Friday, August 28, 2009

Building: Less Government? More Maurice. [Update 3]

Few details have been released so far, but Maurice Wimpianson’s proposal to “shift the responsibility for building work” away from councils and onto “licensed” builders looks like the worst of both worlds.  “The liability for building now lands on local councils and that needs to change,” says Williamson, and so it does.  Trouble is, I’m not so sure that what I’ve heard of his changes – what will be the third major change to the industry in little over a decade – are the silver bullet the industry needs.

It’s true that councils should never have been landed with a responsibility they can properly administer nor a risk their ratepayers can afford.  (The cost of making councils responsible for building risk has been made worse both by leaking houses, and the green-plated building regulations supposed to “fix” that  problem, which heavily inflates the cost of repairs.)  Assessing building quality  is not something councils do well, and with the increasing sophistication of buildings these days the attempt to  have them shoulder the responsibility for it has been a disaster all around.

Long discussions about sophisticated building systems with people who have only just learnt to read and write, but who nonetheless are required to take responsibility for issuing your consent, is not a process calculated to make a person fall in love with the present system.

Long delays in processing consents and issuing Code Compliance Certificates only add to already exorbitant costs for home-builders and home-buyers – costs that reflect the attempts by council to do something they can’t do well, and to stump up for a responsibility they should never have had.

But you’re not going to fix this mare’s nest of unclear responsibility and the extra cost that reflects that loose chain by allowing “licensed” builders to “self-certify.” That just sounds absurd. And it cuts out completely D.I.Y.ers and honest builders who don’t wish to pay fat sums to ignorant fat cats to assess them.

Don’t be confused by the rhetoric of the Building Minister.  It’s not a free market or a deregulation that Wimpianson is proposing.  It’s a hampered market with costs inflated by state meddling, the supply of builders restricted by state controls, and the cost of risk (which is inflated by green-plated building regulations inflating the cost of repairs) landed squarely on builders’ shoulders – those few builders who will choose to remain.

Government-licensing of builders is no more a guarantee of building quality than it was to have government-licensing of building systems.  We’re still paying for the false sense of security that gave everyone.  Using qualifications as a proxy for quality is the only way a bureaucrat in a state-controlled system can “measure” quality, but it certainly doesn’t guarantee it -- as a perusal of the “quality” of registered teachers would tell you.

The idea that registering architects and licensing builders is some silver bullet that guarantees quality can be exploded simply by looking at the number of leaky houses designed by registered architects and built by master builders, i.e., a significant number.  I’m repairing one now that was built by master builders, and designed and signed off by the president of the Institute of Architects – didn’t stop the building leaking, or needing expensive repairs

It’s essential that councils be taken out of the building chain.  They should never have been there in the first place.  But licensing builders is not the answer to fall back on: and the enthusiastic reception by Master Builders to the idea is not evidence that it is the answer, but evidence instead that Master Builders see the opportunity here for rent-seeking.  And they will be.

To see what the answer to all this might be, let’s look at what might happen if  the government got the hell out of the way altogether (aside, that is,  from its proper job of registering titles and contracts).   Now, when you buy a second-hand car you’ll usually get it inspected.  When you buy a house, which is the most expensive thing most of you are ever going to buy, you’d expect that you’d have that inspected too.  And just as sellers of second-hand cars are increasingly touting the quality of the inspections and inspectors to help sell their cars – Come With Full AA Inspection! Signature Class Car! – so too would recognised building inspectors acquire increased importance among buyers.

Wouldn’t be very long before they’d be looking only for houses backed by reputable inspectors – inspectors who, unlike councils, would have their own reputation on the line with every house they assess.

And acquiring importance  too would be insurance companies.  I see Maurice floating the idea of a warranty bought by the builder, but without details it’s hard to know precisely what’s intends for Maurice’s Market.  But what’s likely to happen in a free market is that standards are increasingly set by insurance companies themselves – standards that in many cases will be higher than they are now, but are based on what’s economically workable for their customers.  If you want to sell a house, then you’ll want to convince house-buyers it was well-built – and the best way to convince them of that would be first to convince the best insurance company you can afford. 

The company that insures your house has the biggest incentive to assess its build-quality without taking your wallet off at the arm. And in a free building market, each insurance company would be free to set its own building standards – with premiums and reputations to suit. Build the housing equivalent of a Toyota Corolla, and most insurers would charge very little for the very little risk involved.  Build the housing equivalent of a hot rod however, something more radical, and you’d find fewer insurers willing to back you, and those who did would want to charge you more for the privilege.  But you’d still be able to build it, which you can’t do today.

The outcome of an actual free market would be that you could choose your risk based on the level of building risk and building excitement you wanted – just as you do with a car – and building standards would eventually be set by market mechanisms that left the risk where it should be: on buyers and sellers and insurers. Not on ratepayers.

Standards would likely be higher, as insurers (like the AA do with their car inspections) fight to increase their reputations. And over time you’d have building standards that encouraged innovation, rather than strangled it, protected home-owners rather than leaving them in limbo, and didn’t cost an arm and a leg and numerous long delays to assess. 

Frank Lloyd Wright used to say that the building regulations of today reflect what the building inspectors of yesterday knew, or thought  they knew.

He’s still right.  And it’s getting so that’s all we’re allowed to erect.

UPDATE:  A question from a commenter made me wonder if I hadn’t been too clear.

Basically, I am suggesting is inspections not just when you buy an existing house (which is what most people do now), but also during the construction of your new house – and not from your local council, but by your chosen insurer.

What I'm essentially suggesting is that if govt and local govt withdrew, then what would be likely to replace them is an insurance-driven model, with the insurance companies themselves acting as your "consenting agency."  Unlike now, that would make the chain of responsibility for failure very clear, and the motivation for doing good very stark.

Your motivation as a home-builder for using one would be to ensure both its resale value and its insurability.  Both would be easier if you can choose and afford a reputable insurer who sets objective standards by which your new building can be measured.  (And these could even refer to existing standards like NZS, AS and so on.)

And the motivation of the insurer would be the same as it is now in every other field: to offer a competitive rate and service while maintaining its reputation for square dealing.

So as a home-builder you'd be dealing with a rational organisation who wanted to help you -- and also wanted to ensure things were done right.

And as a home-owner you'd have both the choice of insurer, and the choice of the level of risk you wanted to take.

Basically, if you wanted to build something conventional, you could get a good inexpensive service that protected you and future home-buyers.  And if you wanted something more like the Bavinger House (below and right), you'd have to pay a little more . . . but unlike the situation now, you'd actually be allowed to build it!

GlasgowArchitects-Scope UPDATE 2: Opening my latest copy of ‘Scope’ magazine, I read with interest the story of this new house (right and below) on Fiji’s Denarau Island for a newly retired couple, designed by Auckland-based Glasgow Architects.  The house, one of many in this still popular resort area, has been specced for abundant rainfall, Fiji’s heat and high tropical wind forces. Says principal Garry Glasgow of the insurance-based model used in resort-town Fiji,

“Building in Fiji presents some interesting issues as there is no ‘building code’ as we are accustomed to in New Zealand.  ‘In fact,” Garry says, ‘the control on quality is dependent on the insurance companies who insist on engineering reports and architectural qualifications to comply with their building criteria.  For this reason more detailed construction supervision was required than is the case in New Zealand.”

GlasgowArchitects-Denarau

UPDATE 3: Meanwhile back in New Zealand, the South Pacific’s home of extensive, expensive building bureaucracy, we hear more stories like this one:

    “We're getting a simple shed built, to use as a workshop. The contractor tells us that the council charges for a building permit have gone up by around 40% in less than two years. And even though the number of applications has dropped drastically over the past twelve months the waiting time for approval hasn't varied.....Oddly enough, the four councils in this area have all put up their charges by exactly the same amount.
    “In addition, any windows in a habitable building must be double-glazed--never mind the cost, never mind that it's none of the council's damn business.
    “These bastards are nothing more than parasites, leeching off other people's work and getting in the way of the productive sector of society. A pox on them all.”

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52 Comments:

Anonymous twr said...

How easy is it to inspect an existing house and give an accurate opinion of what might be wrong? I'd imagine it would be harder than for a car.

Also, apparently Maurice does deign to let you do your own building work, as long as you get permission from the council wallahs first and don't build more than one house for yourself every three years. I have no idea what the criteria are for getting an "exemption", but I guess it's marginally better than the previous idea of banning it altogether.

8/28/2009 11:34:00 am  
Blogger PC said...

TWR: Maybe I wasn't very clear. I was suggesting inspections not just when you buy an existing house (which is what most people do now), but also during the construction of your new house.

What I'm essentially suggesting is that if govt and local govt withdrew, then what would be likely to replace them is an insurance-driven model, with the insurance companies themselves acting as your "consenting agency." Unlike now, that would make the chain of responsibility for failure very clear, and the motivation for doing good very stark.

Your motivation as a home-builder for using one would be to ensure both its resale value and its insurability. Both would be easier if you can choose and afford a reputable insurer who sets objective standards by which your new building can be measured. (And these could even refer to existing standards like NZS, AS and so on.)

And the motivation of the insurer would be the same as it is now in every other field: to offer a competitive rate and service while maintaining its reputation for square dealing.

So as a home-builder you'd be dealing with a rational organisation who wanted to help you -- and also wanted to ensure things were done right.

And as a home-owner you'd have both the choice of insurer, and the choice of the level of risk you wanted to take.

Basically, if you wanted to build something conventional, you could get a good inexpensive service that protected you and future home-buyers. And if you wanted something more like the Bavinger House, you'd have to pay a little more . . . but unlike the situation now, you'd actually be allowed to build it!

8/28/2009 02:39:00 pm  
Blogger KG said...

I just had a conversation with our council building inspector. He told me that the compressive strngth of a concrete pad was 'irrelevant'.
The conversation ended right there, and not amicably....

8/29/2009 07:49:00 am  
Anonymous LGMl said...

TWR

Inspecting a car is trivial- much easier than inspecting a house. Under the outer sheetmetal the vast majority of cars are almost exactly the same. There are only a few design variants and these are well known- completely understood.

There is something else you can consider when buying a car. That is the reputation of the manufacturer or of the particular model concerned. Certain types are known to be expensive to maintain. Certain types are known to be unreliable. It isn't difficult to find out which.

What you need to do is decide what you value in a vehicle and go from there. It'd be the same in dealing with buying a house. Actually the whole process of buying a car or a house should be simplicity itself. You only need hire experts to deal with matters that require specialist knowledge, to act on your behalf as your agent (that is, to take instruction from you and act according to those) and to report back to you on what they have discovered and what they have done.

Nothing of this could possibly justify the involvement of a coercive organisation such as a government.

LGM

8/31/2009 07:33:00 am  
Blogger Owen McCaffrey said...

your system has no answer for the dangers posed to innocent members of society who enter sub-standard buildings.

You are imposing a massive deadweight cost on society of having to check the integrity of each and every building they enter in their whole life before they enter. Whereas at teh moment they simply rely on government to check and approve it.

The low amount of deaths in NZ due to poor building is testament to the fact that the current system is working on a safety aspect.

Costs are too hight but your system would impose huge new information gathering costs on consumers aswell and making some buildings less safe because buildings won't bother to certify to save money.

So your system is far from perfect and not as good as the current system.

9/01/2009 12:34:00 pm  
Blogger KG said...

"The low amount of deaths in NZ due to poor building is testament to the fact that the current system is working on a safety aspect."
No. No it isn't.
What it's testament to is the fact that most buildings are vastly over-engineered.

I play Wagner very loud at my place sometimes.
There are no Chinese living nearby.
Therefore Wagner keeps Chinese people away.
It's called Owenlogic. :-)

9/01/2009 01:37:00 pm  
Anonymous twr said...

I don't play Wagner and I've got a Chinese familiy living next door. Sounds like you've stumbled upon the truth there KG.

9/01/2009 03:13:00 pm  
Blogger Owen McCaffrey said...

"What it's testament to is the fact that most buildings are vastly over-engineered."

But...that DOES mean that they are working on a safety aspect. Which is what I said. You attempted to give an analogy of poor logic however this was after you conceeded that my point was both logical and valid. Because something being "over-engineered" DOES mean that it is safe as evidenced by NZ's low number of building deaths.

Man you are poor at logic!

So your solution is to 'under-engineer' them to the point where people are at risk of there lives.

And besides from the obvious reasons already mentioned, your insurance will not work because insurance companies can obviously exclude structural defects as a claimable item. So all the people with shoddy houses out there (and builders) will just get low-cost insurance for fire or other damage which is not caused by existing structural defects.

So your insurance "idea" will not in any way prevent seriously sub-standard housing.

Which is the reason that rational people will avoid it like the plain.

It will impose extra information costs on people to check the integrity of every building they enter.

Also it will greatly increase the number of dangerously sub-standard housing.

Wow. What a good plan...not.

9/01/2009 05:53:00 pm  
Blogger KG said...

Oh gawd...I just can't be bothered. You're little better than a troll Owen and a safety and regulation-obsessed one at that.
I don't suppose it's occurred to you that over-engineered buildings could be due to ignorance (on the part of regulators), corruption (regulators being in the pockets of the building supplies industry), poor design which gets the nod because regulators are indifferent to the extra costs that imposes on the customer just so long as their asses are covered...there are all kinds of reasons buildings are over-engineered.
Your "safety aspect' in those cases is no more than a side-effect of a shit system which imposes huge costs on the consumer.
Most of us have no wish to throw away hard-earned money building something unsafe--we just don't need an army of grey flannel dwarves to make that decision for us.
Interestingly, there are plenty of houses in the N.T. (Australia) and America and Africa which were built entirely without the 'benefits' of an army of self-important, self-serving leeches and safety nazis which have been standing for many, many years without falling to bits and killing people. I helped my own father build a house and shed more than forty years ago and both are still perfectly sound--all without a permit.
If the State and apologists for the State such as you would simply butt out of other people's lives the world would be a better, more productive place. You're no more than a ball and chain around the ankles of grown-ups. In fact, not to put too fine a point on it--people such as you suck the joy and creativity out of life and you give me the shits.

9/01/2009 07:05:00 pm  
Blogger Owen McCaffrey said...

You make some good points KG and you are right MOST of the builders just try and do a good job. But even you admit (by your use of the word most) that not all do.
The present system, while expensive and inefficient, saves lives by preventing (as much as is possible) those poor quality buildings from being built.

The system you suggest encourages people who don't want to follow any best practices to go ahead and build their deathtraps. And you support this.

That is why your view is in the minority worldwide. Because other people are rational and they weigh the efficiencies in your system against it's safety problems.

The existing system is less efficient but much safer.

99.99999% of the world chooses a safer system over a cheaper one. Especially when the cheaper one also creates a huge amount of extra worry about the safety of every building one enters. Actually when taking into account the extra information-gathering costs o not knowing the structural soundness of buildings, your insurance system might end up more expensive than the current system - cheaper for the builder but MUCH more expensive for the customer or visitor to a building.

9/01/2009 08:22:00 pm  
Anonymous Falafulu Fisi said...

Owen said...
99.99999% of the world chooses a safer system over a cheaper one.

Owen do you understand the difference between chooses via state legislation and chooses via individual voluntary actions?

Now, I'll let you clarify that 99.9999% for me please, because the answer is so obvious even to a 5 year old.

Once you solve that typical 5-year-old problem that I asked above, then you can continue your ranting.

9/01/2009 09:20:00 pm  
Blogger Owen McCaffrey said...

It's ok Fisi I think you just misunderstood.

I didn't mean that that had already chosen, ir in relation to the actual situation in place.

I was referring to if you ask someone the question "Would you prefer to have compulsory building codes or not" 99.9999% of people choose compulsory. This is evidenced by the fact that the number of people suggesting or supporting a voluntary building code is so small as to be 0.000001 of the population anywhere.

MOST people are not silly enough to sign away their ability to feel safe walking into shops, hotels, schools and any other building they enter on a daily basis (or incur the extra costs that gaining such safety information would cost them). Because they know that a voluntary system would cost them more wasted time enquiring about the safety of buildings and could end up costing them more.

It is cheaper, safer and easier on the consumer, tourist or person who walks into any building to to have a compulsory building code in some form.

And since there are more people using builsings than there are building them....seems your voluntary idea will never fly. Just a numbers game really.

9/01/2009 09:27:00 pm  
Blogger Owen McCaffrey said...

It is called an information problem and it is an example of market failture.

If you had studied economics you might know something about information failures in the free market.

In this case it is more efficient for all buildings to be compulsorily inspected than for individuals to have to do this themselves.

So it IS cheaper.

builders and dangerous cheap misers win in a voluntary system.

Everyone else wins in a compulsory system.

builders v everyone.

everyone wins.

9/01/2009 09:31:00 pm  
Anonymous twr said...

Owen, can you suggest a practical solution to the delays, cost, irregularities, and general inefficiencies of the existing compulsory systems?

9/01/2009 09:46:00 pm  
Blogger Owen McCaffrey said...

My suggestion is to have a compulsory building code but the checking and such can be undertaken by private inspectors not government.

This would be much the same as the way companies must be audited but they can shop around for the best value one.

I agree that the current system is far far too expensive.

National is trying to simplify it somewhat. At least they are moving in the right direction.

I actually think having qualified builders is a good idea. This is because instead of checking every single house they build, government could check one in 10 or 20 and in most cases that builder, being appropriately qualified and knowledgeable, could build without any inefficient checks.

I know these options still have their draw backs but they do not compromise on public safety like a 100% voluntary scheme would.

9/01/2009 09:51:00 pm  
Anonymous Falafulu Fisi said...

Own said...
If you had studied economics you might know something about information failures in the free market.

Did you just make that up or was it something really being published in economic literature?

I've never studied economics, however I develop software models in economics/finance.

Now, since I read peer review papers in specific domains in economics , would you mind pointing out to me the specific published paper, ie, name article title, name the journal that it was published in, and finally name the author/co-authors of the article, which described the information failures in the free market.. Don't worry that if such article/journal/book may only be available in the library, because all major publishers today have made their journals available online.

Just give me a title and I'll try and dig it in order to confirm of what you're saying here if it has some truth to it, or it is just pure bullshit, perhaps you think that someone here (other readers including myself) wouldn't dare to ask.

If you can't give me a title, then you're a bullshit artist.

9/01/2009 10:07:00 pm  
Blogger Owen McCaffrey said...

Have a look at this one:

http://nobelprize.org/nobel_prizes/economics/laureates/2001/public.html

Seems there was actually a nobel prize in it a few years back.

It is disappointing that you suddenly and quickly assume that nobody else knows anything about economics when you already admitted you don't know anything either. Some of us did study it to a university level.

9/01/2009 10:11:00 pm  
Blogger Owen McCaffrey said...

http://nobelprize.org/nobel_prizes/economics

plus...

/laureates/2001/public.html

9/01/2009 10:12:00 pm  
Blogger Owen McCaffrey said...

The oratory of unrestricted free-markets is often far more appealing than the reality.

Those that speak of property rights as the most important have forgotten that they come only 14th place.

This means that there are 13 other rights that come before the right to hold and enjoy one's property.

Such rights include:

Everyone has the right to life, liberty and security of person.

Article 4

No one shall be held in slavery or servitude; slavery and the slave trade shall be prohibited in all their forms.

Article 5

No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.

Article 6

Everyone has the right to recognition everywhere as a person before the law.

Article 7

All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination.

Article 8

Everyone has the right to an effective remedy by the competent national tribunals for acts violating the fundamental rights granted him by the constitution or by law.

Article 9

No one shall be subjected to arbitrary arrest, detention or exile.

Article 10

Everyone is entitled in full equality to a fair and public hearing by an independent and impartial tribunal, in the determination of his rights and obligations and of any criminal charge against him.

Article 11

(1) Everyone charged with a penal offence has the right to be presumed innocent until proved guilty according to law in a public trial at which he has had all the guarantees necessary for his defence.

(2) No one shall be held guilty of any penal offence on account of any act or omission which did not constitute a penal offence, under national or international law, at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the penal offence was committed.

Article 12

No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.

Article 13

(1) Everyone has the right to freedom of movement and residence within the borders of each State.

(2) Everyone has the right to leave any country, including his own, and to return to his country.

Article 14

(1) Everyone has the right to seek and to enjoy in other countries asylum from persecution.

(2) This right may not be invoked in the case of prosecutions genuinely arising from non-political crimes or from acts contrary to the purposes and principles of the United Nations.

Article 15

(1) Everyone has the right to a nationality.

(2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.

Article 16

(1) Men and women of full age, without any limitation due to race, nationality or religion, have the right to marry and to found a family. They are entitled to equal rights as to marriage, during marriage and at its dissolution.

(2) Marriage shall be entered into only with the free and full consent of the intending spouses.

(3) The family is the natural and fundamental group unit of society and is entitled to protection by society and the State.

9/01/2009 10:21:00 pm  
Anonymous Falafulu Fisi said...

Owen said...
It is disappointing that you suddenly and quickly assume that nobody else knows anything about economics when you already admitted you don't know anything either.

Owen, what I said that I did'nt study economics is that I never enrolled in an economic paper or a course at any tertiary institutions. Not formally enrolling in an economics course doesn't mean that such person is not knowledgeable in economics. I see, that you have an interest in linguistic perhaps you have studied some papers in it, but if I started talking to you about (computational) linguistic (which I've never studied it formally - ie, never enrolled), you wouldn't have a clue.

Owen said...
Some of us did study it to a university level.

Yes, that level is more like 3rd form high school level in my view. I read very complex economic modeling stuff (from peer review journals) that is far beyond 3rd form level (which is where you're at).

Finally, you simply misunderstood of what's been quoted at the Nobel-Prize-org web site about information asymmetry, but I am not gonna give you free eduction here on the subject, you have to dig on your own. The are various papers that have been published on the topic, just find them.

Once you understood what it means, then come back here and ask your next question.

9/01/2009 10:46:00 pm  
Anonymous Julian said...

Owen, It appears to me that you have reached the opposite conclusions to those intended by the academics you link to. Their seminal papers actually demonstrate how the market resolves information asymmetry. Akerlof's used car example, provides a case in point as does Spence's signalling theory on education. Brilliant papers which seem to contradict your thesis.

Julian

9/01/2009 10:51:00 pm  
Blogger PC said...

Owen, I'm not even sure you've even read the article here that you now purport to be addressing.

You say (both here and on the thread you thread-jacked) that people want quality control and protection from fraud and unsafe buildings?

Well, of course they do. But why do you insist (at great length) government licensing and government regulation can provide that?

Bernard Siegan famously argued in 'Other People's Property' that, “A freer market in housing provides great housing benefits at little cost to the taxpayer.” It leaves money in home-owners' hands, and allows more to be done better with less.

John Cobin's book, 'Building Regulation, Market Alternatives, and Allodial
Policy,' supports Siegan’s opinion, and fully adresses your naive call for more building regulation with both arguments and evidence.

The primary problem is not market failure, but regulatory failure -- regulations which impose a huigher cost, which manifestly fail to achieve their stated goal, and which strangle innovation at birth.

Says Cobin:

"I found [for example] that costly fire safety regulation in Baltimore has not been effective. The annual number of structural fires in Baltimore per 1,000 population has steadily increased to 25.2 times
the 1859 level, while the building code has grown from 1 to 1,397 pages and the number of
inspectors has increased from 0 to 178. Thus, there is no evidence that costly safety regulation has
improved building fire safety. Moreover, judging from the data I have gathered on fires in
Santiago (which seem somewhat less dramatic than the results in Baltimore), there is little
evidence from the Chilean record that regulation improves fire safety.

"In addition, I found that the absence of a building code in Jefferson County, West Virginia and
Franklin County, Pennsylvania has coincided with anywhere from a negligible effect to a 30%
increase in home prices, relative to prices of homes in their principal cities (which have a building
code). Controlling for other demand factors, I argue that price is a fair proxy for quality. Thus, I
conclude that building quality has not been ameliorated by costly regulation and, in fact, may have
dwindled because of it. I also recorded ample visual evidence of housing and construction that
confirmed this supposition."


Cobin could have also looked at plenty of other historic and geographic examples.

One other contemporary example he could have cited was the unincorporated section of Harris County Texas, which like much of the US until the mid-to-late twentieth century, has no building codes -- and no problems without them. Writing in 'The Economics of Building Codes & Standards' Peter Colwell & James Kan point out that protection still exists, and as with the Fijian example above, is frequently more demanding (though more logical) than the government's. To whit:

"Before they lend money, private sources such as savings and loans associations require certain specifications to be met [just as I describe in the post above]. Both the fire insurance companies and teh electrical utilities have restrictions on teh quality of consruction before they cover or service the building, respectively. THis would indicate that building codes administered by the government are unnecessary."

True that. Cobin agrees . . . [continued in part two]:

9/02/2009 12:53:00 am  
Blogger PC said...

[continued from part one]

True that. Cobin agrees:

" I argue that building safety and quality are not public goods that cannot be provided by markets, and that costly building regulation could be replaced by a more effective and efficient market-based alternative. My book provides auxiliary support for Siegan’s conclusion that zoning should be eliminated in favor of market-regulatory alternatives. Like Siegan, I found that restrictive covenants were
effective in allocating real property resources and I suggested that further reliance should be given
to market incentives to improve the quality of life. Unlike Siegan, I thoroughly grounded my
results in public choice and Austrian knowledge theories in order to better explain the reasons for
the regulatory failure I found."


Regulatory failure is always worse than market failure, since markets fail small time, but regulations can poison everyone who was required to follow them. [see houses, filled with stachybotrus - wood pulp and dryframe, reaction with]

Conclude Cowell and Kan:

"The system that produces buildng standards and ultimately codes is structured so that it does more mischief than good. Innovation is stymied, while codes are made increaslingly rigorous and costly."

They could have been talking about New Zealand!

"Codes have been subverted by special-interest groups in and out of government to accomplish a number of purposes, from selling more supplies [hello dry-frame, Winstons and James Hardie] to reducing the liability of building officers [hello Maurice]. In fact there is no body of evidence that shows building codes add to health and safety in any way. It has certainly not been demonstrated that the system of building codes is economically efficient or that it produces desirable distributional effects. The system is intellectually and morally bankrupt."

It sure is.

PS: Do ask me for references for these papers. It will be my pleasure to supply them. :-)

9/02/2009 12:55:00 am  
Blogger PC said...

"Those that speak of property rights as the most important have forgotten that they come only 14th place"

Alright, I'll bite: Now what the hell are you talking about?

9/02/2009 12:57:00 am  
Anonymous LGM said...

Owen

Without the property right you have nothing. For you to even form an argument, let alone present it, presupposes that you own your own mind and also your own body. Think about it.

---

BTW, previously I asked you whether you were prepared to check the qualification, knowledge, experience and skill of all those who wrote your building compliance regulations. I was also interested in whether you were prepared to check the qualification, experience, knowledge and skill of each of those approving and signing off on the certification of the buildings you intended to enter. You remined silent on this, merely repeating the mantra that the government looks after everything. The question I directed to you remains unanswered, so I'll put it to you again in slightly different sense.

Are you prepared to check the government has indeed made certain that every building you enter is safe PRIOR to your entrance? Are you prepared to check that the government functionaries who drafted the certifications knew what they were doing- that they were qualified, experienced and suitably skilled to consider each and every possible building (past, present and future) in their draft documents? Are you prepared to ensure that those who passed the legislation actually knew what they were approving? Are you prepared to ensure that those who signed and approved building certification documents actually possessed suitable qualifications, experience and specific knowledge of each and every building they approved? Are you prepared to check that each and every one of these buildings is actually as it is stated to be by government pieces of paper?

Were you to answer honestly your response must be, "No." For this and other reaons your entire argument undermines itself. It's faulty. Think on that well.


LGM

9/03/2009 07:26:00 am  
Blogger Owen McCaffrey said...

I have 100 years of solid safety record to make me comfortable that council inspections DO work.

When I enter a building under a voluntary system there is no guarantee that that building will have had any inspection at all.

Of course some buildings at the moment are built illegally too.

But under a voluntary code this would dramatically increase NOT decrease.

Making NZ far less safe.

Regarding Property rights. The right to yourself and your person is obviously more important than your right to own property such as land. Just answer the question "would you rather lose your life or your house?"

Therefore 99.99% ofthe population are acting like true libertarians in protecting their body from threats posed by others. Much the same way as someone hires a security or police force, so the 99.99% of the public have hired a building inspector force to protect their life and limb against threats from negligent builders.

It makes more sense than your argument.

9/03/2009 09:46:00 am  
Blogger Greig McGill said...

I've just read through this entire thread, and the papers referenced. Owen, I want two hours of my life back! :P

You keep making basic logic errors (primarily mistaking correlation for causation) and incorrectly citing external resources you don't seem to have a handle on. When people don't dismiss you as a troll (which I'm starting to be fairly sure you are, but I'm biting anyway), and actually take the time to address your unfounded statements, you respond by simply restating your flawed assertions and throwing around made up stats (99.9999% indeed).

This whole thing has the feel of someone who knows they've backed themselves into a corner, and can't really argue their way out of it, yet keeps persisting anyway out of pride.

It's OK man. You can back down. People will only think better of you for doing so. It's not a pissing contest, but a debate.

I'm not trying to be a prick here, just thought it might help to have the perspective of someone who isn't entrenched in the debate, and has no axe to grind.

I hope you take it as I intend it - constructively.

9/03/2009 10:32:00 am  
Anonymous LGM said...

Owen

You wrote this: "I have 100 years of solid safety record to make me comfortable that council inspections DO work."

Really? So there have been no building failures, no slips or subsidences, no leaky homes, no faulty materials etc. etc. etc... All those certified buildings were held together by the magic of pretty pieces of paper and the incantations of holy inspectors. Tell that to the residents, mate. Owen, one word for you and that's this one, "BULLSHIT!"

Anyway, you need to stop evading the substantive. Answer what you were asked. Here is is again:

Twice now you have been asked "whether you were prepared to check the qualification, knowledge, experience and skill of all those who wrote your building compliance regulations."

Are you prepared to "check the qualification, experience, knowledge and skill of each of those approving and signing off on the certification of the buildings you intended to enter?"

"Are you prepared to check the government has indeed made certain that every building you enter is safe PRIOR to your entrance? Are you prepared to check that the government functionaries who drafted the certifications knew what they were doing- that they were qualified, experienced and suitably skilled to consider each and every possible building (past, present and future) in their draft documents? Are you prepared to ensure that those who passed the legislation actually knew what they were approving? Are you prepared to ensure that those who signed and approved building certification documents actually possessed suitable qualifications, experience and specific knowledge of each and every building they approved? Are you prepared to check that each and every one of these buildings is actually as it is stated to be by government pieces of paper?"

Hello. Calling Owen. Can you answer honestly Owen?

---

Regarding property rights. The point is, Owen, that the property right is FUNDAMENTAL. It does not come after 14 other "rights."


LGM

9/03/2009 10:41:00 am  
Anonymous Falafulu Fisi said...

Owen said...
When I enter a building under a voluntary system there is no guarantee that that building will have had any inspection at all.

That's great. Just, don't enter the building, since the building is not pointing a laser gun to wherever you are and threatening you to enter or else.

The other good thing that comes out of you not entering a building because you don't trust if its going to collapse or not, is that it keeps you and lots of typical paranoia customers away from McDonald, so that I can go in there to eat cheap Big Macs since the price will definitely drops because of lack of (paranoia) customers.

9/03/2009 10:43:00 am  
Blogger Owen McCaffrey said...

The economy would tank if people could not feel safe walking into shops and builsiness, hotels and other establishments.

That is why voluntary building codes cannot work.

9/03/2009 02:29:00 pm  
Blogger Owen McCaffrey said...

The main problem with what you are saying LGM is that you would rather choose your house over your life since that is the statement you just made.

Safety of person comes before property such as houses.

BUilding regulations is a safety of person issue therefore is justified even under libertarian guidelines.

9/03/2009 02:31:00 pm  
Blogger Owen McCaffrey said...

You didn't make any point to back up your comments.

Not sure e3ven quote what you meant since you cou;dn't give any examples either.

9/03/2009 02:32:00 pm  
Blogger Owen McCaffrey said...

The point about information is that the cost of the person entering a building under a volutary scheme is so high as to be prohibitive. Plus the added time they must take to remember and check each time.

A compulsory scheme reduces this cost and hassle. One can be sure that most buildings they enter will have met a minimum standard. Paying someone else to give you that information each time you enter a building would cost many times more.

Therefore compulsory building codes are more market efficient because they save consumers both time and money.

Voluntary schemes would cost the consumer more.

9/03/2009 02:36:00 pm  
Blogger PC said...

Owen, are you going to continue pretending you haven't already been well answered?

Either address the points raised or push off.

9/03/2009 02:37:00 pm  
Blogger Owen McCaffrey said...

I am confused PC:


From Jefferson County Council website:

"Building Code Enforcement Ordinance - Structures constructed in Jefferson County shall comply with the requirements of the adopted version of the International Residential Code and/or the International Building Code, as established by the State of West Virginia. The requirement for building permits includes but is not limited to: residential and commercial/industrial structures, remodeling and renovation projects, finished basements, signs, fences of 6' height or taller, sheds/storage buildings, garages,and swimming pools/hot tubs. Building permit applications and the fee schedule may be obtained from the Office of Building Permits & Inspections."

9/03/2009 02:43:00 pm  
Blogger Owen McCaffrey said...

I just don't understand why Jefferson County would decide to put in place compulsory regulations if the existing system was working "so well".

Can you explain? Because it sounds a bit like something isn't being told from that story...

9/03/2009 02:48:00 pm  
Blogger Owen McCaffrey said...

LGM: I have 100 years of evidence to show that the NZ government has indeed been keeping buildings safe.

When you enter a building under a voluntary code yuou have no was of knowing whether they even have had any checks at all. It might be a deathtrap. There is Significantly less chance of that under a compulsory system. By factors of 1,000s.

9/03/2009 02:50:00 pm  
Blogger Owen McCaffrey said...

LGM: when those builders who wanna do things cheap have a voluntary system it makes it much easier for them to get away with shoddy practices.

meaning a voluntary code will cause more slips, subsidences, and faulty materials etc.

The existing system is not perfect but it is much safer than a voluntary one for that reason.

And since protection of body is a higher right that protections of other property...

Compulsory building codes win. again. next question.

9/03/2009 02:53:00 pm  
Blogger PC said...

Owen, if the bureaucrats in Jefferson County, WV, have elected to introduce county-wide council-enforced building controls since Cobin's book was written (it was published in 1997), that's evidence of nothing more than that the bureaucrats in Jefferson County, WV have elected to introduce county-wide council-enforced building controls.

It is not evidence of failure of a private system, and the evidence Cobin draws from the private system when it was in operation still holds.

Fact is that buildings in Jefferson County not being certified did not cause widespread building failure in Jefferson County (as you say they should have), did not cause the economy in Jefferson County to "tank" (as you say they would have), and did not cause people to "stop and check" before they entered a building (as you absurdly claim they must have).

Which causes me to suggest that frankly you're just making up your claims out of whole cloth.

You say that "voluntary building codes cannot work," and I provide evidence that in fact they do work and they have worked. By contrast, you have provided plenty of bald assertions and very little evidence. The failure of NZ's building regulations is enough on its own to dismiss your claims of the 100% reliability of compulsion, and as Julian noted above the academic evidence you have provided says precisely the opposite of what you claim it said.

And for all your manifest bluster, those are the only two pieces of evidence you have bothered to bring to the table to underpin your conviction that compulsion "works."

If you're honest, then show us what you have.

9/03/2009 03:28:00 pm  
Anonymous LGM said...

Hello Owen

Stop wriggling. Just answer the questions that were posted for your attention.

LGM

9/03/2009 06:16:00 pm  
Blogger KG said...

"Compulsory building codes win. again. next question."

The only place they "win" Owen is that one between your ears.

9/03/2009 07:13:00 pm  
Anonymous twr said...

Owen, can you think of a circumstance where a party would be better off by building or operating a structure that is built so poorly that it will fall down?

The builder does not benefit under a voluntary system as the person who pays them to build it should pay someone to certify it before they make the final payment (or along the way). So the builder is unlikely yo cut corners to save money.

The person who commissions the building does not benefit from it being unchecked because they lose out if it collapses.

Subsequent owners do not suffer because they know to check the certification before they pay their money to the previous owner.

So who would be motivated to cut corners?

Building users would be in no more danger than they would be from a building which was built a long time ago and compulsorily certified at the time, then fell into disrepair over the years.

9/03/2009 09:17:00 pm  
Blogger Owen McCaffrey said...

It is really funny PC/LGM because you will believe anything you read.

A quick perusal of redily available facts would show that in actualy fact Jefferson County is much richer than it's Principal City Charles Town. In this case it is obvious that the increase in the prices of buildings in Jefferson County relative to the principal city is a result of the much higher income of the residents there.

People with money tend to build buildings that stay up well and as such building codes are not an issue. It is only on the poorer end of any market that there will be pressure to build to sub-standard levels.

When looking at Jefferson County it is obvious that there is simply alot more people with enough money to build valuable safe properties.

If only every builder had this luxury or inclination.

The State has an obligation to protect the life and limb of all citizens from mortal danger wherever possible and it is not the right of the parent to endanger their child. Therefore building codes are entirely appropriate even in a libertarian society where the welfare of the child is to be safeguarded.

Additional concerns include, in places where forest fires or tornadoes are a possibility, houses which are hazardous to their neighbours become a threat to life and limb and can be forcibly brought into line by the community. This is particularly an issue in California and Tornado Ally.

In NZ, we have problems with visitors and overseas students who come to NZ with little English who have little or no hope of being able to correctly decipher a building inspection sticker. Crimbling a house onto them or burning them in a fire is not the best way for NZ to entice more of their friends to come here.

In order for society to function properly, NZ needs to be a place where someone can travel and do business in relative safety so things such as Vehicle WOFs, bans on lethal weapons, bans on harmful drugs and bans on harmful buildings are all legitimate in the interests of the safety of each individual person.

The cost of time and money that it would take for someone to ascertain that there was no threat in another, person/car/building, everytime on came across one is many thousands that which it costs to have this checking done by a public entity on everyones behalf. The increased costs of a voluntary code are called costs from information-related market failure.

JEFFERSON CITY
Median income:
household $32,538
family $43,547.
Males $30,917
females $22,241.
per capita income $18,104.
Below the Poverty line
13.20% of families
15.80% of the population
20.30% of those under age 18
13.40% of those age 65 or over.


JEFFERSON COUNTY
Median income:
household $44,374
family $51,351.
Males $35,235
females $26,531.
per capita income $20,441.
Below the Poverty line
7.20% of families
10.30% of the population
11.40% of those under age 18
9.40% of those age 65 or over.hing

9/04/2009 02:31:00 pm  
Blogger Owen McCaffrey said...

TWR:

Have you ever seen a cheap backpackers that looked like it was just standing up?

Every seen a shabby takeaway restaurant?

Ever seen or heard of children living in a garage?

Every heard of nightclub fires where people couldn't escape because there were not enough exits?

Ever heard what happens in earthquakes when the buildings people are in are not built to any standard (search for Sichuan Earthquake)...

You obviously aren't living in the real world then. Just a fantasy one where everyone has enough money to do things properly and they never have to make a decision between someone else's safety and the cost they pay.

The problem has never been good people who want to build a good house. It is surprising you are even suggesting it ever was. Makes it seem like you don't actually have a handle on what the issues really are. You are railing against regulations when you don't even understand why they were put in in the first place....

9/04/2009 02:47:00 pm  
Anonymous twr said...

It's not realistic to expect all buildings, no matter how well inspected, to be able to survive an earthquake the size of the Sichuan one.

The poor-looking takeaway or backpackers are examples of the market working. People will pay what they can to have aroof over their head. What's the alternative? The backpackers has to move to a better building which has passed all the prettiness codes, and therefore has to put prices up, so the backpackers have to sleep in their tent and get mauled by a bear, or mosquitos, or annoying arguments, or whatever.

Much like the minimum wage, building codes price the bottom end of the market out of people's reach. Furthermore, like drugs laws, they tend to force people to go to dodgy providers when they can't afford a legal alternative.

The fact borne out by the evidence remains that most uninspected buildings don't fall down, and not all inspected ones stay up. And you can't remove all risk from your life, but you can make educated choices about which risks you take.

9/04/2009 03:10:00 pm  
Blogger PC said...

Owen, what new stuff you've provided here is not relevant to discussing the insurance-based model, and what relevant stuff you've provided isn't new -- it's just a repetition of what you've already said before, all of which has been answered either here or at the post that you successfully threadjacked.

So I can only conclude you're either an ill-informed single-issue obsessive or a troll, and an either case you're no longer welcome here.

Readers have better things to do with their time than to read what amounts to nonsense.

9/04/2009 03:12:00 pm  
Blogger Owen McCaffrey said...

This comment has been removed by a blog administrator.

9/04/2009 03:20:00 pm  
Blogger Owen McCaffrey said...

This comment has been removed by a blog administrator.

9/04/2009 03:22:00 pm  
Anonymous Anonymous said...

This comment has been removed by a blog administrator.

9/04/2009 03:41:00 pm  
Anonymous Elijah Lineberry said...

Owen, I am a recent (last 20 minutes) reader of this post and its comments.

A quick question...

Are you in love with the sound of your own voice???

(May I request that you cease and desist your endless posting on peripheral nonsense, and stick to the original point Peter was making?)

9/04/2009 05:57:00 pm  
Blogger PC said...

Just a note on this thread, and on comments -- and commenters -- in general.

I welcome comments made in good faith, particularly from commenters prepared to put their name to them. Who wouldn't?

When I'm wrong, I learn; when they're wrong, they learn; and in the ensuing debate, hopefully, we all learn something.

But that requires an honest debate, and by my estimation that wasn't happening here, so I asked Mr McCaffrey to go -- something I only do reluctantly (I've only had to do it three times in the four years of this blog, and only twice has the 'ban' needed to be permanent.)

If it interests you now to follow the thread of Mr McCaffrey's arguments and responses on this thread, perhaps to review my decision to invite him to go, then you'll need to begin at the comments thread of another post, (where for reasons only he could fathom he chose to debate this one) before reading this thread.

If you want to review the two posts and the threads that followed them, then please feel free to tell my I've been unfair -- if you think I have been.

9/05/2009 12:04:00 pm  
Anonymous Building Materials Supplies said...

Thank you for a interesting read on Building: Less Government?

9/10/2009 07:31:00 pm  

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