Aug
06
2009

  Allstate Promotes North Korean Famine Strategy

Have you seen this Allstate commercial?


This was another one of those where Terry and I just shook our heads in disbelief and burst out laughing. "Brunch. It's breakfast and lunch, a combination that saves you money." Really? Do they imagine the following conversation happens in kitchens throughout America?

"Honey, I think we need to start economizing, is there anything you can think of to help us lower our expenses?"

"Yes! Let's go out to brunch!"

Actually, perhaps that it what people think, and why so many people are in debt and don't know why. "I don't understand, we ate brunch every day! How could we have negative cash flow?"

As if that isn't funny enough, it turns out that Allstate is not the first group of geniuses to come up with this strategy. As I read in an article by Marcus Noland, the North Korean government first peddled this solution to their public years ago,

But in 1994 and 1995, a disillusioned China reduced its exports to North Korea. If there was a single proximate trigger to the North Korean famine, this was it.
At this juncture the government could have relieved emerging shortages by relaxing the supply constraint, either by increasing exports to finance imports or appealing for aid. (Borrowing was not an option: sovereign defaults in the 1970s—the only communist country to do so—left it effectively excluded from international capital markets.) Instead, it chose
to suppress consumption, initiating a “let’s eat two meals a day” campaign and cutting rations
delivered by the public distribution system (PDS), the quantity rationing system from which urban residents, roughly two-thirds of the country, obtained their food.

Way to go, Allstate! I guess your ad agency didn't think of that, eh? Time for a new contract?