Spam as a Social and Economic Indicator

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Unlike most
people, I like spam: the digital kind, not the processed meat
kind. Every day, I see what’s being offered for sale to millions
of people. I see the efforts of hope-filled people who think they
can make big bucks for almost no investment by renting a list
and sending out an offer. A few of them must be making money,
because I see the same ads over and over.

I have a
rule: no matter how good the offer sounds, I refuse to buy anything
from a spammer. I follow the same rule for telemarketers. The
rule is “never.” I don’t want to encourage these people. But I
do at least read the spam’s headlines.

The Internet
has about half of the adult American population on-line. It is
a good indicator of what the top half is thinking. These are people
with credit cards. They can’t get ISP service without one in most
cases. So, it’s an audience with money to spend.

Spam lets
me see what the bottom tier of the upper half is thinking. The
recipients are better off financially than most people on earth,
even better off than most people in the United States. I can’t
read more than a few magazines. Other than by reading Reader’s
Digest, I can’t figure out what typical Americans are thinking.
But by paying attention to spam, I can get a quick view of what
people at the bottom end of the middle class are buying.

Spam is
visibly amateurish. Major American corporations don’t indulge
in spam. They don’t want the bad publicity. So, what we read in
spam letters are the dreams and schemes of average people who
think they can tap into great wealth with a $250 investment.

Most of
these offers are from people with some business experience, but
we rarely see anything from a firm that looks as though the marketer
has any idea of how to market. There is some sophisticated marketing
going on these days on the Internet, but it’s not through spamming.

The master
of non-spam e-mailing is Dr.
Ralph Wilson, “Dr. Ebiz.”
Over the last five years, I have
watched Dr. Wilson go from a designer of very nice Web sites to
a master Internet marketer. What he is doing offers a viable model.
He has a free newsletter (100,000+) that gets sent weekly. He
uses it to get subscribers to his $49/year newsletter (50,000+).
He sells ads in both. The cost of mailing are a few thousand dollars
a year. Do the numbers. Ralph Wilson has found a model that works,
and he is now refining it. But he warns his readers against using
all forms of spam marketing.

Here are
the topics that I see in spam every day.


There are
pornographic offers. I note the nature of the headline’s offer.
Have I seen this headline before? I am interested in deviancy
as a social phenomenon, and Web pornography I regard as a form
of deviancy. Because of spam, I can see where mass-market porno
is today. I want to know how far we have come from the world of
Ozzie and Harriet. Pretty far, it seems. Spam offers sometimes
are for a fringe market — pornography also has a bell-shaped
curve — such as “animal buddies,” but not too often. But
the overall moral degeneration is obvious. Hugh Heffner is the
old man of pornography in more ways than one.

The pornographers
are still making most of the money that is being made in the Web.
The Web is still like the videocassette market in, say, 1985.
Pornography went through a major transformation with the videocassette.
It remains big business, but it is no longer visible in the videocassette
stores. I notice that there is more pornography — sealed
— for sale in Hastings’ magazine racks than there is in Hastings’
video/DVD section. The older printed pornography maintains a visible
market, but the videocassette market has gone into the shadows.

I think
this is what the Web pornographer have already found. There is
a steadily growing market out there, and new digital technologies
— “steaming video,” maybe — will continue to be appropriated
by this subculture, but in general, pornography is not visible,
even though it’s hidden in plain site. There are millions of desperate
people out there, addicted people, but they are not anything like
a majority. If they were, the DVD’s would be mostly pornography.


Then there
are the save-money offers. Discount term life insurance is big
these days, as well it should be. The newer level-term insurance
policies really are terrific. Last year, I went to a Web site,, and saved $600 a year on a million-dollar
policy, a policy that let me extend the new fixed rate out ten
years, to replace a policy that was six years old. How can they
do this? Are we living that much longer? No.

The economics
of the new policies has to do with reducing company risk. With
an annual renewable term policy, the company can’t cancel your
policy unless you stop paying. If you get cancer in year eight
or nine after you buy the policy, then you’re going to keep paying
your premiums. The company will pay off your beneficiaries. But
with ten-year level term, they get to re-examine you medically
when the policy runs out. If you’ve got cancer, you will lose
your coverage.

This tells
me that degenerative terminal diseases are big loss-producers
for life insurance companies, diseases that kill you slowly. Level-term
policies let the companies cull out the high-risk prospects after
they get sick. This is good for us low-risk people who rarely
get sick and whose parents are still alive, as mine are. We aren’t
paying higher premiums to co-insure sick people. We are essentially
buying fatal accident insurance, which insures against a rare
event. The premiums are lower.

The next
category of save-money spam is low-interest mortgages. I think
the bulk of these re-finance offers are being sold to people who
want to get their hands on extra money. The ads don’t say this
openly. They initially promote the savings feature of lower rates.
But the fact is, most people will use their new credit line to
the maximum. They will borrow enough money to absorb all of their
homes’ equity. If they borrow only enough to pay off their existing
mortgage, re-financing is wise. But most people will grab all
the debt they can get their hands on. Here is an offer that I
received last week.

Compete for Your Lowest Rate

Now is
the time to refinance your home or get a second mortgage to
consolidate all of your high interest credit card debt.

Get all
the Smart Cash you’ll need!

Cash out
your equity while rates are low! (UP TO 125%)

Homeowners Easily Qualify!

Credit Is never a problem!

We work
with nation-wide lenders that are offering great deals and will
provide you with the best service on the INTERNET!

Our service
is 100% free!

Anyone who
borrows 125% of his equity is not looking to reduce his debt.
He is tapping his last remaining source of cash.

Then there
are the ads to help you get out of debt. These seem to be counter
to the mortgage re-finance offers, but they aren’t. The people
who have gone into the hole with their credit cards at 18% can
pay off their cards with money borrowed from the mortgage issuer.
They will pay 7% instead of 18%, and their interest payments are
deductible from their gross income for income tax purposes. The
problem is, they will probably start using their cards again.
They are addicted to debt.

The ads
that offer to help people to reduce their debt are based on the
fact that credit card companies will cut rates from 18% to 9%
if they think the card holder is about to go bankrupt. So, there
is a new industry: debt counselling. These non-profit firms make
their money from the creditors, who prefer to get paid something
rather than nothing. They are kind of like debt-collection agencies,
except that they are pre-default collectors. They can position
their services as helpful rather than coercive, unlike debt-collection

The creditors
would offer the same deal to individuals directly, but individuals
don’t know that a letter to the credit card company explaining
their predicament and offering a lower payment schedule will get
them a better deal. The creditors aren’t about to publicize this.
Otherwise, they would get hit with thousands of sob-story letters
and threats of going bankrupt. Creditors prefer to let the credit
counseling firms serve as intermediaries. Someone else makes the
offer for the card-holder. It looks better this way. The creditors
can look cooperative without looking weak.


There are
ads to show you how to make a lot of money by becoming an independent
businessman. These are the business opportunity offers. They are
no longer confined to the local classified ad section or small-circulation
business opportunity magazines. They testify to a longing of millions
of men to start their own businesses, on the false assumption
that running a business is easy.

the time that I started writing this article and when I finished
it, I received this offer.

Stop Searching
and Start Earning Immediately!

NOW, Are You Earning a Strong Monthly Income?

Our Nationwide
Entrepreneurs Are and We Can Prove It

Proven Program that is Sweeping the Nation No Experience Required

Work Your
Own Hours, Be Your Own Boss


The punctuation
indicates a man with not much of an education, at least not in
English. He capitalizes everything. He uses a comma splice. He
neglects periods.

His targeted
audience is struggling financially. “RIGHT NOW, Are You Earning
a Strong Monthly Income?” Income opportunity-seekers are like
dieters: always hopeful and soon disappointed. “Stop Searching
and Start Earning Immediately!”

I got another
offer a few minutes later. It is better written than most, but
the offer classifies it as an ad aimed at the terminally naive.


over half a million dollars every 4 to 5 months from your home
for an investment of only $25 U.S. Dollars expense one time”



you say “bull”, please read the following. This is the letter
you have been hearing about on the news lately. Due to the popularity
of this letter on the Internet, a national weekly news program
recently devoted an entire show to the investigation of this
program described below, to see if it really can make people

The show
also investigated whether or not the program was legal. Their
findings proved once and for all that there are “absolutely
NO laws prohibiting the participation in the program and if
people can follow the simple instructions, they are bound to
make some mega bucks with only $25 out of pocket cost”. . .

you should sense where this is headed. It’s a chain letter —
a good, old-fashioned chain letter. But the offer is not being
made by the U.S. Postal Service, so it’s not illegal. (I never
have figured out why chain letters are illegal. The offers and
the checks are sent by first-class mail. The Post Office makes
whatever positive cash flow it generates from first-class mail.)


I do not recall having seen this offer before. But that doesn’t
mean it hasn’t worked.

Here is
another testimonial:

“This program
has been around for a long time but I never believed in it.
But one day when I received this again in the mail I decided
to gamble my $25 on it. I followed the simple instructions and
walaa 3 weeks later the money started to come in. First month
I only made $240.00 but the next 2 months after that I made
a total of $290,000.00.

So far,
in the past 8 months by re-entering the program, I have made
over $710,000.00 and I am playing it again. The key to success
in this program is to follow the simple steps and NOT change
anything.” . . . .

For each
ORDERING and YOUR E-MAIL ADDRESS to the person whose name appears
ON THAT LIST next to the report.

This guy
is telling me that two people offered voluntary testimonials for
him to publish by name, who pulled in several hundred grand each
in $5 bills. Do I believe this? Suuuuure I do!

He makes
the program legal by having you order reports. Of course, the
reports cost next to nothing to deliver by e-mail.

The instructions
for filling in the forms are so complex that I figure the guy
spent several years writing software manuals.

Here is another

My name
is Mitchell. My wife, Jody and I live in Chicago. I am an accountant
with a major U.S. Corporation and I make pretty good money.
When I received this program I grumbled to Jody about receiving
“junk mail”. I made fun of the whole thing, spouting my knowledge
of the population and percentages involved. I “knew” it wouldn’t
work. Jody totally ignored my supposed intelligence and few
days later she jumped in with both feet. I made merciless fun
of her, and was ready to lay the old “I told you so” on her
when the thing didn’t work. Well, the laugh was on me within
3 weeks she had received 50 responses. Within the next 45 days
she had received a total of$ 147,200.00 all cash! I was shocked.
I have joined Jody in her “hobby.”

Wolf, M.D.

Well, Mitchell,
had I been you, I would have kept my mouth shut. As the Bible
says, “A prudent man concealeth knowledge: but the heart of fools
proclaimeth foolishness” (Prov. 12:23). By the way, Mitch, if
you’re an accountant, why did you put M.D. after your name? Times
must be hard on physicians in Chicago. And, also by the way, why
aren’t you listed in Yahoo’s yellow pages under accountants? You
should be.

I suppose
that someone may have made money off this thing. It’s possible.
But this letter indicates that the greed factor is alive and well
on the Internet. People with enough capital to run up credit card
bills are ready to send $5 cash to each of five people on a list.

I suppose
the most depressing thing about spam is the moral condition of
senders and would-be responders. The spammers are trying to get
rich quick. They are appealing to the base motives of readers:
sex, money, and fear. Spam-responders think there is a magic bullet
for sale by people not much better off financially than they are.
The senders see the responders as their personal magic bullets.
Unlike a legitimate e-mailer like Dr. Wilson, who offers serious
advice on non-invasive Web-based marketing techniques, the spammers
are looking for a quick fix to their own financial problems.

So far,
there really isn’t too much spam. This is the good news. When
you think about how cheap it is to do bulk e-mailings, it’s amazing
that we don’t get 100 to 200 spam offers a day. I can go through
most of mine in about 5 minutes. It takes me that long only because
I read the headlines. I want to see what people think will sell,
especially the same people with the same headlines. There aren’t
many repeats, but I look for the repeats. They give me information
on the state of the lower end of the digital nation.


Most of
the Web is informational. It is broadcast-oriented. It is for
very dedicated people who want to get their story to an international

With Google
— how do they make any money? — the Web is a 2.3-billion
page encyclopedia. Google searches the complete index of all 2.3
billion pages, some of which would take 200+ pages to print out,
in 0.3 seconds. How is this possible? I pay nothing for this.
For almost any obscure fact that I can even vaguely recall, there
are at least half a dozen Web sites that will tell me specifically
what I thought I remembered.

This is
the division of intellectual labor as never seen in human history.
The Web is Professor Hayek’s spontaneous order on a scale inconceivable
a decade ago. Think of The Encyclopedia Britannica. At
$1,300, printed, it used to offer information that had grown out
of date before the ink had dried. Now we can buy a CD-ROM copy
for under $20. It can be updated without much trouble. The company’s
Web site tries to sell a printed version of Compton’s Encyclopedia
for $559, but I cannot imagine anyone who would be silly enough
to buy it. It is sold to people who do not understand academia,
but in the name of academia. The ad copy says, “The Perfect Learning
Resource for Every Family.” What family do they have in mind?
Kids never did read encyclopedias. Did you? By the time you are
in college and might actually need one, it’s in the library free
of charge. Then you find out that quoting from anything but a
narrow-focus academic encyclopedia gets your paper marked lower.
You are supposed to quote from scholarly journals and monographs.
All that an encyclopedia is good for is legal plagiarism: the
bibliography at the end of each article and the basic outline
of the committee-screened version of the topic.

The spammers
think that they can get people to send them money for better information.
A few spammers will prosper for a while, but information is rarely
force-fed outside of a classroom. When people are looking for
information, they are active. They want something highly specific
to meet their immediate interest. The odds against a spammer are
great: to discover a hot button for the masses. Hot buttons by
their nature appeal to a narrow market. “The larger the audience,
the cooler the button.”

That’s why
I watch spam, and why I suggest that you do, too. Spammers are
working night and day to figure out hot buttons for the masses,
or at least for a large enough percentage of e-mail readers whose
purchases will pay for the spam.

What I have
learned from spam is that the burden of personal debt is beginning
to cause trouble. People are looking for lower interest rates,
as a last desperate measure: pre-default. They are also looking
for pots of gold at the end of digital rainbows. They want financial
independence. They want an easy, one-step way out of their present

You don’t
see “end your pornography addiction” offers from spam. You see
“the first one’s free, kid” offers. So, the pornography market
is still a growth market. Addicts are not ready to quit.

You do see
“get out of debt” offers. These are not all offers to increase
the size of your principal owed by lowering your monthly interest
rate payments. Some are, but not all, and the ones that are do
not promote this openly. This tells me that spammers think there
is a large market out there, an audience that perceives that they
are in too deep, and that they must get their lives together by
getting out of debt. Spam readers may be looking for a quick fix,
but they presumably already know that, apart from declaring bankruptcy,
there is no quick fix. I don’t see offers on how to declare bankruptcy.
I see offers on how to get out of debt instead of having to declare


The nation’s
debt addiction is continuing, but its growth rate has slowed.
The recession did not slow it enough. Consumer spending continued.
The savings rate has collapsed.

What I’m
looking for is a pattern of spam that moves from the “get out
of debt” mode to “get a credit card that offers a better rate.”
This would point to a booming economy. I know this offer appears
all over the Web. I know a man who makes search engine-based Web
offers — not spam — and he says that offers to get out
of debt do about as well as offers to get a better credit card.
It’s kind of like candy sellers and dentists. They need each other.
But spam offers are not for lower-rate credit cards. They are
for debt-reduction programs and mortgage re-financing programs,
which are sometimes sold up front as a way to lower one’s debt

The mortgage
rate ads are the ones I pay closest attention to. I am watching
for this offer: “Rates are going back up: re-finance now.” When
that one starts hitting your mail box, you will know that we have
moved back into the inflation scenario. I think that will indicate
a loss of confidence in the dollar. That will be a bad sign for
the stock market, as if signs were not bad enough already.


North is the author of Mises
on Money
. To subscribe to his free
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