September 1, 2000 (Ira Pilgrim)
The important thing in our industrial system is to make
money. How you make it seems to be irrelevant.
One would think that if someone made a fine affordable product, that his success would be assured. While some people have gotten rich doing just that, others have gone broke via the same route.
Suppose that Mr. Terribly Clever designs and builds something that is useful and that many people would buy. Not only that, but he builds it so well that it will last for a long time. You would think that his company would be successful and that he would make oodles of money. Ah, but it isn't that simple. Suppose that he sells his product to all of the people who might use it; what then? Unless he can find other markets for it, he might have no more customers because he built his product too well.
What? Am I implying that capitalism doesn't work perfectly for the benefit of everyone? You bet I am. But some capitalists are clever enough to know that whatever they build should either be something that everyone will want the next improved model, or that it should break down irreparably within a certain period of time. Then his customers will have to replace it and he will sell more of them. Builders of storage batteries(lead-acid) can build batteries that last for over 25 years. They build some for telephone companies, but they don't build them for automobiles. Automobile batteries usually last for a couple of years. I doubt that it costs very much more to build a long-lived battery.
Some products don't have this problem because, like food, they are consumed and converted into fertilizer. However, if it is not consumable, a clever entrepreneur will have to build something into his product that will cause it to fail so that his customers will have to buy another one every few years or so.
I can see it now; the board room of the Amalgamated Widgett Company Inc. The president of the company is standing in front of a large graph and pointing:
"Fifteen years ago our sales were small and we were barely breaking even. Then sales picked up and continued to increase. We were showing a substantial profit, which was reflected in your bonuses. For the last five years, sales have been slowly falling off. How do you explain it?"
Williams, the sales manager, speaks up:
"Fifteen years ago we had a product whose quality was so bad that no one in his right mind would buy one of our widgets. Then, with improved engineering, production and quality control, we developed a reputation for having the best widgets on the market. Naturally our sales increased. Now our major problem is that our widgets are too good. They rarely break or wear out. As a consequence, most of the people who might want to buy a widget already have one. We tried changing the color and shape, but a person only needs one widget. We even tried TV commercials, but nothing worked. The only people who buy our product are people who don't already have one."
"Well," said the CEO, "what can we do to reverse this deplorable trend?"
The head of engineering speaks up: "We could.......make a product that breaks down."
"If we do that," the head of sales said, "no one will buy our widgets the way they didn't buy them when we had a lousy product. They'd buy our competitor's widgets."
The CEO asked, "Couldn't we make it so that it was good enough to satisfy a customer, but broke down after a suitable period of time?"
"You mean like a few months after the guarantee expired?" said a young man who had just been promoted to the job of vice president for planning.
"We could do that simply by buying some inferior electronics parts, but we will have to be careful that they aren't too crummy," said the chief engineer.
And that, I think, is the way that it might be.
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