Published on October 10th, 2012 | by Glenn Meyers0
Planned Obsolescence & the Bubble That Burst: Part 4
Few can forget the housing bubble that climaxed in 2007/2008 before someone slammed on the brakes. Said bubble – or was it a zeppelin – was once perfect demo of planned obsolescence and Brooke Stevens’ mantra, “Instilling in the buyer the desire to own something a little newer, a little better, a little sooner than is necessary.”
Count the sales transactions that took place before real estate prices went tumbling and mortgages became toxic assets. The pace of home sales was hypnotizing. Real estate, once regarded as little more than a solid long-term investment, had become an investment racecar some people were sending to the moon.
By the time this century hit, real estate was now considered by many to be a great short-term play that could yield as much as 10 or 20 percent annually. Commonplace homes and condominiums, priced from $125,000 to $150,000, were said to return tidy profits in less than two years. No muss, no fuss; just let inflating prices happen. All one needed to do was buy a ticket on the real estate train and make sure they were on board.
The market would take care of everything else. Or the growth quotient would.
By 2008, too many tidy deals had turned into toxic pipe dreams in bank vaults. Instead of netting tidy profits and enough cash to leverage one’s way upward – taking a busload of supply chain people along the way, from appraisers to real estate agents to plumbers and bankers – the bank account became overdrawn.
But wasn’t this the way our economy had always been meant to work, constructing its own unique growth quotients? It had worked as a formula, much like the American Dream had always worked. Except this highway does not continue on infinitely.
Whether it’s a real estate bubble that’s burst, or a Ponzi scheme that gets reported by the last person in, an analysis of the many products built in our economy can call us back to General Motors for some reflection, to find out what worked so well until it went wrong.
If years ago, there had been a gathering of the nation’s engineering and production elite, one has to wonder how such brainstorming discussions would have proceeded, say in the act of building a perfect vehicle, one that didn’t even need a driver. With a perfect vehicle in its vaults, would this iconic company still be forced to declare the unthinkable – Chapter 11 bankruptcy – as it did on June 1, 2009? Probably yes, and probably many years sooner.
Even if said perfect car rolled off the line, the mere fact it had been created would have been completely contradictory to the needs of the producing society from which it had been created.
For GM to manufacture said perfect transport would have served as little more than a suicide note written in bold, 72-point type. The effort, best intentions aside, would have run counter to how all manufacturing plants and their employees function: to continue growing, to support the scores of neighborhoods that profited from its business and people. Nor to forget the government side of the equation, its tax revenues and generally loose disposable change made available for all takers, whether as roads, parks, or employment. In this case we are better off imagining perfect cars, dreaming about them, smelling them, tasting them – but never owning them.
The company had to grow, to be fed, and absent of perfect cars, even if its own growth quotient would eventually kill it.
Next: Unplanned Obsolescence & the Texas Back Roads – The back highways in southeastern Texas are plentiful with picturesque small towns – places many once saw as the American Way’s bedrock. Each town’s picturesque assembly of hardware stores, clothing stores, and churches might have been lifted from a Norman Rockwell canvas – “go-about-your-business” sorts of places.
About this report: The following series on planned obsolescence is taken from a book Glenn Meyers presently writing, “The Growth Quotient.” Here is an archive of these posts:
- The Greatest Invention: Planned Obsolescence – Part 1
- The Freight Train for Planned Obsolescence Jumps to High-Speed Tracks – Part 2
- Moore’s Law & Planned Obsolescence Construct a Technology Traffic Jam: Part 3
- Planned Obsolescence & the Bubble That Burst: Part 4
- Unplanned Obsolescence & the Texas Back Roads: Part 5
- Planned Obsolescence and the Bic Effect – Part 6
- The Evolution of Planned Obsolescence: Innovation’s Litter – Part 7