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Whatever Happened to 'Caveat Emptor'?

Press Release For Immediate Release 'Leaky Homes'

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 contract."

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."


Andrew Bates LIBERTARIANZ SPOKESMAN (021) 346 478

www.libertarianz.org.nz www.libz.org

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