David R. Henderson  

Bizarre Salon Attack on Libertarians

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Alex Pareene, at Salon, has a bizarre attack on libertarians. He titles it "For-Pay Fire Department Lets Man's House Burn." He refers to a story about a man who failed to pay an annual fee for fire protection and then, when his house caught on fire and he called the fire department, the fire department refused to show up. In the story that Pareene links to is the following statement:

The homeowner, Gene Cranick, said he offered to pay whatever it would take for firefighters to put out the flames, but was told it was too late.

You would think at some price, the fire department would show up. After all, a private for-profit fire company could make some good money doing so and, by charging high enough, could limit the incentive for people not to pay in advance for protection. Rural/Metro in Arizona is the example we libertarians often point to of a company that charges a fee. I remember reading, although I can't find the source, that if someone didn't subscribe and his house is burning down, Rural/Metro will show up and charge a fee that is a high multiple of the annual fee.

It turns out, though, that the fire department in Tennessee was not a private for-profit fire department. It was a government-run fire department. You read that right: the fire department that refused to show up and refused to name a price at which it would show up was run by the government of South Fulton.

So let's see now: Libertarians tend to advocate that government not be in the business of providing fire protection because we think that people should be free to contract with whoever they want to contract with and, as a side benefit, they will get better protection at a lower cost. If someone could show us that this works badly, we would look at that case. But it's bizarre for a statist to attack libertarians when his own statist alternative works out badly. That's exactly what Alex Pareene and many of his commenters did. What's next: blaming libertarians because TSA is taking x-rays of people? Or blaming libertarians because the government is so vicious in the drug war? Or blaming libertarians because government schools are so lousy?

HT to L.K. Samuels


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CATEGORIES: Political Economy



COMMENTS (26 to date)
Stephen Smith writes:

The second-to-last one's already happened - I hear liberals all the time blaming the drug war on for-profit prisons.

Arthur_500 writes:

Having worked for a subscription fire department I have intimate knowledge of such operations. You need to say no. We will save your life. We will help you get you stuffr out of the house but you are not a member and we are only there to protect our members.

Why is this diffrerent with a government organization. How often do we see rolls of people who have not paid their taxes and yet they expect to use the services those taxes cover?

Many are upset that illegal residents get government benefits and yet they are not paying into the system. Why should this be any different?

If you are not paid up at Sam's Club, Costco, AAA, or your local health club you will not recieve those services. Is this any different?

The market will result in certain actions that people will take based on their choices. Some will make poor choices and others will make good choices that appear poor at a later time. Either way, some people's choices will result in less than desirable results. Likewise some people will call heads and it will come up tails.

Oh well.

Brian writes:

There are some externalities that are significant enough that they warrant government intervention, me thinks a non contained fire on a neighbor's lot is one of those.

Consider the assignment of rights implicit in this problem. There are essentially two options

(1) It is one's right to be free of the danger imposed upon them by a neighbor who does not pay for fire protection. This must inevitably lead to the conclusion that charges for fire protection must be mandatory (privately or publicly provided does not matter).

(2) It is one's right to have a fire on their property regardless of the danger imposed on a neighbor. In this case, no need to require mandatory payment of charges (again does not matter who is providing it).

In the matter of option (2) there is of course still the "free market" mitigation option in which the endangered neighbor pays for the fire protection. As my original argument shows, I clearly am not convinced that the assignment of rights in (2) is just. So, at minimum, government intervention is required to enforce a mechanism of contribution collection. These mandatory fees could then be used to fund fire protection provided by a privately operation company.

Bill writes:

Of course, MSNBC's Keith Olberman jumped on this story last night, mis-reporting it as a private fire fighting company, closing his statement with his characteristic condescenging sneer.

ColoComment writes:

This has been all over the internet yesterday and today, usually with lots more explanation and background than one finds here.

Briefly, Cranick does not live in the town fire district. Before the current opt-in arrangement with the town, Cranick's rural neighborhood had NO fire protection. The county and the fire district came to a contractual agreement that for $75.00 per year paid by a county resident to help defray costs, the town's fire district would serve the subscriber in the rural neighborhood, as it did for Cranick's subscriber neighbor.

Cranick chose not to pay the very nominal fee; he declined the service. He made a bad bet and lost.

Why is that anyone's problem but his own?

It does pose an interesting analogy to the health insurance problem of mandatory coverage of pre-existing conditions without a universal mandate, doesn't it?

StrangeLoop writes:

Brian, one could imagine homes built far enough away from neighbors to mitigate against fires. Likewise, one could easily imagine free-market HOAs that require fire-protection services for all homeowners. (Heck, there have even been free-market solutions to the blazing neighborhood-destroying fires of California where gel is is used to cover homes, etc.).

Kevin T. Keith writes:

This was a place whose entire municipal government was Republican. They had considered, and refused - and in the immediate aftermath of this fire have refused again - to provide county-wide fire protection by raising rural property taxes an estimated 0.13%. Their chosen alternative was to sell fire services on a subscription basis, and, when doing so ruined a family's life, the Republican mayor's comment was "if homeowners don't pay, they're out of luck".

This was not a "statist" system. (Seriously: "statist"? Fire departments are your idea of the communist collective?) This was a system set up by "small government" Republicans run amok. It was their ideology taken to its logical extreme, with the exception that, unfortunately, the central city in the county already had a fire department. But when they couldn't privatize fire service within the city, they did the next-best small-government thing: they refused to extend municipal fire services to the rural areas, and then offered fee-based fire protection with the unspoken proviso that they'd let your house burn to the ground if you didn't pay up. That is, they effectively privatized the municipal fire department outside the city limits. This incident was the result of that decision - not (by way of comparison) of the earlier decision to provide normal public-service fire protection to the city residents (whose houses are never passively allowed to burn down, because the fire department actually fights fires in that part of the county).

This is precisely the opposite of state-administered public services, which, you know, provide service to the public. Your discussion of optimal distress pricing for fire services does not address the central concern here; presumably, any fee-based fire service would, in fact, do just what this one did in an emergency if the homeowner would not or could not meet the fee they demanded. The only surprise in this case is that the fire department's chosen pricing scheme required fees in advance and did not allow for on-the-spot negotiations, but that is just a business decision they made - they were just as much within their rights, from your perspective, in letting this family's home get destroyed because they hadn't paid $75 in advance as they would have been in letting it burn because the family wouldn't pay $50,000 on the spot. From the libertarian perspective they did nothing wrong, although you may think they made a bad business decision. (Great advertising for their services, though - wasn't it?)

What is wrong is the entire perspective that perceives the only problem here to be one of pricing strategy and not a fundamental failure of the state to meet its obligations to its citizens.

A true public fire department - not a pimped-out fee-based service using public resources - would put out the fire, regardless of fees, because putting out fires (and, stopping epidemics, and purifying water, and providing education, and building roads and bridges and dams and harbors, and ensuring access to healthcare . . .) is one of the things civilized societies do for their citizens. This fire department refused to do that, not because they were a "statist" service but because they had been perverted to the fee-based, "let them watch their houses burn", libertarian private subscription model. The cost for a civilized society that provides basic public goods is to pay - in this case marginally tiny - taxes, because civilization carries obligations both ways. But it is the only way to avoid situations like the one we saw here.

ThomasL writes:

For-pay fire fighting has a long and glorious tradition. Crassus ran one most successfully. :)

StrangeLoop writes:

"The cost for a civilized society that provides basic public goods is to pay - in this case marginally tiny - taxes, because civilization carries obligations both ways. But it is the only way to avoid situations like the one we saw here."

Ah, the glories of the State--limited to putting out fires (...and bombing foreign civilians). If this is a CIVILIZED society, then consider me a brute!

If this even were a private fire company, then I believe letting one house burn (in a utilitarian sense) is weak to subsidizing high-risk homes (e.g., New Orleans being bailed out) or a multitude of other instances where government interference generates death.

K. writes:

Perhaps one of the nuances of this situation that other posters may be missing, is that, being a state run system, no other options were available.

Gene Cranick could not contract with another fire service at a lower price, could not negotiate terms, and could not call another fire service that specialized in distress cases. This was how it was set up and he had to live with it.

That is why it being a state-run scheme is meaningful.

Brian writes:

StrangeLoop,

I do admit that I must concede to your first point that properties can be so large or the distance between home so vast that such a problem no longer exists. However, perhaps I should have been more clear that when I said 'government' I didn't not mean only municipal governments, as a home owners association is certainly a form of government. I would also argue, however, that at some point the HOA must rely on an overarching authority, a municipal government, to enforce its agreements and regulations.

Francis writes:

Kevin:

Why did no OTHER city fire department came to the rescue of the farmer's family?

If you tell me "it was not of their jurisdiction", then I don't think it is a more justified answer than "he didn't pay the fee".

Perhaps however there was no other city around. That would make it quite a remote place, but it is not impossible. Do you know if it's the case? That would need to be clarified.

And if the farmer were not insured, would you blame an arbitrary insurance company for not paying his house? Why?

Aaron writes:

Francis makes a very valid point. Goo-diligence shows the town of Martin, TN (with a fire department) is just 11 miles down the road from South Fulton. Union City is similarly situated. They also appear to have put up a page that discusses the house fire here:

The remaining 5 city fire departments have for years responded into the county without a subscription service, banking on collecting fees for their services, “after the fact.” The problem has been, that once those people have been provided the service; they often seem to choose not to reimburse. Attempting to charge on a per call basis does not generate the needed funds nor does it give county residents an incentive to support the cities, if they can wait until they actually have a fire to pay anything.

I wish my car insurance company would let me “wait” until I had an accident before I had to pay my premium. Why should fire service be looked at any different? The fire service has gotten expensive just like anything else. If it is not run as a business it won’t be around for anybody.

Those city fathers have reached the point where they can no longer ‘foot the bill” for county residents using city tax payers monies.

Of course, "Guy's house burns down because he was cheap" is a substantially less appealing headline.

Sharpshooter writes:

Arthur_500 writes:

"If you are not paid up at Sam's Club, Costco, AAA, or your local health club you will not recieve those services. Is this any different?"

Yes, it is. This is almost a test question a 5th grade student would have to answer in days gone by.

You can't see a fundamental difference?

Daniel Kuehn writes:

How is this "his statist alternative" (and why is he a "statist" - because he thinks there should be public fire departments??).

I can appreciate the logic of not attributing this directly to libertarians, but by the exact same logic you shouldn't really attribute it to the author. The whole point is it's not his prefered system either.

Francis writes:

Thank you, Aaron;

your post answers my question. In my opinion, the article you quote offers a fresh perspective to the whole debate.

Hobo Chang Ba writes:

"Their chosen alternative was to sell fire services on a subscription basis, and, when doing so ruined a family's life, the Republican mayor's comment was "if homeowners don't pay, they're out of luck"."

Kevin, remember: the city/fire department policy did not itself "ruin a family's life." The homeowner's own multi-level irresponsibility did - from letting his grandson burn trash next to his house, to not purchasing extremely affordable (and likely subsidized) protection.

It's not a compelling argument to me to say that firefighters need to put their lives at risk for the houses of people not contributing to their salaries, especially in this case where there was no one in personal danger. We don't even tell doctors, who are essentially the only private actors currently compelled by law to provide services regardless of the ability to pay, "hey, you need to run into the middle of that gunfight and risk your life to administer care to the dying gangbanger immediately, although you will never get a penny for your services." Doctors need not administer care until their own safety is insured; why should firefighters risk their lives for those who have not contracted for their services when everybody is safe and out of the building?

The private market would be preferable because firefighter companies who refuse to act on behalf of paying customers would be violating contract, and they could negotiate on the spot to provide a response for a fee to non-paying customers based upon the situation and risk. I do think the department could have made some accommodations as he offered to pay in full and was willing to sign a dotted line saying such; private companies would be more likely to be flexible in such situations.

I do see fire protection as distinctly different from police protection and court protection (where state monopolies are required to prevent the outbreak of warfare between conflicting security companies and lack of contract enforcement between conflicting judicial companies.)

Dixon writes:

I don't see what the problem is. Letting houses burn down is a great way to work off our elevated housing inventories. People who are underwater on their mortgages are better off letting it burn.

tms writes:

I wish they had put out the fire and then sought reimbursement for every last dime worth of trouble and expenses. But another interesting question is..what will happen now?

Many are pointing out that anyone who had previously opted out are now going to strongly re-consider. However, the other important player in this whole equation is the insurance company that was insuring the man’s home. Apparently, the insurance company is on the hook for at least some of the loss.

My guess is that insurance companies are now going to want to change their contracts to include a requirement that policy holders pay for a fire-fighting service if it's not otherwise provided. It would work the same way that a mortgage contract works, where the lender requires the borrower to maintain a homeowners insurance policy. The insurance company could even set up an escrow account on behalf of the homeowner to make sure the fee is paid.

So the marketplace will work this out in about a second, assuming the state insurance board approves such a change and the policy doesn't change.

rob writes:

This isn't so much a story about 'statist' vs. 'libertarian' ideas, or morality vs. economics, as it is a story about good sense vs. senselessness.

The answer to both the moral question and the economic question here is the same: put the fire out. Morally, we help our fellow man in need. Economically, the wealth of the community is endangered by an uncontrolled fire. And as Dave pointed out, the fire department could have charged a one-off fee for its services (a fee the homeowner reportedly offered, if not begged, to pay).

But what happened instead was an example of moral and economic vacuousness -- the stubborn, stupid, and seemingly spiteful kind. In that sense, one could be equally inclined to blame it on a "perverted, fee-based, let-them-watch-their-houses-burn, libertarian private subscription model", as you could blame it on senseless bureaucratic red-tape.

Nathan writes:

Is there any evidence the house could be saved by the time the fire department arrived?

It looks like the station is about 10+ miles away, and it took the guy at least a couple minutes to make the call. My guess is it was well charred by the time they arrived.

Assuming this, the only thing they could do was save other property, which they did.

Douglas2 writes:

Not that is makes any difference or offers substance to the conversation, but the County Mayor Benny McGuire ran as a Democrat, so any claim that the elected officials there are all Republican is false.
I've seen many references to the city leaders or county leaders all being Republicans. I think the source of this claim might be an Obion County GOP page headed "This is a list of every elected representative serving Obion County". A quick reading might lead one to think they were claiming all elected officials in the county as party members.

Douglass Holmes writes:

Kevin T. Keith,
Thank you for enlightening us about the significance of this story. Personally, I wondered why it was news that a home had burned down in a very rural part of western Tennessee, but now I see why it is newsworthy. With all the examples in our lives of large government run amok, we need to be reminded of the implications of small government run amok.

Douglas2, yes it does make a difference. That's why Kevin made that point first. The entire "municipal" government was Republican. That was the most important point in his rant, whether or not it was factually correct.

John R. Graham writes:

I don't think it's reasonable for the fire department to put out the fire on the homeowner's verbal commitment to pay "whatever it takes". The credit risk is obviously very high, and the firemen need to decide very quickly.

Even if there was no credit risk (i.e. that the homeowner was 100% certain to pay the full cost after the fact, or had a suitcase full of cash that he showed the firemen), then it would give the wrong message to other homeowners. They would tend to drop coverage. This means that the fire department would have to borrow money from a bank to finance its equipment, payroll, etc. and have an extremely volatile cashflow.

Beth Haynes, MD writes:

The best response to this event is from Trey Givens who explains how a fire dept. would function if it was a business:

"First of all, why is the government running a fire fighting business? I’m all about privatizing fire fighting services...the government is not a business. And it should not be a business...

See, when you’re the government and you work in a bureaucracy, you have a list of rules and you act like a robot and say, “If X then Y. NO EXCEPTIONS! NO SOUP FOR YOU!”

[...]

http://treygivens.com/?p=2368

[To read the remainder of the article, go to the suggested link.--Econlib Ed.]

DK Wilson writes:

Hmmm, fire department uses citizen-funded equipment to run its fire dept. and citizen-funded money to house said equipment, but then chooses to deny citizens their services.

This is exactly what team owners do with their stadiums and arenas across the U.S. and is exactly why Wal-Mart/Sam's Club and every other corporation has helped to ruin the U.S. economy by outsourcing its labor for manufacturing-producing goods (or, stealing citizen's ability to possess adequate funds), only to turn around and sell those goods to an economically dispossessed American citizenry, while employing that citizenry at a less-than livable wage; they build their companies off the money spent by the citizens but refuse to serve the citizens by employing them to make the goods they sell.

That is corporatist in every way. And what was Mussolini's term for corporatist?... oh, right.

And to use "high-risk" homes in New Orleans and rebuilding them as an example ("Strangeloop") for this selective form of libertarianism most of you have glommed on to, is actually racist. Note on the "rebuilding of the "Crescent City": The areas most damaged there have NOT been rebuilt and the city has not been bailed out, except in instances of damage done to what you would consider "low-risk" properties, that is properties that restore the image of New Orleans but not its reality.

Our present form of government is not at all an adequate answer to our country's myriad problems because it is run by the corporatists and protected by intelligence agencies that serve banker's interests.

When we can house a Congress that is majority responsible to its electorate, we can hold these corporatists responsible for their vile acts and fundamentally alter the course of the U.S., sending it in a positive direction where individual rights are truly protected while the needs of the majority are met. Until then, no Tea Party, Libertarian, Democrat, Republican, or whatever labelled and elected group/party will do anything other than protect the status quo.

And the last elected official I know of who met that challenge to any real degree was Paul Wellstone - and you see what happened to him.

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