In David Halberstam’s 1979 book, The Powers That Be, he dedicated a significant amount of space to analyzing the “purpose” of the L.A. Times and the Chandler family (and their real estate fortune) who owned that paper. When I read that book 45 years ago, it was struck by the oddity of a major newspaper whose primary purpose was to promote L.A. real estate property values. Today as we all watch L.A. burn it’s pretty obvious that the compromises that were made to optimize real estate values and liquidity are one significant contributor to a national disaster. Today, even the L.A. Times is admitting that, maybe, the city needs fire regulation and prevention in their residential and business construction standards.
When I lived in southern California, in the 80s up to late 1991, the construction boom was just kicking into gear in my town, Huntington Beach. Construction standards were never particularly stringent in Huntington Beach, but the stuff that was going up in the late-80s was laughable. What was coming down were old beach houses, usually less than 1,000 square foot single floor bungalow-style homes, and what was going up were three times that in two and three floors with barely an arm’s reach of space between each residential building. The stated justification for some of the structural materials and design was “earthquake survivability,” but the reality was that most of these homes were simply poorly made with ridiculously cheap and lightweight materials (1/4” sheetrock, 2”x2” studs with 2”x4” corner posts, no insulation in the outer walls, and sprayed-on stucco over wire mesh for example). It’s true that those buildings might sway in an earthquake rather than break and collapse, but it’s also true that some of our new neighbors experienced catastrophic structural failures early in the life of their homes when they ignored the surprisingly low weight limits listed deep in their building’s description.
As those shoddy and gaudy places were springing up around our neighborhood, I used to joke that if society ever collapsed and I needed to turn to looting for a living, I could just strap on my motorcycle gear and run through the walls of the neighborhood taking what I wanted as long as I didn’t hit a corner post. At the time, it didn’t even occur to me what a fire hazard these closely spaced and poorly built houses would be. Or I just put the thought aside because I was already overwhelmed by the obvious risks and hazards of living in an over-populated, highly stressed environment.
As we’re all seeing today, those buildings are designed to burn and as the on-going
disaster news dissipates, the news is beginning to report information that had
been either ignored or repressed about the number of major insurance companies
who are abandoning California property insurance policies (and
Florida, Arkansas, Colorado, Louisiana, Minnesota, Oklahoma, South Carolina,
South Dakota and Washington). For the ultra-rich, this is an inconvenience.
The multi-millionaires and billionaires are inconvenienced by a burned house. For
those who consider those houses to be their homes, it’s a whole different
situation. Because we’ve become a country that puts the interests and welfare
of the ultra-rich first, Trump’s faux-government will be bailing them out
first, then screeching “socialism” when humans want some federal assistance.
In spite of all of today’s terrible news, California’s home insurance has been a fraud for decades. Take this $3,350,000 mansion, for example: 226 13th St, Huntington Beach, CA. Property taxes are about $35,845/year and home insurance is $12,000/year. While that might seem like a lot (and it is!), $12,000/year to insure a $3.3M house in a high risk area (for earthquakes, fire, property crime, flood, and whatever else climate change will bring to costal area with zero risk management planning) is a pittance.
I live in a Midwestern area with two major risk issues: tornados and hail. Zillow estimates that my home is valued at $200,000 and my property insurance costs me $2,200/year and property taxes are $2,400/year. If my property value was scaled to the Huntington beach level, my property taxes would (and should) be $36,000 and insurance would $39,600. That means California homeowners’ insurance policies are subsidized by the rest of us to the tune of almost $27,600 per year in the case of just this one house. What that means, of course, is not that California homeowners’ insurance would jump to that kind of insane level, but that California property values would fall to more rational levels.
And that is exactly the kind of thing that David Halbertstam and The Powers That Be explained that the L.A. Times existed to prevent. It will be interesting and, probably, irrationally entertaining to see how all of this plays out in what passes for news over the coming months and years. The stories will rarely be rational or honest or productive. They will be heart-wrenching, emotional, and information-free with as little critical analysis as possible, from all sides. In the end, as always in our rapidly disintegrating empire with a thin shell of democracy, the aristocracy will be rewarded for their existence and the rest will be sacrificed to keep the economic pyramid in place.
