May 30, 2014

Planned Obsolescence

This essay examines the struggle at the heart of the planned obsolescence struggle; summed up in two contrasting quotes:

1) "Anyone who believes that infinite growth is compatible with a finite planet is either a fool or an economist" (Kenneth Boulding), and

2) "Any professor who revises a textbook but still makes it so students can use the old version is a fool"

Planned obsolescence occurs when a manufacturer of a product designs it in such a way that it becomes obsolete in a set time period. The product can become obsolete due to mechanical failure, or more complicatedly, from it's becoming unfashionable (see bottom for full list of planned obsolescence strategies). The purpose of a planned obsolescence strategy is to have the consumer replace the product with a new one. A never ending gobstopper, although a great product, won't make a company any money because the child would only ever need to buy one. Planned obsolescence can become a dangerous business practice as consumers become resistant to repurchase if the product becomes obsolete to quickly. For example, the gobstopper that only last a couple seconds won't be repurchased by the child as he will choose a competing product. Planned obsolescence has negative effects on consumer welfare and the environment, but is not a conspiracy and can be combated through increased industry competition, consumer value of product durability, and public policy.

A longer product life time is seen by consumers as an advantage, therefore a longer lasting product will, all else being equal, be more competitive than the shorter lasting product.  In a competitive market, if consumers value a long product life, manufacturers will deliver that feature. This defense of planned obsolescence, unfortunately, relies on the premise that consumers have an understanding of the product life span during the purchase decision making process, as well as value that factor in their decision. The success of planned obsolescence strategies can be curtailed by consumer education and fair disclosure of expected product life time. There are many other factors that consumers will take into account when purchasing a product, and it is completely reasonable that even will full knowledge of the durability of two products, at the same price a consumer may opt for the less durable product in light of superior product attributes in other areas. To reduce planned obsolescence Consumers should place more value on the eco-efficient and sustainable attributes of products.

Planned obsolescence is often viewed as an evil conspiracy on behalf of the manufacturers and marketers, but it should be viewed as a competitive force compatible with capitalism. The later notion is more compatible with a sober view of the market. The defenders of the conspiracy notion need maintain that the main manufacturers in the specific industry have entered into a pact to maintain an obsolescence scheme. This claim only works if the industry is monopolistic or oligopolistic because they are more sensitive to industry agreements. A pact of this kind is illegal under most national business laws, so no new policy would need to be created, but simply enforced.

Other critics of planned obsolescence claim outright that it is a market failure; therefore it demands government intervention to reduce it. For example, Apple has designed its iPods in such a way that the battery is irreplaceable. This practice should be unacceptable. Government could enforce certain manufacturing practices to ensure fair play. It should work towards introducing standardization of some elements in products such as printer tone cartridges, shavers, and batteries. This standardization gives more control to the consumer, increases competition towards supplying the product at a lower cost and reduces the ability for an individual company to have control over the product life. We saw this type of intervention recently with cell-phone chargers, and I don't think there is a cell-phone owner out there that can claim this was a bad idea.

Government can also reduce planned obsolescence problems by introducing taxes. There are two methods that it can employ: a tax that effects the sellers, or a tax that effects the buyers. The latter takes the form of environmental fees that the consumer pays when he makes the purchase - this in effect internalizes the value that consumers should have for eco-friendly products that they may not have. In an educated environment, where consumers value their environmental footprint, this would not be necessary. The method that effects sellers takes the form of sellers being forced to take back expired products and recycle them. This increases the cost of the product to the sellers, and will be reflected in higher product pricing. Both have the same effect on pricing, but I argue that the latter has a more efficient result.

Planned Obsolescence if left unchecked may diminish consumer welfare and may have unsustainable effects on the environment. Planned obsolescence can be controlled through competitive market forces, consumer education, and government policy. There are numerous things that you can do to help prevent the effects of planned obsolescence. During the purchase decision, put emphasis on the longevity of the product and choose products that are repairable and up-gradable. Don't replace products simply because they look worn-out or are no longer 'fashionable' - make it fashionable to be eco-friendly. Boycott companies that don't support its old products. Demand government regulations on planned obsolescence. Each one of the six strategies listed below can be fought against by consumers and pleas to government. It is up to us to shift the consumer paradigm to one that values long lasting, eco-friendly products.

Isaac Snow
Replacing yet another iPod in Vernon, BC
May 2014

(Appendix) Planned Obsolescence Strategies:

  1. Limited function life (ie iPod batteries die after 2 years)
  2. Limited opportunities for repair (ie iPod batteries can not be replaced)
  3. Design aesthetics (ie iPod gets scratched easily prompting disposal)
  4. Fashion (ie new iPod is hip, old iPod is super lame)
  5. Technological updates (ie new iPod holds more music - new iPod is better)
  6. Technological incompatibility (ie old iPod doesn't work with new iTunes)

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