Which American companies are taking advantage of the planned obsolescence

Planned obsolescence: helping the economy that is destroying our planet

The planned out-of-fashion or premature obsolescence of products is "in". Many companies increase their profit margins by getting customers to replace their products with new ones after a short period of time. But what appears economically rational is fatal for society as a whole. Consumers and politicians should finally open their eyes and take decisive action against this madness.

The idea of ​​planned obsolescence is to intentionally shorten the life of a product. John Maynard Keynes suggested that, in extreme cases, economic crises should be stimulated by products that are used for a short time. This can be done, for example, by installing predetermined breaking points or equipping the products with counters, which herald the decline of the device after a certain number of uses. Frequently observed examples of this are inferior quality and quickly wearing individual parts such as plastic cogwheels in various household appliances or printers that display an error message after a certain number of printed sheets.

However, planned obsolescence also takes place when the product in question is basically still intact and the customer is induced by indirect influence from the company to purchase a new product earlier than actually necessary. On the one hand, this can be done through appropriately aggressive marketing, which conveys to the customer that the product is no longer up-to-date or simply no longer modern. On the other hand, companies can help with the decision to make a hasty new purchase by removing certain spare parts or services from the range or offering them at higher prices. Examples of this can be found in large numbers in the field of electrical appliances, where it all too often happens that the repair is more expensive than a new purchase or that the corresponding spare parts can no longer be bought. But not only here is planned obsolescence taking place. A less obvious case are, for example, soap dispensers that dispense an unnecessarily large amount of soap, which accelerates consumption and wear and tear.

Consumers often do not have the opportunity to differentiate between high-quality goods and goods that age quickly. The quality deterioration happens gradually and remains below the customer's perception threshold. Especially when there is a certain degree of brand loyalty on the part of customers, the company hardly needs to fear their migration. In order to be able to keep up with the market, it is currently not only expedient for the individual company, but the dominant strategy to offer products with artificially shortened lifespans.

Why is this so? From a game-theoretical point of view, in the present so-called prisoner's dilemma, the companies make a decision that is advantageous in terms of the individual economy, but disadvantageous for the general public. When manufacturing the products, the individual company has the choice between “long service life” and “artificially shortened service life”. For the general public, but probably also for the companies involved, it would obviously make sense if they opt for long-lasting quality products. However, since the individual company does not know how its competitors will behave, it will opt for the safer and more profitable variant of the shortened lifespan. If the individual company does not choose the strategy of artificially shortened service life, it will have a disadvantage. This is due to the fact that consumers will not even notice the reduced service life due to asymmetrical information, barely noticeable service life reduction and the similar behavior of all companies in the relevant industry. At the same time, however, the cheating competitors can reduce their production costs by producing low-quality products, offer the products slightly cheaper and increase their profits through increased sales. The honest company would then have a competitive disadvantage.

The considerations also show very clearly that the real disadvantages are experienced by the consumers. The most obvious disadvantage is the reduced usability of the products combined with negative environmental consequences. Another disadvantage is the falling standard of living in the long run. Because a lot of money has to be invested in one product and the various replacement purchases, less money is left for other things. As a result, we can all afford less.

Overall, there is a frightening and unnecessary overexploitation of finite resources. There are only limited raw materials on our planet which must be handled with care, which is why the lifespan of products should be as long as possible. Of course, it could be argued that the products could be recycled, but in practice this is still completely inadequate. In addition, the unnecessary excess of obsolete or defective goods often leads to illegal exports, as proper disposal in Europe is associated with high costs. The implementation of the EU directives on waste electrical and electronic equipment is slow and there are great incentives to ship the goods to developing countries according to the motto 'out of sight, out of mind'. The consequences for people and the environment are devastating.

If the companies now opted for the 'long service life' strategy, this would mean that households would have to spend less money on purchasing new artificially outdated products. So there would be more money available for other things, so-called consumer capital. This could be put into a wide variety of other consumer goods and thus enable the emergence of new, high-growth markets. The creativity and work energy that is put into the development and production of rapidly aging products could be used to pursue more meaningful activities in the research and development of new quality products.

It seems as if the legislature has to set barriers for companies. Last month, as part of the energy transition in France, a law was passed in which the 'set of techniques through which the person who brings the product onto the market aims, namely through the design of the product, the lifespan or the possible utility value of the Deliberately shortening the product in order to increase sales of new products' are penalized. Proven cases are to be punished as fraud with up to two years imprisonment and a fine of 300,000 euros.

Something is happening in Germany too. The Greens and the Left took the initiative in 2013 in the form of draft laws and reports. As a consequence of the application by the Greens entitled "Stop planned wear and tear and ensure the longevity of products", the Federal Environment Agency commissioned a study, the results of which, including recommendations for action, should be available in February 2016. An interim report of the study was published in March of this year. The Greens are calling for longer-lasting products to be manufactured, for better conditions to be created for repairs and recyclability, and for high-quality recycling to be ensured.

In this context, it would also be a very useful measure to design the regulatory framework for companies in such a way that proper and fair competition can develop in the direction of high quality. This could be achieved by requiring companies to recycle the products they sell and, in particular, the electrical appliances they sell, completely independently and in an environmentally friendly manner. The negative external costs would thus be internalized. This means that consumers and the countries to which the garbage is sent no longer have to bear the social and ecological costs, but rather the companies are made responsible for them and the costs fall back on them. That would make short-lived products so expensive that planned obsolescence would hardly be worthwhile.

Without appropriate government intervention, it will remain rational for individual companies to artificially shorten the lifespan of their products. There is a classic case of market failure, that is, the market mechanism of supply and demand does not lead to the economically desirable result. Consumers alone have only very limited options for protecting themselves from planned obsolescence. A rethink on the part of consumers would certainly make a difference, but not be enough. The destructive waste of manpower and resources can only be stopped through appropriate laws.

——-

The post photo is from Ihaha. Further use is subject to the guidelines of the CC license.