Get Government Out of the Construction Business

USA Today: Nearly three years after city voters approved a $1.2 billion construction program over 10 years, the city has  yet to see the first building completed. Average per-apartment costs have zoomed more than $100,000 past prior predictions, the study by city Controller Ron Galperin finds.

…At an average cost of $531,373 per unit – with many apartments costing more than $600,000 each –  building costs of many of the homeless units will exceed the median sale price of a market-rate condominium.

…Prices rose dramatically because of higher-than-expected costs for items other than actual construction, such as consultants and financing. Those items comprise up to 40% of the cost of a project, the study found. By contrast, land acquisition costs averaged only 11% of the total costs.

Based on a recent audit of the program.

It’s absurd for a government to be building houses, a task for which it is manifestly unsuited. What the government should be doing is easing restrictions on building, improving public transportation which increases the supply of effective housing and dealing with any shortfalls by using housing vouchers.

Comments

It’s absurd for a government to be improving public transportation: what the hell does a government understand about trains and buses?

This may turn into a pretty long list.

It’s absurd for a government to be providing national defense: what the hell does a government understand about conducting war?

I knew someone would post something that's actually a public good in order to defend the current overreach.

I think conducting war is one of the few things the government does understand.

The really crazy thing is that this super expensive housing is discussed under the euphemism of "affordable housing". What that really means in government doublespeak is "subsidized housing". The tax payer is on the hook for the original costs, the upkeep costs and the subsidy for ever.

In fairness, Pentagon procurement process *is* legendarily inefficient. Maybe we go back to mercenaries, Letters of Marque, etc?

Letters of Marque would seem the obvious choice for anti-piracy. ROE circa British Navy 1750. Should be quick and relatively cheap.

"I think conducting war is one of the few things the government does understand."

As evidenced by the many attacks on the US by scary people since government declared endless global war on scary people?

In fact, the US has been engaging in war for longer than the Big Dig in the Mideast: the Big Dig finally finished and produced results better than expected, while the endless war in the Mideast is proving victory is impossible, and losing is worse than surrender.

Of course, in war, Western governments pick increasingly bad private sector partners, with the US since Reagan seemingly actively making the private sector more and more incompetent.

Government conducts war against other governments but competes against private industry to build houses. It's best to enter an industry where competitors are feeble.

It's an insult to absurdity and to absurdism (a sound anti-rational epistemic stance for this epoch) for American governments (federal, state, and local) to so poorly oversee the provision of "education".

Public education in the US is NOTHING but aggrandized babysitting, with the babies contesting to be in charge themselves or running amok on school campuses.

Promote multi-culturalism: ABOLISH public education.

I think schools might be different, private schools turn out to be cheaper but the students do not seem to learn more. My theory as to why is that there are a significant number of people who would teach for free, indication that teachers think of teaching as a calling and so many teachers are very dedicated even though management is lax, as in government generally. One thing I think that they could do short of privatizing would be to outsource as much as possible starting with renting from REITs.

A Rational Argument Could Made that the USA has Best Education in the World and Florida has the Best Education in the USA

Medicine is a calling too many also and might be why it works OK in the UK.

American public school students certainly seem to learn LESS: otherwise, MILLIONS of American adults would NOT be functionally illiterate and innumerate.

Last I heard, too, US public school on-time graduation rates hovered around only c. 60%: in US schools a grade of 60 is FAILURE, which is the proper score to impute to US public education . . . a failure benignly overseen and observed by all the well-trained geniuses of the DC-to-Boston Corridor, who obviously have no care or concern about US adult literacy and numeracy rates.

The failure of public schools is due to multiculturalism. MILLIONS of Americans are not functionally illiterate and innumerate, although MILLIONS of blacks and immigrants are.

Also that teaching is a calling, is another reason that we should probably cut higher level administration and give the schools over to principals, teachers and parents at the school level.

After adjusting for demographics, US schools are some of the best in the world. We have lots of blacks and Mexicans that Europe and Asia don't have.

"One thing I think that they could do short of privatizing would be to outsource as much as possible starting with renting from REITs."

Occasionally when back in my hometown I chance to drive by my old middle school, which amazingly is still there, utterly unaltered, still virgin of any landscaping after all this time. I was in one of the first classes, I think.

It was so ugly, so soul-destroyingly ugly - almost windowless - you'd think they were responding to that archaic tax on windows when they built it. You'd think - that they had built it grudgingly, for a population they despised, like criminals or street people. But they built it for kids! You're just going to have to take my word on this. Inside - apart from the buzzingly flourescent-lit classrooms - there weren't really corridors, just what seemed a huge unadorned void, loud and echoing. We weren't allowed to go in the library, so I don't know if that was a nicer space.

What you wrote triggered me, because I picture "renting from REITs" to mean holding kids captive in disused Walmarts and the like.

Give me a beautiful setting over smart, dedicated teachers any day. On this subject I am completely aligned with William Howard Kunstler, and his "Geography of Nowhere."

Sorry, James Howard Kunstler. William Howard Taft.

The artificial social settings conjured on US public school campuses (pre-K, primary, middle, and secondary) have gotten to be at least as bad.

No justification at all for the lethality of their attack, but I've learned to understand Harris and Klebold's Columbine attack (and many such student-authored attacks since then) as an inchoate adolescent protest against artificial and thoroughly detested PC-allegiant "public school culture".

REITs own many attractive buildings.

I cannot fathom the hubris it takes to say, "Millions of people do this thing, and it is obvious that they are mistaken for doing so"

Private schools provide parents with something more than Public Schools, or they would not choose the more expensive option. We rob the poor of access to quality education by crowding out those that would provide it with government run schools.

Are children learning the same amount from private schools? If so then wouldn't the cheaper option be better?

I'm a city boy. I ride subways rather than buses, taxis or Uber - surface traffic.

They imported a Brit to run the MTA.

NYC, NYS, MTA on-and-off spent a hundred years and $9 billion building the Second Avenue Subway line covering nine miles up the east side. They keep the brand-new escalators running about 75% of the time.

Take that Uber!

Jurisdictions have different public works costs. A recent study showed NJ and NY spent a multiples on highway construction costs compared to other states.

Republicans obstruct construction and make public works projects expensive and slow. Then they turn around and say see! Look how expensive it is! Crocodile tears.

Infrastructure in California, to include our state of the art high speed rail line, is orders of magnitude cheaper than other states. Because we don’t have the “burn it all down” crowd.

The chiefs of PG&E most definitely do NOT belong to the "burn it all down crowd": their decision to cut power to (millions? living in) northern California to avert fires puts them in good stead.

(What recourse will northern Californians have in making legitimate claims against PG&E after this latest fiasco? How vulnerable are or should Sacramento and the Governor's Office be to public disgust with public utility performance in California?)

Learn to spot the troll. I think that one's pretty easy. Nobody loves that rail project.

California: Seven year old Barack (named after the latest successor to Christ) asks, "Grandpa, what did people use before candles?" Grandpa answers, "Light Bulbs."

Still butthurt over light bulbs, hun? Head over to Home Depot. They have hundreds of varieties; no need to sit around cursing the darkness!

What is the role of the "consultants" in all this? If they know things that the government employees do not and this knowledge is required to implement the project then what is the role of the government employees? Why are both needed? Or are they hired to allow the bureaucrats to escape responsibility for the very failures indicated in the article?

"Consultants" in the context of public infrastructure projects generally are professionals with skill sets that aren't economical for the public agency to hire in the quantities needed to complete the project, e.g., urban planners, engineers, architects, etc. Except for the planners, they don't have a lot of control over the scope of the project or whether it gets built, just how it gets built.

Thanks for making my point.

Thumbs up.

They are also notorious for being close personal friends of the politicans and bureaucrats. The great thing is it's hard to write a spec for a service like "urban planner" that would allow competitive bids.

Good work if you can get it.

LA voters, and I am not one, made their decision.

Could it be because they saw this bond issue as an available move, and zoning changes across the basin as an unavailable choice?

(Building 10,000 units at once proved hard. Well, building 10,000 units at once sounds hard.)

By the way, I do see granny flats (ADUs) going in around the city, so it's not like zoning isn't being loosened at the same time.

"Since the new state rules went into effect in January 2017, the pace of ADU construction in Los Angeles has accelerated rapidly. More than 7,700 property owners have submitted plans to build ADUs as of September, according to the city’s planning department. By comparison, the city received just 536 permit applications in the two years prior to 2017."

A permit application does not a granny flat make. If I recall, many applications get abandoned because of the red tape or cost. Hope this time is different.

The homeless population has also been falling rapidly due to government investments in housing and services. An additional $650 million in state funding has been appropriated this year to assist local governments.

California is down to 134,000 homeless, which may seem like a lot but is actually in the bottom when adjusted for population. 33 per 10,000 means we have one of the lowest rates in the country. High taxes means high quality services.

Please explain how the rate per capita of homeless people is low, but you still have nearly half of the nation's homeless population, with less than 20% of the nation's population?

https://www.google.com/amp/s/www.marketwatch.com/amp/story/guid/58BB2418-D986-11E9-977B-6E1686FE4439

I think you're full of half truths and feces.

The rate needs to be adjusted for weather.

Spot the troll, and with "which may seem like a lot but is actually in the bottom" it's pretty easy.

Spot the troll, California figures need to be adjusted for population.

It's fine to be an "anonymous" on this page, or Anonymous, or Anon, or ten million other variations.

But when you match names to answer an "anonymous" it's clear your only purpose is to troll, troll.

And again, it's not unique to this name. Ask Thiago or Art Deco.

Spot the troll, easy mode.

I’m giving facts, figures, and links. As I always do. This one tries to muddy the waters and cries victim.

I don't think Mr. Ribeiro was a troll. He raised some important points.

Thiago was fairly often spoofed though, only to shout "imposter!"

Being anonymous is my best, but not perfect, solution to that.

You guys understand by now that any particular post by anonymous could be serious, or a troll. It may or may not be me.

It was easier when you posted as polar bear.

Polar bear was impersonated too, but it was a bit more annoying, because it was supposed to be "unique."

Anonymous or troll, you're what? 27 years old and literally know nothing.

No, I’m a baby boomer in my early 70s. My father fought in World War 2.

That means he knows a lot more than you.

Singapore seems to be perfectly competent at construction. The problem isn't government building houses, the problem is low-quality government.

Amen. Cost disease in the US municipal government tier is a distinctively American dysfunction.

+100. I like to see cognitive dissonant responses from libertarians that have raging boners for Singapore's "socialism that works". 70% of Singapore's housing is public housing. You live in SG you live in the "projects" yo!

Trafficking and possessing drugs in Singapore gets you anywhere from a caning to the death penalty. Maybe that is why public housing works in Singapore.

It is worth rereading the article. 40% of the costs are consultants and financing for a project that hasn't finished a living space yet, after 10 years.

Caning might be part of the solution.

That has nothing to do with it (though public order helps everything).

People "own" their Singapore "government" flats. So it's a bit more complicated than "public housing."

Technically, the raging boners are more for Singapore's "Socialists that don't work much." Libertarians love Singapore's high freedom index scores.

Perhaps. But it is no more feasible for California to import Singapore's public housing system than to import its health-care system. California has proven itself manifestly incompetent, over long periods of time, in building public housing and rail infrastructure. It may not be absurd for all governments everywhere to be building this stuff, but it is in California.

When people bring up tiny places like Singapore or underpopulated countries like Iceland regarding how to do things in the US, they can be safely ignored.

Tent living is not so bad in LA.

If L.A. was smart, it would take advantage of sales at REI and Big 5, and stock up on tents. They're much cheaper than $500 per unit. I don't recommend camp stoves, though, based on the fire in Brentwood.

Foundation thinker of the Enlightenment John Locke justified the westward expansion of the US as utilization of unused land. Of course, it was being used in a manner no longer employed by Anglo-Europeans. If Locke's ideas made so much sense then, actually as a basis for the US experience, why are they no longer valid? For instance, the areas inside freeway interchange cloverleafs are entirely vacant. Why shouldn't any person be able to make this unused spot his home? Why shouldn't his labor to improve it give him title? Of course the reason is that he isn't as well-armed and powerful as the state, regardless of the state's application of Locke's ideas. Remember that the beginning of the great democracy that is the US didn't involve a vote among the residents if a revolt against the UK was a good idea.

another +1!
chuck martel wins the comment section

Alex wants them out of the construction business, but he's perfectly happy to let them make every healthcare decision for 330 million people.

>> "What the government should be doing..."

Who decides what government "should" be doing ?

It's almost always the individuals with government power at any given time and location.

Citizen-voting and written constitutions have consistently proven ineffective in controlling government absurdities, waste, and endless expansion of power.

What to do about it ? What to do ??

Here was Alex yesterday on Twitter:

"Leaders on both the right and the left have no principles whatsoever."

I diagnose this as the classic libertarian blind spot. All human institutions are fallible, and the correct response is checks and balances all around. Including of course and most importantly Constitutional checks and balances.

It isn't actually a get out of jail free card that the invisible hand leads to nirvana. Never has, never will. Because the invisible hand just empowers a different set of human institutions, with their own problems.

Checks and balances, all around.

Spot the troll. Three paragraphs of word salad.

I remember another "word salad" guy. Then as now it means "beyond my ability."

Back then you at least used capital A

https://marginalrevolution.com/marginalrevolution/2019/08/more-from-less.html#blog-comment-159970870

Spot the troll, medium difficulty.

I always embed my links.

I wish you guys would just bang and get it over with. Or would that just be masturbation?

I know I'm getting a woody just watching.

'It’s absurd for a government to be building houses, a task for which it is manifestly unsuited.'

But it is apparently manifest destiny for all governments in the U.S. to be building prisons, regardless of whether that is a task for which they are manifestly unsuited.

Dispute rages currently over the status of "private-sector" prisons: because jurisprudence IS a legitimate government function, governments are at least as responsible (roughly) for prisons as they are for courthouses and legislatures.

"Celebrity arbitration of justice" still seems beset with all kinds of difficulties, almost as bad as "celebrity arbitration of 'culture'" or "celebrity arbitration of politics".

Note that California chose to keep Sirhan Sirhan, the Palestinian who assassinated Robert Kennedy, in jail for 50 years and counting. At a cost of perhaps $50,000 a year, it’s a nice demonstration of priorities. Would have paid for a lot of social services.

Where do the money go?

BTW are we certain that someone did not make a mistake and put an extra 0 in there at some stage in audit?

Yet, there was a time when we, Americans, used to build things.

https://en.m.wikipedia.org/wiki/Hoover_Dam
https://en.m.wikipedia.org/wiki/Interstate_Highway_System
https://en.m.wikipedia.org/wiki/Empire_state_building
https://en.m.wikipedia.org/wiki/Overseas_Highway

Most of the shortfalls in the audit relate to failures to meet pre-established goals. Setting precise performance goals for programs involving an amorphous and constantly changing population such as the homeless is an admirable but highly dubious activity. That said, we don't know whether the achievement gap was the result of poor performance or unrealistic goals. In any case, what is the evidence that the private sector would have done a better job of providing housing for LA's homeless?

"average cost of $531,373 per unit" seems to be more than missing a precise performance goal.

I would say if initial plan was $400K+ per unit, it was defective by definition.

The big problem is the notion that people have the right to live in NY City, LA or SF. If they can't afford it, live somewhere they can afford.

You can't even blame that, though I agree with you. Cost of land is 11%.

Budget hotel cost per key is well under $100K.

This is almost good, for government standards. Check this (ny times) piece about costs of building a subway in New York:

https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-construction-costs.html

I think the whole point of this is the ridiculous expenditure. At the cost of $531,000 per unit the city could house over 14 people in motels at the rate of $100 per night. Rather than building $500k apartments to house one person.

I should have said, 14 people, for a year each.

Plus there's an ice machine, wake-up calls, free coffee in the lobby and complimentary USA Todays

This coming from the man who keeps saying, "We couldn't build the Hoover Dam today." Which one is it going to be, Alex?

The worst thing is the housing, when it is finally completed, will have turned into shitholes inside of a decade due to lack of maintenance.

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