With this multi-part thread, I will show that history has borne out the consumerist position that the market is so thightly intertwined with society that it exists to provide for Man’s quality of life, hence: The Market must serve Man or else American society can no longer call itself free.

UT Austin has an excellent Advertising School.  When I attended in the late 90’s, I remember seeing national statistics year after year, ranking us in the top 3 or top 5 in various categories.  In a few categories we were number 1.  I was invited to participate in the Media Track (the only such program in the country) by its founder Dr. Elizabeth Tucker.  I chose not to accept the offer but only because I got into the IPS sequence in the RTF School (Intensive Production Sequence – the film school).  My last semester, I was talking to one of my former Advertising classmates who partook of Dr. Tucker’s Media program.  She informed me that all of the Media Track students already landed internships with GSD&M.  I remember that GSD&M was hard to get into because they were red hot and the employment competition was fierce.  They had a policy that all new employees had to do an unpaid internship before getting hired, which meant instant career for probably most of the interns.  

I took a very interesting course titled “Advertising in Society”, the purpose of which was to explore the advertising industry as an institution and its function in a capitalist society.  The history that we studied began with the creation of the market system (capitalism, free enterprise).  There are only three systems on which society can be built; The Market, Tradition, and Authoritarian Control.  In America, we wisely chose the Free Market System which was born out of the oppression of the Middle Ages (a tradition based society) and is the social foundation for freedom and democracy as we know it.  In order for the Market system to work “naturally”, the original assumptions that dictate its inner workings must be maintained.  One of these assumptions is that adequate and accurate information will be available.  Without information, the market cannot be balanced or fair and therefore cannot be a suitable foundation on which to build a harmonious, efficient, and prosperous society.  You might ask: Advertising???  What the heck does advertising have to do with banks and loan servicing and my efforts to save my home?  Good Question.  As a social institution, the ad industry is charged with the duty of providing “adequate and accurate” information to the market.  Because of modern developments in technology and market forces, it is Advertising that serves this purpose and so it is Advertising that has been the focus of society’s efforts to maintain balance in the market for over 100 years.  Socially speaking, whether market information is provided via advertising, direct mail or a singing telegram it doesn’t really matter, so long as the consumer is sufficiently informed.  If homeowners are deceived in conjunction with their efforts to cure a mortgage default, on a large scale, then our society which is based on the free market has become diseased and freedom as we know it is under attack.

By design, the free market should regulate itself, but in practice it does not.  The proponents of free enterprise and lax government regulation tout the system as being “self-righting” or self-balancing as theorized by the framers of the system.  As we’ll see, in the present day market environment, the only thing that can “naturally” provide this self-righting quality is corporate conscience which has been found lacking in our modern day market system.  In the absence of corporate conscience, the only solution is regulation through administrative or common law.  The Federal Trade Commission (FTC) is an administrative agency created in 1914 to compensate for market changes and a lack of corporate conscience and to ultimately restore the necessary balance to the market.  It does this by regulating deceptiveness that originates with sellers of products and services.  This deceptiveness hurts not only consumers but other businesses as well (in fact the FTC was originally created to protect businesses, not consumers, from other businesses).  Around the 1970’s many states implemented their own version of the FTC in common law which is known as Deceptive Trade Practices Act (DTPA) legislation.  Texas is one of those states. 

Consumer Culture and the Market System

Today we use the terms “Liberal” and “Capitalist” to describe members of enemy camps.  But, liberalism and capitalism were born together out of the same desire for freedom.

Industrial capitalism is a system of economic organization that arose out of the decaying feudalism of the Middle Ages.  In part it was caused by and in part was the creator of a radically new value and belief system – Liberalism – which rose to dominance in the eighteenth century and literally conquered the world in the nineteenth 1

Classical liberalism was heavily influenced by the theories of John Locke and came to replace the tradition based social structure of feudalism.  In those days, “liberalism” meant the same thing that “freedom” does today.  By the time the U.S. constitution came to be, these theories were dominant in the west, hence reference to John Locke’s concept of natural rights (life, liberty, and property) in the U.S. Bill of Rights in 1776 and spoken in 1886 by Abraham Lincoln as part of the Gettysburg address (life, liberty, and the pursuit of happiness).  

It was Locke’s view that man originally lived in a state of nature possessing certain natural rights – life, liberty, and property – all of which were sacred and inalienable by the very construction of the natural order.  In creating governments man surrenders certain rights he possessed in the free state of nature but he does not, because he cannot, surrender his natural rights. 2       

At the end of the Middle Ages, capitalistic forms of economic life began to replace feudalism as a result of the new ideas of liberalism. 

…the ideas that were of fundamental importance in justifying the new economic order were the notions that all was mechanistic, that natural law governed the physical and social world, that the world was characterized by fundamental harmony, that man possessed reason and conscience, that men were born equal and endowed with certain fundamental rights – life, liberty, and property. 3     

These ideas and advancements mark the transition from the Middle Ages to the age of enlightenment.  This new economic order setup in the new age is known as economic liberalism.

Hence, the battle cry of economic liberalism became laissez faire – let the market alone – for if the market were allowed to obey the laws of its own motion it would, in the long run, produce a higher degree of efficiency and prosperity than it could if hamstrung by the regulation of government 4

Caveat Emptor:

Locke’s concept of the “tabula rasa” which held that all humans were equal and the human brain was a blank slate at birth.  Accordingly, all men are equally worthy and capable of participating in and benefiting from the market as intellectual beings.  In theory, the consumer was capable of navigating the market in the absence of government regulation, because of Man’s universal ability to reason.  This idea was expressed in the market as “Caveat Emptor”.  Notice, however, that according to classical liberalism and the free market theory, in order for the system to work in the real world, there has to be adequate and accurate market information upon which people can base their decisions.

Caveat Emptor – let the buyer beware – simply means that every individual, being rational, is assumed to possess the ability to exercise correct judgment by basing his decisions on available market information 5

The history behind Caveat Emptor is evidence that the capitalist system was, even at its birth, concerned with fairness and egalitarianism.  Another similar notion that found its way into the foundation of our society is the harmonious order of the World Machine conceived by Isaac Newton.  The Newtonian World Machine concept was used by Locke to define the natural order of society (described above) that influenced the emergence of the capitalist system out of the ruins of the middle Ages.

The idea of mechanistic systems, of harmonious order in the universe, of natural laws governing the activity of phenomena, of the atomistic conception of matter, of the ability of Reason to apprehend Reality – these ideas infected the economic, political, and social thought of generations.  And nowhere did they find more eloquent expression than in the ideas of John Locke, a friend and contemporary of Newton, who translated the discoveries of the physical science into the basis for a social physics, into the basic world outlook for the period 6

To summarize (More on Caveat Emptor in future posts):

The ideas that brought about the new economic order that would become capitalism were about the nature of Man; who we are in relation to the universe we live in:

  1. Natural law governs the physical and social world
  2. The world is characterized by fundamental harmony
  3. Man possesses reason and conscience
  4. Men were born equal and endowed with certain fundamental rights – life, liberty, and property

How is this relevant?  As a democratic society, it’s our responsibility to demand change when our rights are being trampled and if we don’t do so, the strong will oppress the weak. Or, to say it in free market terms, the oligopolistic will oppress the atomistic (the seller will oppress the buyer).  In order to prevent this, we need to show that ethics have always applied to the free market.

In future “Man or Machine” installments I’ll touch on the textbook history of the current structure of the market in contrast with its original design, and continue to expand my position to include why the mortgage crisis is evidence of a disturbing un-balance in the market; an unbalance that, if gone unchecked, will push America back into the social structure of the Middle Ages characterized by a small upper class that dominates a massive lower class…..Bye-Bye American Dream.


The sources cited in this post came from articles that were reprinted in our class textbook for Advertising 371J “Advertising in Society”.  The textbook is: Roxanne Hovland and Gary B. Wilcox, “Advertising in Society, Classic and Contemporary Readings on Advertising’s Role in Society” (Chicago: NTC Publishing Group, 1989)

  1. James W. Carey, “Advertising: An Institutional Approach,” in The Role of Advertising, eds. C.H. Sandage and V. Freyburger (Homewood, Ill.: Richard D. Irwin, 1960).  Copied from Hovland and Wlicox pg. 13
  2. James W. Carey, “Advertising: An Institutional Approach,” in The Role of Advertising, eds. C.H. Sandage and V. Freyburger (Homewood, Ill.: Richard D. Irwin, 1960).  Copied from Hovland and Wlicox pg. 17
  3. James W. Carey, “Advertising: An Institutional Approach,” in The Role of Advertising, eds. C.H. Sandage and V. Freyburger (Homewood, Ill.: Richard D. Irwin, 1960).  Copied from Hovland and Wlicox pg. 18
  4. James W. Carey, “Advertising: An Institutional Approach,” in The Role of Advertising, eds. C.H. Sandage and V. Freyburger (Homewood, Ill.: Richard D. Irwin, 1960).  Copied from Hovland and Wlicox pg. 19
  5. James W. Carey, “Advertising: An Institutional Approach,” in The Role of Advertising, eds. C.H. Sandage and V. Freyburger (Homewood, Ill.: Richard D. Irwin, 1960).  Copied from Hovland and Wlicox pg. 21
  6. James W. Carey, “Advertising: An Institutional Approach,” in The Role of Advertising, eds. C.H. Sandage and V. Freyburger (Homewood, Ill.: Richard D. Irwin, 1960).  Copied from Hovland and Wlicox pg. 16 (The bold formatting was not in the Carey article and was added by me)

Springtime 2010 – When Confusion, Complexity, (and Corruption?) is in the air

As I understand it, there are 2 forms of harm that can occur as defined by the DTPA;  Personal harm or harm to property.  The federal government originally led the charge to protect consumers from harm inflicted by shady advertisers by expanding the mission of the Federal Trade commission to cover consumers (its original purpose being to protect sellers from each other).  Later, states wanted similar protections and came up with the Deceptive Trade Practices Act (DTPA) so that they could regulate the same deceptiveness at the state level.

On February 5th, I received 3 Call request letters that were identical.  I’m not sure why they send multiples but common sense and fear led me to believe there might be some miniscule difference and that if I didn’t carefully inspect each one, then I might miss something important.  When this happens over and over again, it becomes very stressful because I fear that they’re trying to sneak something past me.  Also, the amount of time it takes to process the information is time that could be spent on more productive tasks.

On February 17th I received this Proof of income request  which (in this case) was defined as 3 months of Profit/Loss Statements and copies of tenant leases.  These documents were faxed to them on February 19th.

On Feb. 24th (only 7 days later) I got another information request for a financial worksheet and February Profit/loss statement (The P&L I had already sent them 7 days earlier.  Did they lose it?)  I faxed the documents on March 3rd.  According to my records this document was refaxed on March 9th.  The refax suggests to me that ASC lost the documents.  I can’t be 100% sure why there was a re-fax because I don’t have a record of it.  With 7 years’ worth of account management experience, I’m used to keeping records and yet I still forgot to record something (that’s probably not the only time it happened.  Even for a professional, it takes some time to develop record keeping habits meticulous enough to be able to keep up with the complexity of a mortgage loan servicer). What probably happened with the re-fax was, I may have called them to check status (which you have to do regularly or risk the servicer throwing out your application for some reason that you never knew about) and discovered during the phone call that they never received the March 3rd fax.

On April 2nd, I received this Default & acceleration notice.  You’ll notice that it’s only about $2,400.00 that I owe at this point (after 6 months’ worth of delinquency).  Seems like the easy solution is to just pay the full amount to reinstate the loan since there has been no “acceleration” of the note (see the acceleration notice above for a definition of “acceleration”).  But, if you have money lying around then of course, that’s what you would do but if you had the money, then you wouldn’t have fallen behind on the payments to begin with.  I was also delinquent on my utility bills, phone bill, and 3 credit card bills.  The utility company allowed me to pay back the delinquent amount by tacking on a little extra to each new bill (AT&T was not so friendly).  As you can see, paying off the loan delinquency in a lump sum, was impossible.  I could, however, afford to resume normal payments of $538.00 per month because my income had increased.  Unfortunately for me, per ASC documentation, that was not an available option.  They state clearly in the acceleration notice that:

“To avoid the possibility of acceleration, you must pay this amount on or before April 27, 2010 in CERTIFIED funds, to America’s Servicing Company, PO Box 1820, Newark, NJ 07101-1820.

The next entry in my database is a hardship letter & more financials that I faxed them on April 26th. This was probably faxed in without ASC requesting it because I had just gotten a new roommate and wanted to notify them of yet another income increase.  Now I was making $1,850.00 per month with expenses of about $1,300.00.

The next entry is the Lerma roommate lease re-faxed to them on May 7th.  It was faxed originally on February 19th but they wanted it updated with a new “signed on” date.  This common practice was a major aggrivation because they would take months to process the application which would force the documents to become “out of date”.  The out-of-date documents would trigger the underwriter (decision-maker on approval or non-approval) to kick the application back down to a lower level who would call (sometimes) with instructions to update the documents.  This happened constantly throughout the entire two-year process.  On May 13th, I received the first Decision on request for mortgage assistance.  You’ll notice that they listed my income at $1,069.50 even though my financial statements (faxed Feb. 24th) prove $1,500.00 worth of income ($1,350.00 after taxes).  So during the bulk of the review period, I was making $1,350.00 and my expenses were about $1,800.00 per month.  Granted, a 36% deficit looks bad to an underwriter, however my situation was improving as cited in the April 26th financial statement.  Notice that the April 26th financial statement was faxed at least a week prior to their decision to deny my request for assistance.  The new financial statement notified ASC that on May 15, my income would increase and also documented a decrease in expenses that occurred when I used cash to pay off other debt.

While you might argue that I could not afford a modification on the first go-round (debatable), the next attempt was a sure deal (or so I thought).  December 17th to May 15th was the period of time where I had an actual deficit in my income/expense ratio….That’s only 5 months.  Some states have a rule that prohibits acceleration of notes within a 6 month timeframe.  Not Texas.

Notice of intent to foreclose – Dated May 18th

Foreclosure sale date notice – Dated May 24th