Los Angeles Fire Update

From: allin

Current Situation

An “absolute tragedy” is unfolding in Los Angeles, with a death toll currently at 25 people [00:23:24]. Approximately 25,000 structures, primarily homes, have been destroyed [00:26:55]. The fires have affected 40,000 acres, equivalent to 60 square miles, which is larger than all of San Francisco [00:23:31]. The Palisades and Eaton fires are still burning [00:23:44], and as of Wednesday, 80,000 people were under evacuation orders [00:23:49]. Friends of the podcast hosts have lost their homes, emphasizing the tragic loss of memories, documents, photos, and art [00:23:53].

Financial Impact

The estimated damage from the LA Wildfire Disaster is between $135billionand$150 billion, making it “10 times more costly than any other wildfire in history” [00:24:14]. For context, the Camp Fire near Paradise, California, cost $12.5 billion [00:24:29]. This scale of destruction in some of the “most expensive real estate on the planet” has prompted discussions about the recovery and rebuild efforts [00:24:20].

California Leadership Response

California leadership, including Governor Gavin Newsom and Mayor Karen Bass, has faced significant criticism [00:24:50].

Executive Orders and Policies

Governor Newsom has issued executive orders to address the crisis [00:25:41]:

• Prohibiting Lowball Offers: It is now illegal to make unsolicited offers to impacted homeowners for the next three months [00:25:44]. This specifically applies to offers “less than the fair market value of the property” before the fire started [00:33:56]. This measure is time-boxed for three months and applies to specific zip codes [00:33:28].
• Eliminating Coastal Act Review: Review of permits for houses along Pacific Coast Highway (PCH) has been eliminated [00:25:55].
• Price Gouging Protections: Key price gouging protections have been extended indefinitely [00:26:08]. Price gouging is defined as raising rent or prices of goods/services more than 10% from the last marketed price, potentially as little as 5% [00:26:14]. This applies to essential goods, emergency supplies, building materials, and housing-related services [00:29:30].
  • Mayor Bass created a “snitch hotline” (LA 311) to report price gouging in rents, leading to public “naming and shaming” of platforms like Zillow and Redfin [00:26:28]. The free market is currently doubling rental home prices [00:26:46].

Debate on Policies

There is a debate regarding the effectiveness and impact of these policies:

• Against Intervention: It is argued that price controls and non-solicitation rules challenge “appropriate market recovery” [00:27:51]. To attract builders, contractors, electricians, and plumbers to the LA area for rebuilding, the market must be allowed to function [00:29:45]. An influx of service providers would increase supply and eventually normalize costs [00:30:05]. The current rules disincentivize workers, potentially leading to homeowners waiting “six, seven years to get your home rebuilt” [00:31:47]. The prohibition on unsolicited offers, even if for three months, removes liquidity and makes it harder for owners of burned-down lots to sell and relocate [00:32:37].
• For Limited Intervention: The executive order on unsolicited offers is considered “somewhat reasonable” [00:33:17], being hyper-specific to certain zip codes and time-boxed [00:33:28]. This measure aims to prevent fraudulent activities, such as contractors posing as legitimate workers offering inflated prices or poor-quality work [00:34:23]. It’s suggested that the “cooling off period” benefits individuals in highly stressful situations, allowing them to make better decisions without pressure tactics [00:38:59]. While the free market is generally beneficial, during critical periods of high abuse, “checks and balances” are necessary [00:37:57].

Rebuilding Challenges

The indefinite price controls on services are particularly concerning, as there are not enough construction workers in California [00:43:53]. Incentivizing workers from other states with premiums and bonuses is crucial for a rapid rebuild, similar to how Uber’s surge pricing ensures availability [00:42:51].

A comparison is drawn to the 1994 Northridge Earthquake response in California, where the I-10 freeway artery was rebuilt in “66 days” [00:46:00]. This was achieved by offering a “$200,000 per day early build bonus” [00:47:17], demonstrating that “show me an incentive, I’ll show you an outcome” [00:47:35]. The current process, even with a six-month permit expectation, is deemed too slow given the state’s potential [00:45:22].

Discussions also include incorporating new regulations for future building:

• Fireproof Construction: Adding regulations for fireproof materials like stone-scaping, gravel, and non-overhang designs, and discouraging wood construction, could create “natural breaks” in wildfires [00:47:40].
• Temporary Housing: Allowing people to park mobile homes for construction workers would be “super critical” for housing needs but is currently restricted [00:48:44].

Broader Context: National Wildfire Risk

The LA Wildfire Disaster highlights a larger trend across the United States.

• FEMA Disaster Risk: FEMA data shows growing disaster risk on the Western Seaboard, with California and Florida being the two most complicated states [00:49:19].
• Wildfire Risk Across Western US: CoreLogic data illustrates widespread wildfire risk across most of California, Nevada, Arizona, parts of Texas, and Washington, indicating a “multi-trillion dollar risk” [00:50:00].
• Value at Risk: In California alone, $750billioninvalue(1.26millionhomes)isatmoderateorgreatriskoffires.OtherstateslikeColorado($141 billion), Texas ($88billion),Oregon($45 billion), and Arizona ($36 billion) also face significant value at risk [00:50:30]. This necessitates a national-level conversation and standardized building codes, rather than localized municipal planning [00:51:04].

Related Topics

• Congestion Pricing in New York: New York City has implemented congestion pricing below Central Park, aiming to reduce traffic, noise, and air pollution [00:51:34]. Wait times have significantly decreased [00:52:20]. This is seen as a positive innovation for cities to “reinvent” themselves and improve quality of life to compete [00:54:57]. The funds generated are allocated to public transportation [00:53:01].
• San Francisco Crime and Safety Challenges: Concerns are raised about crime and security in American cities and their liveability [00:53:35].
• Ohio’s Approach to Business: Ohio’s success in attracting companies like Palmer Lucky’s new plant is highlighted as an example of a state that “pulls you in and speeds you up” through workforce availability and political cooperation, in contrast to states that “push you out and slow you down” [01:00:07]. This demonstrates how states compete for elite companies with “willpower” and intention [01:01:19].
• Urban Identity: The debate between a city’s desire for “progress and acceleration” versus maintaining a “small, quaint town” character is discussed [01:03:07]. It’s argued that many cities fail to deliver either outcome, resulting in “dysfunctional hellscapes” due to poor management and corruption [01:04:28].
• Political Accountability: The lack of operational experience of elected officials like Karen Bass is criticized [01:05:43]. Rick Caruso, a real estate developer who built the Pacific Palisades Village, proactively hired water trucks and firefighters to protect his development during the fire, while Mayor Bass was in Ghana [01:06:07]. Calls are made to recall unqualified politicians [01:06:57].