Planned Obsolescence

I support the free market because it makes my stocks and real estate go up, but it makes too many utopian assumptions – specifically how competition is supposed to lead to better products. Maybe better in terms of new features and more advanced technology, but not reliability or perceived speed. Wirth’s Law, a computing adage made popular by Niklaus Wirth in 1995, states that software efficiency halves every 18 months to compensate for Moore’s Law. For example, it takes roughly the same amount of time to load a webpage today as in the 90′s with dial-up because complicated scripts and graphics negates the gains made in bandwidth and computer memory. You can code a simple JavaScript to countdown from some arbitrary number; if left uninterrupted, it will countdown to negative infinity. This trivial script consumes memory. Modern websites have the equivalent of millions of these scripts running in the background for things such as serving ads and tracking your location, resulting in slow load times and occasional browser freezes, despite fast internet and fast computers. It’s hard to find data on this, but it would not be surprising if the rate of bandwidth consumption exceeds the rate of bandwidth.

Computers are faster, but new software doesn’t seem to run any faster than old software on old computers due to bloatware. Personal computers are considerably cheaper than in the 90s, but because of more frequent breakdowns and obsolescence, people are replacing their computers more frequently than ever, which negates the benefits of lower prices. Unfortunately, data is scarce because its not like companies want to make this information public, and it’s not tracked by the government, either. There is anecdotal evidence old appliances are more reliable than new ones, attributable to planned obsolescence and less durable parts to meet environmental regulations.

From the Wikipedia entry:

Planned obsolescence tends to work best when a producer has at least an oligopoly.[6] Before introducing a planned obsolescence, the producer has to know that the consumer is at least somewhat likely to buy a replacement from them. In these cases of planned obsolescence, there is an information asymmetry between the producer – who knows how long the product was designed to last – and the consumer, who does not. When a market becomes more competitive, product lifespans tend to increase.[citation needed] For example, when Japanese vehicles with longer lifespans entered the American market in the 1960s and 1970s, American carmakers were forced to respond by building more durable products.

Hmmm not so sure about this. It could have gone the other way: upon establishing brand loyalty, Japanese manufacturers gradually reduce reliability to match their American competitors, boosting profit margins and sales at the cost of some number of customers, to be determined by cost/benefit analysis.

As an example of free market competition leading to less reliable products, in the 90′s Dell Computers was second to none in reliability and support; that all went away when cost/benefit analysis showed Dell could get the same earnings and bigger profit margins by cutting back on reliability and support. This was also due to pricing pressure from competitors like Acer, HP, Gateway and Compaq. On the other hand, one could also argue that because computers are cheaper, consumers are spending less money on computers even after accounting for obsolescence and diminished reliability. The obvious benefit of planned obsolescence is bigger profits and more consumer spending to replace broken products, which helps the economy and stock market. In some instances, we get better products like bigger TVs, which doesn’t seem susceptible to Wirth’s Law; it’s not like TV has ‘lag’, but on he other hand, in accordance to our theory of bifurcated inflation, content fees such as cable have surged in recent years. This would imply that TVs provide a constant amount of marginal utility, regardless of technology. Adjusted for inflation, we pay more in exchange for more shows and a bigger and clearer picture.

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