Wednesday, October 06, 2010

Burning down the house

Checking out my blog reader today I couldn't help but notice how much attention has been given to this story out of Obion County, TN. For the uninitiated, the gist is basically this: rural Obion County lacks a fire department, so the nearby town of Fulton offered to provide fire protection to residents in exchange for payment of a $75 annual fee. You don't pay the fee, you don't get the service.

This policy was put to the test this week when one homeowner's son was burning papers in a barrel outside the house, the grass caught fire and spread to the house. Calls to 911 went unheeded as the $75 fee had not been paid, despite pleas that the homeowner would be willing to pay any amount for the fire to be put out. Then the fire spread to a neighbor's house who was fully paid up and the fire department comes out to put up the blaze. Despite the first homeowner's exhortations, however, firefighters stood idly by and watched his house burn after the second fire was put out.

End result: the guy who refused to pay doesn't have a house anymore and four of his pets died. One more detail: the guy had also failed to pay the fee three years ago but the fire department still responded to put out a chimney fire. The story is now being cited by some as a failure of libertarian philosophy in action.

  • After years of bailouts, its nice to see someone finally pay for the consequences of their actions. Indeed, the homeowner's previous ability to secure fire department services despite not paying the fee probably encouraged his refusal to pay this year -- this time with more dire results.
  • The homeowner literally played with fire and got burned. This wasn't the product of bad luck such as a lightning strike.
  • I imagine the number of homeowners that have failed to pay their $75 annual fee in Obion County is somewhere approaching zero right about now.
  • Had the fire department put out the fire -- which they had already done before -- it would have introduced moral hazard into the equation of whether to pay the fee. It would have sent the message that paying the fee was unnecessary to obtain the service, thus logically leading to fewer people paying and less income and resources for the fire department.
  • The cost of the service comes out to $6.25 per month. Through his refusal to pay this meager amount, the homeowner demonstrated he didn't think his home was worth very much. Given this, why should the fire department expend any resources saving a structure even the owner thinks is near worthless?
  • Despite the homeowner getting a comeuppance, this is nothing to celebrate. A family is homeless and several animals are dead. However, it is interesting to contrast the approach taken by the government-run fire department and a hypothetical profit-making organization. Someone out to make some money would have gladly put out the homeowner's fire despite his failure to pay the fee -- for a premium. Sitting there watching a house burn down while the owner is prepared to pay money is just absurd, and the product of a government-run organization hamstrung by rules and regulations that dictate how it is allowed to operate.
  • The notion that this episode represents libertarianism in action says more about the accuser than the accused, as it reveals ignorance on part of those who promote this narrative and a grasping at straws in order to undercut the libertarian philosophy. This was a government enterprise in action, which as previously stated stands in sharp contrast to how a privately run organization would operate.

Update: A good post on the subject from Thomas Firey.


Scott said...

I agree with many of your points, except the homeowner's valuation of his home. The amount he is willing to pay the fire department is a function of his valuation of the home, his estimation of the likelihood of a fire, and his expectation of receiving services without paying.

Quotes from the man demonstrate that he believed he would receive fire protection services whether he paid or not. This alone is enough to justify not paying, even if he placed a high value on his home, and even if he thought the likelihood of a fire was 100%.

Colin said...

That's a fair point.