them excess billions to buy an absurd amount of ads. For the rest of us, though, the growing imbalance between real wealth creation and worthless paper pushing is bad newsand that's why the gecko and Flo are so deeply disturbing. More than just the moment's most annoying shills, they are the cheeky visages of our nation's long-term economic decline.

David Sirota is a best-selling author whose upcoming book "Back to Our Future" will be released in March of 2011. He hosts the morning show on AM760 in Colorado and blogs at OpenLeft.com. E-mail him at ds@davidsirota.com or follow him on Twitter @davidsirota.

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The author tells it like it is. How selling Insura...

The author tells it like it is. How selling Insurance is nothing like selling a Product or a Service. How innovations will improve products and services, but innovations do not improve insurance, they only improve the insurance companies' profits.
Look at it this way, as the various ways of making money on Main Street, or any American business:

You can sell a Product. You need to buy raw materials, pay for workers to change those raw materials, and at the end the deal, the customer has something real to hold on to. Paid jobs produce the raw materials, paid jobs convert the raw meterials to finished products.
You can sell a Service. Maybe you don't have much raw materials to buy, but you still got workers doing something useful for the customer. At the end of the deal, something about the customer is changged... hair is cut, car is washed, something has been done. A paid job was worked to do that service.
You can sell Insurance. No raw materials, no workers, so it in no way creates any jobs for anybody, American or not. All you sold to the customer is a Promise, and if all goes according to plan, all that happened was the customer paid money, got nothing back at all. Innovations there just find new ways of not paying the customer when a claim is thought to be due.

That's why my previous comments on other articles point out the general "cashing out" of the American business gamble. The capitalists have basically given upon on Americans, they just want to find a way to take the money out of here, tax free, so they can re-invest it in a place that still has room to go on the up and up... 2 fastest growing economies today are China and India.
Maybe the voters should look at it this way... where can you put tax dollars so that they will boost the economy here? Give it to a Welfare mom, she won't invest it overseas, she's going to buy products or services. Give it to the working class, same thing. Give it to a Middle Class Joe the Plumber, he still is spending it here. Even spending it on a high speed train in Wisconsin means jobs are worked here to lay that track, even immigrant rail workers will buy food and beer at Wisconsin bars. But give it to a global capitalist like what runs Walmart, BP, GM or even the big Wall Street banks, it's going to be spent on a plant in India or China, anything but an American job.
THIS IS WHY OBAMA ADMINISTRATION WANTS TO RAISE TAXES ON THE SUPER RICH. TAXED OR NOT, THAT TYPE IS GOING TO KEEP MOVING JOBS OVERSEAS, WILL KEEP DOING SO AS LONG AS THE OVERSEAS JOB IS BEING PAID $4/DAY VERSUS EVEN THE PIZZA DELIVERY BOY'S $7/HOUR. Even if the prices go way up, at least the money is able to be shoved back down to the bottom, and work it's way back up again, this time in America!
I have a Republican idea... build a Star Trek transporter, then we can simply have your pizza made in some poor part of India, by women sitting cross-legged on a dirt floor, flies buzzing all around, then have them beam it to your home, fresh and hot, at American prices, not a stitch of American labor, ingredients, or regulations! (Ooohh, my capitalist hands are wringing at the thought of it)
How do I know this to be true? Look at DVDs, look at the so called "region code" printed on them, google it, too. Region 1 is the US and Japan. Region 5 is Mexico. This is done to prevent someone from buying a cheap, Mexican-priced Region 5 DVD, and putting it in an American Region 1 player, it won't play here (but an expensive US DVD will play in the Mexican player). No difference whatsoever between those 2 DVDs except for that region code, they cost the same to make. Do you think they would sell that Mexican DVD at all if they weren't already making money at the Mexican price? I sure wouldn't invest in them if they were losing money. So how much of that US-priced DVD goes toward making it, how much is just pure profit?
PS - do you think customs will let you bring a Region 5 DVD player into the US? I think not!

Anonymous more than 13 years ago