Wednesday, October 6, 2010

Yelling Fire On A City Street

I generally lean toward libertarianism in the sense that I believe strongly in limited government and strong individual rights. However, I have real problems with doctrinaire libertarianism. Specifically, I don’t accept the view that many libertarians have that government is always bad and that private sector answers are always better. (I also object to the confusion of libertinism with libertarianism, but that’s a post for another day.) This view ignores the problems of free riders and opportunity costs, and I think it’s an intellectual dead end.

Doctrinaire libertarianism holds that there is no problem that the private sector cannot resolve better than the government. In most instances, I would agree with this. The private sector is better at delivering food and products, balancing the needs of producers and consumers, meeting needs and wants, and allocating resources to their best uses. But there are other considerations that continue to make government a necessary facet of our lives, and which libertarians often ignore. Specifically, I’m talking about free riders and opportunity costs.

A free rider is someone who realizes that they don’t need to spend money because others will do it for them. The best example might be someone who attends a church every week, but never contributes to the church. This person enjoys the services the church provides, but does not pay anything to make sure those services can still be provided because they know that others will make those payments for them. They are basically “free riding” on the greater desire of others to ensure that the services continue. The same is true in group projects, where one person learns that others will pick up the slack if they don’t do their part, or anywhere where a person discovers that others will do their work for them.

The free rider problem in doctrinaire libertarianism arises this way: services like fire protection, roads, emergency medical, and police protection are important to the community at large. But the free riders know this. So if we eliminate the government’s role in providing these services, and we leave it up to private persons to pay for these services if they want them, then the free riders will simply refuse to pay because they know that others will make up the difference. Thus, they get the benefits of the services without paying for them.

One solution to this is what happened in Tennessee the other day. In Obion County, residents are required to pay a $75 annual fee to get fire protection services. If they don’t pay, then the fire department will not put out any fire that hits their homes. This week saw an extreme example of this, where the fire department refused to put out a home fire because the owner had not paid the $75 fee, even though they had turned out to protect the home of a neighbor who had paid the fee.

On the one hand, this sounds fair and reasonable. The guy didn’t pay for the services, i.e. he tried to free ride, and he knew what would happen; thus it was right to not provide him with the services. But there is more to consider here. For example, fire is a tricky thing, and there is no guarantee that letting this home burn wouldn’t cause the whole neighborhood to burn down, thereby risking millions of dollars in damages and dozens of lives. Further, think of the economic waste of letting a $100,000 home burn down because of a $75 fee. You may say, “so what, it’s his problem,” but that $100,000 loss will now be spread among all the homeowners in higher insurance rates or in deflated property values if he can’t rebuild.

Consider other services as well. Suppose they don’t pay for police services. Would you really want a magnate for crime next door to your house? What keeps it from spilling over onto your property before the police can come protect you? And what about visitors who don't know that the homeowner didn't pay the fee and suddenly can't get the police to respond to their emergency?

Or think about roads. Many people now argue that roads should be turned over to the private sector. But is that wise? First, consider the free rider again. You may spend a fortune to build the perfect road so that the fire department can rush to your house. But what’s to keep a neighborhood on the route from refusing to build a road, and thereby keeping the fire engine from even being able to get to your perfect road? Secondly, consider the waste. If all roads were private, then nothing should keep the owners from putting up toll booths and denying access to people who don’t pay. Think about the economic waste of suddenly employing millions of tollbooth personnel around the country. Further, think about how difficult it would be to travel anywhere without knowing how many tolls you would run into, what the cost of those tolls would be, or whether the roads are even open. Image if going across town suddenly involved crossing 50 private roads, each with its own toll regime (charging whatever they felt they could get away with). Imagine trying to go across country. The chaos, inefficiency, and misallocation of resources this would cause would be devastating to our economy.

The truth is that some activities are simply better handled by a government, which can impose a tax on all persons and thereby eliminate the ability to free ride, and which can then allow all citizens to use those services/facilities without having to navigate the whims of dozens of private groups. Thus, this is an area where I diverge from the doctrinaire libertarian view, which places ideology above practicality. I certainly agree that the government has gone too far and gotten into too many things that should be within the exclusive domain of the private sector, but I do not agree that there is no role for government in providing services that are essential to making a town function.

So while conservatives seem to be lining up on both sides of the issue of whether or not the Tennessee fire department acted correctly by not putting the fire out (see National Review), I think the bigger point here should be whether it makes sense for conservatives to advocate a system that lets people opt-out of essential services like fire protection. I think that arguing in favor of the opt-out system misunderstands the effects on society as a whole and weakens our claims when we talk about privatization or elimination of nonessential services. In other words, if we’re arguing that the fire department should sit on their hands because you didn’t pay a fire service fee, then we have little credibility left when we argue that the government should not be providing dozens of non-essential services.

So what do you think?


Tennessee Jed said...

Your view strangely is so close to mine it is almost scary. perhaps that explains why I disagree so seldom. I am reading an interesting book on a topic which touches on some of these issues, although the overall thrust is more towards the liberal view of welfare state programs titled "Never Enough" by William Voegeli. I'll let you know what I think about it after completion.

Tennessee Jed said...

I forgot to add that there are activities where government can really do well such as the military. They almost always can not do things as efficiently as the private sector (such as public employee unions for example.) As you point out, there are often other considerations such as the free rider. A great example is flood insurance even though it is not really handled well.

T_Rav said...

Yeah, this would be an instance where I too make a distinction between small government and libertarianism (despite definite sympathies in that direction, I could never go totally along with it). In this case, I think the fire department was in the wrong. Someone in the blogosphere (can't remember who or where) put it this way: Suppose you had ten paying homes surrounded by ten non-paying homes, several of which were on fire. Since the fire in that situation will almost certainly spread to the paying homes, do you still let them burn then? In my opinion, there are some cases where the free-rider problem has to be ignored in the name of common decency.

JG said...

I absolutely agree with you. (No surprise there) There are some things that simply must be a government responsibility because they just won't work otherwise. Excellent example. (I hadn't heard about the fire situation.) The problem comes when people assign the free-rider-fire-department analogy to other situations - like healthcare. It could be argued that everyone should be given (at the cost and effort of the government) equal top-shelf healthcare because those who don't "pay in" and get treated now are health risks by being carriers and transmitters of disease to those who do pay in and get healthcare. That's the argument I hear most in the vaccination wars. (Which is a whole separate topic and I'm not trying to bring that up, just mentioning it for the sake of a comparison.)

Joel Farnham said...


I agree. I think there are certain functions that the Government does so well that we take it for granted. Like a fire department.

And the free rider argument is a straw dog when you stop to consider all the myriad taxes that are taken that we give without a fuss. Sales tax, property taxes, income tax etc, etc.
No one is getting a free ride here.

AndrewPrice said...

Sorry I'm late this morning, everyone -- internet problems. :-(

AndrewPrice said...

Jed, Great minds right? Please do let me know about the book. I'm always interested in new books.

The military is another example where the private sector is simply no substitute for the government. I'm not saying that there isn't a role for private contractors, nor am I saying that mercenary armies can't be effective. But when it comes to something like national defense, that should be an issue for the entire public because we simply don't want considerations like profit to interfere with national interest and loyalty.

AndrewPrice said...

T_Rav, I agree. There are simply more issues to be considered than just "you could pay to get the service." Keep in mind that fire spreads, as you point out. That means a simple fire that could have been contained could suddenly spread all over town or into a forest or wherever -- which will affect people who paid.

Secondly, remember that something like this can endanger innocent lives even if it stays in the one home. For example, suppose you send your kids to a friend's house for a sleepover. A fire starts. A neighbor sees the fire and calls the fire department. The fire department doesn't come because they're not on the list. Everyone dies because they've already passed out from the smoke. . . including the kids of the people who did pay the fee but who just happened to be at that house that night -- whether they knew about the fee or not.

Patti said...

my first reaction to this story was : they give you a choice?! my second reaction was: he opted out?!

it was a risk, for $75 that he lost big on.

my third reaction was: there's gonna be a stoopid lawsuit from the same dude who opted out, thereby costing him, and us, way more than the initial $75.

my final reaction: what an idiot.

AndrewPrice said...

JG, Thanks! :-)

Yeah, the vaccination wars are an issue unto themselves.

I agree with you completely. There are services that simply should be provided by the government because they affect everyone and if we turned those into a pay-for-service basis, then a great deal of chaos, injury and waste would ensue.

BUT, the problem, as you point out, is that it's too easy to turn this into a game of semantics and say "well, it hurts everyone if not everyone has health care so the public should pay for it for everyone" or "it hurts employment when people don't have cars, so the government should give everyone a car."

This is an area where common sense needs to be brought back into government. Some things are necessary services without which society becomes chaotic and horribly inefficient as people need to start hiring private guards to follow them around or start building water tanks to protect their homes from fires. Other things are "societal luxuries", things that would make some people's lives better at the public's expense, but which aren't necessary to making society work.

We need to get the government out of providing the second group of services, but not the first. And I think it hurts our credibility when we adopt the theoretical approach many are currently adopting to say that the government should get out of providing all services.

T_Rav said...

Andrew, that's another good scenario (okay, not "good," but you get the point) I hadn't thought of. As far as smoke inhalation goes, you could also suppose a situation where toxic elements from the smoke get blown through the entire neighborhood.

Not to get off on too much of a tangent, but this is why I distrust libertarianism, at least in the form it's advocated. I worry that if taken to the extreme, it leads to complete social atomism, where one has no relation to others beyond a purely economic level. People are social animals, and benefit themselves and those around them by being concerned and sacrificing for others. To be clear, I'm not advocating some kind of namby-pamby "Social Gospel" like certain persons in the government who shall go nameless; I think this can only be done on a voluntary basis. And I don't think libertarians mean to destroy civil society. But I do think it trends in that direction, regardless of intentions.

AndrewPrice said...

Joel, I agree. I think that there are certain types of services that are simply inherently governmental -- police, fire, military. These are the kinds of services where we are better off having them provided "by the people" rather than forcing individuals to make their own arrangements.

I also agree about the tax issue. With the amount of taxes paid, the issue of the $75 fee is ridiculous.

I got your numbers, but haven't had a chance to consider them yet (finished the article at 3:00 am). I think you may be on to something about the amount of taxes being paid and where they went!

AndrewPrice said...

Patti, I agree. It was very stupid not to pay the fire fee. But you know (as you point out), this will ultimately cost everyone more than $75 in legal fees or whatnot.

But even more importantly, consider what would have happened if someone had died because this fire spread or if the guy was trapped inside and the fire department stood by -- or if a neighbor died who was visiting. Those are the kinds of problems this situation lends itself too all too easily.

LawHawkRFD said...

Andrew: There are indeed some things that government can do better. Fire protection and police protection are probably the best local examples. The military (specifically provided for in the Constitution) is the best nationwide example. The Progressive-era and subsequent "reforms" have made us dependent on government and at the same time created a tax code which encourages the "free riders."

The government service should be in proportion to the need and the superior ability of the government to provide the service. That has gone completely out of whack as more and more people come to think the government is the fountain of all good.

In my lifetime, I have seen a perfect example of this government expansion of a legitimate function from a local good to a national evil. That example is education.

As a small child in California, I attended excellent public schools which were entirely controlled by local government (even neighborhood government). The taxes were local and the school boards were local.

Then came mission creep. If a little government-control is good, bigger government control is better. By the time I hit high school, the local school districts had all been consolidated into a citywide "unified school district."

The years went on, and the State Board of Education began to gain financial and curricular control over even the local and regional school districts. Then Jerry Brown appointee Chief Justice Rose Bird and the Supremes decided that all school monies, collected from local property taxes should be sent to Sacramento and redistributed statewide (resulting in solid middle class communities with good schools spending most of their tax money on shooting galleries and gang territory in failed schools in South Central and East Los Angeles, Oakland and elsewhere).

The piece de resistance was the US Department of Education collecting taxes nationwide and dumping the money on useless projects, outrageous facilities, support of teachers unions, failed educational programs, and "no moron left behind." The local need to educate all citizens has transmogrified into a national disgrace and a whole generation of illiterate high school graduates.

Let private enterprise do its job, and let government services be proportional to the need and ability of the citizens. If it's local--leave it local for God's sake.

Joel Farnham said...


Where I got the numbers is in public domain. Census, property taxes and the "fee" charged. I didn't attempt to look at sales tax which is 7% for anything non-food and 5.5% for food.

The argument that the fire trucks belong to the city and not the county bothered me enough to find out how many people are involved paying the fees.

That and the fairly recent knowledge of Bell City employees voting themselves 6 figure incomes that depleted the city coffers to the point they were contracting out police functions.

AndrewPrice said...

T_Rav, I agree completely. I usually write in terms of economics and logic rather than morality because morality tends to be a lot more fuzzy and those arguments turn people off. But there is a moral side to most arguments and you've hit upon one.

People are social creatures and the pure libertarian view doesn't seem to recognize that. And if we do reduce everything to a matter of economic equations, then we do lose something as a society that really is necessary to hold us together and keep the world from becoming rather brutal. In other words, there are some things that we simply want our society to do to maintain society, and we don't want to eliminate those because we think the economics might be better or because we'd like to see the government essentially eliminated.

In fact, if you want to see a perfect example of how the world would work if we privatize everything, then look at a lot of Third World countries where the only services you get are those that you pay for. Thus, in places like Africa or South America, the rich hire their own police forces, live behind high walls, and take care of these issues for themselves. Everyone else is left to fend for themselves. That's a horrible way to live.

I would be very concerned if we started to separate the world into those who are covered and those who are not, that we would end up with a similar world where private security forces become the norm and where a cold-hearted detachment replaced our sense of community.

Pittsburgh Enigma said...

Good points on what libertarianism falls short on. This why conservatives support "small government", not "no government".

Ironically, when government needs to justify its existence, it is exactly these core essential services (fire, police, emergency medical, etc.) that they always threaten to cut. And in the case of Pittsburgh's budget crisis, in addition to these, it was crossing guards (a threat to children is always a great political issue.) Meanwhile, no one (especially media) ever questions the necessity of the secondary services. Two examples in Pittsburgh: we have this completely useless service called street cleaning, where these completely useless vacuum cleaner truck behemoths roam the streets on designated days of the week to "clean" the streets. But they do nothing of the sort. I've watched them go by my house countless times, and all they do is rearrange the dirt and litter already on the street. For a while, they even had a parking enforcement vehicle riding behind the street cleaner handing out citations to cars that were parked illegally. Who knows, maybe they raised more revenue in citations than what they paid in salary and benefits to the street cleaner driver and the parking enforcement officer? But I doubt it. Case two: we have a forestry division that is responsible for maintaining "public domain" trees in the city. Yet, I can't count the times I've seen forestry workers in their pretty white trucks camped out in our city parks, not doing an awful lot of work. This "service" is just screaming to be privatized.

Most of these secondary services could be outsourced, and local governments would save a lot of money.

T_Rav said...

Andrew, good point. I dare say some of the real libertarian fanatics out there would pass on the chance to live in the full-privatization paradise that is the Third World.

Another thing I think could be pointed out is that since, as you said, there is a vague recognition of the need for community, libertarianism also has the danger of causing a mass reaction that could very easily lend itself to some really socialist ideas. There is sometimes a tendency to flip from one extreme to the other like that. The rise of socialism in a Britain that took laissez-faire capitalism to the max is, I think, a good example of this.

AndrewPrice said...

Lawhawk, You raise an excellent point about education. Some services are inherently governmental, some aren't. I would say that ensuring the existence of some form of education is a governmental function -- whether that is by providing it directly by state run schools or by partnering with private schools.

But even though this is a function that I would argument government should do, that doesn't mean it should be handled in Washington. In fact, this is one of those functions where local control is better because local control tends to mean accountability. You just can't get accountability when the people in charge of the schools are 2000 miles away and don't have to face the parents or the community.

That said, I have no problems with minimum requirements being put in place to make sure that the education provided by all schools is at least competent, but beyond that, it has proved to be a disaster to let the federal government start imposing political dogma and teacher-union supported labor laws, educational requirements, etc.

AndrewPrice said...

Joel, I don't doubt your figures, I just haven't had a chance to think about them yet. But like I said, you raise some excellent questions. Where is all the money going? This is something that people should look into because maybe it is another instance of a corrupt local city government milking taxpayers for outrageous personal gain?

It's a good find and deserves investigation!

AndrewPrice said...

Pitts, You raise some excellent points. First, just because something is an inherently governmental service doesn't mean it can't be privatized. In other words, there is no reason that these services always need to be provided by city employees. In fact, in most cases, the city is probably better off hiring a private company to handle the services and then just managing the contract.

In fact, I've been involved in a lot of privatization issues in government contracts and it's amazing how many things (like cafeteria services) the government claims need to be run by government employees, and how much better and cheaper they run after they've been privatized.

Secondly, Colorado Springs like Pittsburgh tries to blackmail the citizens whenever they want to raise taxes. Right now they are turning off street lights and threatening to fire police and firemen if they don't get a tax hike. Yet they never seem to find a way to reduce salaries, fire some of the thousands of works who do nothing in the city building, lay off some park workers, or privatize things like garbage pick up in parks. Those are the things people want to see cut, but those are the last things the city will talk about. . . instead, they threaten to fire the people the public actually wants.

Also, I know the street sweeper machines you're talking about. I've never seen them pick anything up either -- they just push the dirt around.

AndrewPrice said...

T_Rav, Another excellent point! When one side pushes too far, the reaction tends to be equal in size and scope. Hence, the collapse of communism brought a form of near-anarchy. . . the laissez-faire approach in Britain ushered in steep socialism. . . the immorality of Rome ushered in a truly repressive religious period. . . etc.

It seems to be part of the human condition that when we react, we overreact, and the further we were to one side of the pendulum, the greater the swing to the other.

Like you, I think that putting in place a system where everything is essentially laissez-faire would push more and more people to the left as they saw the system produce things that they considered unjust. This would eventually lead to a repudiation of the laissez-faire system in favor of a socialist system, which would be much worse.

The better approach is the measured approach where we determine what kinds of services the government should be providing and we work on (1) limiting the government to those service, and (2) making sure that those services are provided as efficiently, cheaply and correctly as possible.

Ponderosa said...

The private FD simply failed to fulfill their charter:
Don’t let sh*t burn down.

If the company cannot provide the same or better service and make a profit (with free riders, etc.) they should not accept the job.

Not change the definition of a FD.

The town is to blame as well. They knew a private firm would not provide the same service still they hired them.

The town "owned" the risk but allowed it to fall on the shoulders of the citizens instead of including it as part of work requirement.

Two entities don't do their jobs but its the individual that's blamed & hurt.

A bunch of nonsense.

CrispyRice said...

Oddly enough, I find myself in agreement with rest of the Commentarama readers, by and large. ;)

SMALL gov't does not equal NO gov't. There are things the gov't must do and should do. The question becomes, where do we draw the line. Somewhere along that line you go from libertarian to conservative to socialist, with fuzzy borders, I think.

AndrewPrice said...

Ponderosa, Very nice summation of their charter -- "Don't let sh*t burn down!" :-)

To me, the problem is the model being used here. I don't think a city should be using a model that only provides service to people who pay the fees. As I note above, I think that's inefficient, wasteful and destructive, and there are hundreds of scenarios where this blows up on everyone.

In terms of this particular instance, I agree that the guy got what he deserves because he didn't pay the fee.... but the problem was that the city should never have put in place a system that allows opt-outs. They should have just put the $75 in the property tax and then covered everyone.

In terms of the private FD, on the one hand, I find it hard to fault them for following the contract. But on the other hand, they should never have accepted a contract on these terms.

All in all, there are no winners here. And I think our side is better off not trying to justify this situation -- as many are doing. I see this as the kind of situation that hurts our side with non-doctrinaire conservatives who want smaller, better run government, but don't want to wipe out government.

AndrewPrice said...

Crispy, In truth, the lines will always be fuzzy because language is imprecise and one person's "need" is another person's "want." That said, I think the borders are sufficiently clear that even if we just stayed within the fuzzy area, we would be better off. The problem is that we're way over the fuzzy border and well into the socialist zone, with our government doing things it has no business doing at all.

And every time Congress meets, it tries to add more responsibilities to the government plate.

Ed said...

I can't say the guy didn't get what he deserves, but I don't think I would be very happy if I was a neighbor. Could you imagine sitting there watching the neighbor's house burning up and hoping that the wind didn't blow it into your house as the firemen sitting there doing nothing. I'd be pretty pissed.

AndrewPrice said...

Ed, I wouldn't be happy about it either, even with the FD sitting around outside with the hoses at the ready. If they could have put out the fire and saved the neighbor's house and instead they spend their time watering the pieced of debris that hit my lawn... I still need to clean that up, it could still damage my place, and there was no need for any of it.

Not to mention, what happens when someone else's home catches on fire and they can't get there until this fire burns itself out because they're protecting my house.

The whole thing is a real disaster waiting to happen.

AndrewPrice said...

T_Rav, I just realized I missed part of your comment -- good point about the toxic fumes, the smoke and the flying debris. That stuff can get everything. So rather than put a fire, which could possibly be put out right away with minimum damage, instead, you end up with debris on your lawn, your car and in your lungs. This whole idea is just a bad one.

Joel Farnham said...


Well, some people are asking the right questions in South Fulton.

Evidently the city spends money not in the way the people want it to be spent.

AndrewPrice said...

Joel, Yeah it looks like this didn't play to well around town huh? It will be interesting to see how far this ultimately goes and what they finally do uncover if they ever do an investigation.

Joel Farnham said...


I just wonder when they are going to go "Tea Party" on them. :-)

AndrewPrice said...

Joel, LOL! Unless I miss my guess, they're already starting!

DUQ said...

I'm still of two minds on this, but your argument is compelling, as always.

AndrewPrice said...

Thanks DUQ. I understand the Elves are preparing a counter-argument, but we'll see. Maybe I'll put extra demands on the boiler just to keep them busy! LOL!

Actually, look for the counter-argument some time next week.

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