Is there a true benefit to the contest? For the CEOs of the beverage giants and the stockholders there is a payoff for inching ahead in the cola war. Stock prices and quarterly dividends are connected to the point spread between the contenders.
If one company decided to suspend advertising, the two heavyweights would settle into some equilibrium where both could stop spending all the billions of dollars on ads and apply the funds to the bottom line for consumer price reduction, investor dividends and a huge bonus for the CEO and other top Execs. But would that benefit the economy?
The CEOs don’t need the bonuses and the investors would only use the dividends to but more stock and drive the market prices higher without creating any MMFF (Mining, Manufacturing, Farming and Fraud) wealth.
The consumer would not benefit substantially because he would spend his surplus funds on consumer goods or more cola. The downside would be the massive loss to glossy paper publications, television networks and the NFL. In short, the cola war sustains a high level of commerce that benefits an economy that doesn’t care how or why the money moves, as long as it stays in motion. Advertising Execs have needs too. They have husbands, wives and children too. They must be clothed, fed and sheltered too.
The economy needs its “fix” to appease its addiction. Every time the economy slows down, Alan Greenspan and the Fed would try to speed it up with an interest rate cut, only to reverse it again as the speed picks up. The health of the economy is measured by the speed of money movement. We want it to be fast enough to keep everyone interested but not so fast as to fuel inflation.
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