A couple of months ago, I received an email linking to this fascinating video titled The Story Of Stuff by Annie Leonard. The video had received front-page coverage in the New York Times on May 10, 2009 (view the NYT article online). It also has its own Wikipedia page (this is not a very big deal, but the fact that Wikipedia considered it notable is notable).
I found the video interesting but, unfortunately, poorly researched and misleading in many contexts. I’ll begin with a summary of the gripes I have with specific statements made in the video. I’m using Annie Leonard’s footnoted transcript (PDF).
Note: I am not the first one to critique The Story of Stuff. A blogger and video creator who claims to be a libertarian Republican has produced a four-part critique of the Story of Stuff. While some of my criticisms overlap with his, the bulk are different.
Generic problems
Poor sourcing
Leonard’s transcript is extensively footnoted, so at first sight, she seems to be providing sources for all her assertions. A closer examination, however, reveals these poblems:
- Leonard often links/cites friends and environmentalist groups that are not primary sources, or even published or reputed academic secondary sources, even in cases where perfectly good primary sources exist and could easily be linked to. For instance, footnote (4) on page (1) gives a link to a website called warresisters.org (specifically, this page). First, Annie Leonard’s own data doesn’t match up with what the website shows, for the simple reason that the website shows data for the current year while Annie’s footnote refers to data collected for her year. Second, warresisters.org is not a primary source for such information. Even if Annie learned about the information from warresisters.org, she could have spent a few extra minutes going to the reliable source linked to from warresisters.org and linked to that. (She could additionally have credited the warresisters.org website for highlighting this information to her). There are many similar examples, that I talk about at different points, where Annie only credits the source from where she got the information rather than taking the effort to go to a primary source and verify the information.
- Related to the previous problem is the problem of not separating fact from opinion in her footnotes. In other words, she makes no distinctions between facts she is citing from public data and numbers that others have pulled out based on their personal opinions. Moreover, numbers tentatively put out by others and treated by Annie as solid facts (many examples of this will be discussed).
Specific problems
To cross-check and verify everything I’m saying, please open the footnoted transcript (PDF). I will use page numbering and footnote numbers as given in the transcript.
Note also that there are many other minor areas where I disagree with Leonard’s formulation or consider it hyperbolic, but I have stuck here to cases that I consider problematic and where I can marshal clear arguments rather than just a sense of unease.
Military spending
The first page of Annie Leonard’s transcript is largely innocuous, though I do have some stylistic gripes. My main gripe is with the absence of a link to a primary source for the military spending figure (as discussed above). This isn’t, however, a serious concern, because the page she links to does provide links to primary sources.
Let me just make a couple of additional remarks here. First, concern about US military spending is something common to both the libertarian/free-market end of the viewpoint spectrum and to many of the environmentalist groups such as Greenpeace, for which she works/worked. Libertarian think-tanks such as the Cato Institute and Reason Foundation have advocated for reductions in military spending and opposed interventionist wars.
Second, the fraction of spending that goes to the military can be changed significantly based on what one counts as spending. Leonard and Warresisters.org talk about “federal tax money”, and hence get their “over 50%” figure, but a very different figure could be reached (as noted at warresisters.org) if one includes the many other taxes levied on people, notably social security taxes.
Government’s job
Quoting from the beginning of Page 2:
It’s the government’s job to watch out for us, to take care of us. Really, it’s their job.
This is again a (far from mainstream) opinion stated as if it is a well-established fact. The footnote that Leonard provides here quotes from the preamble of the US constitution, talking about people’s right to life, liberty and the pursuit of happiness, and that these rights are “unalienable”. But saying that the government has no right to take away people’s right to life, liberty, and the pursuit of their own happiness, is a far cry from saying that the government should “watch out for us” and “take care of us”, which could be interpreted as a call for government paternalism. There is a great difference in spirit between the libertarian ideal of the Founding Fathers, that often focused on limiting the powers of government through a system of checks and balances, and the paternalistic call made by Leonard.
Running out of resources
Under “Extraction”, Leonard says:
So here we are running up against our first limit. We are running out of resources.
This is an extraordinarily sweeping statement. Fortunately, she does provide a reference and a link, but this link again goes to an advocacy website. Well, fine, but this page doesn’t have the sentence she quoted (well, right, webpages get updated). But agreed, the data in the website support the sentence she quoted from it, which says that in 2003, the ecological footprint exceeded the biocapacity by 25%. However, this is a far cry from the alarmist statement that we are “running out of resources”, which is a much much broader statement than one about ecological footprints and biocapacity.
An analysis of long-term resource trends is extremely complicated, because of the very different kinds of resources. For instance, there are resources like oil and coal, that, once burned, are gone forever. We can “run out” of these, and if current consumption rates go on, we might very well run out of oil in the next 50-100 years. (Coal should last longer). But then again, there are other forms of oil (tar sands, shale oil) that are currently economically inefficient to use because petroleum is in abundant supply. When petroleum is short, these forms of oil might become more profitable. (Of course, it is possible that nuclear energy as well as solar, wind and geothermal energy may also meet an increasing fraction of energy needs, and renewable biofuels may also be discovered).
If you think about metals, it is again unclear that we are “running out” of metals. Of course, it may happen in the near or far future that there are no longer any mines for profitable extraction of some of the metals. But this is not going to happen all of a sudden — people can plan for it, designers will start shifting production away, recycling of that metal will take priority because the value of reused and recycled metal increases when the original metal is scarcer, etc.
Studies about commodity price trends over 5-10 year periods have been largely inconclusive. Naively, many of them appear to show that prices have been falling, but adjusting for the relative improvement in the quality of manufactured goods, there seems to be no clear trend. All I can say is that if a commodity seems to be getting over, miners and industries using that commodity are likely to become aware and start planning accordingly well in advance. (Yes, they care about running out of it at least as much as Ms. Leonard does, because after all they get their living from it).
Finally, the area where I think Leonard does have a point — land use. But even while her concern is valid, her figures are nonsense, which brings us to the next point.
4% of our original forest cover?
At the beginning of Page 3, Annie Leonard writes:
Where I live, in the United States, we have less than 4% of our original forests left.
However, the quote she herself gives here belies her statement:
“Ninety five to ninety eight percent of forests in the continental United States have been logged at least once since settlement by Europeans.”
Note the operative word here: logged at least once. but a forest that has been logged at least once is not destroyed, simply because the trees can be replanted. For instance, paper companies own paper forests that they regularly log and replant. These people are not interested in destroying the forest because the forest is their source of income. Further, because they own the forest, they have every incentive to replant as they reap the full benefits (this is actually a very important point that needs to be understood by people who advocate reducing paper use to “save trees” — reducing paper use does not save trees, at least in a direct sense, because paper use is what causes the paper companies to plant trees. Of course, one might argue that the energy used in producing paper from the trees can be eliminated if we reduce paper-based products, though such energy use should be compared against the energy that needs to be spent in recycling paper. But that is an entirely different question from “saving trees”.)
As the population grows, more forest land may need to be cleared for agricultural use, leading to a destruction of animal habitats and ecosystems. This is a very real concern, but in fact, as any juggling with data would show, the amount of agricultural land that needs to be cultivated to feed one person has dropped hugely in the last century. That is why today we are able to support a substantially larger population that any time earlier in history with only a small fractional increase in cropland. In his book The Improving State of the World, in Chapter 6 (Long-term environmental trends), Indur Gokhlany looks at the issue in detail. He refers to Angus Maddison’s page (follow the link “The World Economy: Historical Perspective”) which has a graphical simulation using OECD website data, for the population and affluence statistics, and to a US governmental website for land uses.
Gokhlany’s argument is that the substantially greater increase in agricultural productivity is due to a combination of improvements in science and technology, a greater use of capital inputs, and a substantial increase in water use (in other words, economization on land at the expense of water, perhaps due to subsidies for water use in the US). While agreeing that the increase in water use is troubling in its own right, Gokhlany is grateful that technological advances have allowed for a substantial expansion of human population without natural habitat destruction in the United States. He also discusses the situation for the rest of the world, where the picture, although not as good as in the US, still shows increases in agricultural productivity. Nonetheless, the fact that increases in productivity have not happened to the same extent (which may be owing to one or more of these factors: poor technology, poor market access, land cultivated by people with little stake in it (e.g., feudal/zamindari type systems), a heavy labor surplus that makes investment in capital-intensive technologies unproductive, poor infrastructure (such as lack of access to electricity)) has been responsible for the clearing of forests in many developing countries.
However, he is no wild-eyed optimist about continued increases in agricultural productivity to meet the needs of a population that is expected to grow until 2050. But Gokhlany makes a strong argument that some genetically modified foods may offer a way to offset, at least in part, the growing demand for additional cropland to feed this population. This, though, takes us into a different topic…
The point I’m trying to make is that the story of how resource endowments are changing is an extremely complicated one and does not benefit from generalizations like Leonard’s. To summarize, some of the sources of uncertainty are: the constant discovery of new resources or new, more profitable technologies to extract hitherto unreachable resources, the constant discovery of new technologies for better and more efficient utilization of existing resources, and the way market incentives, social pressure, and some regulatory action can combine to shift production and consumption patterns when the shortage of certain resources becomes acute.
If everybody consumed at U.S. rates
Leonard makes a plausible point when she says on Page 3:
If everybody consumed at U.S. rates, we would need 3 to 5 planets. And you know what? We’ve only got one.
Thomas Friedman, a columnist for the New York Times, has repeatedly made a similar point, as have many others. However, what Leonard ignores here (and what commentators like Friedman acknowledge as they discuss in detail) is that if everybody around the world today suddenly became affluent and wanted to consume as much as the U.S. did, prices would simply go up forcing the U.S. people to consume less. There would still be a net rise in consumption, but it would not be a proportionate rise.
But more tellingly, the way the real-world trajectory will (hopefully) move, by the time everybody in the world will be rich enough to consume the amount the U.S. does, technology may well have moved to the point where the same level of consumptive satisfaction can be achieved with substantially less resource use. Of course, this is by no means certain. But it is an important hole in the “if everybody did this …” argument.
Ultimately, “if everybody did this…” arguments are superfluous and misleading. For instance, if everybody traveled as much as the global warming awareness-generator Mr. Al Gore, carbon dioxide emissions (and hence, the global warming effect) might be several times as much as what it currently is. (I might be wrong about Mr. Gore, but I’m sure there are many similar arguments that are valid).
Fisheries
75% of global fisheries now are fished at or beyond capacity.
Fisheries is an excellent example where Leonard selectively quotes. The problem of overfishing of fisheries is related to what economists call the “commons” problem or “the tragedy of the commons” — when everybody can take freely from a commons, then even if it is in the collective interest to ensure the growth of the commons in order to ensure a good take in future years, each individual is being perfectly rational by overfishing, because if they don’t, somebody else wil ltake the catch. Economists often contrast fisheries with poultry farming — nobody can argue that we’re running out of chicken, because there are none of these incentive problems with the commons. Many have suggested privatizing fisheries. There are other proposed solutions, including taxes and quotas, with their respective merits and demerits, but the problem here is not a general problem of resource greed (which surely also applies to poultry farming) but a lack of clear ownership/property rights and/or lack of trust and cooperation among the many different actors.
No testing?
Leonard says (Page 4) that:
There are over 100,000 synthetic chemicals in commerce today. Only a handful of these have even been tested for human health impacts and NONE of them have been tested for synergistic health impacts, that means when they interact with all the other chemicals we’re exposed to every day.
This is again a valid concern, but again it is best put in perspective.
In many parts of the world even today, cooking is done in the home by burning fuels like wood and coal, producing soot and half-burned gases. Apart from the experience of cooking being claustrophobic, many of these particles have severe respiratory effects, causing lung problems and asthma, and some of them, such as soot, are carcinogenic. In addition, soot is also a contributor to global warming. Ever-so-occasional barbecues may be fun but cooking that way daily in an enclosed space is not.
Looking at it historically, coal was a significant improvement on wood in many respects, but the use of petroleum-based cooking fuels was the real leap. Today, gas stoves or electric stoves are the norm for affluent people.
Harmful synthetic materials are a threat. But harmful natural materials are a threat too. It is true that natural materials that were harmful have probably already been recognized and identified as such, while synthetic materials, being new, may have unexpected effects. But, all said and done, both market actors (the companies selling the synthetic materials) and governmental regulatory agencies have incentives to ensure a reasonable amount of testing before products are put out to market. Those who put out products that do damage suffer public ridicule and a loss of confidence for their remaining products, and also fines and possibly punitive damages. Despite all this, they will not test a product for all possible impacts before putting them out to market.
Why? Because not putting a product to market has its own costs. This is most obvious for drugs, where there is a cost to putting a drug with adverse side-effects on the market, but there is also a cost to severely delaying the introduction of a new drug. The latter cost is all the people who could have used the drug and didn’t because it was not available in the market. There is a certain amount of balancing that needs to be done. The real question is: who does this balancing? Is it the company? Is it a governmental regulatory agency? Is it Annie Leonard? If the company does the balancing, is it taking all the costs of its actions into account? If it isn’t, why not? Are fines and penalties for the introduction of dangerous products not high enough? Leonard may be right that companies are able to get away in some cases with consistently shoddy products that are not in the public interest, but this is far from obvious in any way, and any accounting must take into account the benefits of such products.
Erosion of local economies
On Page 6, Annie Leonard talks about the erosion of local economies — how governments often confiscate local land and resources forcing these people into menial jobs by depriving them of the resource system they’ve used for years. This is something where I almost agree with Ms. Leonard. Government expropriation of land and resources from people, claimed to be in the “public interest”, is a recipe for corruption. Some people get benefited and others lose, but if those who lose lack the legal rights to negotiate, then it may very well happen that the costs to these people far outweigh the benefits. In other words, the use of force as opposed to negotiation when taking land from one use to another could lead to outcomes that are both inefficient and unfair. (Note that it may still be the case that the benefits created from expropriation exceed the costs, but if this were the case, I think governments, or corporations operating via the government, should be able to achieve the same result by buying the land in the marketplace, because benefits exceeding costs implies they’ll still turn a profit). So, expropriation of land makes me deeply discomfited both on moral/philosophical and on practical grounds. And again, we find that many free-market proponents such as Milton Friedman have been very critical of government expropriation.
But Leonard makes a lot of mistakes, which may have been influenced by the selection of people she has talked to. If one goes to places that have suffered the most damage of dislocation, one gets a very one-sided picture. But my own impression is that people aren’t moving from villages to cities because the villages that always sustained them well have suddenly stopped working that well for them. Rather, people have been moving from villages to cities for a long time, at least in India. Some of the reasons for the move to cities include more opportunities in cities, less chances of dying of starvation because of more jobs and higher wages, and less discrimination. Yes, there are cramped urban conditions, but having enough food to eat may well be worth it.
If there is an increase in cityward migration, I suspect that (again, at least in the case of India) this has a lot more to do with the rapid expansion of opportunities in cities than with the decline of villages due to their natural resources being destroyed or depleted. However, this may vary from country to country and region to region, though I suspect a similar truth holds in a lot of other developing countries.
Dirty factories out
Larry Summers, a Harvard economist who is now part of the Obama administration, got a lot of flak for making a remark that moving dirty factories overseas is a good thing. Apparently, many were offended at the idea that the U.S. was cleaning its act by dirtying that of others.
But Summers was simply articulating a basic commonsense notion that many economists and analysts would agree with. A much more elaborate notion has been developed in Gokhlany’s book The Improving State of the World, mentioned above. Gokhlany outlines, and provides substantive evidence for, the environmental transition hypothesis. This says that societies initially try to grow, even at the expense of degrading the environment. When they become richer, they are able to shoulder the costs of cleaning up the environment, and do so, leading to a decline in the degree of pollution/degradation. The secular (long-term time-based) trend is thus that of an inverted U-shaped graph. (Gokhlany discusses a large number of caveats). With this view, we see that many developing countries, such as India and China, are still on the growth plus degradation side of the environmental transition. One might argue whether they will get to the other side of reducing degradation fast enough, but it is by no means obvious that they will not. China, and to a lesser extent India, have already started taking into account the environmental consequences of their actions and looking at how to minimize them.
Econ 101: Externalized costs
On Page 7, Annie Leonard talks about externalized costs. Also called “externalities”, these are costs of an activity that are not incurred by the people undertaking that activity. In other words, they are imposed on innocent bystanders. This is a classic concept of basic economics, with the textbook examples being waste disposal and pollution.
First, Annie Leonard misunderstands externalities. She thinks that underpayment of workers is an externalized cost. But it simply isn’t! Underpayment of workers may be a problem in some industries, where there is singificant market power for a small number of market actors who can dictate terms. But think about the average supermarket or restaurant in a city. What kind of scarcity power does it have? Almost none! At any rate, even if Leonard believes that workers are paid less than she’d like them to be paid, this is not an “externality”.
There are a lot of proposed solutions to externalities, two of which are: the creation of a rights market for that cost, and the imposition of Pigouvian taxes. For instance, the problem of air pollution can be done by vesting the right to the air with somebody (which could be a private individual, a nonprofit collective representing a community, the government). Then, anybody who wants to do anything with the air (like pollute it with gases, burst firecrackers) has to get permission from that somebody, and getting permission entails making a payment.
The Pigouvian tax is a tax levied to account for an externality. So, if it is computed that a unit of carbon dioxide released into the atmosphere costs a certain amount of money to society, the tax is set at that amount of money.
In any case, externalized costs are not the whole story. Any reasonable mention of externalized costs should mention the flip side of the coin: externalized benefits. People doing things that are good for others, even others they don’t know or care about. Classic textbook examples are getting vaccinations for contagious diseases (reducing the possibility of their spread), and mowing my lawn and painting my house (which improves the view for passers-by). Mentioning only externalized costs seems to imply that people working in their own self-interest harm society, but looking at both sides of the picture shows that it could work out either way.
Radio Shack: radio for $4.99
I was thinking about this the other day. I was walking to work and I wanted to listen to the news so I popped into this Radio Shack to buy a radio. I found this cute little green radio for 4 dollars and 99 cents. I was standing there in line to buy this radio and I wondering how $4.99 could possibly capture
the costs of making this radio and getting it to my hands. The metal was probably mined in South Africa, the petroleum was probably drilled in Iraq, the plastics were probably produced in China, and maybe the whole thing was assembled by some 15 year old in a maquiladora40 in Mexico. $4.99 wouldn’t even pay the rent for the shelf space it occupied until I came along, let alone part of the staff guy’s salary that helped me pick it out, or the multiple ocean cruises and truck rides pieces of this radio went on. That’s how I realized, I didn’t pay for the radio.
Not only is this completely speculative, but it completely misunderstands production and supply. Leonard looks at all the different people and resources that went into the making of a radio, and concludes (without any attempt at calculation) that $4.99 is way too small for a radio. Rather than being grateful for the beauties of the supply chain system that got her such a cheap radio, she wants to see a hidden hand of exploitation.
Her language is misleading for many reasons. First, she makes it sound like every step in the construction of that radio was exclusively devoted to creating the radio. Wrong. Nobody booked an ocean cruise exclusively for the radio. Probably thousands, may be even millions, of other items went in that same ocean cruise. Similarly, I can assure Ms. Leonard that no trucker drove around exclusively with her green little radio. No. The truck probably had thousands of other items as well. As for the metal mining, no, nobody said that they need to mine these many grams of metal for Ms. Leonard’s radio, so let’s set up the machines and stuff for it. No. All these activities were done on a large scale.
Now, I have no idea what the total of all this should be. But I’m assuming that, if Radio Shack is selling such radios regularly for $4.99, then they don’t cost more than $4.99. Of course, I may be wrong: it may so happen that Radio Shack is discounting the radios because they have excess inventory and nobody buys those radios at higher prices. Or, may be the radio is a loss leader. Still, the fact that, as Leonard will have no doubt admitting, Radio Shack is in it for the money, should make her doubtful of her own instinct that it should have cost a lot more.
Finally, Annie makes an unconvincing argument that people everywhere are subsidizing her radio by working for lower rates. But why would they work for lower rates if they can get higher rates elsewhere? People would generally work for the highest paying job relative to the working conditions. Unless she assumes that people in China, Iraq, South Africa, and Mexico are very interested in making sacrifices to help her, this makes no sense.
At the end of the day, her only point is this: lower wages in these countries relative to those in the US, at current exchange rates, make this radio cheaper than it would have been if wages were higher. This is true, but that would get one into the question of why such wage differentials exist in the first place. This is a fascinating question, but not one that Annie either states clearly or provides an answer to. Moreover, Annie confuses this even further by explaining the discrepnacy of already high explicit costs (which is her own creation) using externalized costs (betraying a complete lack of understanding of mathematics, logic, accounting, and economics).
Shop, please
Come to Page 9, Consumption. This is where Annie makes some of her most serious errors and misleading statements. Let’s quote:
That is why, after 9/11, when our country was in shock, President Bush could have suggested any number of appropriate things: to grieve, to pray, to hope. NO. He said to shop. TO SHOP?!
First, President Bush did ask Americans to “pray” for those who “grieve”.
Should President Bush have asked Americans to shop? I don’t know, but it doesn’t seem like bad advice. In fact, given my general opinion of the quality of Bush’s advice to the nation, this might qualify for some of the best advice he has given!
There is room for disagreement here, but at any rate I don’t see it as outrageous to tell people to go about their life as usual, not to tighten their belts or get scared as a result of 9/11. I think this is a lot better than the many things politicians (including possibly President Bush) do to make their people paranoid about “national security” and “terror” and use it to expand their own powers and curtail civil rights. Also, telling people to shop seems better to me than telling them to “pray” — I see it as no business of presidents to be donning the mantle of spiritual and moral guide and leader to a nation in distress (again, something that many politicians try to do, when they’re not dealing with scandals that reveal their own moral failings).
Nation of consumers
Page 9:
We have become a nation of consumers. Our primary identity has become that of consumer, not mothers, teachers, farmers, but consumers. The primary way that our value is measured and demonstrated is by how much we contribute to this arrow, how much we consume. And do we!
There may well be truth to this, but it overlooks the basic fact that the primary reason people consume things is because that consumption is an indirect route to happiness. More on this in a moment…
One per cent still in use after six months
Annie Leonard quotes from a book to argue that only one percent of goods bought are still in use after six months. I do not have full access to the book she quotes from, but the passage she quotes does not seem to be saying that it limits itself to durable goods. For a family whose main consumption is food and toiletries, obviously, most of what they buy will not be there after six months! These goods get eaten and rubbed/poured on the body (thus contributing to sewage and drain waste). At any rate, if the only thing a family consumes is food and toiletries, and they have 1% of what the consume less after six months, I don’t think that’s bad at all, even from Leonard’s viewpoint!
Second, as Annie clarifies in her own footnote to the transcript:
This statement is not saying that 99 percent of the stuff
we buy is trashed. Think beyond your household to the upstream
waste created in the extraction, production, packaging, transportation
and selling of all the stuff you bought. For example, the No Dirty
Gold campaign explains that there is nearly 2 million tons of mining
waste for every one ton of gold produced; that translates into about
20 tons of mine waste created to make one gold wedding ring.
Driving consumption
This is the most hilarious and depressingly misleading of Leonard’s pieces.
First, a decision to emphasize on consumer goods as the growth engine of the economy is not at all the bad thing that Annie Leonard makes it out to be. What are the alternatives? I can tell you some. An alternative would have been a focus on large scale industries, that largely just provide goods for each other and where consumers are completely out of the loop (The kind of thing we see in Soviet-style central planning, with huge amounts of production but consumers getting nothing). Given the criticisms made by Leonard, I’m sure she’ll find such a system even worse. Or, it could be an economy where the driving engine of demand is the military, where most production happens as inputs for the military. This is again something I’m sure Annie would detest. These are examples of production systems where more and more is produced without “consumers” being richer.
The choice of being a consumer-driven economy is thus a choice, ultimately, to be an economy giving people what they want (the flip side is that it sometimes involves making people want things they didn’t want, but this does not negate the point).
The second, and more grievous, mistake made by Annie is in this passage:
Not provide health care, or education, or safe transportation, or sustainability or justice? Consumer goods?
Actually, education is a consumer good, or rather, it comprises a lot of individual consumer goods (schooling, textbooks, educational videos (such as hers?), college education). Ditto for health care. One might argue that these are “services” rather than physical goods, but they do involve a lot of physical goods as intermediaries: first-aid kits, medicines, hospital equipment, and what not.
Transportation is also a consumer good, whether it is private automobile transit or mass transit. In the sense that individual consumers decide whether and how much of it to buy. Now, it may be the case that the government subsidizes many of these activities, but that doesn’t make them not consumer goods. An example of a good that isn’t a consumer good is a nuclear bomb.
Context of the depression
As an additional aside, this extraordinary focus on consumer demand might well have been influenced by the events of the Great Depression. At the time, Keynesian ideas of the Depression, which said that a decline in aggregate demand was the main cause of it, were still in vogue. After World War II, there was great concern about getting economic growth up on a solid ramp. There was paranoia about the Soviet Union and the Communist system. There were many vocal voices saying that the government had a role in stimulating Demand. A lot of these plans, silly as they may seem today, should be seen in that context.
Obsolescence
Here, at last, we see some good research by Annie! Yes, some industrial designers wanted to accelerate product usage to get people to buy more. Obsolescence is a way to achieve this.
But what industrial designers want and what they are able to achieve are not the same. There are a number of moderating forces, such as market competition, and people not being very stupid.
First, people would typically factor in how long something will last when they pay for it upfront. This means that a company that makes products that are “made to break” expects to sell its products for less. If, for instance, it makes the product break twice as fast, then it may expect to make half the money. Perhaps, due to future discounting, people’s short-term memory, or lack of complete information, it may actually be able to charge something like 75% of the cost for something that last half as much. Ripoff?
But if the production cost to the company were the same (i.e., it didn’t save any money with the “break” feature, which is what made-to-break is all about), then it is spending the same in production cost and making only 75% of the money. Even though it is doubling its sales (people buy the good twice the number of times) it is lowering the profit margin on each sale. It is conceivable that the company still benefits, but it is much more likely that the company does not benefit from the break feature. In fact, a company can profitably benefit from break features only if its production costs are very low compared to the price at which it is selling the good, so changes in the number of times they produce stuff have no impact. (Do the math for yourself to judge).
All this is assuming that the company does not have competition. But as soon as a competitor steps in, they can cut through this immediately. How? Simply offer something that lasts a year, and _advertise_ that it lasts longer, possibly offering warranties or money-back guarantees.
So, planned obsolescence may work in a handful of situations, but most of the times, it doesn’t. Moreover, a look at the durability of goods would probably find that goods have been becoming more durable over the years, which means either that planned obsolescence hasn’t been on the rise or that it has been dwarfed by technological innovations and greater competitions.
Next, we come to perceived obsolescence.
This is again a valid point made by Annie. Keeping up with the joneses and conspicuous consumption are valid reasons why people buy new stuff, and creating a perception of obsolescence is a powerful tool.
But I suspect that there factors are marginal or incremental. The main reason why new products are introduced, especially in the technology sector, is new technological innovation that has driven down cost. Her own example of flat-screen monitors illustrates the points. Flat-screen monitors are much more convenient to use and take less space than the big bulky monitor sets used in the past. There was good reason for introducing them. It is not merely a matter of “fashion”. I can guarantee Ms. Leonard that we will _not_ see the bulky curved-screen monitors become fashionable in the future.
Next, to the fashion industry. It is true that changing fashions is a strategy to get people to keep buying new stuff. But Annie exaggerates the consequences of such a strategy. Consider her simple example of thick-soled versus thin-soled high heels. If the fashion keeps oscillating between the two, women who want to keep up with the latest fashion simply have to buy pairs of both types (which is what a lot of women do) and wear the ones that are fashionable.
This does _not_ double the number of heels they buy, because the main reason to buy a new pair is not an old one getting out of fashion but rather an old pair having been used for a long time (do the math yourself). Yes, there is an increase, but it is not a doubling.
Our national happiness
Quoting from Page 12:
So, in the U.S. we have more stuff than ever before, but polls show that our national happiness is actually declining. Our national happiness peaked sometime in the 1950s, the same time as this
consumption mania exploded. Hmmm. Interesting coincidence. I think I know why. We have more stuff but we have less time for the things that really make us happy: family, friends, leisure time. We’re working harder than ever. Some analysts say that we have less leisure time now than in Feudal Society.
If one believes the assertion that the goal of progress is to make more people happier, then this is one of the most important passages. I was interested to know how she made the assertion, so I looked up the footnotes. I was very disappointed to see that, once again, she did not link to a primary source but rather to a book that in turn discusses some polls conducted by some other agency.
Measuring “national happiness” is extremely tricky. First, nations aren’t happy or sad, it’s people who are happy or sad. So the question might be: is the average person on the street happier than before? But then again, who is the average person on the street? How representative are these polls of average people? Since I do not have access to the details of the polls, I make a few conjectural remarks.
First, it was around the end of the 1950s that civil rights agitation began in good force. The major legal breakthrough was in 1964, but there were many other things happening at the time. The 60s were dubbed an era of hippies and rebellion. Since the polls were taken in the 1950s prior to civil rights agitation, do we conclude that civil rights agitation is responsible for a decline in national happiness?
In the 1950s, the American economy was largely a national economy, not integrated into the world. There were many big businesses and relatively less competition. There was the concept of the “organization man” (note the gender bias) who joined a job at a young age and rose through the ranks. This was a satisfying and secure time.
Civil rights, increases in women seeking jobs, and increasing integration with and competition from the world economy led to more competitive pressure. Organizations had to painfully restructure, people moved from one job to the other both because of more opportunities and more layoffs. Couples started divorcing more. There was an increase in crime rates around the 70s and 80s. The economy went through many boom and bust periods. So, one could make a case that civil rights legislation and improvement in the position of women were largely responsible for a decrease in happiness. (A position that might be similar to some segments of the conservative movement).
But this is only partially true, and even if so, is meaningless and could be exaggerated in polls. Why? An “organization man”, once settled into a job, when asked whether he is satisfied with his job, isn’t thinking about alternatives much. He’s already settled. So, he may report a high level of satisfaction simply because of that, not because the job provides great pay or great stimulation and satisfaction. Similarly, a woman asked whether she’s happy with her marriage may report higher happiness if the possibility of divorce just hasn’t occurred to her, because such things are looked down upon by society.
Finally, self-rating is notoriously difficult for this and other reasons. Asking people whether they are “dissatisfied, satisfied, or very satisfied” with their job does not give meaningful, measurable and comparable results. A person living in non-grinding poverty may feel “satisfied” with life in a third-world country where people around her starve every day. But this same person may be very eager to move to another place that offers a better standard of living. Another person enjoying the higher standard of living may report feeling “dissatisfied”. The real test of who is more satisfied comes by looking at who moves where. Do people from India migrate to the United States, or vice versa? Do people from rural India migrate to urban India, or vice versa?
Finally, Annie’s judgmentalism about what “really matters to us” strikes me as disgusting. What’s wrong with preferring to watch a movie (or a documentary such as Annie’s) all alone rather than spend the evening chatting with friends? What is wrong with a person choosing to slog day and night to become rich (or help society, or become famous, or simply for the stimulation) rather than choose to spend an evening relaxing and admiring nature? The best judge of what “really matters” may be how people voluntarily choose to do stuff, but Annie’s suggestion that for fifty years, people have voluntarily chosen to do stuff that doesn’t really matter to them is too radical to be made without substantial justification.
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