Ending the Depression Through Planned Obsolescence

Part 1

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ENDING THE DEPRESSION THROUGH PLANNED OBSOLESCENCE

BERNARD LONDON

ENDING THE DEPRESSION THROUGH PLANNED OBSOLESCENCE

BERNARD LONDON

21 EAST FORTIETH STREET NEW YORK, N. Y.

COPYRIGHT, 1932, BY BERNARD LONDON

Ending the Depression Through Planned Obsolescence

By BERNARD LONDON

Frank A. Vanderlip, former President of the National City Bank, of New York, characterized this as a stupid depression. He emphasized the fact that millions were suffering amidst glutted markets and surpluses.

The new paradox of plenty constitutes a challenge to revolutionize our economic thinking. Classical economics was predicated on the belief that nature was niggardly and that the human race was constantly confronted by the spectre of shortages. The economist Malthus writing in 1798 warned that the race would be impoverished by an increase in population which he predicted would greatly exceed gains in the production of foodstuffs.

However, modern technology and the whole adventure of applying creative science to business have so tremendously increased the productivity of our factories and our fields that the essential economic problem has become one of organizing buyers rather than of stimulating producers. The essential and bitter irony of the present depression lies in the fact that millions of persons are deprived of a satisfactory standard of living at a time when the granaries and warehouses of the world are overstuffed with surplus supplies, which have so broken the price level as to make new production unattractive and unprofitable.

Primarily, this country and other countries are suffering from disturbed human relationships.

Factories, warehouses, and fields are still intact and are ready to produce in unlimited quantities, but the urge to go ahead has been paralyzed by a decline in buying power. The existing troubles are man-made, and the remedies must be man-conceived and man-executed.

In the present inadequate economic organization of society, far too much is staked on the unpredictable whims and caprices of the consumer. Changing habits of consumption have destroyed property values and opportunities for employment. The welfare of society has been left to pure chance and accident.

In a word, people generally, in a frightened and hysterical mood, are using everything that they own longer than was their custom before the depression. In the earlier period of prosperity, the American people did not wait until the last possible bit of use had been extracted from every commodity. They replaced old articles with new for reasons of fashion and up-to-dateness. They gave up old homes and old automobiles long before they were worn out, merely because they were obsolete. All business, transportation, and labor had adjusted themselves to the prevailing habits of the American people. Perhaps, prior to the panic, people were too extravagant; if so, they have now gone to the other extreme and have become retrenchment-mad.

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.

What the people can afford is very different at a time when the majority are gainfully employed than it is in a period when perhaps ten million are without gainful employment. The job of modern management is to balance production with consumption—to enable one large group, like the factory workers in the cities, to exchange the products of their hours of labor for the output of farmers. The prevailing defeatist assumption that depression and unemployment must continue because we have too much of everything, is the counsel of despair.

Society is suffering untold loss in foregoing the workpower of ten million human beings. The present deadlock is the inevitable result of traveling along blind alleys. Chaos must unavoidably flow from an unplanned economic existence.

In the future, we must not only plan what we shall do, but we should also apply management and planning to undoing the obsolete jobs of the past. This thought constitutes the essence of my plan for ending the depression and for restoring affluence and a better standard of living to the average man.

My proposal would put the entire country on the road to recovery, and eventually restore normal employment conditions and sound prosperity. My suggested remedy would provide a permanent source of income for the Federal Government and would relieve it for all time of the difficulties of balancing its budget.

Briefly stated, the essence of my plan for accomplishing these much-to-be-desired ends is to chart the obsolescence of capital and consumption goods at the time of their production.

I would have the Government assign a lease of life to shoes and homes and machines, to all products of manufacture, mining and agriculture, when they are first created, and they would be sold and used with the term of their existence definitely known by the consumer. After the allotted time had expired, these things would be legally “dead” and would be controlled by the duly appointed governmental agency and destroyed if there is widespread unemployment. New products would constantly be pouring forth from the factories and marketplaces, to take the place of the obsolete, and the wheels of industry would be kept going and employment regularized and assured for the masses.

I am not advocating the total destruction of anything, with the exception of such things as are outworn and useless. To start business going and employ people in the manufacture of things, it would be necessary to destroy such things in the beginning—but for the first time only. After the first sweeping up process necessary to clean away obsolete products in use today, the system would work smoothly in the future, without loss or harm to anybody. Wouldn’t it be profitable to spend a sum of—say—two billion dollars to buy up, immediately, obsolete and useless buildings, machinery, automobiles and other outworn junk, and in their place create from twenty to thirty billion dollars worth of work in the construction field and in the factory? Such a process would put the entire country on the road to recovery and eventually would restore normal employment and business prosperity.

An equally important advantage of a system of planned obsolescence would be its function in providing a new reservoir from which to draw income for the operation of the Government. The actual mechanism involved would be briefly something like this:

The people would turn in their used and obsolete goods to certain governmental agencies, situated at strategic locations for the convenience of the public. The individual surrendering, for example, a set of old dining room furniture, would receive from the Comptroller or Inspector of such a Station or Bureau, a receipt indicating the nature of the goods turned in, the date, and the possible value of the furniture (which is to be paid to him in the future by the Government). This receipt would be stamped in a receipt book with a number, which the individual would have received when he first brought in an obsolete article to be destroyed. Receipts so issued would be partially equivalent to money in the purchase of new goods by the individual, in that they would be acceptable to the Government in payment of the sales tax which would be levied as part of my plan.

For example, a consumer purchasing a $100 radio, on which the sales tax is 10 per cent or $10, the purchaser would pay cash for the radio, but could offer $10 worth of receipts for obsolete merchandise turned in, in payment of the sales tax. The merchant or manufacturer would have to accept these receipts for this purpose, and would turn them back to the Government in payment of the sales tax, which must be borne ultimately by the consumer in any event.

Part 2

Under this system, the purchaser would feel he had been paid for the used-up article which he turned in to the Government, yet the Government would not have had to pay a cent of cash for the goods so surrendered. As a result of the process, nevertheless, the wheels of industry would be greased, and factories would be kept busy supplying new goods, while employment would be maintained at a higher level.

I maintain that taxes should be levied on the people who are retarding progress and preventing business from functioning normally, rather than as at present on those who are cooperating and promoting progress. Therefore I propose that when a person continues to possess and use old clothing, automobiles and buildings, after they have passed their obsolescence date, as determined at the time they were created, he should be taxed for such continued use of what is legally “dead.” He could not deny that he does not possess such goods, as he might hide his income to avoid paying an income tax, because they are material things, with their date of manufacture known. Today we penalize by taxation persons who spend their money to purchase commodities, which are necessary in order to create business. Would it not be far more desirable to tax instead the man who is hoarding his money and keeping old and useless things? We should tax the man who holds old things for a longer time than originally allotted.

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