More on That Fire

By now everyone's probably familiar with the Obion County fire incident (if not see here). It has led to a debate about Libertarianism and how, supposedly, awful it is that the fire was not put out. Many have defended the position by pointing out how the insurance system works.

Yesterday I blogged on this point and a commenter called fraser pointed me in the direction of this post on Mises.org. That post argues that this was not the free market in operation because in the free market they would have put out the fire and sent the bill afterwards:

In a real market, there is no way that a free-enterprise fire service would have refused to provide the homeowner service. They would be in business to provide that service. The fire would have been put out and he would have been charged for the service. It is as simple as that. It is the same as lawn-mowing services or plumbing services or any other type of service.

Now, it is certainly true that I am not anywhere near as intelligent or learned as those guys but I think they're wrong here. There is a big difference between the services mentioned in their post and fire services, the difference being the cost. For some services it is entirely reasonable to pay after the fact but not for the fire service. It's just too expensive for most people.

The London Fire Brigade, for example, had an operating cost of £422.3 million in 2008/09. In that year they dealt with 138,385 incidents. Of those 29,215 were fires, 64,374 were false alarms and 44,352 were other non-fire related services. I assume that the cost of putting out a fire is much larger than the cost of dealing with a false alarm or freeing someone from a lift. So some quick calculations - if all services were charged the same the cost per incident would be about £3,000. But in reality putting out a fire would be much more, say at least £10,000.

How many people could afford to pay that after their house is damaged by a fire? Not many I suspect. So in reality, I think, a private fire service may well refuse to put out some fires on the basis that they cannot make any money doing so. Certainly there will be some fires that will not be put out.

What's more, this is a matter of historical fact. In the years when London did not have a State fire service but rather a series of privately provided ones, they did not always put out fires in those properties owned by people who did not have insurance with them.

We can believe that the market is better at providing services and defend it when that means that people who do not pay do not receive. We do not need to insist, though, that it is perfect and will never lead to results that leave some people worse off.