I, like many of my peers, watch The Daily Show with Jon Stewart. The Pew Research Center even claims that many young adults consider The Daily Show their primary news source. While the Daily Show claims no journalist responsibility, their hard-hitting satire encourages many (including myself) to take a second look at more traditional news sources -- plus, I love the fact that I can watch The Daily Show on hulu.com.
I was watching last Thursday's episode when Jon brought up the name change of AIG. For the low, low cost of 170 billion dollars, AIG is now AIU. While it's easy for Jon Stewart to crack jokes about buying a vowel, I think from a marketing perspective, it's also really fascinating. Clearly, AIG had lost the confidence of the American people and a name change signifies a fresh start, but are people really going to accept a slight name change and jump back into business with the insurance giant?
It reminds me of something Dick Cheney once said:
"Deficits don't matter."
Now, ordinarily, I would never agree with any thing that Dick Cheney says. I even belong to a Facebook group called "Telling Dick Cheney to Shut The Hell Up," but I have to concede that he has a valid point.
The Federal Reserve estimates today that the entire worldwide supply of US money is currently about 10 trillion dollars, but that only 7% of that exists as paper money. That leaves a lot of money in existence as an electronic abstraction. Studies have shown that people tend to spend 15% more when they use a credit or debit card than when they pay cash. Sure, it's a broad generalization, but if you think about it, it makes sense. When money becomes an abstraction, it's easy to lose track of its actual value. I think nothing about throwing down my credit card to buy a latte, but when I only have $5 in my wallet, I switch to a regular drip coffee instead. That extra $2 to $3 seems all that more precious when I actually have to hand it over.
I equate the US government with a person holding an American Express black card. Nobody is going to turn that card down, regardless of the purchase price. Besides, it's not like the US can just pick up and move so creditors can't find them. Now, I'm not arguing for unchecked federal spending -- huge deficits can lead to inflation and a rise in interest rates. I believe that most of our economy runs on trust, confidence, and possibly fuzzy rainbows. If you believe that the economy is stable then the economy is stable.
The Great Depression wasn't caused entirely by the stock market crash, but rather by fear and by a run on banks. The stock market had returned to moderate levels by the mid 1930s, but the Depression persisted over the next decade. Which brings me back to my original point about AIG/AIU : Can a simple name change be enough to earn people's trust again?
If I had been in charge of rebranding AIG, I would have gone a different route and done a complete departure from the existing brand. Remove all bad memories and start fresh with a new name and a new brand identity. (But, hey, nobody asked me.)
When someone buys a new business, it comes as a package deal; the employees, the location, and the reputation -- for better or for worse. You can fire employees and you can move locations, but you're stuck with the reputation. If AIG had been rebranded as something totally different, the bad reputation would sooner fade in people's memories.
~ Meghan
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