Starting around 11:00, Annie Leonard (narrator) starts talking about our behavior of purchasing goods then throwing them out 6 months later. It's a process called planned obsolescence, and Leonard claims that it was intentionally designed by corporations in the post-WWII era.
First off - what the heck is planned obsolescence?
It's actually a pretty interesting economic idea. It's the practice of producing goods that are designed to last for short periods of time before breaking down, or being replaced by superior models or designs. (Think about how new editions of textbooks frequently lower the value of past editions, or how Microsoft Word 2009 isn't compatible with the inferior Microsoft Word 2003.)
I won't really comment on how Leonards statement that planned obsolescence was "created" under the Eisenhower administration - because I don't have a clue of the history behind it.
But I WILL talk about the process, because there are certainly market structures that can create these conditions.
As an aside, it's important to not confuse planned obsolescence with just pure innovation. If companies are producing a good that provide much greater benefits than the model that was produced 6 months ago, then it's not planned obsolescence. It's innovation. And innovation is incredibly beneficial to consumers and shouldn't be seen as a corporate conspiracy to screw them over.
But that's not always the case.
Michael Waldman wrote a paper on this very issue in 1993, and explains some of the causes behind the behavior. (His model builds off of conclusions from the Coase-Bulow approach, with slight changes in the definition of planned obsolescence.)
The point of the analysis is to show that if the monopolist sells his output, then both from the firm's private standpoint and from a social welfare standpoint, his incentive will be too high to switch to technology B in the second period. The reason is that when he chooses which type of output to sell in the second period, he does not internalize how his choice affects the value of the units he sold in the previous period. Or to put the result another way, the monopolist faces a time-inconsistency problem; i.e., his actual technology choice in the second period is sometimes different from the choice he would make if he could commit to his second-period technology in the first period.To put it more concisely - when a firm produces in time period 1, they aren't taking into account the affects of how it produces in time period 2.
Waldman writes that this leads to firm behavior that is less than socially optimal as a result of misplaced incentives.
So what is the policy solution to this situation? Waldman addresses that as well:
In a Coase-Bulow-type setting, it is true that a prohibition on leasing serves to reduce monopoly power. However, it is also the case that forcing the monopolist to sell may cause inefficiencies in production due to the monopolist's attempt to avoid the time-inconsistency problem. For example, the monopolist might respond by building less than the socially optimal level of durability into his output. The subsequent result is that even though a prohibition on leasing decreases monopoly power, it is still possible for social welfare to be reduced by such a rule.
If a monopoly was leasing a good (if consumers rented the good while the firm retained full ownership) than this behavior would be avoided, because the firm would avoid actions that would lower the costs of their assets (i.e. they wouldn't produce goods the devalue their current assets every few weeks). However, current monopoly regulations prohibit a monopoly to lease a durable good, which is a measure upheld by the supreme court to regulate monopoly power. So while allowing leasing may reduce planned obsolescence, it would be at the cost of reduced monopoly power. Bummer.
For now, college students should still expect to have to buy the new edition of their math textbook and be ready to throw their old copies out.