Firehouse Follies

I haven’t been particularly impressed with either side of the recent Tennessee firehouse kerfuffle.  The left seems to simply assume that any problem is the fault of the evil free market.  If a documentary shows awful sweatshop conditions in Chinese factories or coal mines, well then it obviously shows the folly of laissez-faire capitalism, even if the factories and mines are government-owned.  And apparently if a government-owned fire department behaves in a cruel and callous fashion, it shows the folly of privatization.

In fairness to the left, the argument was a bit more subtle.  I think they argued that this government-owned fire department was behaving as they’d expect a private fire company to behave.  But as Coase showed with his lighthouse example, we can’t assume that real world firms will behave as our models predict they will behave.  We need empirical evidence that libertarianism won’t work, and this example sure doesn’t provide it.  There are privately-owned fire companies—I’d be much more interested in how they behave.  David Henderson points out that one in Arizona behaves very differently from the Tennessee firehouse.

I was also not impressed by the conservative defense of the fire department’s action.  They argued that the way to prevent deadbeats from not paying their fire dues is to set an example by having the house burn down.  I doubt that is the best option, and Henderson’s example of the private Arizona fire company makes me even more skeptical.

Some would argue against forcing people to pay for fire services on dogmatic libertarian grounds.  My problem with making it a matter of principle is that it would seem to also apply to pensions and catastrophic health insurance.  But would we really want to let an old lady starve because she didn’t voluntarily contribute to a pension?  I wouldn’t, which is why I favor forcing her to contribute to a pension, and also buy catastrophic health insurance (with a government subsidy if she is poor.)

I don’t know enough about fire services to have a firm opinion, but off the top of my head I can’t really see a good reason for letting houses burn down.  But I also don’t favor the big government approach that seems to favor.  If private fire companies are good enough for Denmark, they are good enough for me.  I recall reading that we have twice the number of firehouses that we need in this country, so if the service was contracted out we’d presumably save billions of dollars as the industry was rationalized.  And I always wanted to turn one of those neat old firehouses into a private residence.

I’m not a dogmatic libertarian and I’m not a statist.  I’m a pragmatic libertarian who wants to drastically shrink the size of government, but I have an open mind on whether we might want to compel insurance coverage in a few cases.  I don’t know what sort of government role (if any) is optimal for the firehouse industry.  All I know is that it is absurd to make sweeping ideological generalizations on the basis of such murky examples, especially when there are plenty of private firehouses to examine.  The fact that thinks this is what constitutes a good argument against libertarianism makes me think that libertarian critics don’t have much of a case at all.

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About Scott Sumner 492 Articles

Affiliation: Bentley University

Scott Sumner has taught economics at Bentley University for the past 27 years.

He earned a BA in economics at Wisconsin and a PhD at University of Chicago.

Professor Sumner's current research topics include monetary policy targets and the Great Depression. His areas of interest are macroeconomics, monetary theory and policy, and history of economic thought.

Professor Sumner has published articles in the Journal of Political Economy, the Journal of Money, Credit and Banking, and the Bulletin of Economic Research.

Visit: TheMoneyIllusion

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