Public Relations: the Conclusion

I must say that I really enjoyed the documentary and you can watch it for free courtesy of Google. [The related videos will lead you through the four parts] The question though is how is this seemingly anthropological look at public relations relevant today? For this I will outsource to David Einhorn writing in his investment newsletter. [It is a PDF]

As I see it, there are two basic problems in how we have designed our government. The first is that officials favor policies with short-term impact over those in our long-term interest because they need to be popular while they are in office and they want to be re- elected. In recent times, opinion tracking polls, the immediate reactions of focus groups, the 24/7 news cycle, the constant campaign, and the moment-to-moment obsession with the Dow Jones Industrial Average have magnified the political pressures to favor short-term solutions. Earlier this year, the political topic du jour was to debate whether the stimulus was working, before it had even been spent.

Paul Volcker was an unusual public official because he was willing to make unpopular decisions in the early ’80s and was disliked at the time. History, though, judges him kindly for the era of prosperity that followed.

Presently, Ben Bernanke and Tim Geithner have become the quintessential short-term decision makers. They explicitly “do whatever it takes” to “solve one problem at a time” and deal with the unintended consequences later. It is too soon for history to evaluate their work, because there hasn’t been time for the unintended consequences of the “do whatever it takes” decision-making to materialize.

The second weakness in our government is “concentrated benefit versus diffuse harm” also known as the problem of special interests. Decision makers help small groups who care about narrow issues and whose “special interests” invest substantial resources to be better heard through lobbying, public relations and campaign support. The special interests benefit while the associated costs and consequences are spread broadly through the rest of the population. With individuals bearing a comparatively small extra burden, they are less motivated or able to fight in Washington.

David has in four short paragraphs perfectly surmised what it took me 4 separate blog postings. I will concede, I dug further into the psychology of the transmission mechanism of psychoanlaysis being applied to the link between product and consumers and how it has evolved over time not only in that link but how politicians now use the same mechanism to connect politics[product] to voters [consumers.]

On a regular basis I read financial news and am incensed by how it is spun. I talk at length with former business school professors and we vent together. However, when I talk to some one like a parent or a colleague in the law profession, I only receive glazed over eyes.

There are two factors at work: A) information overload B) esoteric nature of the finance industry.

I have already posted at length about information overload. My money quote that I keep chanting in a mantra is: it was Herbert Simon though who posited a long time ago "...in an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it..." This is very similar to the idea that by reducing people to desires you can stop them from thinking about how policies are affecting them. Dancing with the Stars, 30Rock, Celebrity news all stop people from thinking about how they just donated 2,300 to Government Sachs and its colleagues to pay out, at Goldman alone, 23 Billion to its employees.

The esoteric nature of finance. So any normal Joe who did not graduate with a finance degree, MBA or an economics degree, is involved in her every day life that revolves not around finance, but what ever it is that pays the bills. Everyone can have an opinion on whether on not to raise taxes, or pursue certain domestic policies but not everyone will have an opinion on Negative Amortizing Interest Only Mortgages, or Collateralized Debt Obligations.

Thus, my hope is that my new arsenal of information on public relations and spin that I will be able to better engage my non-finance friends and family to better explain why the issues are important to everyone not just the people with vested interests in finance and financial policy.

Call it for what it is. It has more names than Satan. Call it plundering. Call it pillaging. Call it extortion, Call it fraud. Call it racketeering. Call it the financial raping of the middle class. Call it criminal. Consider the following. Middle class never consented to this financial rape. They vehemently protested it when the gov’t first proposed a $700 bailout of the financial system called TARP in Septermber 2008. Yet what did Congress and our government do? They went ahead and did it anyway. This boils down to one thing, taxation without representation. Our votes do not matter anymore.

Be outraged. Do not go softly into the night. Scream into the tempest. People voted in Obama for change, if you feel he has not effected it, then you must create your own.

Public Relations Part II

The second installment of this series was not nearly as impressive as the first. Then again, only The Godfather Part II and The Empire Strikes Back really ever made something of batting second in the line up, so it was not unexpected.

Basically this episode tracks the rise and fall of psychoanalysis. It shows how Anna Freud built upon her father Sigmund's ideas and decided that instead of just presenting why people behaved in the manner in which they did, she would be able to better these people through analysis and understanding. These inner drives would be controlled by conforming to the rules of society, these affirmations would then strengthen the ego to control its irrational counterpart, the id.

This of course turns out to be a bad idea. Anna's original patients suffered mental breakdowns, alcoholism and one committed suicide in Anna's house. These ideas also lead the CIA to brain wash people and also for Marilyn Monroe to commit suicide after living with her psychoanalyst's family. This created a crisis for psychoanalysts, in that society began to question why psychoanalysis had become so prevalent and powerful.

Underlying these set backs was still the notion of control of the masses and shaping good democratic citizens. After WWII and the fear in the elite of the irrational man, psychoanalysis centers were created all over the country. Some were marriage guidance counselors and other were social workers who would advise families and individuals about what normal behavior was and how to control the latent danger that was inside them. The analysts themselves never questioned that their techniques could do anything but good, not understanding that there would be trade offs between the latent feelings inside their patients and the new model citizen ideas they were trying to instill.

Two of the biggest developments in the post-war environment were the focus group and banana republics.

Focus Groups

Ernest Dichter created the Institute for Motivation Research where he proposed and enacted psychoanalysis of products. His idea was to use the self image of the customer and her underlying motivations could be talked about freely just like in a psychoanalysis session. He would then analyze and understand the true non-verbalized motivations of the consumer, be it sexual, psychological or sociological issues of status and power. Thus, the birth of the focus group.

The first big break through was with Betty Crocker and their line of instant consumer foods. When consumers were surveyed they affirmed that the would appreciate the convenience of the food but at the point of sale they would not actually buy the instant mixes.

During the psychoanalysis of the focus group Dichter understood that the women actually felt guilt about the ease and convenience of the product, that is they wanted to make the process easier on themselves but they would feel guilty about it. So Dichter added a participation element with a symbol. Even though the product would taste just as well with a freeze dried egg already mixed into the mix, he proposed Betty Crocker remove the egg and let the house wife add it herself. By mixing in the egg, this added participation for the wife and let her believe she was offering a gift to her spouse. Sales subsequently soared.

Psychoanalysis started working with businesses to make connections, like Betty Crocker, with their customer. The analysts believed that the products would sate inner desires and add elements of commonality amongst members of the community. Further, as the consumers identified with products and built a self-identity around them this would improve self-image and make the consumer feel more secure in their choices. Thus, all of society would be improved as consumers were self-actualized by products. However, again no one asked if it was wrong to give people what they wanted by breaking down their psychological self-defenses.

Bernays and the Banana Republics

The Cold War. America already had a fear of Communists dating back to the Bolshevik Revolution but now they had the bomb and America's politicians needed public relations to control America's psyche. At first the politicians wished to minimize the threat, but after Bernays was brought in this idea was reversed. He decided to use the threat as a control device. By instilling fear in the populace politicians could offer guidance from above. Bernays masterstroke this time was with United Fruit and Guatemala.

United Fruit's interests in Guatemala were being threatened by a popularly elected social democratic government. Bernays framed this government as a threat to American values and further that this threat was at America's doorstep in the Western hemisphere. Bernays had journalists flow to Guatemala to meet the recently ousted, not from a coup but from elections, former political leaders. These politicians called the new government Communists and a United Fruit conspired riot broke out, calling for freedom. Finally, a group started by Bernays back stateside insinuated that the Soviets were using Guatemala as a Soviet outpost and launching point into the Americas.

The CIA acted swiftly in creating a coup d'etat. This involved a terror campaign and the dropping of bombs on Guatemalan citizens. United Fruit organized Soviet literature that was found in the capitol building as the elected government officials fled the country. All of this was done under the guise that the interests of business and democracy were in the interest of the masses. Bernays again talked of engineering of consent because people could not handle the truth and so he forced people to choose what he wanted them to choose.

Wrap Up
There was a backlash that people were maladjusted. New voices cried that the sickness of society, if there was such a thing, was at the societal level and not internally. The brands, gadgets, products created to sate desires ultimately lead to empty prosperity. The social norms that were prescribed to the maladjusted citizens include terrible ideas. How can the thoughts of societal norms include intolerance, economic inequality and civil rights for the few. I leave you with these same ideas ML King decried in a speech given at Western Michigan in 1963 about Social Justice.

There are certain technical words within every academic discipline that soon become stereotypes and cliches. Modern psychology has a word that is probably used more than any other word in modern psychology. It is the word "maladjusted." This word is the ringing cry to modern child psychology. Certainly, we all want to avoid the maladjusted life. In order to have real adjustment within our personalities, we all want the well-adjusted life in order to avoid neurosis, schizophrenic personalities.

But I say to you, my friends, as I move to my conclusion, there are certain things in our nation and in the world which I am proud to be maladjusted and which I hope all men of good-will will be maladjusted until the good societies realize. I say very honestly that I never intend to become adjusted to segregation and discrimination. I never intend to become adjusted to religious bigotry. I never intend to adjust myself to economic conditions that will take necessities from the many to give luxuries to the few.

Public Relations Part I

So it begins...

The other day while reading about how shocking it is that more Americans are not rallying against the return to the status quo that is taking place in the financial industry, an astute observer linked to a video series online called The Century of the Self.

Don't worry the first 10 seconds are a little scrambled as it looks like some one ripped this from a VCR recording. VCR? Well it was a machine that played videotapes, which were very similar to cassette tapes in that you could record on certain types videos from your television. My grandmother vividly remembers watching two or three Nintendo video games instead of Dr Zhivago, but I digress.

So I started watching and then I started note taking and below is what I have garnered from watching two of the four parts (they are each an hour long.)

In the beginning there was Freud. Freud gave his young nephew a copy of his book called "General Introduction to Psychoanalysis" This nephew was Edward Bernays and he worked on the PR effort for the US during the First Great War. One of his key messages that he created was that the US was not restoring old monarchies but bringing democracy to Europe. He attended the peace talks with Woodrow Wilson and emerged with a slogan "Making the World Safe for Democracy." After the war he wondered, and would soon make himself rich upon, whether the same type of propaganda/persuasion employed during the war and peace talks could also be equally applied in peacetime.

In a later in life interview with Mr. Bernays he casually states that the Germans had used the word propaganda and now it was tainted, thus, he coined a new term called public relations. The idea that information is power was certainly very relevant to Mr. Bernays. However, he also knew that the information could be coached in such a way as to elicit the desired response despite what logical conclusion could be drawn from it. This was a key understanding of his uncle's work.

One of his first clients was the American Tobacco Company. His task was to find a way to break the male originated taboo of public smoking for women. As Big Tobacco noted, they lost half the target market due to this social taboo. Bernays turned to AA Brill who told him and ATC that cigarettes represented the male penis and male sexual power. Brill continued, stating they would need a way to connect cigarettes as a way of challenging male power by giving women their own penises.

This is where Bernays makes his money. During the NYC Easter parade, Bernays had female models stash cigarettes on their person and at a designated time to light them up and begin smoking. Then he informed the press that Suffragettes were going to light up cigarettes in public as a protest of voting rights and that the cigarettes were "Torches of Freedom." The symbolic gesture, the phrase, the emotion and the memory all tied together as one in the American psyche. The Torches of Freedom ran in major newspapers and soon the sale of cigarettes began to rise. Women found them socially acceptable and felt that smoking made them more powerful and independent. You read that right, a product, a consumption habit (unhealthy at that), was signaling to other people status and power. Bernays had proven what Freud has insinuated that you can produce irrational behavior in people by fulfilling deeper needs and desires.

This method became Bernays masterstroke that he would employ over and over again for businesses. It was called the tie in and it would be the machine that drove the "engineering of consent." One example is of Cosmopolitan magazine (a customer) and he would place advertisements next to specific articles or interviews, which would be one of his other clients, say an actress. In the pictures of the interview she would be wearing or consuming the product. Then in the next movie she filmed she would also be using the product. These powerful images of an attractive person, leading an attractive life filled with products that everyday citizens could also enjoy marked a new era in consumerism.

In the days before the war products were sold on a basis of practical value. Industry worried that once you had sated people's needs that there would be fewer profits as you would then only be replacing obsolescence. Bernays was now showing a new way for the consumer to buy, to have their desires out shadow their needs. He was changing the focus from the clothing to how the clothing made you feel. Also implicit in this was the idea that consumerism helped the country as well. This is because products could fill the voids of everyday life by appealing to the desires and fears of the masses. By keeping these consumption machines happy, which would also keep them docile. It was now as though products were giving people "feel-good" medicine and thus initiating social control. So instead of using social institutions to control people, you could answer their desires and upon sating the desires, the elite could then go about ruling the country.

Some additional acts Bernays pioneered include: product placement in movies, selling cars as symbols of male sexual power, paying doctors to state a product was healthy or recommended (an apple a day...), having fashion shows at department stores with models.

This became especially relevant once the Bolshevik revolution in Russia. The idea that humans could make rational decisions was being crushed as Moscow and St Petersburg burned. This was not the only piece of evidence. As the Great Depression began and ran its course the new consumer Bernays created died. Then the Second Great War ended and the aftermath including the Holocaust very much convinced those in power that humans are dangerous and needed to be controlled.

A closer look at National Socialism was enlightening. Here were normal every day citizens wielded as a weapon by the leadership. The messages were spun in a way to channel the feelings of the masses. Analysts would look at the situation noting that libidinal forces were repressed in deference to the leadership, but it created violence. This violence was then directed outside the group. Even though this behavior should be considered irrational the social norms instituted by the Nazis outweighed what an earnest human being might deem correct.

Later, during a controlled experiment in which 29 participants were actors, 30 people would have to decide which of two lines shown were longer. At first the actors would choose the correct one and of course the experimentee would as well. Then after about 10 different sets, the actors would choose the shorter line. The lone real person, would hesitate, take longer to decide, may at first fight it, but eventually succumb and choose the shorter line to achieve group consensus.

More during the next post, stay tuned.