BIAW: the Voice of Deregulation and the Housing Industry

September 17, 2008

It was reported that nationally new home starts in August were at a 17 1/2 year low. The housing industry sector of the economy is in its worst slump since the Great Depression. By absolutely every credible account this is due to a failure of regulation in the financial industry, the same cause as the Great Depression.

Just as the new breed of Republicans wants to roll back the social safety nets of the New Deal, they also want to unfetter all of industry from regulation. This is why Bush appointed deregulation champions and incompetents to head federal agencies. Having failed to learn from the past we were doomed to repeat it. Once again the failure of regulation has led to economic crisis.

The loudest and most ardent — if not the rational — voice for deregulation in Washington is the Republican attack dog BIAW, which constantly shrieks about getting the government off its back. The BIAW complains bitterly about environmentalists who are likened to Nazis. Officials of local governments, who enforce building codes fare no better in their eyes. Evidence of the benefits to society from growth planning, safety standards and environmental regulation are dismissed as the toxic propaganda of evil doers.

The strength of this ideological fervor is such that it overrides even concern for the interests of the BIAW’s constituency, the building industry in Washington. It is the absence of meaningful regulation — a condition insisted upon by the BIAW and the Republican Party — that created the disastrous economic conditions that are ruining so many construction-related businesses in Washington.

Time and again we learn that unchecked greed is not a functional foundation for an enduring society. Certainly there can be over-regulation but that is not a justification for the utter abandonment of regulatory constraints on society-threatening institutional avarice.

Our society in its blind fervor to reduce government to a military subsidization function, has failed over the last several years in two respects relevant to this topic: First, our tax money, instead of being used for generally recognized governmental purposes is being used to subsidize huge corporations, the profit going to investors and executives, and losses to the government; Second, under slogans promoting self reliance we have repeatedly in the last several years spectacularly depleted retirement funds and the savings of individuals, undermining the end sought to be achieved.

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FISA, Immunity, Pardons, and Luthor Collins

July 11, 2008

The recent discussions about immunity in the context of the FISA bill have stirred up a great deal of frustration among people who have been shocked or disapproving of the Bush administration’s apparent cavalier attitude to complying with the law. This resentment no doubt provides some of the fuel for the populist movement that seems to be carrying Obama along. Both Republicans and Democrats have expressed to me frustration that there is not even any meaningful investigation of the charges. The administration does not have immunity but it does seem to operate with impunity.

Part of the public’s outrage about FISA relates to the appearance of hypocrisy. The same law-and-order people who advocate strong criminal sentencing standards advocate immunity for the corporate officials whose conduct apparently involved violation of constitutional rights on a massive scale. The sense of hypocrisy is heightened by the color and class distinctions between the criminal justice defendants and the corporate miscreants.

This frustration is very deep and involves what appears to be a failure of our system of checks and balances. The Republican Congress during the first six years of the Bush administration is widely seen as having allegiance to party over country or over the citizens of the country. During this time effort seemed to be directed to covering up the regularly occurring scandals. The two years of Democratic control of Congress have not been signifiantly different in terms of rendering people in the executive branch accountable for their transgressions. The FISA bill in granting immunity for illegal domestic surveillance was profoundly disillusioning for many. It went beyond disregarding disreputable behavior to condoning it.

FISA’s defender’s chant “national security” and to my knowledge there is nothing more than this rather empty slogan to support the position, a slogan that I had thought was used so much by the Nixon administration that it would not be heard again in connection with domestic activity. This slogan has also been used to justify the treatment of detainees and has been gradually rejected by the courts. Without anything to back it up it is just a slogan famously used around the world throughout the twentieth century. People need more substance to the claim for it to have traction outside of Congress.

The defenders of FISA point out that the guilty can still be prosecuted for crimes that were committed but few doubt that Bush will pardon everyone before leaving office. He, however, can only pardon for federal crimes and at least in theory any enterprising attorney general could investigate and prosecute under state law for crimes committed against its citizens. I doubt that anyone believes this will happen.

Bush is likely to pardon everyone in his administration, making the investigations promised by Obama unlikely. If McCain is elected he would not conduct investigations at all, at least as far as I know. The only way the Bush could be prevented from pardoning everyone would be for him to be impeached. If he were impeached, he could not grant pardons during the process. There appears to be no chance that this might happen.

Thus it appears that this itch to see criminal conduct exposed, or at least investigated, and punished will go unscratched regardless of the party favored in the next election. This rather sorry state of affairs is not without local precedent.

Civilization came to the Seattle area in the middle of the nineteenth century. Settlers first arrives on Alki, then some came to what is now the downtown area. A few located near the mouth of the Duwamish River between the two camps. Civilization, as everyone knows, requires government and the settlers were quick to elect a commissioner: Luthor Collins, our first governmental official. Two years after his arrival he was arrested for lynching a Native American. His civic leadership may have contributed to the dismissal of the charge. Later, having rooted himself in the administration of local affairs, he lynched two Native Americans and presumably it was his his august stature that prevented charges from being made.


Seattle’s Indemnity Agreement.

June 3, 2008

Many people who are interested in buying real property take solace from the fact that a building meets city code, that the city has inspected the structure and finally approved it. This is particularly true with buildings that might be affected by a landslide. Usually city approval of the project in a landslide-prone area is a part of the sales pitch. People in Seattle who are comforted by this are being badly deceived. Permitting by the City of Seattle areas with a risk of landslide exposes people to greater risk of liability, not less.

Before Seattle will issue a building permit for a project in a “sensitive area” it requires that an indemnity agreement be signed. It requires such an agreement even for a permit to conduct repairs. The agreement is recorded and purports to bind everyone who late comes into ownership. These agreements are harshly anti-consumer and shift risk from the city to homeowners and other property owners.

An example of this occurred in a case called 1515Lakeview Boulevard Association, where the developer built a condominium on a hillside consisting of landfill. He recorded the indemnity agreement but did not mention this to the unit buyers. When the condominium was destroyed in a landslide the city pulled out the agreement and figuratively waived it in the buyers’ faces. The developer had sold the units and for practical purposes was gone from the scene.

The terms of the indemnity agreement are in my mind unconscionable. For a developer who is going to sell the project to consumers the agreement is not a big problem because the burden will fall on the buyers. Residential condominia that are damaged by a landslide cannot be repaired without the owners signing an indemnity agreement. The consumers have the choice of signing the agreement or abandoning their homes, which will subject them to other liability.

If they sign the agreement, they among other things are bound to pay all the City’s expenses if it is sued and not solely responsible. They become liable if they do not keep the City informed of subsequent developments. In this way the economic burden of an avoidable disaster is shifted from the City (and the developer) to the innocent purchaser who has had no involvement or opportunity to protect himself or herself.