Private Fire Insurance Drives the Capitalist Fire Fighting Market

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Paul Wharton

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Jun 3, 2012, 7:14:11 AM6/3/12
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In laissez-faire Capitalism, there is no government fire-fighting.
Some would argue that everything will then burn to the ground.
However, it is precisely this recognition, and fear, that usually
prevents that.

Property owners can *think* and seek ways to reduce possible, future
disasters. I envision a capitalist fire fighting system as operating
like this:

The competition to appeal to customers involves meeting two demands--
assuring a low risk of widespread property loss, and charging them
less than competitors for fire-fighting activities. Economically,
this means that fire insurance has primacy to fire-fighting hardware
systems. If no fire insurance existed and inefficient, over-extending
fire trucks roamed the streets--guaranteeing an attempt at putting out
all fires, few would freely purchase fire insurance. However, if no
fire trucks were on hand, but a fire insurance company had all kinds
of contractual obligations, you'd be right to bet that the private
company would install a system--and fast!

The question then arises, "What happens to someone who has a fire with
no prepaid fire insurance?" Well, the fire insurance-fire fighting
company will probably race to the scene and offer the unfortunate,
property owner a contract--that being to put out the fire in exchange
for a percentage of the property value they save. If the home or
business owner refuses, perhaps the fire fighters will wait awhile,
then offer another percentage. In the meantime there may be a
different fire fighting company in the area that arrives there--
offering a competing percentage. Perhaps a bidding war will erupt.
Maybe the property owner will agree to pay something--maybe not.
Whatever the outcome, this example of what happens to someone who does
not have *prepaid* fire insurance really drives the market--helping to
keep the fire fighting companies in business.

In regard to the practicality of transitioning to laissez-faire fire
fighting, there are two ways to do it: one reckless, the other with
some uncertainty that the change will ever be made. The first is to
declare the end to state fire-fighting overnight. The second is to
look at property-preserving factors such as the fact that there are
less fires when there is snow in the winter, and that a wet spring
often follows it.

I'd be interested to see the question of "How would a capitalist
transition to laissez-faire fire fighting work?" discussed on Ayn Rand
Institute's Laissez Faire Blog. If we are serious about changing to
Capitalism, let's get thinking of the problems that will be thrown at
us, and apply our minds to ironing them out!

Paul Wharton
Objectivist Capitalist Medicine Promoter

Special thanks to Eli Lilly & Co. (LLY) for being the fuel of my mind

Paul Robinson

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Jun 27, 2012, 9:03:41 AM6/27/12
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On Jun 3, 7:14 am, Paul Wharton <paulwhar...@comcast.net> wrote:
> In laissez-faire Capitalism, there is no government fire-fighting.
> Some would argue that everything will then burn to the ground.
> However, it is precisely this recognition, and fear, that usually
> prevents that.

Your entire article completely misses Rural-Metro Fire Department,
Inc., of Maricopa, Pinal, Yuma and Pima counties in Arizona. They are
a private company providing fire service in those areas and they
operate by subscription. You have to buy a door medallion to nail to
your door in advance, showing you have protection.

In fact, I've been thinking about writing an article about a group of
homeowners who decide to start their own semi-volunteer company when
regular fire service becomes too expensive and they decide to start a
"do it yourself" fire department because they can can provide better
protection themselves for their homes for a lot less money.

> The question then arises, "What happens to someone who has a fire with
> no prepaid fire insurance?"  Well, the fire insurance-fire fighting
> company will probably race to the scene and offer the unfortunate,
> property owner a contract--that being to put out the fire in exchange
> for a percentage of the property value they save.

Nope, it's not even that mercenary. It used to be that if you didn't
purchase a medallion in advance, since a fire company didn't have a
contract with you there was no way they could collect from you for
putting out the fire, so they sat nearby and watched your house burn
down, but staying around protecting paying customers in case embers
from your house tried to set theirs on fire . Rural-Metro's website
says if you don't have protection, and you call them to put your house
fire out, then you have to pay the current hourly rate for the
services provided, which your homeowner's/fire insurance probably does
not cover. Meaning it's probably a *lot* more expensive to pay them
afterward if your house burns down to put it out than to buy a
medallion in advance.
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