Cars Will Kill Capitalism

money-trap “Capitalist production begets, with the inexorability of a law of nature, its own negation.” It is supposed to be crude and wrong to say such things.

Meanwhile, consider this bit of insider planning:

Some media experts have predicted 20%-30% increases for this year’s TV upfront market, in which media buyers will strike deals for commercial time in the fall season, based on early reports of economic recovery. Several key economic indicators are up since last year — durable goods; real retail and food service sales; vehicle sales; and consumer spending — leading to a feeling of optimism among network executives. But a lurking factor could spoil the party: rising gas prices.

The average price of regular unleaded gas has hit $3.68. That’s still shy of the $4.24 high set in June 2008. But what happens if the summer driving season and the unrest in the Middle East pushes gas prices above the summer 2008 levels, above even $5 per gallon? According to Nielsen Wire, a 50-cent increase in gas prices would cost the typical U.S. household about $52.50 per month, and if prices were to rise two dollars, that would mean $210 a month, or more than $2,500 a year. In an economy where job and personal income growth is meager at best, the economic and psychological impact of paying $2,500 more a year for gas can have a profound impact on consumer spending.

A jump in fuel prices also eventually translates to higher transportation costs for marketers, which pass those costs to consumers through increased prices for everything they buy — not just gas. As prices rise and inflation ensues, the Federal Reserve could be forced to raise interest rates, which would hurt the still floundering housing market.

At times like these, retailers need to protect their brick-and-mortar businesses. When shoppers go online, there is clearly less foot traffic in traditional stores. Rising shipping costs also eat into the retail profit structure. Either way, retailers are squeezed.

Heading into the upfronts, then, smart marketers and media buyers should consider whether the hike in gas prices will be short-lived or whether it will trigger a longer economic downturn that alters consumer behavior and shopping patterns.

This is from Hank Cohen, CEO of KSL Media, the independent media planning and buying agency, via Advertising Age.

This is not going to be a passing problem, either. Capitalists are institutionally addicted to cars-first transportation. Cars-first transportation in the United States obliges huge use of petroleum. Peak oil ensures that huge use of petroleum will be an increasing choke on the possibility of economic growth. Catch-22.

Meanwhile, thanks to the premium on keeping the capitalist addiction out of sight, the topic remains undiscussed and undiscussable in mainstream venues.

Leave a Reply

Please Login to comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

  Subscribe  
Notify of