Posted by Jason | Posted in Government | Posted on 06-10-2010
Having seen a complete smearing of the free market and libertarianism because of this Tennessee fire fiasco, I figured I should chime in with my four cents (two cents just aren’t what they once were thanks to the Fed). The argument goes that because the government charged a $75/year fee for fire protection and then stood idly by while someone’s house burnt to the ground, that this somehow was a complete destruction of all libertarian and free market thought. Well, let’s break down what happened and see if the free market is to blame or the government.
First let’s look at the actual act. The house caught on fire, and then the fire fighters drive to the fire and disgustingly just stand by watching as it burns to the ground. Is this the fault of the free market? These guys after all are government employees. It does not matter if they are volunteers or not, they are still government employees. If I intern for a company for free, I’m still considered an employee of that company during my intern.
So if the people who stood idly by while the house needlessly burnt to the ground were all government employees, how could this be misconstrued as an example of the free market or libertarian though? Well, it’s because the home owner was supposed to pay a $75 fee to the neighboring government for fire services and did not. Does that act of paying a fee to the government immediately make the government a free market player? Are competitors allowed to freely enter the market? What about inside the borders where fire services are included in the property tax? Can people choose to withhold their taxes and pick their own fire service? Of course not. Every aspect of this was government from the borders created, the laws that dictated the fire fighters could not put the fire out, and the fire fighters who twiddled their thumbs while a man’s home burned.
Was there any aspect of the free market involved? Well, there was the insurance company. You know, those evil bastards who look for any excuse to not pay your claim. I bet they used this whole not paying $75 to refuse this poor family’s claim.
The family has coverage with Farm Bureau Insurance through local agent, Josh Simmons, who raced to the scene of the fire as soon as he learned about it. Simmons says the insurance company would not refuse or reduce payouts on the fire loss just because the fee has not been paid.
Simmons said he knows of one other time this has happened. He said the insurance policy has a provision for a reduction in payouts if a fire protection service has not been subscribed but that the insurer has not enforced that in these situations.
Hmmm, so the one free market actor in this situation actually was the one that stepped up in the family’s time of need. Now I’m sure Josh Simmons, the agent, really wanted to help, being a neighbor and all, but why would the insurance company do this? I thought they only cared about profits, and they’d look for any reason to screw the home owner in pursuit of those profits. Well, the former is much more true than the latter.
Companies do only care about profits. Profits after all are societies reward to companies for delivering what society wants. Now, the question is what is more profitable to the insurance company? Would it be more profitable for them to screw the home owner? Maybe if they existed in a vacuum, but they don’t. In the real world, it’s more profitable for them to do the right thing. How would it look to the world if the news said, “In addition to the government standing by laughing at the home owner while his house burned, the insurance company piled on by refusing his claim. According to the insurance company, there is a clause in his contract that if he doesn’t pay his $75 for fire service, they are not liable for the claim.” Of course it would look bad, and many other customers of the insurance company would go to a competitor. A competitor would say, “Look what Farm Bureau Insurance did to that poor home owner in Tennessee. You want to do business with us, not them. We care.”
Instead the insurance company did the right thing and will pay the full claim. Now they have a raving customer who will tell everyone that in this whole horrendous situation, the insurance company was the only one to do the right thing. As I like to say, “They stepped up in a real big way.” Other current customers of Farm Bureau Insurance will feel reassured they made the right decision in picking Farm Bureau Insurance, and competitors’ customers might even switch knowing that Farm Bureau was there for their client. All of this will increase profits or as I said earlier, will be rewarded by society.
Now on the other hand, will government be punished? They may get a lawsuit brought against them, but I doubt that will go far. They will still be there. They will still be the only game in town.
So while the media froths at the mouth denouncing libertarians and free markets, just remember, in this whole government created nightmare, the free market shined through. The private insurance company stepped up in the pursuit of profits (that is a good thing), and the libertarian and free market thinkers were still right.