Consider the Cheeseburger

Advertising. People in my social circle are used to thinking of it as being an awful institution: greedy, faceless, unscrupulous corporations brainwashing the susceptible masses into wasting their hard-earned money on cheap, low quality, superfluous devices for solving problems no one actually has and that don’t even work. An irritation at best, sheer deceit and manipulation at worst. But in fact, what evils afflict the institution of advertising are reflections of its poor implementation, not of its superfluity. The reason advertising exists is that it is chewing on one of the most important problems in an economy as large as ours: You have 300,000,000 people in the country, which have needs, desires, and abilities. How do you arrange to take the best advantage of their abilities, do the best job of meeting their needs, and turn a reasonable eye towards their desires, too?

Consider the cheeseburger: someone raised a cow, someone slaughtered it, and someone shipped its meat to various places; someone grew some corn, someone made it into oil, and someone transported the oil hither and yon; someone mined some iron ore, someone smelted it and made iron, someone mixed it in a furnace with carbon, someone crafted it (who knows how) into shape, someone made frying pans out of some of it, someone made a stove out of some, and someone transported the frying pans and the stove; someone else grew some wheat, someone ground it into meal, someone cultivated some yeast, someone cooked it into buns, and someone shipped all this to and fro and eventually to the same place as the stove, the pans, the oil, and the meat; someone grew tomatoes, someone else grew lettuce, someone else grew onions, and these too were all brought there; someone grew cucumbers, someone mined salt, someone brined the cucumbers in the salt to make pickles, and someone brought them; someone raised a milk cow, someone milked it, someone extracted rennet out of another cow, someone developed a good strain of cheese microbes, someone cultured the milk into cheese, and someone brought the cheese; someone mined coal, someone built a steam turbine, someone bruned the coal, someone built electric transmission lines, and someone wired up that stove to those transmission lines in that place; and finally someone cooked the meat in the oil on the pan on the stove, melted the cheese onto it, cut the tomatoes, onions, lettuce and pickles, put them all between the buns, and gave them to you. Never mind the copper for the transmission lines, the vehicles for transportation, the fuel to run them, the materials and construction for the roads for this transportation and for the building in which you were given this cheeseburger, and everything that goes into making enough cheeseburgers to feed all these people. And why did the world do this herculean thing? Because it guessed, more or less right, that you would have a hankering for a cheeseburger just then, and that it was worth mobilizing all that mechanism to satisfy you.

Of course, none of this would be possible at all if not for the fact that raising one cow for meat contributes to a vast number of cheeseburgers; and indeed, everything I mentioned has plenty of uses besides the one cheeseburger that touched it in this little vignette. But I hope I convinced you of the fundamental immensity of the coordination problem. The cooperation problem, namely getting all the people involved in this story to want to help you get your cheeseburger, is more or less solved by money: each of them will get paid some small fraction of the price of your cheeseburger, and given the number of cheeseburgers they helped with their respective actions, those small fractions will add up to a more or less decent salary; which in turn will allow them to command similar help from similar networks to satisfy needs or wishes of their own. But what about the coordination problem? How does the guy with the cows know how many to raise and how many to slaughter? How does the guy in the truck know where to go to pick things up and where to go to drop them off? And how do you know that you could come to this place and receive this cheeseburger? This is a tremendous, mammoth problem of communication, historically approached by guesses, small meetings, and public displays (read: store fronts for centuries, also bill boards now). Now that we have invented technology to make communication easier and faster, what is the biggest communication-related economic problem there is to solve? Are you surprised that advertising online is huge business?

That said, the current model is primitive. The effort of doing the communication is funded exclusively by the sellers of goods and services, and takes the form of a more or less targeted broadcast, which it is up to the buyers to filter for what they want. Being seller-dominated, these broadcasts are, from the perspective of the buyers, biased, unreliable, and far too numerous. The problem that this system is trying to address, however poorly it addresses it relative to potential, is nonetheless one of the vital underpinnings of our society.