Free Markets, Free People

Daily Archives: October 5, 2010

About that burned down house — let’s set the record straight

Lots of libs claiming, as Libby Spencer has, that the firefighters who watched a man’s house burn down because he hadn’t paid his fee is representative of the reality of a "conservative/glibertarian free market utopia" (her words, not mine) that we libertarians talk about.

As it turns out, it is nothing of the sort.

It turns out, though, that the fire department in Tennessee was not a private for-profit fire department. It was a government-run fire department. You read that right: the fire department that refused to show up and refused to name a price at which it would show up was run by the government of South Fulton.

Yes, that’s right, it was a government run fire department.  We libertarians are always proposing government do more, aren’t we?  To Spencer’s credit she mentions that factoid a little further on in her post . But she’s already poisoned the well by then. You’re left to think this is what a "for profit" or "subscription", or to use the words the left usually spits out when saying them, "free market" form of fire service might look like.

Not really.

As David Henderson points out, in the "free market" version, it is very likely the fire service would show up and charge you appropriately:

You would think at some price, the fire department would show up. After all, a private for-profit fire company could make some good money doing so and, by charging high enough, could limit the incentive for people not to pay in advance for protection.

Standing by is not logical for a company which gains its earnings by doing that sort of work and, at the time of the fire, it’s a seller’s market isn’t it?  But you don’t get paid unless you put the fire out. 

And there are examples of exactly what we’re talking about. Henderson links to one that provides services in rural Arizona.  Here’s a portion of what it says under “services”:

Service Models:

There are four different models Rural/ Metro Fire uses to provide fire protection services. Descriptions are listed below. If you are unsure which service model Rural/ Metro Fire uses to protect your home or property, please call customer service so that we can let you know.

Fire Service Accounts – In select unincorporated county areas where taxes do not pay for a Fire Department, residents are responsible for setting up an account directly with Rural/ Metro Fire Department to provide fire protection services. Annual fees are based on the square footage of the enclosed property. For more information on a Fire Services Account call your area’s customer service department.

Now you have a choice here, don’t you? Sign up and be protected or blow it off and take your chances. And while I’m not here to defend a government run fire department in Tennessee, it’s the same choice the man there had.  He chose to blow it off and paid the consequences for his decision, didn’t he?  But we know invoking personal responsibility is simply passé, especially if the person involved in the rant thinks they can pin something on the right? 

Anyway, the probable difference is in a “pay for service” libertarian situation, it is more likely that the fire service chief on the scene and home owner would have quickly reached agreement on a price to save his home.  There’s an incentive for the “pay for play bunch” to reach that agreement.

However, government is more about bureaucracy and rules than it is incentive.  If the fire chief on the scene was a government worker he would most likely have no power to make such a decision.  And the fire fighters in question would have absolutely no incentive to fight the fire and every incentive not too – after all, this guy was a deadbeat and their rules said no pay, no play and they saw no reason to break the rules and risk their lives for someone who hadn’t thought enough of them or their service to subscribe.

So in reality, this wasn’t some libertarian fantasy gone awry.  It was a government driven decision with a pretty drastic consequence.  Apparently the government had not been able to imagine a contingency where this might happen, or, if they did, they seemingly had no plan to address it.  Most would call that “inept governance”, not a failure of libertarianism.

Oh, and the “county mayor” of Obion County TN? A Democrat:

Benny McGuire is announcing his candidacy for re-election to the office of Obion County mayor in the May 4 Democratic primary. McGuire said the last 31⁄2 years have been very busy and have been productive for the entire county.

Hmmm … how inconvenient.

~McQ

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“You can keep your plan…”

…for as long as your health care plan exists, anyway. Which, for retirees of the 3M corporation, it no longer will. It seems that the passage of Obamacare has prompted 3M to join the rush for the door in terms of providing health care coverage.

As we’ve noted repeatedly here, the claims that you could keep your health care plan and physician could not possibly be true, as the “reform” package set up perverse incentives. What we are seeing is precisely what we predicted. Corporations and insurers are responding to Obamacare’s  incentives by getting out of the health insurance business. Because that’s what the law’s incentives urge them to do.

It really is one of the most basic principles of economics: people respond to incentives.

Quote of the day – health care version

Got a huge chuckle out of Steven Levitt’s opening sentence at the Freakanomics blog:

Many economists view the health-care bill passed in the U.S. earlier this year as falling somewhere between “a complete waste of time” and “actually making the situation worse.”

Indeed.  In fact, I’d have to go with the “actually making the situation worse” determination, given what we’ve seen this past couple of weeks as more and more companies react to the impact of the legislation.

The context of Levitt’s remark is a story by Delia Lloyd talking about the UK going in precisely the opposite way.  Yes, a country which has had socialized medicine for over 60 years is looking at taking steps for a more market-based health care system, with the belief it will improve the British system.

Markets?  Pricing signals?  Competition? 

Nah, our Congress just rejected all of that – couldn’t be a good thing.

[/sarc]

Why are we always 60 years late and a dollar short?

~McQ

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MSNBC – it can’t be the message

Yup, nothing like a new tag line, finally admitting your bias and a marketing campaign to boost your viewership.  Guaranteed, by gosh:

MSNBC, once the also-ran but now the No. 2 cable news channel, has a new tagline that embraces its progressive political identity.

The tagline, “Lean Forward,” will be publicly announced Tuesday, opening a planned two-year advertising campaign intended to raise awareness of the channel among viewers, advertisers and distributors.

The tagline “defines us and defines our competition,” said Phil Griffin, the president of MSNBC, his implication being that the Fox News Channel, which is No. 1 in cable news and a home for conservatives, is leaning backward.

Really?  That’s the best MSNBC could come up with?  Is it sending tingles up Chris Matthew’s leg?

Talk about lame.

Apparently the brainiacs at MSNBC think that saying “lean forward” and advertising it will make all the difference in the world.

Research, you see, told them they were the least known of the three cable networks (I could have told them that for free).  Obviously then, it’s a marketing problem, no?

Ms. [Sharon] Otterman’s [the chief marketing officer for MSNBC] lesson from that research: “All we have to do is tell our story to more people.”

She added in an interview, “It’s not that the look is changing. It’s not that the programming is changing. It’s that we’re going out and telling people about it now.”

Yesirree – because in reality:

“It’s not that the look is changing. It’s not that the programming is changing. It’s that we’re going out and telling people about it now.”

Uh, yeah.  It couldn’t be the message or the programming, could it?  It has to be that they’re just not getting the word out there effectively.

Lord – they sound like the Democrats.

~McQ

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Death Panels? What death panels?

Rationing?  Never.  “Death panels?”  No such thing! When government runs your health care they won’t act like those evil insurance companies that deny you treatment.  Wasn’t that the promise?

A controversial new policy by the Arizona Health Care Cost Containment System depriving hepatitis C patients coverage for liver transplants is effectively a death sentence that, left unchecked, could have far-reaching consequences for millions of Americans afflicted with chronic viral hepatitis, the National Viral Hepatitis Roundtable (NVHR) said today.  

The new coverage exclusion governing liver transplants took effect Friday as part of broader Medicaid coverage changes made by the state of Arizona in response to budgetary pressures.

I’m not here to call for unlimited spending or every procedure to be okayed. I understand budget constraints.

However, critics have said that the sort of rationing and denial of care that is demonstrated above was an inevitable outcome of government taking over health care.  Those that referred to this type rationing as “death panels” were denigrated and demonized. 

Now I understand that while Medicaid is a government run program, it is a state run program that is subsidized by the Federal government to some extent.

But ObamaCare has pushed new mandates down on the states by expanding coverage and the states are faced with making literal life and death decisions concerning the affordability of care for those in their system.  This is only one of many “death panel” decisions that are going to eventually effect the lives of millions.

All foretold and inevitable. 

In other ObamaCare news more of the foretold and inevitable:

3M Co., citing new federal health laws, said Monday it won’t cover retirees with its corporate health-insurance plan starting in 2013.

Instead, the company will direct retirees to Medicare-backed insurance programs, and will provide reimbursement for that coverage. It’ll also reimburse retirees who are too young for Medicare; the company didn’t provide further details.

Apparently after reviewing the law 3M concluded that even with a subsidy offered in the legislation, it was more costly to keep the coverage than abandon it:

Maplewood-based 3M (NYSE: MMM) is one of the first large companies to indicate that it won’t tap a large federal-government reimbursement program created by Congress as part of the health insurance reform package, The Wall Street Journal reported. The rebate program was meant to encourage employers to keep in place their health-insurance plans for retirees.

Obviously, by 3M’s reading of the law, the “federal-government reimbursement program” didn’t offset the cost of keeping retirees in the system.  As you see more and more of these stories pop up – and you will – you have to begin to wonder if this isn’t a deficiency by ignorance or design – a bug or a feature.

As this goes on, you can’t help but feel it is more the latter than the former as such actions by companies move us closer and closer to a single payer system.  And when that inevitably happens, it will be characterized as the fault of greedy corporations and, of course, “market failure”.

Fair warning.

(HT: Rod F)

~McQ

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