Deferred Maintenance, Capitalism, and Socialism
July 20, 2016
by William P. Meyers

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A Stitch in Time Saves Nine

I live in the country, and my home has a septic system. I've lived here for 18 years and we've never had a problem with it. But we are getting ready to sell the place and move, so our realtor told us we needed to get it checked. And according to our testers, it is filled with roots. It it going to cost us some serious money to get it cleaned out, how much depending on exactly what needs doing.

On the other hand our Giant Sequoias, which were pretty big when we got the place, are truly giants now. Like 5 feet or more in diameter at the base. I wish we could send someone a bill for all the carbon that they sequestered while damaging our septic system.

Deciding when to do maintenance work is a basic human problem. The nation, we are told, is way behind in maintaining its highways and bridges. At the human end, I don't think I'm the only one who has put off going to the dentist until a root canal or extractions was required.

A lot of judgment is involved. Some wooden buildings look fine and are fine, some are about to collapse from termite damage. Should that computer be repaired, or is it no longer able to run the new software, so a new one makes more sense?

Maintenance involves costs. If something is over-maintained, its costs exceed its benefits. When resources are limited (and they are always limited), it makes sense to prioritize among maintenance projects. Some neglect involves minimal future consequences; other forms of neglect can range from bad to disastrous.

Much the same problem confronts people and governments whether they constitute a pure capitalist society, a pure socialist society, or a mixed society.

Deferred Maintenance of Machines in Factories

Machines that are in constant use tend to wear out quickly. Engineers have worked out quite a variety of ways to minimize this problem. They make parts of special materials, they lubricate, they make the parts that wear out quickly easy to replace. Every machine is in a state of wear and tear the moment you turn it on. And short of replacing the entire machine part by part, at some point it becomes more expensive to keep doing repairs than to buy a replacement machine.

Most Americans have learned this from their cars. When the car can only be sold for $1000, even though it has been pretty well maintained for years, and there is a $4000 repair needed, all but the most fanatical maintainer will scrap the old car. Even if only to buy another old car in somewhat better condition.

In a capitalist society, when business is bad, owners try to cut back on expenses. Sometimes they can just shut their machines down, so that maintenance costs go away, as long as rust or similar problems are dealt with.

But sometimes managers try to increase profits by cutting back on maintenance costs. Usually they think the are cutting back from over maintenance to a proper level. But if lubricants don't flow and parts are not replaced or at least adjusted, the end products start deteriorating in quality. If customers notice, that can be the beginning of a downward spiral.

The same is true of landlords. Let a building run down and the rents that can be charged start to decline. Eventually it may be cheaper to knock the building down than to try to rent it out.

The same problems can occur under socialism. A socialist factory or building needs maintenance just as much as a capitalist one. Resources must be allocated for maintenance. If a government constructs new buildings and then does not allocate people and materials to keep them up, they can become slums just like buildings with bad capitalist landlords.

Of course there is the problem of over-maintenance, though it is a rarer problem. How often does a floor need to be washed, how often is a new coat of paint needed. Should motor oil be changed every 12 thousand, 6 thousand, or 3 thousand miles? If everyone in a building is always making the windows spotless, other kinds of work, or even maintenance, that are needed somewhere else in society are probably not getting done.

Vacations for humans are a sort of maintenance. How much vacation is adequate? How many work days should there be in a week? Too much vacation for too many people can contribute to economic collapse, as we saw in Greece around 2010. Socialists tend to favor long vacations. Capitalist favor minimalist vacations, at least for employees. Maximize vacations for maintenance workers, and they might feel well-maintained, but machines might not be kept up to snuff.

Bridges Between Capitalism and Socialism

Bridges in the United States are in bad shape, at least according to the transportation industry. In worst case scenarios bridges collapse, sometime killing people and always disrupting traffic. Closed bridges usually are prioritized for repairs, but in the meantime they make the economy less efficient.

In America politics determines which roads gets maintained, and what goes to ruin. At the largest scale there is the annual transportation budget (combined national, state, and local) that is allocated for road and bridge maintenance. Then there is the amount of deterioration that needs correction each year, which engineers can give cost estimates for. For a couple of decades in the U.S. the amount budgeted has been less than the amount needed. The difference is the deferred maintenance.

It seems stupid. Why not just budget the amount needed? Especially because a stitch in time does save nine. Whether it is a bridge, building, or factory (or even human health), the longer you defer maintenance, the more likely damage is to escalate to critical points. Like when a bridge actually collapses, or a person has a heart attack.

But most people don't like taxes either, unless someone else is paying them. Resistance to taxation is an American tradition that predates 1776. So getting legislators, whether local, state, or national, to pass tax increases is usually difficult. There is always the question of who will pay taxes to work out. When taxes are based on a growing part of the economy, say personal income, then there is room to grow services, which include maintenance.

American roads and bridges are highly dependent on funds from fuel taxes, which are set per gallon. So as the price of gasoline has risen, the amount of tax collected has not risen. As inflation has affected the price of road and bridge maintenance, naturally the amount of maintenance getting done has decreased. Politicians like new roads and bridges, so we also have the phenomena of the spend being directed there while maintenance is neglected.

This could be described as a mixed systems problem, in that in the U.S. we have a largely capitalist, free-market system, with some socialist components, like public roads and the Social Security system. If the roads were privately owned they would likely cost more because they would be run for profit. You might have maintenance issues, but most likely stockholders would want the roads to be well-maintained in order to attract traffic.

In a pure socialist system, in theory, society would be careful to allocate plenty of money for the common good of maintaining roads and bridges.

And it is worth noting that despite the criticism, the vast majority of our bridges have not collapsed. America is one of the great road-building nations because, at times in the past, that has been a priority. A congress and local governments only slightly more willing to tax and maintain could catch still up with maintenance in a reasonable period of time.

The same is true for maintaining public buildings like schools. There tend to be cycles. After a spending cycle, people are pretty happy, and go into a tax conservation cycle. Years or decades later people become so angry at the state of repairs, they demand that politicians do something about it, even if taxes need be raised.

Socialism's Maintenance Problem

Not all socialist countries are alike, and neither are all capitalist countries. As I have harped on in my columns, socialism works much better if a country is already rich when it starts it. So, for that matter, is capitalism. Most third world countries, after their rape by imperialist countries, have found themselves at a continuing disadvantage which ever system they have adopted.

Just because you have socialism does not mean resources will be rationally allocated to maintenance. In the 20th century socialist governments often preferred building new to maintaining old infrastructure. In socialism, though, you are not just talking about making these mistakes with roads and public buildings. They can be made with steel mills and cement factories, or with anything. When there is no food on shelves it isn't because socialists want people to starve. It is because they failed to invest in the agriculture sector and in food distribution systems. We saw that recently in Venezuela.

Capitalism's Maintenance Problem

If a capitalist steel factory is under-maintained, pretty soon it will be unable to compete with the well-maintained factories. It will go out of business. A more careful capitalist may buy it and fix it up, or it could be left to ruin, depending on the specifics.

Under capitalism deferred maintenance problems tend to be of two types. One is failure to maintain public infrastructure. The other is to heavily allocate resources to the rich while failing to allocate maintenance funds to projects that help workers and the poor. Usually in a capitalist society, even if it is a nominally democratic one, the government will tax capital lightly and spend minimally for the good of the general public.

Summary

Maintenance is crucial to society. Deferred maintenance is a universal problem. How much to defer maintenance is a human decision. How humans are organized can effect decisions about maintenance.

But in this area capitalism and socialism have much in common. Bridges are bridges, whether maintained by capitalists, by socialists, or by a government presiding over a mixed system.

Human decision making is crucial. And it is complicated, because there are so many different things that need maintenance, each with individual issues, and with effects on differing types of people in a society.

""It doesn't matter whether a cat is black or white, if it catches mice it is a good cat." — Deng Xiaoping