How Corporate-Friendly Accounting Rules Create a $30 Trillion Transfer from Consumers into Wealthy Pockets

This essay is inspired by insights from @umbrarchist on Bluesky Social, who specializes in depreciation due to planned obsolescence. His insight that “Economics makes more sense if you think of it as a Power Game” reveals how the system systematically transfers wealth from working families into the pockets of executives, major shareholders, and the corporate elite.

Your smartphone dies after three years. Your washing machine breaks right after the warranty expires. Your car needs expensive repairs at 80,000 miles. Each time, you get poorer while wealth flows directly into the pockets of corporate executives and major shareholders who profit from your forced replacement purchases.

The government tracks this wealth destruction, but here’s how the system channels money upward: when business equipment breaks down, that depreciation gets subtracted from GDP and provides tax benefits to wealthy business owners. When your stuff breaks down? While technically included in the same depreciation calculation, it’s treated as normal market activity that generates profits for the wealthy without any corresponding benefits for consumers.

This isn’t an oversight. It’s a deliberate structural design implemented over recent decades—one among many regressive mechanisms, from tax policy changes to financial deregulation to labor law weakening, all systematically channeling wealth upward while appearing economically neutral.

What Progressive vs. Regressive Really Means

Progressive policies create opportunities for wealth-building across all strata of society—like graduated income taxes that fund education and infrastructure enabling upward mobility. Regressive policies create barriers to wealth-building for working families while protecting advantages for those already wealthy—like flat sales taxes that take a larger percentage of poor families’ income.

Here’s how the depreciation double standard creates barriers to wealth-building: When businesses lose value on equipment, economists subtract that from Gross Domestic Product (GDP) to calculate Net Domestic Product (NDP)—showing how much the economy actually grew after replacing worn-out capital. This makes sense: some economic activity just replaces broken business equipment rather than adding to the economy’s productive capacity.

But when working families lose value on cars, appliances, and electronics? The Bureau of Economic Analysis tracks this depreciation and includes it in overall calculations, but here’s the regressive structure: business depreciation reduces taxes for wealthy business owners, while consumer depreciation generates replacement profits that flow directly into executive compensation and shareholder dividends without any corresponding protection for families trying to build wealth.

Consumer durables (cars, appliances, electronics—anything lasting over three years) get classified as “consumption,” not investment. So when they break due to planned obsolescence, wealthy shareholders profit from replacement sales while working families lose wealth-building opportunities with no policy protection.

The Massive Scale of Blocked Wealth-Building

Since 1950, working Americans have bought hundreds of millions of cars, refrigerators, TVs, and smartphones. All depreciate over time, but only business depreciation provides tax benefits to wealthy owners—creating a massive barrier to wealth-building for working families while channeling profits into the pockets of corporate executives and major shareholders.

Your grandparents’ 1960 refrigerator lasted 30 years, allowing them to build personal wealth over time. Today’s lasts 8 years by corporate design. Our economic statistics treat this constant forced replacement as prosperity, but it actually prevents wealth accumulation for working families while generating profits for wealthy shareholders.

Planned obsolescence—corporate strategies to shorten product lifecycles—appears economically beneficial but actually creates systematic barriers to wealth-building for working families while concentrating profits in wealthy pockets.

How This Warps Every Policy Debate

Corporate interests celebrate GDP growth while working families struggle to build wealth due to stuff that breaks by design. This measurement framework shapes policy debates in ways that systematically block wealth-building opportunities:

“The economy is growing!” Often means profits are flowing into the pockets of executives and shareholders through mechanisms like planned obsolescence, while working families lose wealth-building opportunities.

“Environmental regulations hurt the economy!” This argument protects profits flowing to wealthy shareholders while ignoring how durable products would help working families build wealth through lower replacement costs.

“Innovation drives growth!” Sometimes. But when “innovation” means designing products to fail faster, our measurements celebrate profit concentration in wealthy pockets while ignoring blocked wealth-building for working families.

Information Designed to Favor the Wealthy

The U.S. could have made financial literacy mandatory in high schools since the 1950s. Why didn’t we? Because existing power structures benefit from information asymmetries that favor those who already have access to sophisticated financial tools.

Corporations employ teams of engineers calculating optimal failure points—when products should break to maximize profits flowing into executive bonuses and shareholder dividends. They use depreciation modeling to systematically channel wealth from working families into wealthy pockets.

Meanwhile, working families lack institutional support for understanding or recovering these losses. Corporate depreciation strategies systematically funnel wealth into the pockets of executives and major shareholders through engineered product failure.

The Hidden Costs of This System

Environmental consequences: Constant forced replacement creates massive waste, but since we don’t count consumer depreciation as regressive redistribution, we can’t see how corporate profit-maximizing strategies impose environmental costs on society.

Working-class wealth-building barriers: Previous generations could buy durable goods lasting decades and build personal wealth over time. Today’s families face systematic costs of replacement designed to block wealth accumulation while channeling profits into the pockets of executives and shareholders.

Systematic opportunity blocking: This isn’t market inefficiency—it’s policy design that consistently prevents working families from building wealth while concentrating profits in wealthy pockets. Corporate teams optimize failure cycles to maximize wealth flowing to executives and major shareholders while economic statistics make these barriers to upward mobility invisible.

Why This Pattern Persists

When @umbrarchist has tried discussing this with professional economists, many avoid engaging with the underlying mathematics and policy implications. This suggests the issue challenges comfortable assumptions about how our economic system functions.

This problem cuts across different economic schools because it involves fundamental questions:

• Accounting structures – how we categorize and measure economic activity

• Policy priorities – whose interests get systematic protection

• Legal frameworks – how property rights and depreciation are treated

It’s not about fixing economic theory—it’s about recognizing how seemingly neutral accounting rules function as mechanisms for regressive redistribution that systematically favor capital over working families.

This pattern fits broader tendencies where economic analysis constrains progressive policy imagination. Many economic frameworks embed assumptions that make progressive policies appear problematic while making regressive outcomes seem natural.

The depreciation asymmetry represents one example among many regressive policy designs implemented over recent decades. Corporate interests receive sophisticated protections—depreciation deductions, asset management advantages, legal frameworks—while working families face planned obsolescence, predatory credit, and debt structures without corresponding support.

Policy Solutions That Work

The solution requires both microeconomic policies that protect working families and macroeconomic measurement reform that accurately reflects wealth redistribution.

Macroeconomic Measurement Reform

Current economic measurement versus proposed reform: The left diagram shows how current NDP calculations only subtract business depreciation, while the right diagram shows how “Real NDP” would account for both capital goods depreciation (Dcap) and durable consumer goods depreciation (Dcon), providing accurate measures of sustainable economic progress.

This diagram illustrates the fundamental measurement problem at the heart of our economic accounting. Current calculations treat consumer durable depreciation as invisible, but the laws of physics don’t care about economic theory—when your refrigerator or car loses value, that represents real economic loss that reduces family net worth. The circular flow shows how wages become spending, which becomes business revenue, yet the current system only counts depreciation flowing out of the business side. Consumer depreciation (Dcon) is currently ignored despite reducing family wealth, while businesses already recover their depreciation costs through tax benefits.

The proposed “Real NDP” formula would give policymakers honest measures that account for wealth-building barriers facing working families and provide accurate measurement of sustainable economic progress.

Implementing this requires several coordinated reforms:

Consumer Depreciation Inclusion in Economic Analysis: The Bureau of Economic Analysis should treat consumer depreciation the same way as business depreciation in economic analysis and policy discussions. While consumer depreciation is technically included in NDP calculations, it should be explicitly recognized as economic loss that reduces sustainable prosperity.

International Standards Alignment: These reforms would align with the UN System of National Accounts (SNA), the internationally agreed standard for GDP calculation. The SNA already recognizes consumer durable depreciation conceptually—the U.S. could lead efforts to make distributional analysis standard practice while maintaining international comparability.

Alternative Economic Indicators: Develop economic measures that explicitly track wealth redistribution patterns. Current GDP growth could be positive while working families systematically lose wealth through depreciation asymmetries—new indicators would make this visible to policymakers.

Regressive Impact Assessments: Require economic policies to include analysis of their distributional effects, including how depreciation and replacement costs affect different income groups.

Microeconomic Family Protection Policies

Working Family Depreciation Credit: The IRS should establish standard depreciation schedules: cars (5-7 years), appliances (8-12 years), electronics (3-5 years). When filing taxes, families would report major purchases and automatically receive depreciation credits. Making it refundable ensures working families who don’t owe federal taxes still benefit.

Progressive Consumer Protection Framework: Require manufacturers to provide repair manuals, parts, and diagnostic tools for at least 10 years. Mandate disclosure of expected product lifespans and failure rates. Enable working families to recover damages when products fail significantly earlier than disclosed through class action mechanisms.

Combined Benefits

• Measurement accuracy: Economic indicators would reflect actual wealth-building opportunities instead of hiding barriers to upward mobility

• Policy visibility: Lawmakers would see how policies affect working families’ ability to build wealth versus wealthy shareholders’ profit concentration

• Immediate wealth-building support: Thousands of dollars annually helping working families build wealth rather than lose it to forced replacement cycles

• Market accountability: Corporations would face economic consequences for blocking wealth-building through designed obsolescence

Building Better Capitalism

This systematic barrier to wealth-building demonstrates how progressives often retreat from building comprehensive policy frameworks instead of challenging institutional structures that block upward mobility for working families. The consumer depreciation asymmetry represents just one mechanism among many that systematically prevent working families from building wealth while concentrating profits in wealthy pockets.

In our modern monetary system, we could fund working family depreciation credits without difficulty. The constraint isn’t fiscal capacity—it’s political organization capable of challenging the broader constellation of policies that block wealth-building for working families while protecting profit concentration for the already wealthy.

When working families can recover depreciation costs through progressive policy design, market incentives naturally favor durability over planned obsolescence. Corporate strategies that currently block wealth accumulation for working families would face systematic economic accountability.

This approach offers a progressive alternative to degrowth economics—rather than shrinking the economy to address environmental and inequality concerns, these reforms would redirect economic growth toward genuine prosperity. Instead of accepting lower living standards, working families would benefit from products that last longer, require fewer replacements, and generate less waste. Economic growth would continue, but through durable goods that serve families rather than extraction mechanisms that serve shareholders. This appeals directly to environmentally conscious people who want sustainability without economic sacrifice—creating a win-win where environmental protection enhances rather than constrains family prosperity.

Rather than pursuing anti-capitalist strategies or waiting for late-stage capitalism to collapse, these reforms demonstrate how to build better capitalism—the kind that works in many other developed countries where “capitalism and democracy, two great tastes that taste great together.” While progressives debate system overthrow, authoritarian and fascist forces actively shape policy to serve their interests. The consumer depreciation reforms outlined in this essay show how organized progressive political power can reshape capitalism to serve working families rather than cede ground to authoritarians while waiting for economic transformation that may never come.

This kind of thinking—focusing on progressive goals rather than progressive ideology, on expanding opportunity rather than ideological purity—has inspired me to explore new approaches to political organization, including the Opportunity Party, built around creating wealth-building opportunities for all Americans regardless of their beliefs, culture, or lifestyle. The goal is developing practical policies that expand upward mobility and strengthen the middle class, rather than getting trapped in theoretical debates while authoritarians actively reshape America.

Once you understand how this systematically blocks wealth-building for workers while concentrating profits in corporate hands, the class dynamics become unmistakable. Every argument that “consumer protection hurts innovation” assumes that engineering product failure for profit represents economic progress rather than barriers to upward mobility disguised as market efficiency.

After decades of systematic barriers to wealth-building through depreciation asymmetries and many other mechanisms, isn’t it time for progressive policies that give working families real opportunities to build wealth across all strata of society?

The question isn’t whether we can afford progressive depreciation policies—it’s whether we can build the political power necessary to challenge the comprehensive framework of policies designed to block wealth-building for working families while protecting profit concentration for those already wealthy, making progressive alternatives to expand opportunity appear economically impossible.