Archive | October 6, 2010

We Didn’t Stop the Fire

A recent spectacular example of government failure – namely, a government fire company’s refusing to put out a nonpayer’s fire– has been transformed, through the magic of non sequitur, into a criticism of libertarianism. That last charge is too silly to comment on, but the case does raise some interesting libertarian issues. I venture some tentative answers:

1. Should a fire company be legally required to put out the fires of nonpayers?

Firehouse Subs

In a free market, the answer is obviously no. In an oligopolistic market where the company is the beneficiary of artificial restrictions on competition – or, as in the recent case, is an actual government monopoly – the case for yes grows a lot stronger.

2. Would a fire company have an (unenforceable) moral obligation to put out a nonpayer’s fire in a case like this recent one?

I lean toward saying yes – especially once they’d arrived, and especially given that there were pets in the house. Obviously still more so if there’d been children in the house. We have positive obligations to our neighbours as well as negative ones, even if the positive ones aren’t legitimately enforceable (other than through shaming).

3. Wouldn’t it be economically unfeasible to fight fires of nonpayers, inasmuch as letting the house burn down would serve as a warning to other nonpayers?

Seeing a nonpayer forced to pay full price for having their house saved seems like sufficient incentive.

4. Would this recent event be likely to happen in a competitive market?

I think not. Company A says “sorry, we won’t put out your fire, even though you’re now offering to pay the full amount.” What’s your natural response if you’re Company B? (Note that the existence of private fire companies does not by itself guarantee a competitive market; I suspect most private fire companies historically operated in an oligopolistic context.)

5. What if a nonpayer can’t afford to pay full price? Is there any economic incentive to save her house then?

Sure. Letting nonpayers’ houses burn is the kind of bad publicity a rival would benefit from exploiting.

6. What if a nonpayer can afford to pay full price but is out of town and can’t consent to it, so the fire company saves her house anyway. Can they force her to pay?

I’d say no. But reputation effects apply to customers too.

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