Quick Take: Grotesquely Inflated "Cost" of LA Fires

Can nobody do basic math anymore?

The “news media” have been uncritically reporting - and re-reporting - phantasmagorically enormous numbers for the “damage” of the LA fires. At this rate, if the fires keep burning, and they certainly will, the “cost” for replacing the 12,000 burned structures will close in on one trillion dollars. For those in Rio Linda, that’s a thousand billion dollars. That’s approximately equal to six percent of the entire American economy!

This makes zero sense. The fires aren’t burning the land itself and, unlike Hurricane Helene damage, rapid fires like these leave roads, bridges and anything underground - meaning most critical infrastructure - largely intact. If a 1200 square foot house on .18 acres in Pacific Palisades is destroyed, the value of the land is irrelevant in the loss calculation - the land is still there! And that quaint 1940s bungalow could be rebuilt today for a couple hundred thousand dollars. Not the 3.2 million dollar Zillow value.

Consider this: if the average “structure” destroyed costs just one million dollars to replace, that means the total cost of replacing structures is…….wait for it…….just 12 billion dollars. Not hundreds of billions.

Yes, there were some schools, apartment complexes and businesses destroyed. Okay, we increase the average cost of structure replacement by 100 percent - say two million dollar per structure. This includes a LOT of houses (the overwhelming majority of structures destroyed). Most of these homes can be rebuilt for just hundreds of thousands of dollars. That takes the estimate to…….wait for it……..just 24 billion dollars. Coincidentally - that exact number, 24 billion dollars - is the insured estimate of losses.

Unlike Hurricane Helene’s damage, which required digging out and hauling off and disposing of millions of tons of useless wreckage, the fires have largely performed the demolition phase - in many cases, right down to the ground itself.

What’s the extra 200 billion dollars for?

I’ll tell you what it’s for: government. That 90 percent pass-thru tax - or “handling fee” - goes to government “management” of the rebuild. It pays for the lost property taxes, lost income taxes, lost sales taxes. Government revenue. California’s annual budget is $322 billion this year - you don’t really expect them to take a hit from this, do you? Why should they? It’s not like California’s government caused the fires - they’re blameless!

All I ask of you, my loyal readers, is to critically challenge any number you get from the government-media blob. They’re golden-shoehorning* in a huge number for the cost of these fires because government thinks they can get away with it. Don’t let them.

*With a tip of the hat to Peter Venetoklis.