Laissez Fail

MSN: No Pay, No Spray: Firefighters let home burn

Firefighters in rural Tennessee let a home burn to the ground last week because the homeowner hadn’t paid a $75 fee.

Gene Cranick of Obion County and his family lost all of their possessions in the fire, along with  three dogs and a cat.


Cranick says he told the operator he would pay whatever is necessary to have the fire put out.

His offer wasn’t accepted, he said.

The fire fee policy dates back 20 or so years.

“Anybody that’s not inside the city limits of South Fulton, it’s a service we offer. Either they accept it or they don’t,” said South Fulton Mayor David Crocker.


So, THESE are the people who make capitalists look like assholes. If I were prone to conspiracy theories, I’d think they did it on purpose just to “prove” that free markets don’t work.

First of all, why is the government running a fire fighting business?  I’m all about privatizing fire fighting services, but contrary to Reaganites, the government is not a business.  And it should not be a business.  Why? because of shit like this. (Never mind how that introduces SO many opportunities for corruption and how government has a monopoly on the initiation of force and businesses work with their customers by the customers volition.)

See, when you’re the government and you work in a bureaucracy, you have a list of rules and you act like a robot and say, “If X then Y. NO EXCEPTIONS! NO SOUP FOR YOU!”

If you’re a business, you say, “How can I make more money in the broadest sense possible?”

If these assholes were business people, they would run up to the guy’s house as fast as they can and say, “We will put this fire out for $100.”  The guy might say, “I can’t afford $100!  Is there a payment plan?  Would you accept $85?”  Whatever happens, the end result is that putting out the fire is still an option even if the guy didn’t prepay.

The argument that these petty tyrants make is that if they allow people to pay on the spot, then no one would prepay. That’s why you charge a premium for on-the-spot requests.  If you’re a business person, then you know to calculate your on-the-spot premium rate based on what you need to make off of those people in light of the number of other people who prepay.  And the fewer people who prepay, the higher the on-the-spot rates need to be. Duh.

And if premium pricing didn’t exist and the firefighters roll up to a burning house and someone says, “I will pay you any price to put this fire out now!” The firefighter who negotiates a decent rate for it would get praised for his initiative.

But noooooo… This is bureaucracy masquerading  as a business.  And so some people’s house burned down needlessly.

This is just another manifestation of people not knowing the proper role of government.  And I just know some asshat like Keith Olbermann will or has already pointed to this to say, “See! Capitalism failed!” This isn’t laissez faire capitalism. This is just another government fail.


  1. Mike October 5, 2010 3:45 pm

    HAHAHAHA I bet they will pay next time, that’s hilarious!!

    Seemed to work just the way it was supposed to to me

    • Trey Peden October 5, 2010 3:53 pm

      Except that their house burned down.

      If this firefighting service were a proper business, it would want to save the house because that’s a customers they’re saving. The government is more or less indifferent to your house burning down.

  2. Katrina October 6, 2010 12:41 pm

    Well, it *could* still happen under capitalism. Capitalism doesn’t guarantee that businesses will be good businesses, it just does a better job of punishing bad and rewarding good business practices (relative to the demands of its customers at least). There will still be as many bad businesses as there are bad people.

    Fire departments used to operate in a free market, more or less. Small towns tended to organize around a volunteer fire department system, which is basically the same idea as insurance i.e. we know someone’s house will burn down, but not whose or when so let’s all contribute a small amount of labor to minimize the damage of the rare event. In larger cities, property insurers provided fire fighting services, which is obviously in their interest since it will help reduce the losses they have to pay out. Insurer-owned fire departments would typically put out fires even in buildings they did not insure because if left unchecked, the fire could spread to buildings that were insured.

    Smaller towns tend to have crappier businesses, even under full capitalism, though, because who wants to live in a crappy small town? If the existing fire department sucks, you only get a better one if someone else is willing to do the job. You may have to pay quite a lot more to entice someone to move to that crappy town and be your firefighter. I doubt that $75 they missed out on would be enough to entice a new business to move there. These days, though, most everyone has homeowner’s insurance, even in the middle of nowhere, so firefighting services would probably be taken care of that way.

    • Trey Peden October 6, 2010 4:46 pm

      Yup. I actually posted about the possibility of fiscal disasters under Capitalism a while back. It is certainly possible for businesspeople to make bad decisions or for businesses to fail to realize an opportunity, etc. etc.

      But in a case like the one here, it’s really unlikely. I mean, the fee is $75. If the guy says, “I will pay you $500 to put out the fire now,” it doesn’t take a genius to see the opportunity there.

  3. Katrina October 6, 2010 6:27 pm

    Hm, I wonder. $75 definitely won’t cover the cost of putting out that fire. I doubt it would even pay for the water and gas. The $75 fee is like an insurance premium, and if you aren’t paying your premium (along with many other insureds), you don’t get coverage when disaster strikes. That’s like the ultimate adverse selection.

    Even if the guy offered $500 or $5,000 or a million, it might not make sense to help him out because the fire department needs funding to stay open. They cannot just wait around for a fire and then hope for a bunch of money when that happens. The odds of your house catching on fire like that are pretty small, so I think most people who are risk neutral to risk averse would elect to pocket the $75 annual premium and fork over $500 only if the emergency actually occurs. At which point the fire department loses all funding and goes out of business.

    Would it really go out of business? Probably not. Enough people would realize that you really do need a fire department and would pay the premium, just like “enough” people would pay voluntary taxes. But a savvy company might indeed show this kind of “tough love” to those who think they can game the system. Otherwise you end up in a classic public good scenario, where sure you have *some* lighthouses, but not as many as you should.

  4. Brian J. October 7, 2010 10:33 am

    The house owner did not live in the jurisdiction of the fire department. He paid no taxes to support the fire department. He did not pay the voluntary fee for coverage by that fire department. However, he wanted it to provide its service when he needed it.

    To put it another way: should someone be covered under MassCare when they live in Rhode Island? Should you get in-state tuition rates for Arkansas or Kentucky universities because you live in Tennessee?

    Why do you have a fundamental right to the services of neighboring counties and municipalities? For humanitarian, dare I say altruistic, reasons?

    • Trey Peden October 7, 2010 6:19 pm

      WHOA WHOA WHOA. He didn’t even live in the jurisdiction of the fire department?!? I was not aware of that. I haven’t made any claim that any one has a fundamental right to the services of ANY locale, least of all neighboring ones.

      I just have two points about this:
      1) The government should not be running a business.
      2) There are revenue opportunities in cases where need is great. For example, when someone’s house is on fire.

      • Brian J. October 8, 2010 8:24 am

        “Anybody that’s not inside the city limits of South Fulton, it’s a service we offer. Either they accept it or they don’t,” said South Fulton Mayor David Crocker.

        It’s not uncommon for smaller municipalities who cannot fund their own services to “rent” the services of larger, often adjoining municipalities. That is, St. John, Missouri, police cover Sycamore Hills, Missouri as well as St. John; St. George, Missouri, relies on St. Louis County police to provide dedicated police cars as well.

        As part of my $3139 in property taxes on my home in Webster Groves, MO, last year, $2511 went to the city itself. Of that $2511, 10% went to fire and police pensions; I haven’t found a quick breakdown of ongoing expenses for the fire department, but whatever it is, $75 a year looks like a good deal to me.

        Residents near South Fulton won’t have that choice in the near future. No doubt they will get a new taxing district to get themselves a professional fire department and all the expenses and inefficiencies therein.

        • Trey Peden October 8, 2010 9:21 am

          So, it is within the range of the area they do service. I thought you were saying that these people lived outside of their serviceable area.

          I, personally, like the “pay or don’t” system, but I don’t see any reason why they don’t have a provision for on-the-spot contracting of services.

          • Brian J. October 9, 2010 9:38 am

            They live outside the fire department’s jurisdiction, but within the region where they provide service by subscription. It’s not the same thing. People in the fire department’s jurisdiction are covered by their taxes, I would guess. It’s what I suss out from the quote and my understanding of how things work.

            If they provide on-the-spot contracting services, they’d have a whole can of worms to deal with regarding delinquent payments, etc., as well as no free cash flow for daily operations that a subscription model provides. And they’d be pegged as almost as heartless for renting out their equipment at thousands of dollars an hour as they would for letting the house burn.


          • Trey Peden October 9, 2010 11:13 am

            I get that it’s not the same thing. I’m saying that the distinction isn’t relevant here.

            I think Fire Departments should be privatized — NOT run by the government — and I see a clear opportunity for additional revenue for on-the-spot service. Solving money problems is what businesses do well.

            Further, my objection isn’t about letting the house burn. My objection is about ignoring the opportunity to make money while also serving to fuel (PUN) arguments against Capitalism made by altruists. If they charged thousands of dollars to put out a fire — which they do as I mentioned in a previous comment — they would at least have the moral high ground to say they were making money. Also, they would get far less press than they are doing by letting the houses burn, as illustrated by the fact that the fire department in Savannah that my sister works for does not get this press. They actually switched to the charge-a-premium model after getting bad press for letting a house burn.


  5. Katrina October 7, 2010 1:22 pm

    Hey Trey, so I did some research on historical free market fire departments to see what business models they used. There are two that were historically successful. One was the model we see here where there is a membership fee for the service. When a fire occurs at a non-member building, the fire department will show up and watch it burn, making sure the fire doesn’t spread to non-member homes. This model has been very successful and is apparently a famous answer to the free-loader problem in economics.

    The second successful model was used I believe in London. When they showed up to a non-member fire, they would offer to save the building, but if they did any and all contents of the building would belong to them. The building owner would keep only the structure. This was how they protected themselves against bad debt on the part of the homeowner.

    I doubt the latter model would work in an area with few fires and poorer people who would have fewer valuables in their homes. Also when this was the practice in London, there was no paper money, so there was a good chance of getting precious metals out of the wreckage. But I’m really just guessing here, based on the assumption that a town with less than 10,000 people would have about 1 significant fire per year and the average home value would be 100K excluding contents.

    Volunteer fire departments sometimes follow the first model, but more often than not they just gave in to free loaders, which may explain why most of them ended up turning to the government for funding. That, of course, is the traditional way to deal with free loaders: force them to pay at the point of a gun.

    So the kind of model you would like did exist, but it did not prove superior to the member-only model. This doesn’t surprise me as the value gained from charging the attempted free loader through the nose would probably be all but eliminated by the cost of encouraging more free loading behavior.

    • Trey Peden October 7, 2010 6:16 pm

      I’m still not convinced that there isn’t a revenue opportunity here for charging free-loaders a premium in some way. As you pointed out, though, I think the geographic density of accounts would be an very relevant consideration. Admittedly, these people who live out in the boonies who don’t want to pay for fire protection would probably be in BIG trouble.

      Maybe their neighbors would be willing to help out in return for some puppies or corn or something.

      • Trey Peden October 7, 2010 9:51 pm

        My mom has become a reader of my blog and she was telling that apparently a section of Savannah operates on this membership thing. (PS. My sister is a fire fighter.)

        Anywhoodles, the way they try to address the freeloader issue is that if they come to your burning house and you haven’t paid, they put out the fire but they charge your home owners insurance an EXORBITANT rate for all expenses associated with the task.

  6. Gary Chartier October 9, 2010 10:05 pm

    It seems to me that an on-the-spot payment option makes sense, but only if you charge in light of people’s expectations about the need for service. If there’s only a 2% chance you’ll ever need fire service, then it will make sense for you not to pay the premium unless the on-the-spot charge is 50 times the premium. Actuaries could surely determine what the relevant figure was, and it could doubtless be publicized to potential customers. I suspect that $500 is too low; but if people knew that the on-the-spot fee was, say, $5,000, they might be a good deal more likely to pay the subscription fee needed to provide the agency with the needed cash flow.

    • Trey Peden October 9, 2010 10:13 pm

      I think you are right about $500 being too low, but in the absence of information on the scene of the fire, I’m surprised the fireman in charge of the scene didn’t think that was a good deal.

      After talking to my mom who spoke to my sister about this (I don’t speak to my sister) she said that when her department charges the home owner’s insurance the fees are in the thousands of dollars, so I suspect that even $5K is on the conservative side.

      Publicizing that fee would be difficult, I think, but it could successfully address the problem.

      • Gary Chartier October 10, 2010 2:01 pm

        I think you’re right that $5K is too low. Since initially posting this, I’ve had an exchange with Tom Knapp in which he calculated, based on the actual incidence of fire calls, that $22,500 might be closer to reality (and he’s convinced that even that might be too low).

        • Trey Peden October 10, 2010 2:09 pm

          It makes the question of paying a yearly $75 rate a lot easier when you consider the fact that saving your house could cost you a large fraction of the house’s overall market value!

  7. The Inspector October 9, 2010 11:02 pm

    This one is just as you say:

    A quasi-government entity acted on bureaucracy (“the rules”) and let a house burn down where a private business would have acted on the profit motive, made a deal, and saved it for a fee.

    (A fee that, even if it were really big, both parties would have been MUCH happier with than the house burning down.)

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