BAUER MBA: Justin Boyar, Cari Day, Ernesto Guevara, Aimee Langlinais, Patrik Sefeldt What is Planned Obsolescence

? Planned obsolescence (PO) is the deliberate engineering of a product to fail prematurely in order to stimulate demand. Planned obsolescence wastes scarce resources, damages the environment, and undermines consumers’ trust. Ethical issues arise when producers are incentivized to adopt this model. Reasons Companies Use Planned Obsolescence Planned obsolescence was pioneered during the Great Depression to sustain jobs and stimulate growth for a manufacturing based economy. It is a profitable strategy in the short to mid-term for some businesses. This model, justified for decades as an inherent necessity for economic growth in industrialized countries, actually harms the economy, the environment, and the consumer (Pyramids of Waste). Ethical Issues to Consider  The idea that the destruction of resources can stimulate economic growth rests on the same faulty logic as the discredited “broken windows theory.” A window maker benefits from the economic activity created in the breaking and replacing of a window, but it is at the expense of the consumer’s alternative uses for that money. In a world of limited resources, deliberate destruction and waste as a business model is unethical.  Planned obsolescence causes disruptive consumptive patterns leading to excessive waste. The exportation of e-waste to developing countries like China and Africa, where products are recycled in substandard conditions, result in negative impacts to human health and the overall environment (Mercury Containing Equipment).  The most direct impact of PO is on the consumer. Companies in fast changing industries that sell directly to consumers are disproportionately inclined toward PO. Consumers have two safeguards from PO: choice and regulation. Unfortunately, PO is difficult to regulate and some products don’t have a viable substitute. This makes PO an unavoidable tragedy for the consumer, hitting them in the pocketbook and violating their trust. As described by AC Hodges, “Planned obsolescence is a predatory abuse of contract jurisprudence by the consumer electronics industry. Artificially manufacturing demand for products through planned obsolescence is anathema to social and contract fairness” (Hodges & Taylor). Proposed Solution In consideration of possible solutions to the ethical dilemma presented, there is an underlying question that must be contemplated: is there a way to make planned obsolescence obsolete? The main goal of mitigating planned obsolescence is to incentivize producers to create higher quality and more efficient products. The solution lies in modifying the current traditional ownership model to a rental/service model. Under the rental model, end-ownership is transferred from the consumer to the retailer since the retailer is now contracting with the consumer for the service. Incentives to manage the quality of products become more important to retailers under a service model because they have to manage cost. This drives the retailer to pressure producers to create higher quality and more sustainable goods in order to reduce business expenses (i.e. replacement cost of equipment) for themselves. The social limitations of this approach should be considered, since it may cause a disruptive shift in the allocation of labor away from manufacturing. Alternatively, an e-waste tax may be a supporting solution to address the environmental impact of planned obsolescence. Implementing this tax may negatively impact both businesses and consumers initially. However, a significant e-waste tax could force companies to create more sustainable, longer-lasting products. In an era of increased communication and available information, consumers are significantly more informed and have an increasing array of choices. Access to information gives consumers the power to make educated decisions based on quality. Therefore, companies that exercise transparency benefit through increased brand loyalty and consumer trust. This is why it is more important now, in an environment where diminishing returns are realized at a faster rate than ever in history, that companies who are interested in long-term sustainable profitability, stay on the forefront of innovation.

BAUER MBA: Justin Boyar, Cari Day, Ernesto Guevara, Aimee Langlinais, Patrik Sefeldt Works Cited: Hodges, Ann C., and Porcher L. Taylor, III. "The Business Fallout from the Rapid Obsolescence and Planned Obsolescence of High-Tech Products: Downsizing of Noncompetition Agreements.” Columbia Science and Technology Law Review. 2005. Web. 15 Mar. 2011. <http://www.stlr.org/html/volume6/hodges.txt>. "Mercury Containing Equipment | Universal Wastes | Wastes | US EPA." US Environmental Protection Agency. 27 Sept. 2010. Web. 20 Mar. 2011. <http://www.epa.gov/osw/hazard/wastetypes/universal/mce.htm>. Pyramids of Waste. Prod. Article Z Media 3.14. Dir. Cosima Dannoritz. Arte France, 2010. <http://www.truththeory.org/pyramids-of-waste/>.

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