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Breaking the Rent-seeker's Chain

Paul Shepard

Apr 19, 2023

A new law in Colorado comes as a rare victory for ordinary Americans in their never-ending struggle with big business. Last week, the state Senate of Colorado passed the Consumer Right to Repair Agriculture Equipment Act, which had been previously approved by the House of Representatives in February. According to Reuters, the Act is expected to be signed by Governor Jared Polis and will come into effect on New Year's Day.

The Act is designed to provide farmers and ranchers with greater control over the repair and maintenance of their equipment by requiring manufacturers to provide access to diagnostic tools, repair manuals, and parts to independent repair shops and equipment owners. The Act is seen as a win for farmers who have long struggled with high repair costs and limited repair options.

Farmers in Colorado and across the country have faced growing frustration for years as companies like Deere & Co. and CNH Industrial cravenly restrict access to what is necessary to repair machinery like tractors and combines that the farmers already purchased.

By insisting on "authorized dealers" to perform necessary repairs, these companies have sought to squeeze astronomical profits from their struggling clientele without providing them with any benefit, instead saddling them with higher costs and longer wait times.

However, Colorado's new law will compel farm machinery manufacturers to provide the farmers who have purchased their equipment with diagnostic tools, software documents and repair manuals. They will also be obliged to furnish third-party technicians with such resources. Thus, farmers will be empowered to repair their own farm machinery and go to repair shops beyond those authorized by these manufacturing giants.

Trash by Design

What tech company wouldn't prefer that you buy a brand new computer of theirs, instead of fixing the malfunctioning one you already own?

The problems addressed by the Consumer Right to Repair Agriculture Equipment Act extend far beyond the agricultural sector.

Regardless of the product, such as kitchen appliances or cell phones, consumers and third-party repair shops face obstacles when attempting to conduct "unauthorized" repairs and modifications due to restricted access. For example, GE charges an annual fee of $919 for access to diagnostics and service information, which is provided for free to in-network technicians, creating significant financial barriers for both consumers and independent repair shops.

A recent investigation revealed that 86 percent of appliance manufacturers surveyed did not provide complete repair instructions, while 89.1 percent of technicians faced difficulties accessing service manuals and 93.5 percent had trouble finding necessary schematics. These findings highlight the pervasive problem of restricted access to necessary repair information, which the Consumer Right to Repair Agriculture Equipment Act aims to address.

It's unsurprising that consumers too-often find themselves replacing what ought to be easily and affordably repaired. The impact on personal and household finances is severe, and the environmental impact is no doubt incalculable: Americans dispose of 416,000 cell phones per day, but only 15 to 20 percent of electronic waste is recycled, according to Public Interest Research Group (PIRG), who conducted the investigation.

Rent-Seeking Behavior

In a 2013 article, Yale economist Robert J. Shiller characterized rent-seeking as "a wasteful activity that achieves nothing more than enabling the collection of rents on items that might otherwise be free." He provides a classic example of rent-seeking, stating, "The classic example of rent-seeking is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee… to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself." This example highlights the parasitic nature of rent-seeking activities, which serve only to extract wealth from others without contributing to the economy or society.

US manufacturers' restrictions on our right to repair are a prime example of rent-seeking behavior. However, there is hope, as the right-to-repair movement is gaining momentum. In 2023, dozens of state legislatures introduced right-to-repair bills, indicating that America may be ready to break free from rent-seeking practices.

In 2021, President Biden issued an executive order instructing federal agencies to make it "easier and cheaper to repair items you own by limiting manufacturers from barring self-repairs."

In 2022, the Federal Trade Commission (FTC) took legal action against Weber-Stephen Products, LLC (a grill maker), Harley-Davidson, and the manufacturer of Westinghouse outdoor generators for imposing illegal repair restrictions.

The same year, New York State passed the Digital Fair Repair Act, which requires companies to provide independent repair providers and consumers with access to diagnostic and repair information for digital electronic parts and equipment if that information is also available to "authorized" service providers. This law aims to level the playing field and empower consumers and independent repair providers to repair their devices without relying solely on manufacturer-approved repair options.

Despite complaints from companies that right-to-repair laws infringe on their intellectual property and cut into their profits, the true danger lies in the negative impact these restrictions have on the environment, independent repair shops, and American consumers. The lack of repair options stifles innovation and competition, leading to higher costs and environmental waste. By prioritizing their profits over the well-being of their customers and the planet, these companies are doing a disservice to us all. The right-to-repair movement is crucial in breaking down these harmful barriers and promoting sustainability, affordability, and choice.

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