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As Long as We Remember...

May 31, 2011

Inspection Privatization: Good Idea or Bad?

Farrell Keough

When a company increases a cost, they must weigh the benefits as they will lose customers if the costs become too high. When a government raises a cost, we the taxpayer suffer the penalty with few options, (short of moving) available to us – we cannot walk down the street to another government office competing for our business.


This is what has happened to our government services – increased costs coupled with increased regulation. We have forgotten the need for limited government and allowed our leadership not only to take over more services, but worse, diminish the importance and credibility of the private sector.


For instance, with the proposition of using private companies to fulfill inspection services, we have seen a plethora of dire predictions. Some have posited that private companies will be more susceptible to graft and “under the table” payments to allow shoddy work to pass inspection. Yet, the evidence behind this suggestion is scant if not none-existent. Have companies paid off subcontractors, et al, to allow substandard materials to be used and poor planning to be accredited? Yes! Have these companies been held accountable for these actions when they have caused injury? Again, yes!


Some will remember back in 1981 when the second and fourth-floor walkways in the Hyatt Regency Hotel in Kansas City, Missouri “collapsed onto the crowded first-floor atrium below. The fourth-floor walkway collapsed onto the second-floor walkway, while the offset third-floor walkway remained intact.


As the United States' most devastating structural failure, in terms of loss of life and injuries, the Kansas City Hyatt Regency walkways collapse left 114 dead and in excess of 200 injured. In addition, millions of dollars in costs resulted from the collapse, and thousands of lives were adversely affected.” Were the government inspectors held accountable for this horrific occurrence? No! The private engineers were held responsible for “charges of negligence, incompetence, misconduct and unprofessional conduct in the practice of engineering.”


So, it becomes legitimate to question why the government (or pubic) engineers were also not held responsible? Are they not held to the same ethical and professional standards? Yet, by virtue of being public employees, they are not held responsible for the service they offer – ensuring the safety of the public.


We have also seen many instances of graft and “under the table” payoffs of government employees – ranging from IRS agents cheating on their own taxes to kick-backs for projects as big as the levees leading to New Orleans. Even neighbors like Prince George’s County are not exempt from such occurrences.


We can see from these few examples that neither private nor public employees are intrinsically exempt from these situations. But, who becomes accountable is the bottom-line argument. Suggestions that somehow government employees are above reproach or, equally important, that they carry the burden of their decisions cannot be documented. It is a false argument.


Along with this false paradigm is the suggestion that cutting back on government services, regulations, and costs will somehow cost the public more in taxes. This, too, is a false argument.


Consider the following, why must you pay for the inspection of a deck someone across town installs upon their house? Is this deck a public facility? No! As we have seen from the above example, the government will hold no liability for any failure in this structure. In short, virtually all legal responsibility for this deck lies with the homeowner. The rationale that somehow all of our health and safety resides in some public inspection of a private deck fails even the most simplistic test of logic. The homeowner is responsible to ensure this structure is built to standards of safety – the homeowner will pay the costs for harm and is responsible to ensure all legal obligations of the contractors are fulfilled.


Another way to look at this proposition of public safety and welfare is to consider the front sidewalk of your home. You do not own this sidewalk, (in most instances) as it is considered public property with public access. Yet, as a homeowner, you are responsible to ensure it is shoveled in the winter. In other words, you as a private homeowner can be held liable for someone harmed on public property. What government service have you derived from this relationship? This falls into the realm of social contract in which the greater public derives benefit from your personal action. Inspection costs are paid solely by a private individual – the homeowner.  Yet, even in this comparison, we have seen areas in which the government simply cannot fulfill their entire obligation of clearing snow. Yet they hold little liability other than a politician losing their office or further expenditures by hiring private individuals to fulfill this obligation of snow removal.


Thus, we have seen from these few examples that:


·        Neither government nor private employees are beyond committing graft.


·        Government employees are exempt from assuming responsibility for their inspections.


·        Private engineers are held liable for their decisions on structural components and design.


·        Individuals and companies hold liability for personal harm on the structures for which they are responsible.


Recognizing these myriad situations of new regulations and costs, one must question why our leadership would not propose a realistic, well reasoned, and well implemented alternative to these burdens. In fact, so many fees, taxes, reviews, and others costs have been implemented in the past few decades, it often cost over $30,000 to build a new home before a shovel ever hits the ground.


That means if your daughter wants to continue to live here, she has few options short of working down-the-road to make enough to cover these tremendous costs which burden our markets. You see, the government never stops at simply increasing these exorbitant costs for their services – they always go the next step to control the market and thereby increase costs.


For instance, our government requires that “Affordable Housing” must also be built to compensate for these increased costs. This requirement, of course, gets translated into even higher costs for home and the vicious circle continues – but that is another column.


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