Household Appliances Were Cheaper 40 Years Ago—We’re Getting Ripped Off

Household Appliances Were Cheaper 40 Years Ago—The Truth About Economic Globalization & “Cheap Goods”

What do flat-earthers and economists have in common?

They both mistake their models for reality.  They confuse what ought to be with what is.

And that’s why economists are often wrong—even when they all agree, like when it comes to global free trade.

Ask 10 economists about global free trade, and 10 will say it’s good.  Always good.

It’s one of the few things economists agree on.

Why?

The logic’s clean: freer trade allows greater specialization, and therefore the maximization of comparative advantage.  That means cheaper, and better stuff—in theory.

But are they right?  Has freer trade with the developing world, with countries like China and Mexico, benefited American consumers?

No.

There are lots of reasons why economic globalization doesn’t work, but in this article, we’re going to look specifically at the cost of household appliances, since they’re some of the biggest purchases people make in their lives.

Also, appliances haven’t changed that much—a dryer from 1976 will get your clothes just as dry as one from 2017.  This means we can compare the products more-or-less directly.

The data shows that freer trade, and offshoring hasn’t made household appliances cheaper.

See for yourself:

Instead, when you account for product quality and inflation (to say nothing of the environmental cost of offshoring to China), household appliances are more expensive today than they were 40 years ago.  Much more expensive.

Free traders promised cheaper goods.  They didn’t deliver.

Modern Appliances Don’t Last As Long As They Used To: This Means You Have To Buy Them More Often

The main reason why household appliances, like clothes washers and dryers, refrigerators, dishwashers, and ovens, are more expensive today than they were 40 years ago is because they don’t last as long.

They’re junk.

Typically, modern appliances last about 10-13 years.  That’s their estimated lifespan.

But sadly, many don’t even make it that long.

According to a 2013 survey by Consumer Reports, as reported by the Columbus Dispatch, nearly 1 in 3 side-by-side refrigerators broke within 4 years.  Likewise, almost 1 in 4 washing machines, 1 in 5 dishwashers failed in the same period.

Overall, modern appliances are junk—and there’re lots of lemons in the bunch.

This is also reflected in company warranties: 40 years ago, it wasn’t uncommon to have decade-long manufacturers warranties.

Now they’re usually 1-2 year warranties—and the best you’ll get is 5.

Even the manufacturers know their products are crap, otherwise they’d guarantee them, like they used to.

Now let’s compare this to products made prior to the waves of offshoring in the late 1980s.

According to Ryan Finlay, an entrepreneur who specializes in antique appliances, old appliances generally lasted 25-30 years, and often didn’t need servicing until the 15 year mark.

This is corroborated when you look at manufacturer’s warranties, and listen to the evidence presented by other industry specialists.

Essentially, older household appliances lasted 2-3 times as long as modern appliances.

Not only that, there were fewer lemons, and they lasted longer without requiring servicing—not to mention that they could be serviced, most modern appliances can’t be repaired because they don’t sell individual parts.  But that’s a different story.

When product quality is accounted for, freer trade has not made appliances cheaper.

In fact, it’s done the opposite—low quality products and parts made in the developing world have hurt American consumers.

Why Are Modern Appliances Junk?

We have better technology and 40 more years of practice making home appliances under our belt.  Theoretically, we should be building cheap, amazing ovens, refrigerators, and dishwashers.

And yet, there’s no question that modern appliances don’t last as long as they used to—what gives?

Why don’t they make ’em like they used to?

Two potential reasons:

1.  Although most appliances are assembled in America, their “made in America” stickers are totally worthless.

In reality, the majority of their integral components are made abroad, in countries like China or Mexico, and imported for assembly in the US.

And frankly, the parts are junk.  They’re garbage.

You don’t have the same level of quality control when you offshore your production—remember when the latest and greatest generation of Apple iPhones bent in your pocket?

Or how about all the problems Boeing had with their aircraft?

Communicating with people that speak English is hard enough—now try teaching Chinese farmhands who’ve never used a refrigerator before to build one from scratch.

It’s not that easy.

Here’s a specific example: in clothes washers, the part that inevitably fails first is the motor.  The motors are made in China—or at least most of their component pieces are from China.

If they were made in America like they used to, they’d probably be lasting for 30 years—like they used to.

2.  The only other reasonable option is that the manufacturers have banded together to build products that are designed to fail sooner, thereby forcing people to buy more appliances.

Maybe.

But all it takes is for one company to buck the trend and expose the others, and they’d win a 100% market share.

People aren’t good at keeping secrets, nor do pacts with thieves last long.

Therefore, the deteriorating quality in home appliances is probably mostly because of offshoring.

Some Examples of the Deteriorating Quality of Home Appliances

Let’s spend a little more time on this, just out of interest, before getting to the cost differences.

Here’s a good example of how modern appliances are worse than those made decades ago, according to Ryan Finlay:

Let me start with an example: for top loading washers and dryers two of the most expensive parts on the machines are the timer and motor. For decades there were rarely issues with these two parts, but over the past 10 years there has been a plague of washer and dryer timers and motors that fail and have to be replaced…

…Motors last about 1/3 to 1/4 as long as they used to. Lid switches are glued together and eventually split and break. Refrigerator door seals are glued on now instead of screwed on, and because of this they eventually start to pull away from the fridge, warp and ultimately fail, which, you guessed it, leads to replacement.

Ryan notes that integral parts, like the motors imported from China, are the first to fail.

No surprise there.

But there’s more to it than that—there are indeed design flaws in modern home appliances that used to be consciously avoided.

For example, metal surfaces used to be dipped in paint, which ensured that a thick, even coat was applied to the part—and that every nook and cranny was filled.

Now, they spray-paint appliances with much thinner coats.  This leads to poor coverage at difficult angles (where the metal folds), and it’s also easier to scratch.

This causes modern appliances to rust much easier and sooner than they used to.

Furthermore, the shift to plastics in lower-end appliances has been a disaster in terms of quality.  Plastic parts break much easier from wear and tear, because plastic isn’t as durable as metal.  Go figure.

And even when they use metal, they use less of it.

Overall, home appliances just don’t last as long as they used to, because of poor-quality foreign-made parts, and inherent design flaws, designed to cut costs.

Household Appliances Are More Expensive Today Than 40 Years Ago

Now for the good stuff.

Let’s look at the retail price of major household appliances historically, and compare them to retail prices in 2017.

Historical prices are drawn from the People’s History, while modern costs were estimated given the average retail prices of the appliance from Best Buy and Sears.

Finally, inflation was calculated using Bureau of Labor Statistics data.

1.  Clothes Washer-Dryer Combo: $1,790 in 1976; $2,000-$3,000 in 2017

In 1976, you could buy an ordinary clothes dryer for $219, and a washer for $199.

Adjusted for inflation, the dryer cost $938.36 in 2017 currency.

The washer cost $852.66.

Comparable washers and dryers today start at around $500 each, and work their way up to $1000 for high-end stuff.

On the surface, it looks like washers and dryers are cheaper today than in 1976—they’re almost half price.

I guess NAFTA was a good idea after all!

But not too fast.

Remember, we also have to account for the product’s lifespan—which is way shorter today.

For example, you could reasonably expect your washer from 1976 to last 2-3 times longer than one from 2017—and it probably had a 5-10 year warranty, as opposed to the 1-2 year warranty you’d get today.

That means that over a 30 year period starting in 1976, you’d probably only need to buy the 1 washer and dryer; but in 2017, you’ll buy 2 or 3 over the same time.

Once we account for this fact, the real cost of a washer in 2017 isn’t $500, it’s $1,000 to $1,500.

That means washers and dryers haven’t gone down in price.  They’ve gone up.

2. Side-By-Side Refrigerator: $3,502 in 1968; $4,000-$6,000 in 2017

In 1968 a side-by-side refrigerator cost $499.95, which equates to $3,502 in 2017 dollars.

That’s pretty expensive.

However, comparable products today start at $1,200 minimum, while the average price for bestselling models is around $2,000.

Given that you’d need to buy modern refrigerators in the same time, this means that the true cost over the product’s lifetime would be $4,000  to $6,000.

Doesn’t look like such a good deal now, does it?

3. Dishwasher: $739 in 1980; $1,000-$1,500 in 2017

In 1980 you could buy a standard under-the-counter dishwasher for $249.95 retail.

This works out to $739.54 in 2017 dollars.

Frankly, this isn’t even expensive in modern dollars, since dishwashers usually retail somewhere between $500 to $1,000 in 2017.

But even if we take the lowest price, dishwashers are still a bad bargain compared to what they were.

4.  Oven & Over-the-Range Microwave: $2,111 in 1984; $2,400-$3,600 in 2017

In 1984 you could buy a decent oven and stove set, with an over-the-range microwave for $899.

In 2017 dollars, that works out to $2,111.  Pretty expensive.

If you wanted something similar today, the oven would cost anywhere between $600 and $1,300, and $200-300 for the microwave.

If we took a middle-of-the-road modern set, it would run about $1,200.

And finally, when accounting for lifespan, a modern oven and microwave set would probably run $2,400 to $3,600.

Household Appliances Cost More Today Than They Did 40 Years Ago—Free Trade Didn’t Work

Trade with China was supposed to improve our quality of life.  NAFTA too.

Free trade was supposed to make consumer goods cheaper.

But it didn’t—at least not for the important stuff.

Instead, we sacrificed our industries and jobs in exchange for chimeras and ghosts—the goods weren’t cheaper in the long run, it just seemed that way because the costs were hidden.

But when you import junk, you end up paying for it.  The piper must be paid.

I want to hammer this point home: aside from romance, there are very few win-wins in life.  Sure we can offshore our factories to China and get our appliances for half price—but the quality isn’t the same, and we just end up buying the same appliance 3 times.

It ends up costing consumers more (while fattening up the larders of multinationals).

And when the quality eventually improves, the prices go up: that’s what happened with Japanese products.

Remember when stuff from Japan was cheap but bad?  Now it’s expensive but good—there is no such thing as a free lunch.

And people wonder why the middle class is shrinking.  This is why: hidden costs and stupid people running the show.

Help fix the economy, and do yourself a favor.  Buy American.