* How do libertarians and their "always de-regulate and privatise compliance checks" attitude live with themselves? It seems pretty clear that a large part of the problem, if not the single largest part, is the looser regime that State governments allowed for certification, going back about 20 or more years ago.
* Of course, greedy developers play their part too. What about this tweet after the show, which has a ring of truth about it:
* I was also speaking to a solicitor recently, who has been around a long time, and he wasn't aware that the compulsory insurance run by the Queensland Building and Construction Commission for house builders (and which gives cover for 6 1/2 years for structural faults) does not apply to buildings over 3 levels high. Apparently, this is the case pretty much everywhere in Australia, but it seems a safe bet that for decades, people buying off the plan units have not been aware that they are much, much more certain insurance position if they build a house, or buy a new townhouse with only two levels, than if they buy even a 5th floor apartment.
* The show did indicate that some changes Queensland has made (to the QBCC inspection regime) are better than what exists in other States. Again, yay for Queensland I suppose.
* Going back to regulation - some Asian woman said something along the lines of "we thought Australia did regulation well, so we thought apartment buying was safe". Yeah, well - shows what happens when you go too far into self regulation. Libertarians and their desire to let the market sought it out (you know, dodgy builders will get a bad rep and that will solve the problem) has probably stuffed up the Australian market for off the plan for some years now. Also - see Boeing and self certification in the USA.
* The other big issue, not covered in the program, is the matter of insurers getting cold feet about cover for engineers and certifiers, not to mention builders themselves. I am pretty sure that part of the issue for poor apartment owners can be fights between different insurers as to which is really responsible - I mean, the body corporate itself will have insurance for things like fire and storm damage, but if you have a big water ingress problem from the first storm after it is built, that insurer is likely going to be looking at blaming design, construction or certification, which brings in up to three other insurers to fight amongst themselves as to who was really at fault. That is, assuming the builder has any insurance at all - as the show indicated, some will just organise their corporate finances such that they can easily close down the company that built it if it looks at risk of a multi million dollar claim.
* I am aware of one high rise apartment block in inner city Brisbane years ago that had some design fault or other, which meant that body corporate levies for something like a normal sized 2 bedroom unit there went up to around $10-$11,000 per annum. (I think to fund the legal action against the builder/designer.) As that sort of litigation can take years, it meant people who wanted out couldn't easily sell the apartment with those levies.
* Why has this mainly been an issue for residential apartments? I don't recall hearing of an office block with the same level of problems. I guess residential apartments have a lot more plumbing and fiddly bits, but still. It would seem something about the apartment building business is particularly rotten.
I am experiencing news of a lot of shoddy high-rise working offside a tradesman recently. Very hard to see how we could ever have a purely libertarian situation for building in the best of circumstances. But under our system of state supported usury its even more problematic. Because every act of development is akin to a gold rush. If you can knock the building up three times as fast as you really ought to, then you will get rich. If you take your time with it you will go broke. Plus they put up buildings that, even if they are structurally sound, they can be ugly. An ugly building is child abuse, elder abuse and everything in between. Its visual pollution.
ReplyDeleteIf you have a site wherein a high-rise might be built the outcome is very important to society. Imagine a Georgist situation wherein the up-front cost of such site is much lower. Maybe, within reason, once the best design possible has been approved, for a building of great vertical height and beauty, the Georgist tax could be suspended, and zero interest loans might be approved for the sole trader putting up the building. He might be encouraged to take his time and do it right. He will have been arm-twisted into making the building more structurally sound, taller, and more aesthetically pleasing, than he really wanted to.
Also there is some room for communist building prior to achieving Georgism and low usury. We have precedent here with the small government Singaporeans under Lee. Lee met Georgist realities by way of getting his government to buy up most of the land in Singapore, and then providing most of the living space through communist means. You have to meet Henry George part-way to have a proper real estate market. And if you are not prepared to do that you cannot run away from Georgist realities. So in transition these sorts of schemes may be expedient.
I don't know if this body-corporate model works. Since its an artificial person its possible to consider it an imposition on the market. If the system is based on land tax with a threshold, and sole traders, it could be that you get one person owning the whole building and living on-site in order to avoid land tax. That may be a more successful model.
ReplyDeleteThis adds to the problems of housing. you would have to be mad to buy an apartment at present
ReplyDeleteSelf-regulating. Sure, works great with dictators.
ReplyDeleteIts pretty clear that if you can have a country that is some sort of robust self-regulating small government society, where people can have welfare, but almost no-one chooses it, well thats success. Thats a better outcome and a superior place to arrive at. But its at about that point that the glibbertarians bail out, do that sort of rotating hand wiping/clapping thingy, like a job has been well done, and say that they've won the argument.
ReplyDeleteBut the point is we are not there yet. We are not even close. Modern private business is at a level of dysfunction that goes far deeper and far broader than the fibbertarians own truncated notions of "market failure."
I think its very productive to think about what transitions are needed to get to that happy place, so I used to talk about industry plans on Catallaxy, when the phrase "Industry Plan", was associated with Mao and Stalin. I think you guys can all remember that. I would have an industry plan for shipping, for taxis, for many things. Because we need to bring each industry closer to a well-balanced Misean setup, and we don't want to leave too many tools off the table in order to be able to do so.
And I think people are coming around you know? I thought I invented the term "fibbertarian" but I got the phrase "glibbertarian" off Soon. So people are coming around. Bottom line is that the poison starts in fractional reserve usury and moves its way out from there. Thats where we need to aim at, and the key strategic opening blow, is to remove any taxes for retained earnings for sole traders.