If you really want to understand why the American economy is in so much trouble, don’t look at the politicians on either side of the aisle; look at the company you work for and ask yourself whether or not it has a policy of producing crap. Here’s a hint: if you work for a business that makes consumer products, there’s a really good chance that such a policy exists. Take for instance, a category that for reasons passing understanding, we still call “durable goods.” This includes major appliances, and we call them durable goods because they’re meant to be the kind of purchase a consumer makes once every decade or more as opposed to, say, an iPod which, although it is fairly expensive, we have somehow accepted is semi-disposable after a couple of years. To a certain extent, this is Apple’s policy of crap at work inasmuch as it is almost always more cost-effective to replace several of their products than it is to try to repair them unless they’re brand new. That said, they make excellent computers relative to the rest of the market, so I’m not picking on them.
Appliances, of course, are very different from iPods for two important reasons: 1) they’re expected to last at least a decade or more (your grandmother’s lasted three decades, but let’s not get crazy); and 2) they are devices that keep your life functioning in modern society. Anyone who’s ever had a major appliance conk out on them for a few weeks knows how utterly disruptive it is to the day-to-day needs of a contemporary family. I say this wondering if there is a middle-class family that hasn’t experienced this disruption because as far as I can tell, all appliances are now crap.
I guess the top-shelf stuff – SubZero, Viking, etc. — that most middle-class families can’t afford is pretty good — I wouldn’t know as I haven’t been in a position to buy these brands yet — but the middle to upper-middle grade products, which are by no means cheap, are absolute crap, and the manufacturers who make them know it; and here’s how you know they know it: the service contract. You can’t buy a ballpoint pen anymore without a retailer offering you an extended service contract, and do you know what’s really going on here? The retailer is really saying, “This thing you’re buying is crap. We know it, you know it, and the manufacturer knows it. You’ll be lucky if its first failure happens within the year’s warranty, but odds are it will happen in sixteen months, so why don’t you pay us another two hundred dollars now to hedge against the ghastly cost of fixing or replacing this piece of crap?” Every time I’ve been offered an extended service contract, I feel like a village merchant being shaken down by the local mob. “Nice oven you bought there. I wouldn’t want anything to happen to it.”
My most recent disaster product is a washer that is less than a year old. Good news is it’s still under warranty; bad news is it’s still under warranty, which means the manufacturer (in this case Whirlpool) calls the shots on repair and/or replacement. The repair guy, Steve, replaced the motor but then discovered other problems throughout the circuitry of the control panel. So far, we’ve been washerless for about three weeks, and Whirlpool has paid the repair company about 90% of what I paid for the machine at Lowes. More new parts sit next to me in boxes as I write this, and the repair guy is due back in the middle of this week, which means Whirlpool will pay even more to repair this machine than I paid to buy it new. But they have a policy of three attempted repairs before they’ll replace a product, so there it is.
This might seem counter-intutive, right? Why would Whirlpool spend more to fix a product than it would cost them to replace it? I suspect it has something to do with the short-term balance sheet on which most companies seem to operate these days. See in the 1980s, before my generation started buying durable goods, a lot of American businesses seemed to shift their focus from steady growth to quarterly increases in share price; and the legacy of this is a policy of crap. The most affordable means by which more crap could move off the shelves each quarter became the m.o. of nearly every business from consumer goods to food to pharmaceuticals and financial services; and the mutant child it spawned was what the business world laughably calls “innovation.”
Go online right now and look at how many different types of clothes dryer you can find. A zillion features, each one with a price point for a machine that basically turns a drum and blows hot air through it. That’s pretty much all your grandmother’s dryer did, which is why it lasted 30 years and had to be hauled out of her house by a pachyderm when it finally died. Your dryer, my dryer, has settings — lots of settings that are controlled by delicate electronics that fail if you look at them wrong. Not that there aren’t some improvements that aren’t good ideas, if they were well constructed and assembled, but they’re not. And when your over-complex, shoddily assembled dryer does fail you for a week or two, take notice of the dryer at the laundromat you’ll inevitably visit. It tumbles, blows hot air, and has three settings – high, medium, and low. Put a consumer dryer in a laundromat, and they’d be out of commission in a month.
Speaking of the pre-80s market and appliances, remember the Maytag repair man campaign? Of course you do. It was a solid piece of advertising and, I supposed, based on a fairly solid claim. Funny how such a campaign doesn’t exist anymore. In fact, I don’t think too many companies even try to engender such brand loyalty based on reliability claims (even if they pay it lip-service) because they know that consumers will switch from brand in the futile hope that one of them isn’t crap.
One might argue that so many crap products are actually good for the economy. The repair companies get more business; the help desk people who are no help at all stay employed; the retailers inevitably turn more volume because replacing crap products is often preferable to any attempt to fix them; the marketing and advertising guys keep busy making claims that Whirlpool’s crap is better than Kenmore’s or GE’s (and according to Steve the repair guy, they’re all the same); and of course my local laundromat picks up a few bucks from me for a couple of weeks or so. Sure, the individual consumer suffers frustration, but overall the policy of crap doesn’t look so bad from an economic standpoint, does it? In the big picture, it’s a disaster.
Whirlpool will lose money on my washing machine, especially if they ultimately have to replace it, but they won’t care because of the amount of crap they’ll move off the the shelves while they stall me on the replacement. In fact, I’d love to know how much crap they’ve sold just between service calls to my house. I bet it’s a lot. Of course, a large percentage of all that other crap is going to fail, too; but as long as the cycle keeps going, it’s all good on paper even if not in real dollars. Now, in order to keep that cycle going, to keep the steady conveyor of crap in constant motion, Whirlpool and its competitors have to make stuff cheap and fast; and that mostly means make them someplace other than America, which means loss of manufacturing jobs, which means a shrinking middle class, which means fewer families who can afford quality appliances, which means more “innovation” by manufacturers (i.e. even crappier crap).
I worked in corporate communications for 20 years and have been privy to what we’ll call the mindset (companies like to call it “culture”) of about a hundred or so corporations. My observation is they’re mostly the same, psychologically speaking — short-term focus on share price instead of long-term attention to solid growth based on real value, thereby leading to a culture of greed and selfishness. Whether it’s crap appliances disrupting the flow of a household or crap securities nearly crashing the global economy, we have institutionalized a corrupt mindset into an American value based on the idea that if it makes money now, it’s good. What happens later, is the next guy’s problem. Well, welcome to later.
Wail all you want about government stimulus — good, bad, or otherwise. Our economic woes are cultural and deeply ingrained into the psychology of both consumer and producer. It may take drowning in a sea of crap before the next generation decides to start making shovels.
Read Part II