Planned Obsolescence, Corporate "Rationing," and Household Prosperity

Dear Reader.  As you may know, trivium makes a living as an economic historian, that is, someone who attempts to understand why and how material wealth has been created over the course of history:  why some are rich, and others are poor, in other words.  The idea, for trivium, is to understand this, so that we can focus our efforts on maximizing the wealth of the many, rather than (as is now, and has historically been the case), maximizing the wealth of the few who are already rich.   

So spread the word:  I have an idea which if adopted by economists, would focus the efforts of economists and politicians on increasing the wealth of the household, rather than on the wealth of the self-serving ‘me‘ (ala Alan Greenspan, Ron Paul, and Ayn Rand), or the wealth of nations (ala Adam Smith, and classic economic theory).  If you create an economy which maximizes the wealth of the ‘rational individual’ (read:  the one with billions to invest), you end up creating an economy in which massive inequality of wealth seems natural and logical.

But, just as humans began by continually fighting, and by organizing themselves into hierarchies, and by having all sorts of brutal religious and political rituals, and by creating states based on exploitation and violence, but have slowly, in some places, created democratic states in which more people have more access to peace, equality, freedom from fear, freedom from oppression, etc., and have even begun to see this as a fundamental human right…

…so we can now begin to see freedom from economic oppression as a fundamental human right.

This means, that we need to turn our attention towards understanding how economics can serve the needs of the many, not merely the needs of the few, or the elite, or ‘the country’ in general (which de facto means the economic and political elite, since, a) these are usually interrelated, and b) the few hold the lion’s share of the capital in any given country).

My crucial insight on this plain has been the fact that the household is the basic unit, which in a given country, has its income set by the powers that be (employers), so that the household will be able to buy what are considered the ‘necessiites of life.’  In turn, the average household income tends to determine the prices of things:  the average household’s expense sheet will of necessity look like this: 

Average household income after taxes, let’s say 2,000$/month. 

Thus:  the average mortgauge payment can only be as high as to leave room for other things:  thus:

About 700/mo, which leaves about 300 for bills, and then 200 for car, and then 400 for groceries, and then about 100/week miscellaneous and spending.  And after that, usually, the average household has almost nothing to save.  If you want to save, you have to earn more than the average household, otherwise, the ability of most people to pay more than you will raise prices, so that you are forced to pay most of your income on basic living expenses, such as housing, food, bills, etc….

So you will notice that most people are trapped in a ‘vicious cycle,’ in which the average income determines average prices, and determines a very real limit on what you can expect to do, unless you somehow manage to climb out of the trap, and land a very good job, and/or a highly paid spouse, etc., which will raise your household above the national average.

But notice that this system is pretty much inescapable, because by definition, if we raise average income, prices of basic things (food, shelter, transportation) will rise to accomodate that average? 

So how then, do we increase the well-being of the average household? 

I have talked about this in some previous posts:  i have suggested that if we just build bigger average house sizes, then the average person will, de facto, be able to live in a bigger house.  What if the city council did not approve any buildings less than 1,500 sq ft?  Then everyone would have plenty of space.  Demolish the older buildings?  Of course, key also is lowering population, or keeping it stagnant ,so that people do not create more demand for housing… then, we can slowly increase the average house size, so that we can all have room… and housing will be in reach for all… that is how you’d do it, folks, nothing magic.

And, as I have also argued on this site, if we increase average house size, you will increase demand for different household things, like lawn mowers (if you also increase yard size, which I entirely support), and also gardening tools, and fertilizer, and tools of various kinds.  If most men had workshops, they would need to furnish them…etc… and this would create demand.  I argue that much of the US’s economic success is due not just to average household wealth, but also to average house size… which meant that consumers have more room for stuff, and also more need for a wider variety and for larger and more complex stuff… thus driving demand.

Also, though, we need jobs, and I have argued this elsewhere too:  that management must pay a middle class salary and benefits, and this has to be legislated, so that all companies play by the same rules.  This is entirely doable, and will not ruin the US economy, any more than it did during the heydays of the 1980s and 1990s.  This is an essential expense, that all businesses must confront.  And also, education has to be turned back into an industry which supports middle class salaries, instead of being gutted, and taken over by administrators who suck up resources, and provide very little except for makework projects, and fluff.  And the list goes on.

But today I would like to introduce a new element of this theory, which is, that planned obsolescence and what I call ‘Corporate rationing’ cause an entirely unnecessary element of ’leakage’ of household income, which companies argue sustains demand, and thus economic growth, but which I argue, if not ‘leaked’ could be used to buy more interesting things, and thus, increase the average actual wealth (rather than monetary wealth) of each household, when measured in terms of the amount of material goods, and space, and other measures of prosperity, which they have. 

Here are some exmaples of what used to be called ‘planned obsolescence,’ which also cross over to what I call ‘corporate rationing,’ which are entirely unnecessary, and which cause us to waste significant portions of our household income (perhaps 20% of our monthly incomes, when you think about it, perhaps more), on things which are entirely unnecessary, and for which the monopolists (large companies and their political backers) are entirely overcharging us, often to the tune of several hundred percent or more.   

1) vacuum cleaner bags:  why aren’t they resuable?  They could easily be made so they were tough, and reusable, and easily emptied…. but why aren’t they/??? oh, I dunno, because this not only keeps big companies having a steady income stream, but also makes you more likely to buy a new vacuum, when they all agree to stop selling your particular brand of vacuum bags.

2) toner cartridges.  Er, again, why is there not just one or 4 standard types of toner cartridges?  They can be bought in ‘generic’ form for as little as 10 dollars… does HP really need to charge you 50 Dollars for toner???? Real cost:  5-10 bucks, tops. 

3)  Light bulbs.  I hear that one of edison’s bulbs in a fire station in boston is still burning, since 1910… gee, do you think they could make bulbs that didn’t break every 3 weeks, like my Ikea ones do?  How much do you waste per year on light bulbs, which you could buy once in your life, if they were made with the intent to have them last? 

4)  Vacuums, and all other appliances.  Notice how your vacuum breaks every 2 years… gee, do you think that is intentional?  Often, there is this one tiny but crucial plastic part which just happens to snap, rendering the whole thing useless, or else the ‘motor burns out.” hmm… do you think if they were made for nasa, that they would be breaking every 2 years?  And if they were manufactured on a huge scale, do you think they would cost that much more to produce…. not. 

5)  Toothpaste.  Does it really cost proctor and gamble 3 dollars to fill a tiny tube of toothpaste?  In Europe, the tubes are even smaller, and cost more.   Here we’re getting into the question of quantity.  I have noticed, living in Euorope, that a tiny bag of grass seed, say one quart of it, costs like 7 Euros, while in the US you get huge bags for like 7 bucks, wihch have literally 20 or 30 quarts… so in other words, the price of grass seed in the US is literally 20 or more times cheaper than in Europe:  is it truly the case that European suppliers cannot supply bushels of cheap grass seed like they magically can in the US?  Are transport costs that high?  The answer is:  bullshit.  The companies in Europe know that people here have tiny lawns and only need tiny amounts.  If you happen to be a rare rich european with a large lawn, well you’re SOL.  They price things for the average consumer, and they know that since people only need a little bit at a time, they can gouge you for it. 

This brings us back to toothpaste.  Why don’t they sell it in paint can form?  They know that you think it’s reasonable to go through a tube about once a month for a family.  If they sold it in tubes that you needed ot change every week, you would be pissed off, but once a month seems reasonable.  But why not buckets?  then you could just press a lever, and some would come out, and it would keep for 6 months, and they could probably sell you a bucket of the stuff for 5 bucks.  But now, you buy it in tiny tubes for 3 bucks each, and so they have just upped their profits by literally a thousand percent, selling it easily for 10x what they could do, if you expected to buy toothpaste in bucket-sized containers.

This goes with almost everything:  milk, juice:  you will find, when you look into it, that producers routineliy sell things for tens or more times more per unit than it costs to produce.  Does it really cost 1.50 to produce one “milky way”‘s worth of chocolate, esp when milky ways were about 3x that size in the 1970s?  Hardy har har!  It costs mere cents, probably less than 10 to produce and deliver it.

And the list goes on.  If companies were not allowed to monopolize, and thus gouge you, if the laws were set so that companies had to help to maximize the wealth of each household, how much more disposable income could we all have, to go on vacation, add decks onto our houses, biuld a gazebo in the back, install a swimming pool, buy cooler clothes, etc. etc…. so the economy would hardly falter folks, but instead of being tied to incredibly boring, mundane things like toothpaste, potatoes, and vacuum cleaner bags, we, like the rich, could use our monthly income, the same 2,000 bucks we have now on average, to buy much more invididualized, exotic, freeing, liberating, and happy-making things, and all of our living standards… but more importantly… our sense of fulfillment, and happiness, and freedom, and independence, and sense of economic self-determination, would dramatically increase, all without needing to ask for a single penny of a raise!!!

-t.