In the comments on property taxes, people in the comments were talking about making things like the fire service into a subscription service, or perhaps using fees each time that service is called. Like most things, those methods have been tried (and are being used in some areas), have been talked about on this blog, and largely don’t work. Let’s take a look:
Subscription Fees
Charge a small fee for fire departments to respond to members’ homes. Anyone who isn’t a member, too bad for you. Of course, there will be those who take their chances, and some of them will lose. That is, they will decide they will save some money by not paying the fees, then will try to gin up public support when they lose the bet, their home is on fire, and the fire department refuses to come out. In fact, that is exactly what happened in rural Tennessee back in 2010.
The South Fulton Fire Department charged a $75 annual fee to be a member of their fire association. Those who paid the fee were eligible for that fire department to come out and put out any fires on your property. Gene Cranick chose to roll the dice and not pay the fee, thereby saving himself that $75 a year. On September 29, 2010, he lost that bet and his house caught fire.
The fire started when the Cranicks’ grandson was burning trash near the family home. As it grew out of control, the Cranicks called 911, but the fire department from the nearby city of South Fulton would not respond.
“We wasn’t on their list,” he said the operators told him. So now he complains that he should have been able to pay the fee after the fire started, so the firefighters would come out, but the fire department refused.
That makes sense, because allowing people to pay the $75 AFTER the fire has already started would mean no one would pay unless they actually had a fire. That just isn’t economically feasible for the continued operation of any fire department. It’s akin to allowing people to pay life insurance premiums after the insured person is already dead.
In the case of subscription fire services, the only way this model works is when the cost of the department is spread across a large number of people. You each pay a small fee so that the large cost of a fire department is spread across many people, making it cheaper. Allowing people to not pay until they have a fire is a pay for service model.
Pay Per Service
Firefighting used to be a private for-profit industry. In the 1800’s, the early days of urbanization, in cities like New York and Baltimore, there were private companies who were in charge of putting out fires. The way it functioned was the first company at the scene got money from the insurance company to put out the fire. So, they had an incentive to get there fast. They also had an incentive to sabotage competition. They also often ended up getting into fist fights over territory and many times buildings would burn down while firefighters were busy punching each other in front of it.
Firefighters were hired, not for their prowess in putting out fires, but for their ability to brawl. One tactic that used to be employed was the “plug guard.” These were people hired to race to the scene of a fire, place a barrel over the fire plug, and sit on it, thereby securing the water source for his employer’s exclusive use.
Rivalry among the volunteers was the cause for the establishment of the country’s first paid fire department in Cincinnati in 1853. In 1851, two of the city’s volunteer fire companies crossed paths on the way to a fire, and before the fight was over, ten companies were involved. Help was sent from Covington, Kentucky, across the river-not help to put out the fire, but to assist one of the companies in the fist fight. The building burned to the ground.
The problem here is that fire departments get few fires. The department that I work for responds to less than 300 fires a year, yet has a $20 million budget. Except for large commercial buildings, the fees required to make this profitable would be more than the value of the building. A homeowner would probably refuse to pay a $60,000 fee for a $200,000 house that’s on fire, because now that fee is on top of the $70,000 in damage caused by the fire and the efforts to extinguish it. What if the fire spreads to more than one house? Does each homeowner have to agree to pay before the fire department can act? Or only one? If only one, do they all have to pay a share of the bill, or does the homeowner who made the decision pay the costs of putting out all of the houses? What if someone notices that you house is on fire while you are away at work? Who pays in that case: the person who called, or the homeowner?
For those reasons, pay for service just doesn’t work.
Libertarianism
These methods are both a variation of the libertarian mindset, which just can’t work. Why won’t it work? The Libertarian philosophy will never work because people always want the power to make others give them what they want, but never want to pay for it. Everyone has their issue: the homeless, healthcare, Fire service, whatever.
There are only two ways to get people to do things for you: voluntarily, or involuntarily. Do you think that people should interact voluntarily? If so, then you must allow people to set the standard by which they will provide that care.
If the doctor says that he will only provide care for money, and the patient has no money, then there are only four options:
A. You pay the bill on the other person’s behalf (voluntary donation)
B. You force the provider to provide the service/product for free (forced compliance- slavery)
C. You allow the provider to turn the non-paying person away (voluntary noncooperation)
D. You force others to pay the bill (forced donation- legalized theft)
Libertarians believe that the only fair and proper answer is A or C.
Socialists believe that the only proper answer is B or D.
For those who believe that we have a responsibility to feed/clothe/care for people who cannot pay, just how do you think that the people providing the service will provide it?
How will the hospital pay its staff? How will the fire trucks get fuel? How will restaurants get food for the homeless? How much of your own money have you given to the cause? Do you allow a homeless man to live in your spare bedroom?
If you are not willing to use your own money and resources to provide that service or product, then why do you get to compel me to use mine? Giving away other people’s money and possessions is not charity.
The only way that fire service (or police, military, and courts) makes ethical and moral sense is for the cost to be shared across the entire community, whether through subscription fees or taxes. If it’s through subscription fees, then the fire department has the option of not responding to your property, just as was done in South Fulton. If through taxes, then the people have a right and a duty to make sure their money is being property spent and safeguarded.
I am not opposed to property taxes, but they should be done in such a way that everyone pays the same amount and receives the same service, no exceptions. Ad valorem taxes based upon a speculative value, and having exemptions, special favors, and carve outs is just robbing Peter to pay Paul. We all know Paul will love this deal, but doesn’t Peter get a say?
