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The Economics Of Troubleshooting

Mises Daily: Thursday, January 09, 2014 by

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When fixing things, I often find myself thinking about economics. All work involves economic considerations, but there are unique aspects of repairing machines that deeply touch the core principles of economics which are inescapable for the troubleshooter.

We employ machines to fulfill our worldly wants, which are without end. Satisfying our infinite desires with our limited means has been called the “fundamental economic problem.” Thomas C. Taylor writes:

Yet despite the comparative abundance of products and services emanating from the process of social cooperation, the economic problem remains: Wants continue to exceed the means or resources for their attainment.

If we look at the contents of any landfill we quickly realize troubleshooting is a stellar example of this “fundamental problem.” Broken machines vastly outnumber the resources to fix them! Given the disparity between the quantity of breakdowns and the means to mend them, the end result is: what gets fixed is subject to a harsh but necessary triage based on people’s most pressing needs. Only the most important systems will be worthy of being fixed.

When a machine breaks down, the entirety of the economic calculation that gave rise to its purchase will be thrown into stark relief. Questions arise. What need was it fulfilling? Is the need still present? If so, what resources will be diverted to fix the machine? Will you choose a cheap, quick fix or go with a more expensive, longer-lasting solution? Or, should the machine be replaced instead?

These issues are always present for the business owner, but they are easy to ignore when a machine is happily humming away. Once a system is installed, people tend to forget about the motives behind its acquisition — that is until a malfunction occurs. Troubleshooting is deeply linked with economics because choosing a course of action demands an answer to the above questions. You can see that, if the original want is to continue being satisfied, an economic decision will need to be made in conjunction with the technical matters of fault finding and correction. In fact, the two influence each other. What is discovered by the troubleshooter informs the economics (i.e., “this is what is wrong and this is how much it’ll cost to fix”) and the economics dictate what is possible for the troubleshooter (i.e., “you have these resources with which to discover the problem and make a repair”).

Scarce Resources

A wide array of means are available to the troubleshooter: tools, colleagues, consultants, spare parts, manuals, etc. Each of these may be optional, but, as Murray Rothbard has explained, time is needed for all repairs:

A man’s time is always scarce. He is not immortal; his time on earth is limited. Each day of his life has only 24 hours in which he can attain his ends. Furthermore, all actions must take place through time. Therefore time is a means that man must use to arrive at his ends. It is a means that is omnipresent in all human action.

The smart troubleshooter understands the spectrum of possible fixes and what resources each requires. The resolution of opposing forces, the desire for the best possible fix and the limited means to pay for it, is achieved through compromise. This dance is most prevalent in outsourced repair work, like an auto repair shop. The person bringing in his or her malfunctioning machine wants to get it working again by spending the fewest possible resources. Professional troubleshooters have their own incentives: to make a living and to pursue only those repairs that will result in long-term customer satisfaction (and therefore repeat business). This tension is healthy and ensures that both sides are better off from whatever transaction is finally negotiated. Sometimes these opposing forces will not be able to find mutual satisfaction, and therefore a whole spectrum of repairs will never happen.

As a teenager, I ran over a concrete-filled tire rim with my beloved first car. (No one believed me that the rim was knocked loose by the wind and rolled right in front of my car, but that’s what happened.) The collision left a giant hole in my exhaust system. The diagnosis was trivial: the source of the deafening noise that announced my arrival from miles away was obvious. In response, my goals were modest: to shut up that insanely loud car, on a budget of $50, long enough to sell it to another reckless teenager. The repair almost didn’t happen at all: I took the car to every repair shop in the area, explained my modest means, and heard many a derogatory chuckle in reply. I finally found a student mechanic who agreed to make the noise go away for the meager sum I could offer. If I had only $20 instead of $50, or if the damage had been greater, my car would have ended up in the junkyard and been just another example of resources falling short of what’s required to make a repair.

Opportunity Costs

While troubleshooting, “opportunity costs” are on my mind. In the preface to his book Cost and Choice, James Buchanan illustrates the concept in a hilarious way:

You face a choice. You must now decide whether to read this Preface, to read something else, to think silent thoughts, or perhaps to write a bit for yourself. The value that you place on the most attractive of these several alternatives is the cost that you must pay if you choose to read this Preface now. This value is and must remain wholly speculative; it represents what you now think the other opportunity might offer. Once you have chosen to read this Preface, any chance of realizing the alternative and, hence, measuring its value, has vanished forever.

If you had unlimited time to muck around with a broken machine, then the choices you’d make about how to repair it would mean little. Should I use this strategy or that strategy? Who would care? You’d eventually figure it out, but there’d be no emotional weight to either a brilliant solution or a meandering slog. However, our time to make repairs is limited, as with our other resources. You can’t be turning a wrench, reading a manual, calling technical support, and shopping for a replacement all at once. You must make a choice about what direction a repair is going to take and forgo the rest.

The principles of economics have much to teach the troubleshooter. Scarce fix-it resources constrain and focus decisions about what gets repaired, and how. Being forced to choose amongst the many possibilities for repair or replacement, each with varying costs and risks, means economic matters must be considered hand in hand with technical ones. Finally, always keep in mind the concept of opportunity costs while you troubleshoot: periodically asking “what else could I being doing with my time and money?” will help to ensure that you are always on the most rewarding path.