Quality Versus Quantity

[dex]

Are you saying inflation has been 6% over the last 20 years?

No - showing how 300 = 900 growing 6% compounded over #yrs

6% is the opportunity cost growth rate

 

[ERD50]

I think the OP is way, way, way off the mark. Far too much generalization. Far too much just plain wrong.

Just to save typing, I'll be blunt and not bother to sugar-coat this one: "You Get What You Pay For" - that is about as useless as most political bumper stickers. In fact, it is more wrong than right. This crowd is pretty shrewd when it comes to value, how many here drive a Rolls Royce or Lamborghini? Those are expensive, and you know "You Get What You Pay For". In more general terms, price is poorly correlated with quality.

Plus, it is far too "One size fits all". If I need to buy a tool for a one time project, I will buy the cheapest I can get away with. If I'm going to rely on that tool for my livelihood and use it everyday, that is a whole different story. But even then, a "throwaway" makes sense sometimes. I was amazed that my FIL carpenter-contractor had a cheap table saw to use on jobs. He said, it's lighter than the fancy professional ones, when it burns out, I buy a new one. I can buy eight of these for one "pro" tool, and they last long enough for me. Plus, if it is stolen I'm not out that much.

You can't equate "solid wood" with "high quality" and "veneer /plywood" with "low quality". There is junk made from solid wood, and marvelous furniture made from veneer and plywood. The Egyptians invented veneer and plywood and used it on the sarcophagus of the Kings. You think they were trying to cut corners? "Hey, we ran over-budget on that damn Pyramid, break out the veneer!". No, you can do things with veneer you can't do with solid wood. Some artisans have used it to great effect.

I like to have options. We bought some "cheap" furniture for the kids dorm room. I'm glad it was an option, I sure wouldn't want to have to pay "heirloom" prices for that! The fact that it could be "knocked down" was a plus on moving day. That's tough with double-blind dovetail construction.

We also furnished our 3-season room mostly from IKEA. We bought the better stuff there and I think we got an excellent value. And I fully expect it to last as long as we live here. Why spend more?

Electronics? If stuff were made in the old "arts & craft" style, no one could afford a DVD player, and it would be the size of your living room. They fit a couple hundred solder joints in one square inch - no human could solder that by hand.

Now, here's one thing I think the electronics industry could do to avoid some of the "throwaway" economics. I think products could be made more modular. So if something broke, you don't go in and "fix" it, but you could replace the module. For example, the DVD or CD mechanism itself should be something that the user should be able to swap out (they are fairly generic components) themselves with just a screwdriver. Or have done for $20 if they are total klutzes. An approach like that would save a lot of stuff from the trash. This is something the environmentalists could push. And you still get much of the economy of scale from mass-production of the module. In fact, the thread I started about standard charger ports on cell phones plays into that idea.

-ERD50

 

[FUEGO]

I usually buy the cheapest crap I can find that I expect to perform adequately. I try to focus on life cycle costs as well. For example, I may be able to buy a $20 pair of slacks or a $20 shirt that will wear out in 4-5 years but will be unfashionable in 3-4 years. Paying $80 for an article of clothing that will last twice as long but still be unfashionable in the same length of time is an example of something I would not do.

The $60 I save on that article of clothing can be put to better uses elsewhere. Either invested, used to buy goods or services that I value more highly, etc.

 

[samclem]

Now, here's one thing I think the electronics industry could do to avoid some of the "throwaway" economics. I think products could be made more modular. So if something broke, you don't go in and "fix" it, but you could replace the module.

Other candidates:
- Standardized laptop batteries. The sub-cells inside the things are standardized, there's not reason there couldn't be 3-4 standard laptop batteries. They are electrochemical reactors which wear out faster than the other laptop components, and I'm sure many people ditch their 4 YO laptops rather than pay $90 for a new proprietary battery. Standardized batteries would not only encourage folks to hang on to their laptop computers longer, the greater efficiencies in rebuilding a few standardized battery styles would encourage recycling of the batteries. Rebuilding them with new cells might be a good US-based business, as the high weight/high dollar value might make it more profitable to do it domestically.
- Modular laptop screens. The display is a significant part of the cost of laptop computers, and I think the technology is fairly mature. I'd like to have the option of buying less expensive laptop (or one with more features) and re-using the screen.

You are rtight, this is an area where the two "green" constituencies (environmentally conscious consumers and those who are careful about spending their "green") are allied. It would seem that a company could exploit this.

 

[Frugality_of_Apathy]

No - showing how 300 = 900 growing 6% compounded over #yrs

6% is the opportunity cost growth rate

I don't hold with that philosophy. If you want opportunity cost why stick with 6%? Where does that magic number come from?

If you had bought $300 worth of microsoft in '89 you'd have $14,700. So really that purse cost $736 a year if you are going to look at missed opportunity as a metric.

 

[samclem]

I don't hold with that philosophy. If you want opportunity cost why stick with 6%? Where does that magic number come from?

If you had bought $300 worth of microsoft in '89 you'd have $14,700. So really that purse cost $736 a year if you are going to look at missed opportunity as a metric.

You have to include an opportunity cost to do an honest appraisal. We can differ as to the %, but 6% seems very reasonable. From Jan 1970 through Dec 2008, the avg return of the S&P 500 (incl reinvested dividends) was 9.7% .

I'm sure you are using some estimate for future growth of your retirement funds, right? What APR are you using?

 

[ls99]

Other candidates:
- Standardized laptop batteries. The sub-cells inside the things are standardized, there's not reason there couldn't be 3-4 standard laptop batteries. They are electrochemical reactors which wear out faster than the other laptop components, and I'm sure many people ditch their 4 YO laptops rather than pay $90 for a new proprietary battery. Standardized batteries would not only encourage folks to hang on to their laptop computers longer,

What, and deny pc makers the un-PC commerce of selling you the latest googleflop machine with a new microshaft OS. And thus reducing their profits? Why that is anti-business.

 

[Frugality_of_Apathy]

You have to include an opportunity cost to do an honest appraisal. We can differ as to the %, but 6% seems very reasonable. From Jan 1970 through Dec 2008, the avg return of the S&P 500 (incl reinvested dividends) was 9.7% .

I'm sure you are using some estimate for future growth of your retirement funds, right? What APR are you using?

Might want to check your numbers again. Looks like you're using a playbook from the turn of the millennium. or maybe by average you mean median and not actually realized returns. The total shareholder return on the S&P since 1970 is only 5.79% as of last night.

I have an array made up in Spreadsheet which shows growth from 0% to 15%. I don't depend on more than 3% even though I've been getting around 10% the last couple years.

 

[samclem]

Might want to check your numbers again. Looks like you're using a playbook from the turn of the millennium. or maybe by average you mean median and not actually realized returns. The total shareholder return on the S&P since 1970 is only 5.79% as of last night.

I have an array made up in Spreadsheet which shows growth from 0% to 15%. I don't depend on more than 3% even though I've been getting around 10% the last couple years.

I don't have the figures "as of last night", but as of Dec 2008, Bloomberg listed total returns (incl dividends, as I said) for the S&P 500 from Jan 1970 through Dec 2008 as "approximately 9.7%. " They say they got their info from S&P.

So, alert S&P to the mistake you've found in their data, I'm sure they'll be thankful. Or, maybe they'll find you didn't include dividends, etc.

 

[Frugality_of_Apathy]

I don't have the figures "as of last night", but as of Dec 2008, Bloomberg listed total returns (incl dividends, as I said) for the S&P 500 from Jan 1970 through Dec 2008 as "approximately 9.7%. " They say they got their info from S&P.

So, alert S&P to the mistake you've found in their data, I'm sure they'll be thankful. Or, maybe they'll find you didn't include dividends, etc.

Yeah that was without dividend reinvestment as that wasn't readily available. In that case they're only down to 9.31% average as of last night.

 

[samclem]

Yeah that was without dividend reinvestment as that wasn't readily available. In that case they're only down to 9.31% average as of last night.

Accepted.

 

[dex]

I don't hold with that philosophy. If you want opportunity cost why stick with 6%? Where does that magic number come from?

If you had bought $300 worth of microsoft in '89 you'd have $14,700. So really that purse cost $736 a year if you are going to look at missed opportunity as a metric.

Sanclem gave a very good response.

txs

 

[FUEGO]

Frugality of Apathy,

If your discount rate is really around 3% nominal, then you'd be best off just plunking your change in TIPS or some government bond and accepting returns way higher than your discount rate. Heck, TIPS are yielding around 3% real right now.

Either that, or you have a higher discount rate, opportunity cost, or whatever you want to call it. 6% sounds like a good conservative number.

 

[Free To Canoe]

That's always the toughie, figuring out where the cost/benefit curves intersect.

I won the bet on a 20" Honda lawn mower, $600 in 1986. It still runs fine, starts on the first pull, but I keep up the scheduled maintenance on it. Only repairs have been two springs for the self-propelled engagement and one blade that simply wore out from too many sharpenings.

That kind of quality is hard to find. The perfect design for that person. It makes a task feel like a joy.
You don't really know how good it is until you've owned it for a while. That's why I value personal recommendations so highly. Especially on this forum.

I can count on one hand the products / services that I like as much as Walt likes his mower. Cost of the item does not assure it will meet your definition of quality. Low cost is more likely to ensure that it will not meet you satisfaction.

Items of high quality are a rare thing.

Free

 

[ERD50]

Items of high quality are a rare thing.

Free

I think that is selective memory.

Remember having to change the points and plugs on a car every 10,000 miles? Hope it starts in the winter if you can finagle the "choke" just right and not "flood" it (terms our kids do not even know)? Took a picture of the odometer when it hit 100,000? Common nowadays, with little maintenance and 1/1000th the pollution due to ECM and catalytic converters.

Remember floppy disks that would lose your paltry amount of data on a pretty regular basis? Now a 4GB thumb drive is $12, and I've never had one fail.

Remember having to adjust the Horizontal and Vertical on the TV, and slowly adjust the tuning knob on your radio to bring in the station? Now, just push a button and it is locked on.

Remember "mouse balls" gumming up with lint and dirt and skipping? Now they are all optical tracking.

And it's not just high tech stuff- I re-sided the back of my house with cement-board siding. Rot proof, insect-proof, holds paint 4x longer than wood, doesn't crack, knots don't fall out, the woodpeckers ignore it, hail won't damage it, and it looks great.

Yeah, rare.

-ERD50

 

[RonBoyd]

I think that is selective memory.

What he said! (Excellent response.)

 

[Urchina]

I like Quality. I think in the long term it is cheaper. I wanted other opinions on this matter.

I like Quality too. Sometimes it is cheaper in the long run, but not always. So, I can't tell myself it's cheaper in the long term for everything I buy. I also believe that quality items are not always appropriate for every task. Towels I use to dry the dog off after a romp in the mud come to mind.

However, I find that when I get what I really want (and only what I really want), I'm happier with my purchase and feel that I've received value for the money spent. This is important to me.

We have become a buy cheap wally world throw away when it breaks society! We need to go back to appreciating quality and get out of this short term mentality. It's hurting American workers and I honestly believe that it is not good for us as consumers!

I agree that a disposable mentality is having significant repercussions on our environmental and social lives. I think that going "back to appreciating quality" is not as simple as it appears, in large part because what makes something quality (durability, longevity, repairability, low obsolescence rate) is harder to gauge than it used to be. I can easily inspect a bureau or set of bunk beds for sound construction, well-chosen materials and properly applied finishes. But the inner workings of my laptop? My LCD? My light fixtures? Not so much.

I compromise by setting a higher quality standard for the things I can assess myself (pottery, fabrics, furniture, art, foodstuffs, community) and let Consumer Reports (and others ) give me their recommendations on the stuff I can't get a handle on in other ways.

Finally, I find brand names for appliances nearly useless, now. Walt34 had a horrible experience with a Kenmore, but we've got a Kenmore washer and dryer that have seen heavy use for close to 13 years and are still going strong, with no repairs needed. So my Kenmore was Quality; Walt34s was not. How can we tell the difference in the showroom?

 

[Amethyst]

Very interesting thread, as it speaks to a debate my husband and I sometimes enjoy having.

We side with the "things aren't as well made as they used to be" crowd, though we agree with those who pointed out that cars and some other items are now engineered to last longer and function better, even though made with cheaper materials.

For us, the "perfect" clothing, appliance, car, furniture, what have you, is the one that maximizes functionality, durability, aesthetics (if warranted), and cost. Sometimes, to make the "equation" work, I'll sew a clothing item from scratch, or we'll refinish and decorate furniture from a thrift store. But sometimes, we just gotta unlimber the old credit card and let loose! (Paid off at end of month, of course!)

To the OP, I say if that purse has made you happy for 20 years, and you didn't deprive yourself to spend the $$, it was worth it, good for you. I used to love Coach bags, but they got ruined so fast at work that I bought a homely Magellan travel purse (which wears like iron) which I have carried, dragged, dropped, spilled stuff on, and stained with pens that come open by accident, for 8 years.

 

[Free To Canoe]

I think that is selective memory.

Remember having to change the points and plugs on a car every 10,000 miles? Hope it starts in the winter if you can finagle the "choke" just right and not "flood" it (terms our kids do not even know)? Took a picture of the odometer when it hit 100,000? Common nowadays, with little maintenance and 1/1000th the pollution due to ECM and catalytic converters.

Remember floppy disks that would lose your paltry amount of data on a pretty regular basis? Now a 4GB thumb drive is $12, and I've never had one fail.

Remember having to adjust the Horizontal and Vertical on the TV, and slowly adjust the tuning knob on your radio to bring in the station? Now, just push a button and it is locked on.

Remember "mouse balls" gumming up with lint and dirt and skipping? Now they are all optical tracking.

And it's not just high tech stuff- I re-sided the back of my house with cement-board siding. Rot proof, insect-proof, holds paint 4x longer than wood, doesn't crack, knots don't fall out, the woodpeckers ignore it, hail won't damage it, and it looks great.

Yeah, rare.

-ERD50

Couldn't agree more. I would not want to go back to the "good old days" for any of the above. Excellent point.

What I am having trouble articulating is a certain beauty of mechanism design that can be thougt of as a blending of art and functionality. Someone mentioned the book: Zen and the Art of Motorcycle Maintenance earlier in the thread. This book discusses the concept.

Free

 

[growing_older]

Near my office there is a fountain pen store. I went in to look one time. These things are made to last forever (possibly literally) and the quality of workmanship and materials is unbelievable in the finer ones. Yet, I cannot imagine wanting to buy one instead of a box of cheap ball point pens. True that in a hundred years my grandchildren will not have any of these pens to pass on to their grandchildren. But a basic functional writing instrument will have served us just as well in the meantime, especially considering the risk of loss through misplacing the thing (common with pens). If I get a great urge to practice calligraphy, I can indulge in less expensive art sets.

Maybe that's similar reasoning for me with watches. I know some people enjoy very fine watches, but I find I tend to bang my wrist into things, scrape against hard objects, occasionally get messy and need to wash off. I'd rather have a functional but basic timepiece, than a top quality one. When I do eventually manage to damage one to the point of needing a replacement, I can purchase a similar functional but not too expensive one. Something rugged enough to stand up to the expected rigors I put it through is too expensive - and too much risk of loss through accident or theft, to be worth it to me.

I think I'm really looking for the degree of quality that matches my intended use. For dining room furniture that I expect to keep for my lifetime, I do look for good workmanship and quality. For kids room furniture that I expect to suffer crayon, jumping on the bed, loose dog, and other damage I want something serviceable and able to last about 18 years at most.

 

[ERD50]

What I am having trouble articulating is a certain beauty of mechanism design that can be thougt of as a blending of art and functionality.
Free

Well, I think they are out there, but you have to search them out. By definition, they don't appeal to the masses, so no mass advertising, etc.

It's a bit of a pendulum sometimes. For example, in the 70's and 80's there was almost no real high quality beer being offered. Everything was mega-corp-mega-swill, bland tasteless fizzy yellow stuff.

Now, I can go to a local liquor store and find many offerings of true craft-brewed beer. Porters, stouts, American hoppy ales, English bitters, an amazing variety.

Or I can but green coffee beans, varietals from around the world, Hawaiian, Jamaican, Indonesian, Central a & South American, and roast them myself to the degree that suits me. I don't recall those being available in the 70's.

In many ways, I think we are better off, but you might need to work harder to find them.

-ERD50

 

[CuppaJoe]

Near my office there is a fountain pen store. I went in to look one time. These things are made to last forever (possibly literally) and the quality of workmanship and materials is unbelievable in the finer ones....

One of my favorite possessions is a Waterman ball point pen that SO found. The grip and balance is out-of-this-world. It would be horrifying to lose it. Oh, wait! Love that pen.

 

[clifp]

Couldn't agree more. I would not want to go back to the "good old days" for any of the above. Excellent point.

What I am having trouble articulating is a certain beauty of mechanism design that can be thougt of as a blending of art and functionality. Someone mentioned the book: Zen and the Art of Motorcycle Maintenance earlier in the thread. This book discusses the concept.

Free

I haven't thought of Zen and the Art of Motorcycle Maintenance in decades. I believe I read the book three times before I was in my early 20s. It did have some important things to say about quality. I think is never been common to find things which are highly functional and with atheistic beauty. Steve Jobs and Apple seem to have the magic formula.

I do wonder why so many people view memories of old places and things with a rose colored filter. Just a quick glance around the house and I see significant improvements in everyday objects, from refrigerators that consume less energy and have adjustable shelves, icemakers, and different temperature setting for different areas, to Velcro on lots objects, cordless drills, Swiffers, longer lasting paints that don't fade in sun. All these things are much better (at least more functional) than stuff made 25 years ago.

I had an discussion with friend about new vs old movie. My friend in her early 70s say that the movies from the 40s and 50s were better, I disagreed. This week I was helping my 83 year old mom with Netflix, and I was suggesting some old classic movies. She surprised me by saying that while they have rented a number of old movies they weren't nearly as good as she remembered them! Good for mom.

I was reading an essay in Newsweek (IIRC) and the author was lamenting that because of computers, people design things be the bridges or financial product, with much smaller margins of errors. He was marveling that driving through Europe you see lots of bridge still functioning after a 1,000 years. Roman architects over engineered things and so there system was more resilient to shocks and stress. In contrast to America where bridges fall into rivers. A nice romantic notion and of course the author applied it to our financial systems, if only there was more slack (e.g. less leverage) things would have turned out better.

IMO there are couple fallacies with this way of thinking . First there is huge amount of survivor bias in our memories, we remember the beautiful Grand Turino that ran great for 200,000 miles but forget the Chevy Vega that died after 12,000. Similarly I doubt there is a book on Roman Bridge failures 100 BC To 600 AD, even if I am wrong, nobody using these bridge has ever read it. Second there is huge opportunity cost to make high quality objects, thousands of peasant toiled very hard build a Roman bridge that would last 2,000 years, but wouldn't have some of that effort been better spent letting the peasants build a school, or a better home for themselves? Would bridge that only last two hundred years while allowing peasant to have better homes been a better trade off for Roman society? While I admire the craftsmanship of a Swiss watchmaker who can make a watch that will last 100 year and keep time within a few seconds a years, I'll note that neither of my dad's Rolex lasted much beyond 10 years. From a strictly functional aspect my $15 Casio is superior in every respect. Isn't a lot of the effort the watch makers expended in making these things forever, basically wasted.

Of course, there is a little doubt that Walmart effect has resulted in too much cost cutting. I purchased a blender three months ago, it seemed lighter and less sturdy than my roommates previous one. Today while using it the plastic ring which you screw onto the glass container shatter in the middle of my smoothie. Beside ruining in the smoothie it created a mess, the fraction of penny in cost saving is clearly lost in the customer service cost and ill will. (It was an Oyster brand...)

 

[growing_older]

Oster is a reputable brand of small kitchen appliances. If what you had was really an Oyster, then not only was it substandard in quality, they may have been trying to take advantage of confusion with a reputable brand name. Brands that are very close to the names of reputable brands are usually substandard on purpose, and should be avoided whenever possible.

 

[ERD50]

clifp, there is an old adage that goes something like:

Anyone can build a bridge that won't fall down. It takes some exceptional engineering to build a bridge with just enough material so that is barely stands, but does stand.

And you are 100% right. The extra effort expended making the bridge stronger than required could have been utilized for something worth while. Opportunity cost.

-ERD50