Obsolescence: Planned, Unplanned, or Imaginary?

For the July 13-18, 2017 Heart of Europe debate tournament, one of the announced motions is:

This House would penalize corporations for excessive use of planned obsolescence.

Motions page has added comment:

Motion Committee strongly believes, that planned obsolescence is really global problem and we should speak up!

Below are notes and comments on the history and economics of “planned obsolescence.” In my first college economics class our professor remarked that automobiles could run far longer with fewer repairs if only ball bearing were “case hardened.” The claim was that businesses avoided many designs and technologies that would extend the life of their products. Of course this led students to ask why other companies didn’t offer these innovations and then advertise how much longer lasting their cars or other products were. It was hard to separate the conspiracy stories from real history.

Economist Paul Heyne used to say that some things matter whether they exist or not. The Loch Ness monster is one. Trade deficits another. And planned obsolescence is perhaps a third. Students learn in college about corporations and business cartels conspiring to make products that wear out early, or soon become obsolete or out-of-fashion, as a way to artificially spur consumption to boost profits and the economy. But how do we separate fact from fiction? Research is usually the best way to start.

My Mac dictionary defines:

planned obsolescence… a policy of producing consumer goods that rapidly become obsolete and so require replacing, achieved by frequent changes in design, termination of the supply of spare parts, and the use of nondurable materials.

Much of economic vitality depends upon consumption, so if consumers could buy the goods they need early–from light bulbs to smartphones, clothes, washing machines, and cars–each lasting decades, maybe  developed economies would all crash! Companies would run out of consumers, factories would close, shopping malls empty, and even Amazon and Walmart sales would dwindle.

The planned obsolescence story is updated and tied to consumer debt, toxic waste, and third world poverty in the documentary, “The Light Bulb Conspiracy.” Here is the trailer:

An online presentation “Planned Obsolescence- Ethical and Environmental responsibilities as an Industrial Designer,” (September 17, 2012) gives a quick overview of the claims, using examples of early light bulbs being redesigned by a cartel to last 1000 hours instead of 2500 hours each, with patents to enforce the 1000-hour bulbs. The other example in the trailer is iPods redesigned with batteries that couldn’t be replaced and would last only a year.

An online article, “Is planned obsolescence socially responsible?” (The New Engineer, November, 1998) begins:

In the 1930s an enterprising engineer working for General Electric proposed increasing sales of flashlight lamps by increasing their efficiency and shortening their life. Instead of lasting through three batteries he suggested that each lamp last only as long as one battery. In 1934 speakers at the Society of Automotive Engineers meetings proposed limiting the life of automobiles. These examples and others are cited in Vance Packard’s classic book The Waste Makers.

The article continues claiming products could be made to last longer at little cost, but that would cause “market saturation” undermining economic prosperity:

By the 1950s planned obsolescence had become routine and engineers worried over the ethics of deliberately designing products of inferior quality. The conflict between profits and engineering objectives were apparent. The fear of market saturation seemed to require such methods to ensure a prosperous economy…

More on lightbulbs in “The Great Lightbulb Conspiracy: The Phoebus cartel engineered a shorter-lived lightbulb and gave birth to planned obsolescence,” (IEEE Spectrum, September 24, 2014). Providing more details, the engineering trade-offs are more complicated: shorter-lived light bulbs were also more energy-efficient and brighter:

The cartel’s grip on the lightbulb market lasted only into the 1930s. Its far more enduring legacy was to engineer a shorter life span for the incandescent lightbulb. By early 1925, this became codified at 1,000 hours for a pear-shaped household bulb, a marked reduction from the 1,500 to 2,000 hours that had previously been common. Cartel members rationalized this approach as a trade-off: Their lightbulbs were of a higher quality, more efficient, and brighter burning than other bulbs. They also cost a lot more. Indeed, all evidence points to the cartel’s being motivated by profits and increased sales, not by what was best for the consumer. In carefully crafting a lightbulb with a relatively short life span, the cartel thus hatched the industrial strategy now known as planned obsolescence.

But the next paragraph makes clear that early industry dynamics caused much suffering among established manufacturers. Light bulb innovations were coming fast and technologies advanced at a dizzying rate. Consumers benefited as new designs and materials make light bulbs brighter, safer, and longer lasting.

For major manufacturers enough was enough. They wanted light bulb designs standardized and fixed so they could protect large-scale factory investments. Each new design caused what economist Joseph Schumpeter called “creative destruction.” A bomb could destroy a factory, but so could innovative new light bulbs produced by competitors, making factory equipment for existing bulb manufacturing suddenly obsolete. The light bulb cartel of the 1920s followed earlier efforts:

…a European cartel of carbon-filament lamp manufacturers that formed in 1903 to stabilize industry ties. It was rendered superfluous when in 1906 two European companies introduced a superior lightbulb whose filament was made from tungsten paste. That bulb was itself eclipsed in 1911 by General Electric’s metal-filament bulb, which used pure drawn tungsten wire, and in 1913 by GE’s gas-filled tungsten bulb. Dubbed the half-watt bulb, the latter was infused with argon or some other noble gas, which preserved the tungsten better than a simple vacuum; it produced five times as much light per watt as its carbon-filament predecessor.

Again with flashlight bulbs the claims of planned obsolescence might instead reflect engineering trade-offs to gain brightness and efficiency:

A GE engineer named Prideaux wrote in a memo, “We would suggest increasing Mazda lamp No. 10 from .27 ampere to .30; and 13.14 and 31 from .30 to .35. This would result in increases of candlepower of 11 and 16 percent respectively.” That boost in illumination, he suggested, “would be acceptable to all flashlight users” despite the fact that the higher current would shorten not just the bulb’s life but also the battery’s.

For flashlight consumers, which is better: brighter light from the flashlight or longer-lasting but dimmer light? No obvious answers. Consumers want less-expensive but better flashlights. Producers want more sales income and more profits. Competition and innovation by producers benefits consumers, but not established producers.

Flashlight technologies have continued to advance over the decades. Consumers benefit from a wider range of choices, but standards help too (so that batteries and light bulb sizes are standardized) Established producers have to keep spending on research and development or be quickly left behind. So producers can try to set up cartels (associations of producers) that find ways to block competition. Many have tried and most have failed (as the Phoebus cartel did in the 1930s), unless they enlist government regulations to enforce their cartel standards.

(Manufacturers in the Soviet Union, wanting flashlights that lasted even longer, chose to avoid batteries and made a hand-pumped flashlight. I bought one years ago at Restoration Hardware!)

Protectionism was always the first line of defense. Established firms could lobby legislators and government agencies for restrictive regulations restricting competition and new firms in their country, but customers would still have access to higher-quality, longer-lasting versions imported from other countries. India’s Ambassador car made by Hindustan Motors, founded the same year at Japan’s Toyota, faced this challenge and succeeded in blocking both competitors within India and auto imports. Until the 1980s the consumers of India could buy only the Ambassador (usually after waiting years), and its design was decades old.

For manufacturer in eras of open trade, setting up international standards commissions and cartels was a way to protect established firms.

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In the light bulb conspiracy story, patents play a major role. The main firms formed a “patent pool” to share their intellectual property, but also to stop new firms from entering the market. Only when key GE light bulb patents expired in the 1930s were the doors opened for new competition (plus the countries of major cartel members went to war).

“How “Intellectual Property” Impedes Competition,” (The Freeman, September 23, 2009) remarks on planned obsolescence with washing machines (though I just had mine repaired last month, not wanting to pay for a new one):

“Intellectual property” also serves as a bulwark to planned obsolescence and high-overhead production. As it is now, appliances are generally designed to thwart repair. When the repairman tells you it would cost more than it’s worth to repair your washing machine, he’s telling the truth. But he fails to add that this state of affairs reflects a deliberate design: The machine could have been designed on a modular basis, so that the defective part might have been cheaply and easily replaced. And if the manufacturer were subject to unfettered competition, the normal market incentive would be to do so.

For much more on light bulbs and light bulb regulation, see the Freedom Light Bulb blog, which features links to background and discussion of “The Light Bulb Conspiracy.” This blog responds to the E.U. light bulb ban, similar to US government regulations designed to improve the energy efficiency of  incandescent light bulbs. (It’s worth noting that established firms lobby for industry and government energy efficiency standards which restrict competition and cause obsolescence in much the same way as earlier cartels).

For more on this see “Was there actually an incandescent light bulb ban?,” (Lighting Insights Blog, January 9, 2016):

In spite of some bad reporting a few years back, light bulbs using incandescent lighting technology were not banned by the government. More accurately, save for a few exceptions, any lamp failing to meet the energy standards set by EISA in 2007 could no longer be manufactured. Those lamps were, for the most part, tungsten-filament incandescents.

But new innovations with incandescent bulbs may again shift the playing field (if government energy regulations can also be shifted.) “Welcome back to REAL lightbulbs?: Lights banned by the EU could make a comeback after breakthrough that means they use less energy,” (Daily Mail, January 12, 2016) gives some E.U. history:

Incandescent bulbs have been phased out in stages in the UK since 2009 thanks to widely-unpopular European regulations.

While many people preferred the warmer glow given by the incandescent bulbs, 95 per cent of the energy that goes into them gets turned into heat rather than light. 

As a result, they have been branded environmentally-unfriendly.

But their replacements – LED and fluorescent bulbs – while far more energy-efficient have proved unpopular because they give off a cold, unnatural light compared to their predecessors.

Now researchers at the Massachusetts Institute of Technology (MIT) in the US believe they have devised a method for incandescent bulbs to save energy – making them vastly more efficient.

The new lights are expected to reach 40 per cent efficiency compared to 5 per cent efficiency for the old-style incandescent bulbs.

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Fears of overproduction and market saturation were widespread in the late 1800s across newly industrialized England, France, and Germany. Fears of overproduction along with fears of running out of raw materials like coal, copper, and iron ore, led business leaders and economists to support colonial policies to secure territories in India, Africa, and Asia both as secure sources of raw materials for industry, and as vast captive markets for rapidly expanding factories at home.

But that’s another story…