Press Release: Whatever Happened to 'Caveat Emptor'?
- Press Release
For Immediate Release
Whatever Happened to 'Caveat Emptor'?
"Owners of leaky homes identify responsibility for their predicament about
as well as they identify houses to invest it," says Andrew Bates, a
spokesman for the Libertarianz Party. "I have any amount of sympathy for
people who have found themselves in an unfortunate situation in a leaky
house," says Bates, "but taxpayers and ratepayers should not be forced to
pay for the poor decisions of these buck-passers. If the contracts that
home-owners negotiated with their builders did not contain clauses for
repairs to be made good at the builders' expense then the home owners should
pay for them, and probably out of the savings they made using such a
Bates is aware of reports that in some cases builders have used "shell
companies" to build the houses and collect "quick kill" profits and that
these companies are nowhere to be found when their customers come calling to
have their leaks fixed. "Situations like these merely serve to illustrate
the importance of buying from a reputable builder. Such builders have a lot
to lose if they do a shoddy job whereas cowboys, who can usually undercut
them, lose nothing of value when they shut down their companies to avoid the
costs of repairing ill-considered shortcuts."
He points out that regulations designed to protect small scale investors
"merely lull them into a false sense of security, much the same as with
protectionist securities law - as those who invested in Enron can tell you."
He also suggests that "instead of blaming the alleged 'infectious greed' of
builders and other developers, home-buyers should look to the words Alan
Greenspan wrote in his article 'The Assault on Integrity' and see how they
relate to the principle of caveat emptor."
In this August 1963 essay Greenspan points out that small companies must
struggle for years to develop a reputation for quality products and good
faith trading. Greenspan also notes that surveyors of quality standards
employed by the government can be bought but those employed by free market
quality standards testers have a financial incentive to maintain the
integrity of their assessment.
With those words in mind Bates confirms his party's position: "Libertarianz
maintain the job of government in this case is to uphold contracts that do
exist, to investigate frauds that may exist, to provide inexpensive access
to justice where it is needed - and in every other case to get the hell out
of the way."
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