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Common Currency: Revenue, expense gap is not result of government policy

Alan Zemek

If you are of a certain age, you probably remember one of the greatest icons of American television advertising from the 1960s: The Marlboro man. Introduced by Philip Morris in 1924, Marlboro is the largest selling brand of cigarettes in the world. And man! Was that guy cool!

He was tough, self reliant and rugged. He oozed manliness and self-confidence. He was always shown out on the range by himself, riding the fence line alone, impervious to the elements and master of all his domain. He was John Wayne, the Lone Ranger, Daniel Boone and Davy Crockett all rolled up into one swaggering iconic American hero.

You can still see him in billboard and print advertising today, but it just isn't quite the same. Each commercial in those days was a like a short Western novella, a masterpiece of visual storytelling and persuasion. Be like me. Be a Marlboro Man.

But here's something maybe you didn't know. When Marlboro was introduced in 1924 it was branded and sold exclusively as a woman's cigarette under the slogan "Mild as May."

The brand's advertising in the 1920s heavily emphasized how ladylike Marlboro cigarettes were, which even thoughtfully included a red stripe on the filter to hide the stains a woman's lipstick would leave on the tip.

It wasn't until early reports on the risks of smoking and lung cancer started becoming public in the 1950s that filtered cigarettes were widely marketed to men. Consumer research showed men would smoke a filtered cigarette, believing it to be safer, but were concerned it might make them appear girly.

So, voila! Just in time for the age of television, the Leo Burnett agency in Chicago came up with the Marlboro Man to convince men it was okay to smoke a filtered cigarette. So, to all you tough guys out there: you are really smoking a lady's cigarette.

If you have ever studied mass communications and advertising, there is a good chance you may have already come across this example of how the myth becomes the message. It is a great illustration of artful persuasion.

It is also an example of how myth displaces truth, and perception becomes reality. And in the art of persuasion, myths are better than facts, especially in economics and politics. Here is what I mean:

Since 1970, federal spending has averaged 21 percent of GDP (gross domestic product) and tax receipts have averaged 19 percent. The average annual 2 percent deficit was easily sustainable, absorbed into a larger and more productive economy.

However, since 2007, federal spending has increased to 25 percent of GDP and tax revenues have dropped to about 14 percent of GDP, the lowest since 1950. The annual deficit between federal spending and tax revenues is now an unsustainable 9 percent of GDP.

So what happened? Did government spending suddenly just start to run amok? Did greedy corporations and the rich suddenly cut themselves the tax cut deal of the century?

The truth is, the gap between revenues and expenses is explained almost entirely as a consequence of the most recent recession, and not by any significant change in government policies one way or the other.

During recession, tax revenues fall as fewer people are working and consumers and corporations cut back on spending.

As the economy shrinks, government spending necessarily increases as a fraction of the whole economy. The last time government spending and the deficit reached these levels as a percentage of GDP was during the 16-month recession of 1982-83, then called the "worst recession since the Great Depression" when Ronald Reagan was President.

The truth is, the current federal deficit has much more to do with the fact that 9 percent of the work force is unemployed and consumers aren't spending money than the fact the government is.

And as far as myths go, while the Marlboro Cowboy is an iconic and romantic personification of the myth of the American frontiersman, the truer version of history is that it was foolhardy and dangerous to venture into the wilderness alone.

Self reliance and stoic perseverance are worthy traits to celebrate and romanticize, but survival, and then prosperity, depended much more on becoming part of a larger community, and I think we are today a nation more divided by myths than facts.

Alan J. Zemek is a Park Rapids area developer and author of "Generation Busted: How America Went Broke in the Age of Prosperity." You can follow his blog, or comment on this article on his website, www.genera