Economic Nonsense: 35. Big companies cut safety & build in obsolescence to boost profits


If big companies actually did this they would be very silly indeed, and would not remain big companies for long.  What companies want is satisfied customers, preferably repeat customers.  They want customers to value what they are buying, and to come back for more.  They want customers who will spread the word and encourage others to become buyers as well.

One thing companies do understand is that reputation matters.  If they made unsafe products that became unusable, they would soon gain a reputation bad enough to deter buyers.  Buyers are not captive; they can turn to other firms.  It is because of this that firms compete against each other, trying to outdo each other in the value they provide.  That value includes both safety and quality.

Some products do become obsolete, of course.  In areas characterized by innovation and rapid progress, this year's wonder product can be out of date in a few year's time, or even sooner.  Most buyers would not want a computer or a phone that would last 50 years.  There would be no point.  But this is not obsolescence that is deliberately built in; it is obsolescence brought about by improvement.

Because firms compete against each other, they can attempt to occupy different market niches.  Some people would prefer to buy things that are cheap and cheerful and not as long-lasting, rather than things that are more durable, but cost significantly more.  Competition allows both types of people to be satisfied.

The claim that companies cut safety and build in obsolescence is often made by people who are simply anti-business, and these are usually people who do not understand what business is all about.  They think business is some kind of conspiracy against the public and that firms make profits by swindling people.  It is in fact about supplying value for money that will leave both buyer and seller feeling they have gained by the transaction.  This is far more likely to be achieved by selling safe products that are long-lasting enough to satisfy customers than it is by cheating them.