Anyone who pays even a little attention to the bureaucratic/socialist business model quickly figures it out: the fundamental problem is that the people who run the system view "success" not in achieving their stated mission, but rather in growing their own staffs and budgets. And the way to grow your staff and budget is to reveal that the problem you are tasked with addressing is worse than anyone ever thought, and only more money can cure it. In other words, the way to "success" is through failure, and the more spectacular the failure, the better.
Last July, I highlighted a particularly notable example of this phenomenon in the New York subway and commuter rail system, in a post titled "In Government, Failure Is The Way To Get Yourself More Money." The system had just suffered a disastrous series of derailments and other major delays -- things that should have been completely avoided through normal, ordinary maintenance. Facing a political firestorm, the Governor demanded immediate fixes; and the bureaucracy responded as you would expect they would: We can do it for an immediate cash infusion of an extra $800+ million! And, why wasn't the previous multi-billion dollar annual budget sufficient to do the job?
The genius of this is that, in the crisis of the moment, with derailments and delays constantly in the news, nobody stops to ask why the vast sums of money they were already getting were not sufficient to maintain the system. Is the current budget being used effectively? This question is just too crude to be asked in the middle of such a crisis. Certainly, the politicians are unanimous in their view that this is not the time to start blaming the inefficiency of the unionized work force, but rather is an opportunity to hit up the taxpayers.
Today the functionaries at the Metropolitan Transportation Authority are in the process of being shown up as rank amateurs at this game by their compadres at another New York bureaucracy, the New York City Housing Authority. NYCHA has been in the news for a couple of years now for a series of failures, one after the other: a scandal of failure to inspect for and remedy lead paint, as required by law; another scandal of something close to half the residents going without heat and/or hot water for some part of last winter due to inadequate maintenance; pervasive reports of mold and vermin infestations; a backlog of what was said to be $17 billion -- and then suddenly became $25 billion -- in capital projects needing to be done. See extensive Manhattan Contrarian coverage, for example, here.
Eventually, NYCHA became such an obvious target that of course some U.S. Attorney would not be able to resist the temptation to pile on for some easy headlines. And thus yesterday, the U.S. Attorney for the Southern District of New York filed a 75 page Complaint detailing an endless litany of NYCHA failures, and demanding relief including immediately fixing the problems and also the appointment of a "monitor" to oversee the repairs. In this short blog post, I can only give you a small taste of the endless tales of the infliction of suffering upon the helpless tenants by the heartless bureaucrats:
Lead is toxic, and there is no safe level of exposure; in children, lead can have devastating effects. The most common cause of lead poisoning in children is exposure to deteriorated lead paint. NYCHA knows that there is lead paint within apartment units in roughly thirty percent of its developments, but has failed—and continues to fail—to protect its residents from that paint when it peels and crumbles. NYCHA has for years failed to follow key HUD lead paint safety regulations including, among other things, by failing to find and remediate peeling lead paint in its developments and failing to ensure that NYCHA’s workers use lead-safe work practices to avoid disturbing lead paint that might injure residents. Since at least 2011, NYCHA senior managers have known that NYCHA was violating HUD lead paint requirements. . . .
Beyond lead paint, HUD regulations also require NYCHA to provide “decent, safe, and sanitary” housing. This “decent, safe, and sanitary” regulation requires not only that NYCHA comply with lead paint safety rules but also that it provide an environment free of mold and pest infestations and with adequate heat and functional elevators. Every year, NYCHA certifies that it is in fact complying with HUD’s regulations, and HUD has paid NYCHA billions of dollars to operate in compliance with them. To enable HUD to determine whether public housing meets this basic standard, HUD created an inspection regime—the Public Housing Assessment System—to allow HUD to determine whether a housing agency is providing decent, safe, and sanitary housing. NYCHA has undermined HUD’s inspections by disguising the true condition of its properties. This deception included turning off water to developments to prevent HUD inspectors from observing leaks; posting “danger” signs to keep inspectors away from troubled areas; and temporarily hiding improperly stored hazardous materials. NYCHA management even included a document with suggestions for deceiving inspectors in NYCHA’s official training materials. This cover-up “how-to” guide was only removed in Summer 2017, after this Office called its existence to the attention of NYCHA’s outside lawyers.
Really, it's shocking. But don't worry -- help is on the way! Simultaneous with the filing of this Complaint, New York City entered into a Consent Decree with the feds, settling the case. You will never guess what is the key provision of the Consent Decree. Yes, it is an extra $4 billion for NYCHA, to come from the New York City taxpayers to reward NYCHA for its failures. (Go to Exhibit A at the end of the Consent Decree to find a list of the funding commitments.)
OK, they don't say that the money is to "reward NYCHA for its failures." What they say is that the money is for "remediation" and to fix the identified problems. Sure. Given that NYCHA is already on record as saying that it has a backlog of needed capital work of some $25 billion, you can be sure that this $4 billion will disappear more or less immediately, to be followed promptly by another similar gambit to hit up the taxpayers for the next multiple billion. By the way, $25 billion is about $150,000 for each and every family that lives in a NYCHA building -- plenty of money to buy each such family outright a perfectly nice house in a low-cost market like Utica or Cleveland.
In the articles in the press this morning, the big debate has been over whether the bulk of the blame for this situation belongs to current Mayor de Blasio, or whether his predecessor Bloomberg deserves much or all of it. I won't try to resolve that issue. I'm sure that there is plenty of blame to go around. Perhaps a Mayor and Housing Authority Commissioner who actually focused on NYCHA maintenance issues and rode herd on the bureaucracy could have done a better job than these guys. But really, the real problem goes much deeper: it is beyond the potential of a politically-supervised bureaucracy to avoid the overpowering incentive to underperform as a way to get more funding for the bureaucracy.
Consider just one aspect of the NYCHA situation. This issue has been reported in the past, but of course escapes notice at a time like now when the "crisis" seems to call for more funding. The issue is the ridiculous work rules that NYCHA has agreed to with its workforce. As one example, NYCHA has somehow agreed with its plumbers' union that all shifts run 8 AM to 4:30 PM, Monday to Friday; and all work outside those hours is compensated at overtime rates. Now, what idiot ever agreed to that? Everyone knows that plumbing problems occur at all hours of the day and night, and when the water is gushing down, the problem must be fixed immediately. As a result, the NYCHA plumbers rack up truly preposterous amounts of overtime pay. From the New York Post, March 17, 2018:
As Politico reported last week embattled city Housing Authority chief Shola Olatoye has been trying to win more labor flexibility, albeit with no backup from City Hall. Soon after taking over in 2014, she sought common-sense changes to work rules that have maintenance staff and other skilled workers on the job exclusively from 8 a.m. to 4:30 p.m., Monday to Friday. But the Teamsters vetoed her plan for staggered shifts. One result is the agency’s huge overtime bill, which (for example) leaves its plumbers as some of the very highest-paid city employees — five of the top 10 OT earners these last two years. The 2016 overtime king was NYCHA plumber Vincenzo Giurbino, who took home an added $228,000 atop his $141,152 base salary.
So now that this ridiculous overtime rule has been agreed to, it just can't be changed. After all, the Governor and Mayor need the support of these guys for their re-elections. I guess Mr. Giurbino can expect a nice bump up from his previous $370,000 annual pay when the new $4 billion starts flowing.
Can anybody figure out that this model can't work for the long term? In New York, progressive groupthink prevents any application of critical thinking to the situation. In this morning's Post, Manhattan Institute Vice President Howard Husock advocates that New York City should get out of the housing business. But he has been advocating for that for quite a while -- along with myself, and very few others. At the moment, there is no political momentum whatsoever in that direction.