Planned Obsolescence Through Barcodes

The financial crisis of 2007-2008 has come and left an unwanted legacy of Wall Street greed coupled with the obliviousness [Link on Financial Article] of the home owners. We have also seen the unprecedented increase in the money supply courtesy of the Federal Reserve’s quantitative easing. Additionally, we have witnessed Greece battle through its debt problems while Spain also undergoes painful austerity measures. The US presidential elections are being fought tooth and nail; much of it concerns different ways to fix the ailing and sluggish economy. Indeed, the economy is what is on most people’s minds as we enter the voting session of the elections.

Many suggestions have been provided in order to solve recessions. Some have asked for more government intervention through fiscal or monetary policy while others have asked for the market to be freed from government constraints. The Federal Reserve Chairman, Ben Bernanke, embarked on a curious bout of quantitative easing to improve the prospects of the economy. However, there must be other interesting ways to solve the economy’s woes and I made it a task to find them.

As I strolled through the economics section of the Boston University library searching for a book that would capture my interest, I came across an old, black coloured hardback. Curiously named The New Prosperity, the book by Bernard London appealed to me. Upon reading the book, I was struck by London’s remedy to recessions. He asserted that we should undergo ‘Planned Obsolescence’. This is when goods have an expiry date and when that date has been reached, the good must be swapped for money. If the ‘expired’ good is not swapped for money, then the holder will be taxed.

By allowing for goods to expire, this allows for people to sell the good to the government equal to the present market value of the product or market value (from the day you bought it) minus the depreciation. The intended effect was to make people consume and buy goods again. London exclaimed that people held goods for too long and it meant great misery for the unemployed labour:

“People everywhere are today disobeying the law of obsolescence. They are using their old cars, their old tires, their old radios and their old clothing much longer than statisticians had expected on the basis of earlier experience.

The question before the American people is whether they want to risk their future on such continued planless, haphazard, fickle attitudes of owners of ships and shoes and sealing wax.” (11)

Clearly this is a very intriguing way to spur consumption in the market by forcing individuals to sell their old and dilapidated goods back to the government for some compensation. But, how does the government monitor who has bought which good? There is such a multitude of goods that the government must keep a track of that such technology must not have existed in the 1930s. However, upon some further thought, I noticed that we could utilize barcodes.

Barcodes were first created by inventors Joseph Woodland and Bernard Silver. The commercial use for barcodes began in 1966; thirty-three years after Bernard London wrote his book. Barcodes could be implemented in order for everyone’s consumption details to be stored in a computer. Whatever good that has been bought will be registered with a government agency that keeps a track of the specific expiry dates. Once the expiry date for a good has been reached, a letter will be sent to the holder requesting him/her to bring the good to the agency for ‘fair’ compensation. If the holder were to reject this offer, then he would be charged a tax rate for keeping the particular good. This method could be much more tedious if someone were to buy a good for gift-giving. However, websites could be set up in order for people to switch their goods with others. This could be implemented as Amazon’s Kindle switching method (You can state if you have gifted your kindle to someone else, so that Amazon can update the cloud settings to the receiver’s account). This method could be applied to any sort of good, even buildings.

Benefits

Clearly the economy will see an increase in spending. Once you swap your shoes, you will surely be purchasing another pair so that you can traverse the outside world. This will spur a growth and improve the economic malaise that countries have suffered from.

The fundamental problem between labour and capital is that once workers have toiled to build specific machines, they will be left unemployed until more orders arrived or the machine withers away. The latter could take years and the former could be extremely uncertain. The wages paid for such work could sometimes be meager and in the end many workers in a production line are replaced by highly efficient machines. London succinctly explains:

“In our present haphazard organization, the product of the worker’s toil continues to benefit and produce income for its owner long after the one whose sweat created it has spent and exhausted the meager compensation he received for his labour.” (16)

With planned obsolescence the capitalist will have to create demand for the workers by asking them to build more machines. According to London, these workers will have a stable occupation that will generate steady income for a good living.

It will also reduce speculation in the market because people will know when the goods are to expire. Since a fixed deadline has been provided, the people will be able to calculate, with more accuracy, the value of goods. Accounting methods exist now on how to calculate the value of capital; however, the fixed deadline for obsolescence could streamline calculations a little.

Economist  Cantillon, who wrote the first written treatise on economics (before Adam Smith), eloquently describes the function of the entrepreneur:

“Many  people set themselves up…as merchants or entrepreneurs…: they pay a certain price for produce depending on where they purchase it, to resell wholesale or retail at an uncertain price.” (74)

Planned Obsolescence will provide fixed dates for how long a particular bit of capital will last. This will reduce some uncertainty and enable entrepreneurs to plan more efficiently on what must be done for the future. Entrepreneurs, in planned obsolescence, may plan better.

When buildings have become decrepit, then it will be time for them to be replaced with the latest materials. This will allow for buildings to be built with the best materials and methods of the time. This could make the infrastructure more bearable and livable.

Drawbacks

For both conservatives and liberals, this method may seem to invasive. Planned obsolescence will be the epitome of the government telling the populace what to do. Some may find it immoral that the government has the right to tax a person for keeping the good longer than the government thinks is necessary.

Moreover, it will be increasingly difficult to measure the value of goods to different people. It will be difficult to tell the populace that their favourite pair of shoes must be returned to the government for compensation, otherwise you will be subjected to taxation.

If anything, let us take into consideration the endowment effect. This occurs when people want a higher compensation for the good compared to the price that they have paid for it (once they own it of course). Thus, there could be countless situations resulting in insufficient and unjust compensation rates. Planned obsolescence could be highly subjective resulting in an infuriated populace.

There has been much discussion about the arts. The Economist even did a special debate session on how the arts would be best protected. But, with the inception of planned obsolescence, would I invest in the arts anymore? Would planned obsolescence curb my appetite to buy any artwork? Here is how London answers:

“Goods which cannot be replaced, such as valuable paintings, jewelry, heirlooms, rare manuscripts, antiques and historical relics, need not be destroyed, but their owners should pay a tax for the privilege of owning them after their lawful life has expired.” (20)

This extra taxation could hinder spending for artwork. Consumers may be less likely to buy something if it will be a constant reminder on their tax form.

Since we now know when goods are to be sold to the government (planned obsolescence), would we build infrastructure to last through the ages? Knowing that it will be taken down in 25 years, would I build a structure to survive longer? This may lead to incentives to build structures that may not survive 100-year floods, hurricanes. If anything is projected to happen over a century, then why build to those standards if it will cost more and it will be taken down in quarter of the time?

Conclusion

In the end, government involvement in the economy is imperative for a market to sustain itself. Much of the debate is not concerned about the government being there or not, it is how much government involvement do we want? This plan by Bernard London utilizing the technology of bar codes and supercomputers could work, but at what price? Is it necessary to give up some freedom for a plan that could work and stimulate the economy? It is up to the consumers, entrepreneurs and the many others…It is up to you!

Bibliography

Cantillon, Richard. An Essay on Economic Theory. Auburn: Ludwig Von Mises Institute, 2010. Web. <http://library.mises.org/books/Richard Cantillon/An Essay on Economic Theory.pdf>.

London, Bernard. The New Prosperity. New York: 1933. Print.

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