Bloomberg Wakes Up and Smells the Carnage

Wow, what an erudite message from My2Cents, I never knew the people who risk their time and capital to fulfill peoples desires for housing and businesses, provide jobs for millions, feed and entertain them were such terrible scum. Yes, jail them all, that will definitely show them!

I definitely agree that the DOB is corrupt, and I say that we banish them all, and let insurance companies take over the job of ensuring quality construction practices, just as they do now for a multitude of other risk-prone activities.

With a good insurance rating, you could trust that the home/condo you bought was built in a quality manner, because if it wasn't, the insurance company that indemnified the developer would soon be out of business.

They'd also stand to lose a lot of money if anybody would be physically injured or financially hurt by their less than careful construction process.

They would have a constant visit of overseers to all their insured projects to make sure everything was going according to the documents, and that no developer was flirting with the agreed rules, or they'd lose their coverage.

Of course it means that construction projects would lose the slothlike bureaucracy that the DOB brings to the picture, as competition would force insurance companies to quickly approve or object to the construction documents which were submitted to them.

I'm sure that most of you don't realize this, but the more you "tighten your grip", the more moral hazard is created, leading to even more accidents and deaths, the blood of which is on your hands.

Posted by: iceberg at November 3, 2006 3:23 PM

Lost,

Laugh all you want, but what you basically have now is the DOB subsidize the true cost of construction. no doubt the current insurance required for construction purposes would be higher if there was no DOB to "guarantee" the safety of the workers and the final product.

Of course I don't put my faith in the DOB, so I'm happy to have the lower housing prices, and I'll go with the builder's reputation to make my judgements.

Posted by: iceberg at November 3, 2006 4:23 PM

Don't worry, I've got answers for the lot of you.

Starting with anonymous @ 4:46, I bet he has never known that FEMA the federal agency charged with mitigating the devestation caused by natural disasters is actually the culprit in most cases!

Now of course I'm not saying that FEMA causes the hurricanes, floods and storms, but rather they subsidize the homeowners who decide to live in high-risk areas by providing them with access to cheap homeowners insurance. If that is not a blatant case of moral hazard, I don't know what is.

In essense, we the taxpayers are subsidizing these people's [idiotic] choice to live in the path of a tornado, and when their homes are strewn around the countryside like toys, we pay again.

This has nothing to do with private insurance, because no rational insurance company would underwrite such high risks so cheaply.

Now you want to know why the contractors use cheaper nails? Its simple-- because their clueless buyers don't demand it, because they have no incentive to make sure that their home is hurricane proof, after all, FEMA will pay them to rebuild, and give them insurance coverage when no other sane person would.

My2Cents,

I'd love to have my bread buttered. Please direct me to the right party.

Anyway, I would have to agree with you about the sad state of the insurance market, as unfortunately its a highly regulated industry, which also means that they probably have a good lobby and a few politicians on their payroll.

I disagree with your contention that insurance companies should not be free to change their rates as frequent or as drastic as they would like to. If we would simply stop regulating the amount of players in that market, they wouldn't be able to play those shenanigans if there were many alternatives.

But since its a highly regulated industry, it actually serves in the favor of the entrenched players to maintain high barriers to entry of competition.

I'm suprised you conspiracy-minded nuts haven't figured it out by now, most regulated industries favor the regulation; its a process known as "regulatory capture". See more here: http://en.wikipedia.org/wiki/Regulatory_capture

Esther,

"Do your really believe that "the people who risk their time and capital..." are doing it for the public good? "

Honestly, I could care less for the intentions of developers; they could be the devil and I could care less.

In any case, I'm disgusted by the lot of people who say the word "profit" like it was a sin. The same goes for "greed", and the many other lascivious descriptions of developer behaviour, such as "raping" the neighborhood, et. al.

Profit is a beautiful, and I'm not saying this because I read Rand as a kid. Profit arises from a situation in which a person brought about a highly desired product, and was rewarded in part by society. Think about it, because it means the entreprenuer is actually serving society when he serves himself. Adam Smith, to many the father of economics discovered this fact.

Posted by: iceberg at November 4, 2006 7:27 PM