Search This Blog

Friday, September 30, 2022

Bond Yields Are Too Damn High

 It's important to recognize that 2009-2019’s economic recovery could not shoulder a 2.38% fed funds rate for long. Nevertheless, many place the neutral fed funds rate at a higher 2.5%, where the neutral rate neither helps nor hinders economic activity.

Thus, the FOMC’s median forecast of a 4.4% fed funds rate by year-end 2022 is far enough above neutral to trigger a recession. And if the recession slashes inflation risks, the 10-year Treasury yield will quickly drop well under 3%.

No alt text provided for this image

Rent’s upward bias to future inflation will be recognized

Successful monetary policy is always forward looking. An effective policymaker must be skillful at divining trends. Information only matters if it supplies useful guidance about the future.

To do so, policymakers must understand the degree to which data reflect conditions that have already passed or are nonrecurring.

Nearly 40% of the core CPI consists of either renters’ rent or owners’ equivalent rent. Because rents change only when new leases take effect, the CPI’s rent component is slow to respond to the changes in market conditions that influence rents.

When CPI inflation trends lower, CPI inflation excluding rent (or shelter costs) slows by more than the overall CPI, where the opposite holds true when CPI inflation trends higher.

Regarding the latter, from May 2020's bottom to June 2022's top, the annual rates of inflation rose by a greater 11.8 percentage points for the CPI ex shelter costs (from -1.1% to 10.8%) compared to the headline CPI's 8.9-point increase (from 0.1% to 9.1%).

After understating the underlying inflation rate on the way up, the CPI is likely to overstate inflation’s trend on the way down.

Policymakers will note the upward bias applied to a declining rate of CPI inflation by rent inflation if the macro backdrop favors a declining trend for consumer price inflation. Thus, once the Fed senses the labor market has softened by enough to extend disinflation, rate hikes will end even if CPI inflation still materially exceeds the Fed’s targeted rate.

Higher yields in a declining economy are poison

Treasury bond yields now rise in response to an extraordinary push from Fed rate hikes and the Fed’s reduced holdings of Treasury securities. Fed policy now strives to reduce spending via higher short- and long-term interest rates, where the upward pressure on long-term interest rates also receives support from the shedding of agency mortgage-backed bonds from the Fed’s balance sheet.

The Fed-driven ascent by Treasury bond yields amid a flat economy has worsened the economic outlook. In response to now elevated recession risks, the borrowing costs facing private-sector borrowers have increased by more than the jump in benchmark Treasury yields.

The Fed-driven ascent by Treasury bond yields amid a flat economy has worsened the economic outlook. In response to now elevated recession risks, the borrowing costs facing private-sector borrowers have increased by more than the jump in benchmark Treasury yields.

For example, the 3.74 percentage point increase by the recent 6.70% FHLMC 30-year mortgage yield from 2021’s yearlong average of 2.96% was far greater than the comparably measured 2.45-point increase by the benchmark 10-year Treasury yield from 2021’s 1.45% to a recent 3.9%.

The yield gap between the 30-year mortgage yield and the benchmark Treasury yield has broadened from a 2021 average of 1.51 percentage points to a recent 2.80 points. By contrast, under 2019’s more normal conditions the spread averaged 1.79 percentage points.

Not since July 2007 has the 30-year mortgage yield been as high as 6.70%. Because of today’s costliest mortgage yields in 15 years, not only are mortgage applications from potential homebuyers down by 30% from a year earlier but applications for mortgage refinancings plunged by an even deeper 83% yearly.

When the Fed tightens amid a flat to lower economy, household and business borrowers incur the one-two punch of costlier benchmark Treasury yields and a wider interest rate spread over Treasury yields as compensation for greater debt repayment risks. This supercharged jump by private sector borrowing costs does more than making matters worse for business activity. It also reduces the market value of financial and real assets.

--John Lonski

As Thru the Cycle President, I’m a sought-after expert on the U.S. and global economy. I’ve been a keynote speaker at financial market conferences around the world and my comments have appeared in all major financial press and media outlets. Prior to forming Thru the Cycle, I held the position of Managing Director and Chief Capital Markets Economist of Moody's Analytics. 

https://www.linkedin.com/pulse/bond-yields-too-damn-high-john-lonski/

Thursday, September 29, 2022

Commercial Property in Hurricane Ian’s Path

 Hurricane Ian slams into Florida on Wednesday, putting lives and livelihoods at risk. The projected path of the storm five days into the future can help people mitigate some of these risks by knowing when to evacuate. Commercial real estate in the track of the storm can also be plotted.

There are assets with an estimated value of USD 1.5 trillion in Ian’s five-day path forecast by the National Hurricane Center. The apartment sector has the highest dollar value of assets in the path of the storm, at an estimated USD 603 billion. Of those apartment properties, USD 10 billion may also face storm surge, which can cause extreme flooding and presents the greatest threat to properties and human life.

This aggregation of commercial real estate assets in the storm’s path includes only institutional-quality properties priced USD 2.5 million and greater. There are other assets priced below that threshold that face similar risks.1

One can plan around the risks to commercial real estate in the face of such a storm. While it is impossible to attribute individual events to climate change, events like this storm are predicted to become more frequent and more intense, meaning that real estate investors face risks that must be mitigated.

Commercial real estate in predicted path of Hurricane Ian

National Hurricane Center predicted path as of Sept. 27.


1 Current estimated values of every asset are generated by taking the sale price or appraisal value at the most recent refinancing and moving that observation forward at the growth rates implied by the RCA commercial property price indexes (RCA CPPI) for the relevant property sector and location.

Return of pet projects in U.S. Congress crowds out funding for others

 Glen Ullin, North Dakota, was first in line for money to replace its leaky water pipes before Washington cut funding by one-third this spring. The reason: Congress is yet again diverting money to pet projects known as "earmarks.

Advocates say these earmarks allow lawmakers to direct money where they believe it is needed most.

But they leave less money for everybody else.

Water projects in West Virginia, Alaska and Oklahoma will get more than twice as much money this year as last, thanks to earmarks secured by their congressional representatives.

That leaves states like North Dakota that did not get earmarks unable to fund as many projects as they had anticipated -- even as President Joe Biden's infrastructure law has secured $50 billion more for that purpose.

"Earmarks are a problem I wish people could see. It's just quite drastic -- winners and losers," said DeAnn Ament, who heads North Dakota's public-finance authority.

Earmarks serve as legislative “sweeteners” that build support for major bills by allowing lawmakers to steer federal dollars to projects in their districts, bypassing the bureaucracies that usually distribute federal aid.

A series of corruption scandals and concerns about wasteful spending prompted Congress to abolish earmarks in 2011. But as partisan funding battles led to repeated government shutdowns over the following decade, some lawmakers pushed for their return, arguing they could build support for the massive spending bills that keep government running.

NEW SAFEGUARDS

Democrats included new safeguards when they brought earmarks back last year. Lawmakers have to post their requests online and certify that they do not have a financial stake in the projects they propose. Earmarks are capped at 1% of discretionary spending, and cannot go to for-profit entities.

The annual government spending bill Biden signed in March included 4,983 earmarks, ranging from $133 million to upgrade port facilities in Alabama to $4,000 to buy a vehicle lift for the Huntington, West Virginia, police department.

That money was not distributed evenly: Alaska and Vermont pulled in more than $300 worth of earmarks per resident, according to a Reuters analysis, while North Dakota, Wyoming and Montana got no earmarks at all.

Congress increased the overall funding to some programs to cover the costs of earmarks.

That's not the case with the two Environmental Protection Agency programs that fund local drinking-water and wastewater projects.

Congress provided $2.76 billion for the 2022 fiscal year, a slight increase over the prior year. But that included $841 million in earmarks, which reduced by 30% the amount available to state-run funds, which weigh criteria like affordability and health risks when they decide which projects to support with grants and low-interest loans.

Some states say that is not a problem.

The infrastructure law provides an additional $3.8 billion each year for water projects over the next five years, along with money to remove lead pipes and tackle "forever chemicals" that have emerged as a new environmental concern.

That means even states like North Dakota and Arkansas that did not secure water-system earmarks will have twice as much money this year, the Reuters analysis found.

"We're doing much better than previous years," said Chris Colclasure, who heads Arkansas' natural-resources office.

Others say the cuts will have a lasting impact.

"Those projects that got the earmarks really did jump in front," said Keith McLaughlin, head of Colorado's water-development authority. Even with the extra infrastructure dollars, his state's water funds will probably run out of money in the coming year, he added.

Earmarks allow local governments to bypass those state-run funds.

In New Jersey, several towns that would be normally too affluent to qualify for state grants secured earmarks anyway.

Saddle River, a New York City suburb where the median household income is two and a half times the national average, won a $1.1 million earmark to build a sewer line to a new housing development. The town would not qualify for a grant through the existing state program and did not apply for low-interest financing, according to a state official.

Saddle River did not respond to a request for comment. Democratic Representative Josh Gottheimer, who helped secure the earmark, said he believed it was his duty to steer as much federal aid as possible back to his district.

"The more of our federal tax dollars that we get back to Jersey towns, the less our towns and families have to carry the burden in local taxes," he said in a statement.

That wasn't an option in North Dakota, whose congressional delegation did not submit any earmark requests this year or last.

Republican Senator Kevin Cramer said he has asked to ensure that states like his don't get less funding if they do not secure earmarks. The state's other senator, Republican John Hoeven, said he has been able to adequately fund North Dakota's needs without earmarks.

That would have been the case for Glen Ullin, located 54 miles (86.9 km) west of Bismarck, had North Dakota gotten he same amount of money it did last year.

The city ranked first on the state's list of eligible projects, due to the poor condition of its water system and a median household income that is half the national average.

State officials said they planned to award the city a grant of $2.2 million and a low-interest loan to cover the remainder of the $4.5 million project.

In May, the state learned it would only get $7 million for its drinking-water fund, down from $11 million the prior year.

That forced it to slash its grant for Glen Ullin to $1.4 million. Glen Ullin probably won't qualify for infrastructure dollars because those are distributed using different criteria, officials say.

The city has scaled back its plans. Backhoes could start digging up some streets next spring to install new pipes, but nobody knows when they'll be able to finish the job.

"Of course it's not fair. But I wouldn't be whiny about it," said Vicki Horst, the city auditor. "We'll keep working and see what we can do."

https://www.newsbreak.com/news/2765793343726/return-of-pet-projects-in-u-s-congress-crowds-out-funding-for-others

Wednesday, September 28, 2022

Lowering your heating bills

 It’s still warm out, but the heating season is approaching. Oil, gas, and electricity are all more expensive now, but there are many easy, cost-effective ways to keep your heating costs down without sacrificing comfort — and the first three are free:

    Raise the shades on your south-facing windows when the sun is out for solar heat gain.

  • To the extent that it’s practical, keep furniture away from radiators/baseboards/vents.
  • Lower your thermostat. The Department of Energy said setting it to 68 degrees while you’re home and 7 to 10 degrees lower when you’re asleep or away can lower your heating bills as much as 10 percent.
  • If you have a forced-hot air furnace, be sure to replace the air filter at least twice a year. This will improve both the air quality in your home and the efficiency of your heating system.
  • Insulate exposed heating pipes. This will minimize heat loss into unconditioned areas like basements and crawl spaces.
  • Address drafty doors and windows, which can be big sources of heat loss. “This Old House” can show you how to make them weathertight.
  • Insulate attic/crawl space floors, basement ceilings, and exterior walls, and air seal any sources of leaks, such as cracks and gaps and holes created for recessed lighting, vents, pipes, and more. The cost varies widely, but the investment pays dividends in lower heating bills for as long as you live there.

The Disappearing Art of Maintenance

 The R32 trains, nicknamed the Brightliners for their shiny unpainted exteriors, were built to last 35 years. (Imagine that: Your lifespan stamped into metal, your death prefigured.) When they were finally retired from service in January, they had been riding the rails of New York City for no less than 58 years and were, by most accounts, the oldest operating subway cars in the world. That’s 23 unplanned years of hauling people across New York. A whole generation got to see those stainless-steel beauties creaking down the tunnel to the platform, with their crinkle-ridged exteriors and back-lit advertisements. 

In a way, it was a small miracle that they lasted so long, an “anomaly,” as one mechanic told me. Except it wasn’t really. It took a lot of work from a lot of people, day after day, year after year. 

I recently went to talk to some of those responsible for that work at the MTA maintenance facility in Corona, Queens. There are 13 of these massive workshops across the city, scattered from Coney Island to the banks of Westchester Creek in the Bronx. This one is in a remote pocket of the city, an area given over mostly to massive buildings and spaces: Citi Field, Flushing Meadows Park, the sprawling train yard. It’s like a hospital but an industrial one, scaled up to care for its multi-ton patients.

Standing around the break room with their arms crossed and ID badges dangling, heads full of train-talk, several maintenance workers took turns explaining the process: Railcars roll off the main tracks into a long rectangular building. The cars are lifted to eye level, inspected and repaired if needed. Most of them get to leave that day — back to work, like the rest of us. But some are moved over to a special track for trickier jobs. 

We went for a walk along the service tracks in a big group, everyone chiming in, pointing to the parts that needed repairs or replacing: the truck, the brakes, the AC units. They told me the fleet is split into two camps, one called “legacy,” the other “millennial.” The former were built before 2000, the latter after. The millennial fleet is tougher to repair in some ways because there are more electronics in the cars. Maybe you’ve heard your grandfather complain about this, how engines are too damn complicated these days. Siu Ling Ko, a chief mechanical officer for the train cars, told me the shells may last 40 years. The electronics, though, not so much. 

The legacy fleet has its own problems, of course, and is more prone to failures overall. Replacement parts are harder to find; the firms that made them — the Budd Company, Pullman-Standard and Westinghouse — are long gone. Many components are well past their design life, and mechanics have to pluck similar parts from retired vehicles or engineer substitutes. It’s a very ad-hoc, improvisational process that relies on the know-how that long-time employees build up over years. 

But there’s a method to the madness, and a hard-earned one. Back in the 1980s, when the crumbling, graffiti-covered subway was the stuff of reactionary urban nightmares, MTA president David L. Gunn kicked off an ambitious overhaul of the system, including capital improvements, the famous graffiti removal program and more routine repairs. In 1990, this approach solidified as the scheduled maintenance system. Now, every two to three months, more than 7,000 railcars are taken in for inspection with the goal of catching problems before they happen. 

That’s the difference between maintenance and repair. Repair is when you fix something that’s already broken. Maintenance is about making something last.

By that definition, the MTA is tasked with one of the most difficult maintenance jobs in the country, and its struggles are also a case study in why maintenance is such a tough sell politically. It’s not strictly necessary — or at least it doesn’t seem to be until things start falling apart. It’s chronically undervalued. The MTA is often harassed for its relatively high labor and maintenance costs. 

Most mechanics would probably prefer to have brand new, ultramodern train cars and a rail system built on the best technology available. But they are a practical bunch. “I don’t think that’s going to happen,” Ling Ko told me. “We have to be realistic and deal with what we have.” Dealing with what they have has become a professional ethic for the MTA. 

But how is it that the agency became the steward of the lumbering machines that move millions of people across one of the busiest cities in the world? Behind the decades of underinvestment and political sabotage is a more basic story about maintenance, what motivates it, where it is possible and advisable and where it isn’t. More often than not, maintenance is done only under conditions of austerity; those that can afford brand new things can simply discard what breaks or is no longer useful. 

“If you can make it here, you can make it anywhere,” said Richard Ardizzone, the general superintendent at the Corona shop, referring to the MTA’s knack for overcoming adversity, budgetary or mechanical or otherwise. But the veteran mechanic’s gentle boast begs the question: Should it be this hard to maintain trains? Here, or anywhere else?  

The MTA’s predicament has global implications. The industrial world is aging, and the sheer quantity and geographic extent of transportation, water and energy infrastructure presents an unprecedented challenge at the exact moment that climate change forces us to rethink material use. More robust maintenance practices could help preserve modernity’s finest achievements, from public transit systems to power grids to insulated homes. But first maintenance has to be valued outside of austerity, and right now it’s unclear if our current economic system is capable of that. 

Maintenance could serve as a useful framework for addressing climate change and other pressing planetary constraints that, if left unaddressed, could recreate on a global scale the localized austerity of a cash-strapped transit agency. Indeed, maintenance as a concept could encompass both the built environment and the so-called natural world. Perhaps maintenance, rather than sustainability, is the more useful framework for a green transition, because it can account for how human infrastructure is now deeply entangled with the environment in the age of the Anthropocene. 

If you start talking with engineers about maintenance, somebody always brings up Incan rope bridges. Maybe you’ve seen an illustration or a digital rendering in a Hollywood movie. They’re the color of hay and hang with a bit of slack over rivers and canyons in Peru’s rugged terrain. Made from ichu grass threaded into progressively denser and denser bundles, they were ritualistically maintained by ancient Peruvians. They lasted for centuries. Most are long gone now, though at least one has been preserved for posterity as an infrastructural artifact, just like the R32 at the New York Transit Museum in downtown Brooklyn. 

It’s hard to imagine a modern ritual that would be equal to the task of perpetually renewing steel bridges, concrete highways and cement buildings. It would require an entirely new industrial paradigm. One label for such a system is “circular economy,” which the Ellen MacArthur Foundation, which funds research on the topic, defines as “an industrial system that is restorative or regenerative by intention and design.”

The concept dates to the 1960s and the work of economist Kenneth E. Boulding, but most of us are more familiar with a related slogan that emerged from the environmental movement of the 1970s: reduce, reuse, recycle. Those have been the guiding principles for the green movement for much of the past half-century, informing everything from municipal recycling programs to efficiency standards for toilets to lifestyle movements calling for “zero-impact living.” 

Maintain is notably missing from the triplet, perhaps because it’s difficult to reconcile with sustainability’s implicit emphasis on reduction and restraint. By contrast, maintenance is about keeping things — sometimes large, intensively built things like skyscrapers and subway cars that might be difficult to imagine in the biodegradable utopias of the most gung-ho environmentalists. Ultimately, reduction is prioritized. We must not hold onto things. We must let go like good Buddhists, as industrial civilization becomes merely a painful, transient phase in human history, passing out of us like bad karma. 

There is tension in the question of whether to build objects more intensively, so that they last longer, or to recognize that some things cannot endure and thus should be designed that way. There’s no hope for a paper plate in the long run, for example. It’s designed to enter the waste stream as cheaply and easily as possible. Conversely, a toaster could last for decades if maintained properly, assuming the manufacturer hasn’t built obsolescence into it (as is often the case). 

More complex objects and built environments, like a transit system or a housing development, compound questions over what should last and what cannot. How do we create systems that can address these questions on their own terms? 

Stewart Brand, the editor of the Whole Earth Catalog, helped popularize the concept of “shearing layers,” which describes buildings as stacks of discrete systems, each requiring different degrees of care and maintenance. While a wood frame might be fine for three decades, the plumbing or cabling might last only half that time.

Sustainability, and the climate discourse in general, fails to disentangle the built environment in this way. The built and unbuilt environment are treated as totalities caught in a zero-sum conflict. One barrages the other with smokestacks and landfills, the other retaliates with forest fires and flooding. Climate change becomes a hyperobject, bearing down on all of humanity at once, condemning and forbidding it. 

Companies and governments answer this challenge with obscure benchmarks and proliferating, multi-decade goals. Climate change discourse floats outside the reality of industrial life, with its interlocking material and mechanical dependencies, never touching down until real scarcities assert themselves. In this way, emissions goals are not unlike GDP targets. Both are administered abstractions, somehow all-powerful and impotent at the same time. They reduce action to aggregates and strip human actors of agency. 

Maintenance is necessarily more focused on the particular. There is no single all-encompassing maintenance regime. It is always specific to the material systems that fall under its purview and the labor practices that they require. Best practices emerge at the intersection of production and consumption, service and use, formation and dissolution. 

Under capitalism, maintenance is an ambiguous position, almost a kind of limbo. The economics are rarely cooperative. There are plenty of carrots from a technical point of view — make things safer, more reliable, longer-lasting — but often no stick. In the developing world (or budget-strapped transit agencies), sticks are everywhere. Cuba’s beautifully maintained mid-century automobiles owe their longevity to a cruel and arbitrary embargo. India’s long-standing repair culture is the byproduct of the country’s position at the bottom of the global supply chain, and even now is being undermined by rising incomes and consumption. 

In the abundant West, those limits are less acute, and there is a prevailing faith among capitalists that the market will come through in the end — at least for the highest bidder. Recent price increases for construction materials like plywood should, according to Econ 101, force builders to treat them more dearly. But price swings have to be sustained to really change behavior, and competitive markets make coordinated action difficult under the best conditions, let alone during a mad scramble for supplies.

Right now, the electric vehicle boom is fueling an extraordinary surge in demand for metals such as nickel, cobalt and lithium. Warnings abound that the current supply of those ingredients won’t keep up, and new mines can’t be established quickly, especially when many in the West don’t want one in their backyard. EV makers like Tesla are scrambling to set up direct supply lines, and sometimes getting into the mining business themselves. 

In other words, the specter of material limits is hardly forcing a kumbaya moment. It’s making competition even more fierce and zero-sum, with the riches going to the most aggressive and acquisitive. Perhaps this pressure will create better recycling practices, as the cost incentive for reprocessing old battery materials increases. But there isn’t a society-wide plan for this to happen. If anything, there’s a handful of opportunistic businesspeople and investors waiting in the wings. 

Even when the market isn’t beset by shortages and price spikes, labor dynamics are fundamentally opposed to maintenance. In much of the developed world, labor costs are higher than material costs, which creates incentives to burn through fresh material rather than invest in the labor to use it more efficiently or maintain it for longer-term use. According to one study, for example, it’s more expensive to cut steel into customized pieces, thus cutting down on waste, than to pump out uniformly sized sheets. 

The incentives get even more distorted when stretched across industries and use cases. Here, again, maintenance distinguishes itself rhetorically from sustainability. Sustainability is a state; maintenance is a process. It requires work, and work of a certain type. Whatever its ultimate goal — safety, material efficiency, reducing carbon emissions — practical know-how and repetitive labor come first. This kind of pragmatism is sorely needed in the climate debate, which is so often preoccupied with end-states that it has no earthly or humanly way of achieving. 

So far, however, those who champion maintenance are following in the footsteps of environmental advocates in prioritizing regulatory reform over a more ambitious overhaul of the economy and work itself. As Lee Vinsel, the co-founder of the Maintainers, one of the few advocacy groups to focus on this issue, told me, the lack of progress in getting Americans to value maintenance is a “political will issue.” 

Nathan Proctor, a director of the Campaign for the Right to Repair at the U.S. Public Interest Research Group, said it’s a matter of capitalism not staying in its lane. “I think capitalism is an efficient way to organize commerce,” he said. “But it shouldn’t be organizing social value, and it does.” That places the issue firmly in the domain of rules and regulations. As Vinsel wrote in his book, “Moving Violations: Automobiles, Experts and Regulations in the United States,” industries can evolve symbiotically with regulators. “I really think we can use regulatory structures to get a lot of this done by having requirements that technologies have to live up to,” he said. “It actually opens up the creativity of capitalism, right?”

This tracks with how many liberal reformers and environmentalists view climate change. With the right combination of regulations, efficient markets and moral suasion, there is no structural problem too big for good old-fashioned law. For what it’s worth, Europe has made more progress along these lines than the U.S. The European Commission’s Sustainable Product Initiative, for instance, is pushing manufacturers in the fast-fashion industry to produce longer-lasting clothes that are designed for easier reuse, repair and recycling. While this sounds like a perfect example of maintenance policy, the EU first has to get companies, many of them multinationals with factories located far from their customer base, to comply. And then will come consumer grumpiness over higher prices.

Here in the U.S., the most popular political expression of maintenance is the right-to-repair movement, which is more focused on consumer rights than a top-to-bottom overhaul of production and consumption. Their basic demand is for corporations to make products easier to repair, and they’ve actually made some headway. After years of getting backlash for its sealed-tight product design, Apple started giving customers access to tools and parts in late 2021, and Samsung followed this year. In both cases, the emphasis was on giving tech-savvy customers the choice to repair their products, if they are willing to put in the work. It reflects a very do-it-yourself ethos, behind which is a whole cottage industry of TikTok and YouTube videos teaching viewers how to fix everything from MacBooks to KitchenAid blenders. 

Louis Rossmann, the owner of a computer repair shop in New York City and a popular Youtuber, exemplifies this online right-to-repair culture. For him, repair is a pathway to independence and autonomy. “I care about freedom,” he told me, “and the ability to service your own property is a primary tenet of freedom.” Of course, capitalism doesn’t make it easy for people like Rossmann to make a living on maintenance. He explained that his business didn’t become possible until he started getting blueprints for iPhone circuit boards off the dark web.

The personal dimension of maintenance and repair — how it’s also a form of knowledge that can give you power over the objects in your life — is not often emphasized by progressive environmentalists. That language is left to DIY Youtubers and entrepreneurs like Rossmann, not to mention the farmers and fishermen and musicians and truckers and others whose livelihoods depend on certain machines operating at a certain level. 

If maintenance seems conservative, decked out in language about freedom from government oversight and corporate control, it doesn’t have to be. The right-to-repair movement falls well short of reordering society. It might, however, mark the return of a material awareness. 

The way the world is constructed today is no longer legible, politically or technically. Objects come and go under mysterious circumstances. Cars and trains either run or someone else fixes them. The objects in our lives are shipped to us from faraway lands, and they work until they don’t. Discarded, they get hauled away in the early morning by stinky trucks. 

Maintenance happens out of sight, mysteriously. Overnight, the frame of a high-rise appears, and before you can even look inside, invisible workers are fitting it with panes of tinted glass. It’s a nuisance when road crews block off sections of highway to fix potholes: an obstruction, not a vital and necessary process. 

The built environment becomes a series of mere commodities and services, which are more or less expensive, more or less onerous. Environmentalists, liberal reformers and internet repair gurus share the goal of trying to demystify the world of stuff, but they lack a theory of change equal to the task at hand.

One of the unspoken assumptions of the mainstream environmental movement is that climate change will, at some indeterminate point in the future, swoop in as the externality to end all externalities, and either destroy us or force us to adapt. There’s something both horrifying and comforting in this notion. On the one hand, action seems impossible in the short term. On the other hand, nature could soon force us to change, saving us from the uncomfortable task of addressing climate change in a way that balances other prerogatives beyond simply “saving the planet” in the abstract. 

The way this globalized coercion is supposed to happen is through the price mechanism. Governments will either pass a law raising the cost of carbon emissions through some kind of cap, and/or increasing scarcity will drive up the price of resources. Remember the peak oil debates of the early 2000s? Eventually, experts told us, gasoline would get so expensive that people would start moving to cities, riding a bike and taking the train.

The problem with this approach should already be self-evident. The impact of climate change will be unevenly distributed in space and time. Rather than a single biblical reckoning, there will be a series of disasters and dislocations, which global capitalism has so far proven highly adaptable at ignoring or overcoming. Simply waiting for climate change or resource scarcity to once and for all force us to change our ways is tantamount to taking our hands off the wheel, like a driver in one of Elon Musk’s autonomous rides. Choices have to be made, but maintenance, material efficiency, sustainability — or any number of frameworks gesturing toward a greener, less wasteful economy — are not sufficient goals unto themselves. 

Maintenance isn’t a program. It’s a practice. Melvin Kranzberg, the former president of the Society for the History of Technology, once wrote that “technology is neither good nor bad, nor is it neutral,” which is to say that its value is always contingent, even as certain technologies have their own internal logic that must be accounted for. The same goes for maintenance or sustainability, or any mental framework. Climate change and resource scarcity are real phenomena, but they must be addressed in the full context of other social aims, such as a given standard of living — or in the case of maintenance, a state of repair.

Technical and political-economic concerns are perversely entangled. There is the problem of a crumbling bridge, and then there is the problem of coordinating public action to fix a crumbling bridge. There is a technical answer, a set of actions and materials that must be brought to bear, but the political answer is just as important. The follow-up questions pour in: What if it would be better to build a new bridge in a new place, based on changes in demographics? What if the bridge was constructed shoddily from the beginning and should be completely rebuilt? What if society is moving away from automobile travel and requires other bridges built in different ways? 

The only way to answer these questions is to have a coherent vision for industrial society that oversees the distribution of capacities and capabilities. Growth and degrowth are sorry proxies for this debate. Much of what we’ve built can and should be maintained, while much else should be torn down and built anew. Perhaps the MTA should get new trains, but if not, then it should at least get the maximum level of government and public support to ensure the trains it does have run safely, comfortably and on time. 

Maintenance is no panacea, not within the narrow parameters of a subway system or the planet-sized arena of ecology, but it does offer a rough methodology for thinking through these questions and priorities. As a type of work that straddles production and consumption, maintenance can help us reckon with both the limits and possibilities of industrial society. 

The difference between a state of good repair and a bad one is often highly technical. No amount of utopian dreaming can make a battery hold any more energy or a piece of steel bear any more weight than it’s designed for. Mechanics, plumbers, electricians, engineers and janitors are at the frontlines of figuring out what’s possible with the machines and tools at their disposal, and we can’t set civilizational goals without their input. We need their expertise, just like we need scientists and doctors, to even begin answering the question of what must be done. 

“We have a lot of folks here with a lot of time and a lot of knowledge,” said Raymond DelValle Jr., an assistant chief mechanical officer at the MTA. “One of the jobs of a maintenance division is to share the knowledge that we have.” I can’t help but wonder what they might tell us if we asked them what was possible without simultaneously denying them the resources they need to do their job. 

Their knowledge is only worth so much, however. The real challenge is creating an economic system that values labor outside of profit-driven production. Many have rightfully called for a revaluing of care work in recent years. Maintenance workers deserve a similar revival in attention — but not only that. The price mechanism, and the labor system built around it, is fundamentally opposed to maintenance, both in its narrowest practical applications and in its broadest philosophical implications. The fact that the failures of capitalism happened to encourage maintenance practices at the margins is not worth emulating, and we shouldn’t be waiting around for climate change to recreate that austerity at a global scale. It must be valued on its own terms, and that means tearing down the economic system that rejects it. 

One of the aesthetic charms of the Brightliners was their unpainted steel, their raw factory-floor materiality. They wore their industrial lineage proudly, and we associate them with a time of boldness, with an ascendant industrial age that was still confident in its promise of technology and plenty. We now know the limits of that vision, but we have yet to replace it. 

Whatever comes next must take responsibility for that legacy, while also articulating something new and perhaps even bolder than what came before. There is a useful lesson drably concealed in the MTA’s maintenance facility in Queens: What we inherit comes with responsibility. Vintage machines are owed our best efforts, and our ingenuity in keeping them running should at least be equal to our ingenuity in forging them. 

The work of maintenance is ultimately a way of parsing and knowing a thing and deciding, over and over, what it’s worth. “Maintenance should be seen as a noble craft,” said Rossmann, the boot-strapping repair man who learned the secrets of the iPhone’s circuits. “It should be seen as something that teaches people not just how to repair, but how to think.”

https://www.noemamag.com/the-disappearing-art-of-maintenance/