Liberals ranging from Keith Olbermann to Salon’s Alex Pareene have attempted to use the South Fulton, Tennessee firefighting incident as an indictment of libertarianism, and of all libertarian proposals to supply public services on the free market. Alternet’s Joshua Holland considers it “Ayn Rand Conservatism at Work” (Alternet, Oct. 4), which admittedly might be somewhat less unfair — I can actually imagine Howard Roarke blowing up Cranick’s house because it was ugly, or something.
As a number of libertarian commentators have pointed out, the South Fulton fire department is a government agency, funded by tax revenues, which also supplies fire protection services on a voluntary contractual basis to the surrounding county. Not only is it a government entity, but it has certain state-conferred advantages that put it in a unique bargaining position as against potential customers. So it’s rather perverse to treat it as a black eye for free market libertarianism.
In any case, the specific course of action taken by the South Fulton firefighters is hardly mandated by free market principles as such.
Several libertarian commentators, Thomas Knapp among them, have argued that letting the house burn down was necessary for dealing with moral hazard problems (“Contra Long,” KN@PPSTER, Oct. 7). If Cranick had been allowed to buy in when he actually needed protection, it would undermine the actuarial mechanism involved in spreading risk over the entire population served.
“If you can still get the payoff without tying up your money by placing the bet in advance, even if you have to pay something of a premium, you’re a lot less likely to make that hedged bet. And the hedged bet is probably what allows the fire department, private or public, to equip itself, train its personnel, and keep them on the clock to respond if you ‘win’ that bet.”
But others have pointed out that letting the house burn down wasn’t the only solution to the moral hazard problem. Bob Murphy and Gary Chartier, among others, suggested that the Fulton fire department might have put out the fire for a “penalty rate” or “on-the-spot charge” (“Firefighters Watch House Burn Down,” Free Advice, Oct. 5; “The Fulton Fire Fiasco,” LiberaLaw, Oct. 10).
What’s more, in a market where fire protection was offered by a number of competing providers rather than one government agency in a subsidized monopoly position, there would probably be a market niche for providing fire protection services on short notice for a premium to those not served by other providers. There’s surely some price at which a competing fire protection service could recoup its costs for putting out Cranick’s fire, and which Cranick would regard as a bargain compared to losing his house. And if so, the competing service provider would cut a deal (I believe Bob Murphy’s term was “jump at it”) regardless of moral hazard considerations.
Of course the likely number of competing providers a free market could support depends on things like the minimum capitalization levels set by technological requirements, the resulting ease of market entry, the size of the customer base required to amortize capital outlays, and the downward scalability of service.
One thing that especially warrants looking into is the assumption, apparently shared by the liberal critics and most libertarian responders, that fire protection services in a stateless free market society would be provided by conventional for-profit businesses. Many market anarchists — and especially anarcho-capitalists — work from the implicit assumption that functions currently provided through the state would be provided in a stateless society by business firms and mediated by the cash nexus.
There’s no reason this has to be true, or even that the for-profit business model is likely to be the dominant model for organizing social services. Anarchism, as individualist anarchist Benjamin Tucker put it, is simply the belief that all functions of the state should be replaced by voluntary associations. And out of the almost infinite range of possible voluntary associations, Acme Fire Protection Service spans everything from A to B. As Karl Hess once wrote, libertarianism is a people’s movement, and encompasses whatever self-organized alternatives the people see fit to establish.
In that light, the relevance of the Fulton incident as a test-case for a free market society becomes especially doubtful.
Art Carden, for example, points out that people’s motivations in cases where they’re known to each other are different from cases where they’re simply business person and paying customer (“Fight My Fire: Government or the Market?” Forbes, Oct. 8).
“Strictly moral incentives work pretty well in small settings. My most meaningful relationships with my family and my friends are mediated by norms, conventions and (wait for it) love rather than market prices.”
It’s likely that the same complex of trends that leads to the collapse of state capitalism will also lead to a decentralized society of smaller, demographically stable communities with mixed-use economies, in which extended families and other intermediate social institutions play a much larger role. Neighborhoods and small communities are likely to play the same role in maintaining social services and the social safety net, post-collapse, that the villa did after the collapse of the Roman Empire in the West. Hence Carden’s moral incentives are apt to become a lot more important in the provision of social services.
So it gets back, in large part, to what social model we’re imagining as the background context in which the fire protection service operates, how cohesive the community is, how organically tied the protection services are to the community, and so forth.
In a cohesive community after the collapse of state capitalism, social services might be organized in any number of ways. Fire protection and other services might preserve some institutional continuity with the former state, after its powers to fund its services with taxes and push them off on unwilling consumers were abolished. An elected mayor and board of selectmen might oversee the provision of fire protection and other services to the majority of the population who chose to participate in the former “government,” organized as a consumer cooperative.
A volunteer fire department at the neighborhood or community level might be financed by subscriptions.
A fire protection collective might be organized by a federation of cohousing projects and urban communes, as neighorhoods coalesced into functional social units for the organization of services in the vacuum left by the withdrawal of the state, with dues for all social services taken as a percentage of income as a condition of membership in such primary social units.
And yes, fire protection might be provided by a for-profit firm or co-op whose members or owners were lifelong neighbors of the population being served.
In any of these cases, I imagine the social pressure to put out the fire of a non-subscriber would be considerable. But so would the social stigma on freeloaders also be.
And the smaller the social unit to which fire services are provided, the more likely their provision is to be governed by social rather than monetary considerations. So some of it hinges on the above questions of how low the minimum capitalization is for the smallest possible scale fire prevention startup, how scalable it is to small population units, and so forth.
By the way, there’s one thing we should never lose sight of in all this: what the actual statist alternative is. Lots of people point to the harshness of letting the house burn down for nonpayment. But keep in mind that having one’s house auctioned off for nonpayment of taxes is more common than house fires, and that it entails just as much of an effective loss of your house as having it burn down. The modal statist alternative, as practiced in most places, is to fund fire services with mandatory taxes — and unless taxation is backed in the last resort by punitive measures almost as harsh as having your house burn down, it’s prone to exactly the same moral hazard problems as a voluntary payment system.
That’s a favorite tactic of critics of libertarianism: to compare the actual performance of voluntary institutions to the good intentions of the state. But any social system can be expected to work optimally if it’s staffed by angels.
I'd like to submit to the libertarian lexicon that we stop referring to fire suppression and extinguishing services as protection. Likewise with the police and their protection racket. If they want to protect me from fire, they need to have a guy stationed in front of my house with a hose ready to leap at the first sign of a spark.
I wonder what the contract that the subscribers sign actually says. Does it stipulate that the FD will only come to extinguish a fire on the subscribers own property? I mean, if you are paying for fire protection services, and your neighbor's house is on fire, wouldn't it be protecting your own property to put out the neighbor's fire before it spread to your property (as I believe it did in this case)? I've used my AAA membership to get service on a friend's car that I was a passenger in. How is that different? They are serving me, the customer, not the property itself.
“That’s a favorite tactic of critics of libertarianism: to compare the actual performance of voluntary institutions to the good intentions of the state.”
In fact, it’s a bit worse than this, since as you point out in this instance (and as is typically the case in these situations) the performance that they criticize is actually coming from a state institution.
Say rather that they like to blame libertarians for the actual performance of coercive institutions while pretending that the state has good intentions.
Nice article. This is the way I like C4SS – it’s about anarchy, not about bashing capitalism or communities.
It’ll be very interesting to see how the different alternative solutions do in a free market. I suspect that there will be entire \industries\ where a co-op model will be prevalent, that are suppressed by the state right now. For example I don’t think putting your grandparents into a concrete block with paid staff would compete well against a co-op model of integrating people of different ages in families. Hey, prostitution could become a co-op. Meet Anarcho-Nymphomanism.
The method of comparing what happened to what government fantasizes about happens all too often, right along comparing what was built with \if nothing was built and the money was burnt instead\ (aka Bastiat turning in his grave).
Here in Germany, people like to put up the example of the Bahn AG, the 100% state owned railroad corporation. Now that it is nominally a private corporation, every failure is one of the market. Stupid market, avoiding maintenance work on 100% state-owned trains so children almost die. Those greedy capitalists! Why didn’t they sneak on the train at night, performing maintenance?
I often imagine that insurance companies would be best suited to run fire departments (and police departments, also). With volunteer fire companies (serving for a premium rebate, as they now serve for tax rebates), The focus would be on damage mitigation, with some real economic incentive (as well as the usual "heroic" ones). What if you promised the fire crew they would receive a percentage of the value of the home preserved from fire? In a situation like the one above, how about having the owner sign an on-the-spot contract for a similar fee? And if he refuses payment later, take him to arbitration. A portion of premiums could go toward equipment, etc.
Police, too–find the criminal so HE can pay the penalties, rather than the insurance company!
“In Soviet Union, fires don’t burn houses, houses burn fires”.
Wait a minute, that actually makes sense, what with fireplaces and chimneys and all.
“I can actually imagine Howard Roarke blowing up Cranick’s house because it was ugly, or something.”
Having read “The Fountainhead” for a BS college scholarship essay a couple of times, I’d have to say that this line made me smile.
Great article, truly! I recently made a quick blog about this myself, similar arguments, but with some extra tidbits.
http://abolitionofpolitics.blogspot.com/2010/10/in-regards-to-south-fulton-fire.html
Thanks Kevin. I think we can mention a lot of possible schemes, and say this was a government company, but ultimately statists are people too, and it’s good to simply say that some people are assholes, and it’s up to everyone to not let shit like this happen. I think that it’s really just a bit hypocritical to say that this has nothing to do with libertarianism, because the point against libertarians that statists bring, is that people who have no money will be left behind, and this is what happened just now, and this is why they are bitching even though this is nominally governmental. The spirit of ‘I’ll leave you to die if you can’t pay’ is the same, and we just need to attack it as such, because not all libertarians opt out of all moral duties.
“which also supplies fire protection services on a voluntary contractual basis to the surrounding county”
Perhaps instead of an indictment of libertarianism it is an indictment of voluntary contractarianism. I tend to take the incident as an example of why respect for the Iron Law of Tanstaafl implies that some people are expendable, whether the respect for the Iron Law is in the name of right libertarianism, left libertarianism, or some other minor variant on the negative liberty ideology.
If one lived in an environment where the problem of house fires had “open-ended answers” (subscription fire insurance, volunteer and for-pay fire departments, ye olde neighborly community vibe as per above, etc)…one can only imagine that there’d also be an incentive to seek non-flammable houses or even built-in automatic sprinkler systems. Necessity is always the Mother of Invention. (It seems to me that the greatest fear of statists is that other folks sometimes use their mind to make the statist’s pet projects…superfluous. What nerve!)
“what social model we’re imagining as the background context”
The Amish don’t have fire protection. They just team up and rebuild. This link isn’t a great example, but it does show to an extent. http://www.youtube.com/watch?v=G2KhXBekmsI
The documentary The Amish: A People of Preservation gives a better example of both a fire and tornado. To paraphrase the documentary, rather than the owner dealing with an insurance company, that still leaves him/her alone and trying to get rebuilt, the Amish just rebuild it in a week.
@ G.Ben-Diks – and in this line of thought, the question may arise in a lot of situations: Is it worth guarding against fire? With detached houses, which are not inherited family homes but short term cookie cutter crap construction, maybe you just consider irreplaceable belongings and have a fireproof safe. Maybe people reconsider stocking their houses with so much unnecessary belongings to fret about.
I really wonder if the cost of keeping houses from burning is worth it – considering that even when they try, the fire department doesn’t always save the house or belongings – and certainly doesn’t prevent all loss. City dwelling is a little different because of the possibility of fire spread, but even here we need to consider alternative preparation.
Oh, let me clarify – I’m questioning fire protection from an outside “fire department” be it state or private. Not fire protection and prevention – which would be practiced in a different way if the idea that trucks with water showing up was taken out of the picture.
I have two incidents that I’d like to relay from my hometown and own personal memory.
In the late 60′s or early 70′s when I was still a young teenager we lived in a suburb between a small town and a city. One of our neighbors had a house fire and the fire department was called. The Anderson City FD came out but would not put out the fire as it was out of the city limits. Someone called the Chesterfield FD, a small town just 2 miles east of the suburb, and they came out and also refused to put out the fire. Those 2 fire departments came to the scene and then told the owner, as he house burned to the ground, that they could not help. Someone called a volunteer fire department and they responded and were ready to put out the fire, but it was too late. The house was outside of the volunteer fire dept’s area of operation, but they came anyway.
Here’s the second one I remember. I googled a story about it, but the only thing I could find was this from the owner of a small local business:
“In the 1970’s, the city fire department went on strike resulting in the most devastating tragedy to hit downtown Anderson. In the course of the strike, an unknown individual set fire to one of the buildings on the east side of the block near 8th and Meridian. Citizens and business owners watched in horror as the fire burned all day jumping from rooftop to rooftop. As fire departments from neighboring cities arrived to help, the Anderson fire department union blocked the streets, preventing any fire rescue attempt. Paul recalls that one woman jumped out of a fire truck and yelled to the firemen blocking the road, “You get out of the way and let us do our jobs or I will mow you down!” She then thrust herself back into the fire truck and roared forward as the picket line dispersed in every direction. Two of Anderson’s brave firemen went against the strike and joined the rescue, one of whom was Fire Chief Ballinger. Paul Bickel was among the spectators watching as one business after the next was engulfed in flames. Through the course of the day, the fire crept closer and closer to Bickel’s Cycle & Key Shop. At one point, Chief Ballinger stepped aside to ask Paul how his father was doing in light of the situation, “He’s like to have a heart attack, but he’ll be ok.” Paul replied. After a full day of courageous work from the firemen and women, the fire was extinguished just before it reached Bickel’s store. When the smoke cleared, one man was found dead at the base of a stairwell, and over ten businesses including a barber shop, café, furniture retailer, law office, and jewelry store burned to the ground. Though Bickel’s store was not burned, it stored bicycle equipment beneath one of the other businesses, in which they lost about 120 bicycles in the fire. Paul and his parents sighed relief as the disastrous day drew to a close. Following the fire, the city purchased and cleared the east side of the block; there a parking lot was built which now sits an unmarked grave of that devastating tragedy over 30 years ago.” – http://www.bickelscafe.com/History.aspx
SO THE POINT IS, I PERSONALLY KNOW OF TWO INSTANCES WHERE THE GOVERNMENT FIRE DEPARTMENT STOOD BY AND WATCHED PROPERTY BURN TO THE GROUND, AND IN THE SECOND INSTANCE, THEY ACTIVELY BLOCKED ACCESS TO THE FIRE AND LET OVER ONE CITY BLOCK BURN TO THE GROUND RESULING IN THE DEATH OF ONE MAN.
SO YES, THE STATE IS ONE SWEET, WARM CUDDLY BASTARD.
Brennan Lester: Excellent post. The Elk Grove story was especially interesting. I don’t care for the low salaries and non-union part — sounds like a fire protection equivalent of Wackenhut or some other Halliburton clone. And if there’s any occupation that would seem to call for “insanely high” salaries, it’s people who regularly work 24 hr. shifts and go into burning buildings. But I certainly believe they could drastically reduce costs just by removing layers of administration and civil service work rules, refurbishing old equipment and shopping around, etc.
Mordecai: The problem is, the present statist system has all sorts of gimmicks for deliberately driving up costs, erecting entry barriers to cheaper alternatives, and putting floors under price so that there is no affordable alternative for those with less money. Among other things, a free market would remove the legal barriers to self-service and competing cheaper alternatives.
Lori: I don’t know what the alternative to voluntary contractarianism (taking “contract” in the broad sense of all voluntary relationships and arrangements) would be, other than compulsion. Do you suggest using compulsion to require people to pay for stuff they don’t want? Compulsory rules can only be backed up, in the end, by penalties — being locked up, shot, or having your property seized. So we’re back to the choice between having your house burned down and having it seized for nonpayment of taxes.
Paul: Thanks very much for the perspective. When we compare the state to voluntary alternatives, let’s use the actually existing state as a point of comparison, compare apples to apples.
Lori,
“the incident as an example of why respect for the Iron Law of Tanstaafl implies that some people are expendable”
You’ll have to explain how that’s the exclusive province of broad-tent libertarianism. While right-libertarianism certainly can be tarred with that brush, it is still much more respectful of the value of individuals than the state ever is. The state views *all* of the ruled as expendable. Just ask Cory May, or an enlisted soldier, or the homeless person who was “swept” off the streets to make the city look nicer, or the folks who get their homes and neighborhood communities taken from them via eminent domain for “economic development.”
Seems to me that the view that people are expendable is one of the core tenets of statism that libertarianism opposes. Again, I’ll grant that extreme right-wing libertarians may possess a mote of a variant of that belief, but even that pales in comparison to the beam of belief that statists espouse.
And I’d argue that Kevin’s vision of decentralism is the one dependable way of ridding society of that evil belief (or at lessening its prevalence).
Thanks, quasibill. I’d add that the authoritarianism of the state doesn’t inhere simply in the substance of the rules (i.e., the prohibitions and tax levies themselves). It inheres in the enforcement mechanism — and the authoritarianism of the enforcement mechanism is unavoidable. A regulatory state or revenue collection department can only work economically if there are highly authoritarian administrative law courts, in which the presumption of guilt is on the accused, and the functionaries staffing them have all sorts of opportunities for petty vindictiveness that can be challenged or contested only at enormous effort and expense. If the IRS or the EPA’s administrative tribunals were forced to follow common law civil and criminal procedure, and prove guilt to a jury beyond a reasonable doubt before being allowed to imprison, fine or seize property, it would cost more to collect taxes or enforce regulations than it was worth.
Kevin, I’d argue that the enforcement mechanism is the state. Without the enforcement mechanism in the form of military and police, bureaucrats and politicians could sit around all day passing whatever proclamations they wanted but no one would give them any heed. We see nearly every government agency these days with its own police force, too. DEA, BATF, even the FDA and USDA have armed “agents” now that go around shaking down hardened criminals like farmers who sell raw milk to their own voluntarily contracted cooperative members.
In the early days of fire services in the UK these were indeed provided by insurance companies and yes, if you were not insured with them they would not step in. However, as I understand it, they would act on payment of an appropriate fee. They would also take whatever action was needed to prevent damage to buildings insured by them. They also I think had reciprocal arrangements with other companies so that they didn’t need to have crews in areas with low numbers of insured properties.
I wonder therefore if the case that triggered this post would have been any different with fire services backed by insurance companies rather than the state. The people who lost their house had after all not paid the subscription to get cover by the neighbouring city but they do appear to have had building insurance, so I assume they were effectively betting against being the victims of a fire. I’m surprised that the insurance company agreed property cover without some sort of fire service agreement in place – if indeed they did.
On the other hand it may well be that when they took out the property insurance they could afford it, but not by the time they had to pay for the fire service. Any non-state based alternative has to include measures to protect people who cannot pay (as opposed to choosing not to) if it is to have any moral weight over the tax funded alternative.
On the issue raised by Paul, to be accurate it was not the state that blocked access preventing other fire crews getting in, but the Union. In similar cases in the UK where fire strikes have occurred, the state has called in the military who used ancient equipment mothballed for such an event. However there have been numerous cases where crews on strike have gone in and given assistance where lives have been at risk (including the soldiers where they have placed themselves at risk because of inexperience). There are also recorded cases of major emergencies such as large scale fires where they have gone back to work I have never coma cross any instance of fire crew on strike blocking access to a fire.
The two examples from Kevin and Paul do seem to me to be clear demonstrations of how state involvement has virtually destroyed social and moral considerations. This process is particularly pernicious in cases of child abuse where people close their eyes and say – sometimes literally – that’s nothing to do with me, it is for Social Services.
Some of these responses bring to the forefront the "reigning habits of thought" or cultural expectations that are indeed that which animate people to do this or that in terms of what to do and how to live regarding "life's uncertainties etc". I am reminded of a woman interviewed (Wall Street Journal) after the USSR/Iron Curtain imploded. Her world, her conceptual universe, was gone. She asked, "Who's going to house us? Who's going to grow the food? Who will give us jobs?" She was very serious. I recall reading it and thinking how silly a question! However, in HER world the whole idea that these things are caused to be by an Intelligent Designer (Planners) was the only possibility she knew of; that the "invisible hand"/spontaneous/emergent orders simply did not exist.
Many of the folks out there have the Stockholm Syndrome regarding the state provision of various types of "insurance". When confronted with much of this entire Fulton Fire thread – and emergent orders in general – their psychic state is much like the Pope's must've been when he looked through the telescope for the first time: does not compute does not compute…
[I've also noticed this "does not compute" mindset when some folks are confronted with Bebop/Jazz: "ah, they're just messin' about and nobody is listening to each other and they're all playing different tunes...there's OBVIOUSLY no form, rhyme, or reason to any of it!"]
"But others have pointed out that letting the house burn down wasn’t the only solution to the moral hazard problem. Bob Murphy and Gary Chartier, among others, suggested that the Fulton fire department might have put out the fire for a “penalty rate” or “on-the-spot charge” "
If they were interested in profit there would certainly be a price for which they would have acted. It would encourage some to buy more fire protection, others to buy less, depending on what the "on the spot charge" was.
And if they turned a nice profit then others would be interested and motivated to compete. But we don't have a free market in fire protection.
@Miko (1):
"In fact, it’s a bit worse than this, since as you point out in this instance (and as is typically the case in these situations) the performance that they criticize is actually coming from a state institution.
Say rather that they like to blame libertarians for the actual performance of coercive institutions while pretending that the state has good intentions."
The state is using its regulated and controlled corporate media apparatus to attack what it sees as a threat to its existence: libertarianism. This is nothing new, but the attacks aren't as effective as they were in the past. They won't get an internet kill switch no matter how hard they try.
@Todd S. (3):
"I’d like to submit to the libertarian lexicon that we stop referring to fire suppression and extinguishing services as protection. Likewise with the police and their protection racket. If they want to protect me from fire, they need to have a guy stationed in front of my house with a hose ready to leap at the first sign of a spark."
Good point, I often use the term protection, even though I envision a system of insurance and prevention as opposed to guys patrolling. I see personal protection in a free society as being geographic in nature. Now the most geographic you can get is your immediate surroundings, which means that insurance for personal protection (or some kind of life insurance) would likely be lower if an individual carried a weapon and was trained in how to use the weapon. Fire prevention insurance would probably operate along the same lines. Don't smoke? That's three ounces of silver off your monthly rate!
The bottom line is: a moral human being will help another human being that is in obvious need of help. Period.
Perhaps it's worth reposting something I put on another thread:-
In Roman times, Crassus used his already great wealth to become the richest man in Rome by operating a private fire service. Rome had many overcrowded tenements producing rental income (no doubt indirectly subsidised by Rome's corn dole to resident citizens, allowing them to pay more rent and encouraging them to stay in the city); the tenements often burned down. Crassus's teams used to go to those and offer to buy them cheap from the landlords at – ahem – fire sale prices; if they got a sale they usually managed to put the fire out and could keep the tenants and collect the rent or sell the properties on at better prices. Crassus used to say that nobody was really rich if he couldn't fund an army from his own private wealth.
For more information about the facts of the situation in Obion County that led to the Cranick's home burning to the ground, and to help stop it from happening again, please see:
http://obionfire.blogspot.com/
Crassus is a fine example of someone who knows a good business opportunity out of fear when they see one.
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