Americanly Yours

Originally published on Copblock.org.  Please feel free to comment here or there.

One of the arguments often used to defend poorly behaving police is the claim that they are “just doing their jobs.” This is such an absurdly silly argument that I am surprised that ANYONE takes it seriously.

I will not spend much time addressing the typical response to this most typical of arguments.  This response is the claim that the Nazi’s were also just doing their jobs too when they participated in the mass slaughter of innocents.  Yes, this argument is 100% true, but it hardly seems relevant in the America of today.  Furthermore, using arguments like this may lead us to fail in our attempts to convince others to fight against the arbitrary use and abuse of police power.

Agents of the Gestapo and the SS were indeed following orders when they committed their atrocities, however in many cases, they were forced under threats of violence or death to carry out these acts.  Often times people killed innocent people to prevent from being killed.  This does not in any way excuse these people or these acts, but it does provide us with some kind explanation for why some of these men participated in evil acts.

In America, the situation is different.  Yes, the United States government continually uses force and coercion against its subjects in order to get us to act according to their desires, but America is still a voluntary society in one important manner.  In America, people are not forced to accept jobs that they do not voluntarily choose to take.  This does not mean that we are all employed in jobs that are our first choices, and it does not mean that government acts of coercion have not prevented us from starting new businesses or being employed in the field of our choice.  However, there is no longer a military draft in America and we are still free to reject offers of employment for any reason whatsoever.

This is the key fact which makes the argument that police are “just following orders” or “just doing their job” so absurd.  The police officer who arrests kidnaps a person and throws them into a prison cage with rapists and murderers  for the “crime” of growing a plant marijuana is indeed following orders from his commanders when he makes said arrest.  However, no one forced the officer to become an officer.  He did not have to choose a career which he knew would lead him to cage humans for participating in victimless activities.  Most importantly, he does not fear that his superiors will hurt or kill him if he does not commit acts of violence against civilians.  We should have no sympathy for the officer who is ridiculed when he body slams a manwho is doing nothing but silently and calmly dancing in protest at the Jefferson Memorial, and we certainly should not defend him by arguing thaty he was just doing his job by enforcing the “law.”

In America, we have the right to refuse to be employed by a certain employer if we do not like the tasks that this employer asks us to undertake.  This right is not a secret; every one knows this.  No one is pointing a gun at police officers telling them they have to do things that they do not want to do–in fact, it is usually the police officer pointing a gun at an innocent person and forcing him or her to do things they do not want to do. It says a lot about a person’s character if that person willingly seeks out a job that will lead him to use violence and threats against peaceful people.

Next time someone gets righteous with you and informs you that some police officer was “just doing his job” when he used undue force to subdue a harmless individual, remind this person that the officer chose this job and if he truly did not want to be harming people, he is free to quit at any time.

A Solution

One of the big problems with coercive monopolies is that the providers of protection (police) do not have to answer to their customers. Costs go up, quality of customer service goes down. A tendency towards reducing crime statistics and increasing arrests arises. The problem today with police initiating force is only one of many symptoms of the larger problem: coercive government monopoly of services.

It is perfectly normal for people to aspire to go into the business of protection. People that put themselves in harms way to protect and defend should be praised and compensated accordingly.  However, there is no reason why this service cannot be provided privately and funded on voluntarily. In such a system, people who commit so-called “victimless crimes” would no longer be targets for arrest.  Furthermore, officers who abused their powers would be held liable for any harm that they have done.

To quote John Hasnas (page 35):

“If a visitor from Mars were asked to identify the least effective method for securing individuals’ persons and property, he might well respond that it would be to select one group ofpeople, give them guns, require all members of society to pay them regardless of the quality ofservice they render, and invest them with the discretion to employ resources and determine lawenforcement priorities however they see fit subject only to the whims of their political paymasters. If asked why he thought that, he might simply point to the Los Angeles or New Orleans or anyother big city police department. Are government police really necessary for a peaceful, securesociety? Look around. Could a non-political, non-monopolistic system of supplying policeservices really do worse than its government-supplied counterpart?”

Americanly Yours,

Phred Barnet

You might wonder exactly why it is that janitors earn much less money than CEO’s. After all, in most circumstances, janitors engage in much more physical labor than do CEO’s, executives and managers, and even the average “white collar” worker.

Are the working class laborers being systematically exploited by managers and white collar workers? Is it the case that white collar workers are making money at the expense of blue collar workers, or is there a better explanation?

Value Does Not Come From Labor

If labor created value, then society (and all of its members) could get rich by having everyone use their bare hands to dig large holes in the desert and then fill them back up. After all, this would be extremely hard work of a very physical nature. However, this would create no wealth for society—in fact, it would represent a destruction of wealth (imagine what the laborers could have actually produced if they were not hired to complete this task).  Generally, this destruction of wealth takes place in the form of an absence of economic activity which would have otherwise occurred.

The value of a product does not come solely from the labor of the workers. The value of a product is measured subjectively; a product is essentially worth what people are willing to pay for it.

A laborer in turn receives payment for his services based on the value that his work adds to the product or service. A janitor in a shoe factory adds relatively little value to the shoes that are being created. There is likely more value being added by the designer who designs the shoes, by the worker who sews the shoes together, and by the person who manages the distribution network which allows for the shoes to be sold in thousands of stores around the world. These workers add more value to the product, despite the fact that the janitor undoubtedly exerts more physical effort to do his job.

Scarcity

While value added by workers is an important reason for the existence of disparities in income, scarcity tells much more of the story.

As Thomas Sowell put it, economics is the allocation of scarce resources which have alternative uses. With the exception of air, just about all resources are scarce. Similarly, nearly all resources have alternative uses (should this rubber be used to make tires or shoes?, should this glass be used to make a window or a beer bottle?, should my time be spent watching a movie or cleaning the house?).

Scarcity doesnt just mean that there isnt a lot of a certain good. Scarcity means that the good is limited. Even in America, bread is a scarce resource.

Diamonds and Water

Think of diamonds and water. Which of the two resources is absolutely essential to life, and which could we live without? Water is infinitely important: without water we will all die very quickly. Diamonds are nice and sparkly and women love them, but they are hardly essential to our lives. However, water is very cheap and diamonds are very expensive. This phenomenon is known as the “diamond/water” paradox. The reason for the differences in the costs of these goods is scarcity; water is abundant, while diamonds are scarce.

For example, I live in unincorporated DeKalb County [in Georgia] where my water is provided by a government monopoly (and hence is likely more expensive than would be the case under a free market system). Yet, the monthly bill for my 3 bedroom house has averaged $61.17 per month since April of 2007. In other words, over the past 4 years, it has cost about two dollars per day to provide the 2-3 people living in my house at various times with the most important resource that we need for survival. In fact, water is so cheap that I can do more than just use it for survival needs—I use it for showering, cooking, watering my plants, and even brewing beer.

What does this have to do with janitors and CEO’s?

Well, the same principles which lead to the diamond/water paradox also apply to compensation for labor. Please keep in mind that my intent is not to belittle the work that janitors do. I know that this type of work is physically demanding and dirty work. However, there is little skill involved and little intelligence required. The fact of the matter is that nearly every able-bodied person above the age of 13 or so is probably qualified to be a janitor. In contrast, there are only a very limited number of people who have the intelligence, experience, and ability necessary to be a successful CEO of Coca-Cola. Janitors are replaceable and easily trained. High-level executives are not. In other words, the pool of available janitors is relatively unscarce when compared to the pool of available CEO’s of Fortune 100 companies.

Bringing it all together

Disparities in income are hardly the result of exploitation by the white collar class against blue collar workers or the working poor. Compensation results from several factors including the value added by the worker, as well as the relative scarcity of the pool of workers available to fill that position.

There is no Federally mandated wage scale requiring certain salaries for certain types of workers. Decisions on how to pay employees—be they janitors, CEO’s, or something in between—are generally made on a company by company basis. Those in the position to hire janitors will pay them according to the value that they believe will be added to the firm. They will likely tend to pay the janitor at levels similar to that of other janitors in related fields. This is because a janitor is likely to add similar levels of value at which ever company he works. The range of compensation for CEO’s is very large, with CEO’s of smaller companies earning drastically less than do CEO’s at large multi-national firms. This is because of the differences in the amount of value that can be added by different CEO’s in different fields at different companies. The CEO of Wal-Mart is responsible for running a worldwide distribution network, ensuring that over a million employees get paid, and in a broader sense—ensuring that society is fed and clothed. In contrast, the CEO of a small but delicious pizza chain has responsibilities which are much greater than his employees, but which do not compare to that of the CEO of Wal-Mart.

Ceteris Peribus

This article does not deal with things like corporate welfare or other special privileges which are often received by corporations from the State. While special privileges will likely skew the distribution of income away from the bottom of the and towards the top, the principles at hand do not change. In a truly free society with no governmental grants of limited liability, no business licensing requirements, corporate welfare, and private control of the currency, income is likely to be somewhat more evenly distributed among the productive members of society. However, as long as there is any level of freedom of choice, there will always be disparities in income.  Income disparities are not always bad–in fact, they are very important.  Differences in income give us something to strive for.  If we all earned the same wages, no matter how hard we worked, no matter how much value we added to society, and no matter what type of work we did, no matter our ages, or no matter how much experience we had, there would be little reason for people to put much effort into their jobs.  There would be little incentive for anyone to be productive beyond the subsistence level–after all, any additional effort that they did would have to be shared equally with all of society.  If we were all the exact same, there would be no reason for trade, or even for society to exist.  It is our differences which encourage people to interact and trade with each other.  No society larger than a small tribe could survive for long if wages were distributed equally.

As long as there are people with different skills, levels of intelligence, backgrounds, lifestyles, and so on, there will be differences in income. People are different from each other, and as such, will seek out different goods and services. They will also find themselves qualified for different types of employment than their friends and neighbors. Typically, those who are employed in positions that create a lot of value and are relatively scarce will earn higher incomes than those who are employed in positions that create little value and are relatively common.

Americanly Yours,

Phred Barnet

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If you arent a libertarian, chances are that you have never heard of the non-aggression principle (also referred to as the non-aggression axiom).  Most libertarians base their views about morality and the role of government around the non-aggression principle.

The non-aggression principle is the idea that no matter how disgusting, immoral, or improper you believe an act to be, you have no right to use force to stop someone from committing that act, unless that act itself involves the initiation of force against another person (or person’s property).

The principle is simple and straight forward; it is wrong to initiate force against another person or group of people. This is by no means a passive or pacifist doctrine; it is absolutely permissible to use force in response to force, in order to protect or defend one’s person or property, to enforce a contract, or punish someone for failure to adhere to the terms of a contract.

However, it is not permissible to use force to attack your neighbor, steal another person’s property, or stop someone from using their justly acquired property in a manner that does not aggress upon another individual.

The non-aggression principle has been stated and restated from ancient times to John Locke ["Being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions"] to Ben Harper ["My choice is what I choose to do, and if I'm causing no harm, it shouldnt bother you. Your choice is who you choose to be and if you're causing no harm, then youre all right with me"].

By applying the non-aggression principle to all aspects of life, a just and coherent philosophy of non-interventionism becomes clear: if no one is being harmed besides those people voluntarily engaged in the act, leave it alone. It is that simple. You dont have to like or respect or engage in prostitution, homosexual relations, religion, or the use of drugs, alcohol, tobacco, etc, but you do not have the right to stop any adult from engaging in any of these acts.

The non-aggression principle is a very important part of the natural rights philosophy.

Every person is the owner of their own body and has the right to do with their body as the see fit.  People can also acquire property by using one of three different methods: homesteading, voluntary exchange, and theft.  Homesteading involves taking unowned resources and improving them, while voluntary exchange involves the unforced transfer of resources from a person (or persons) to another person (or persons).  Both of these two methods are fully consistent with the non-aggression principle–by definition, neither homesteading or voluntary exchange involves the initiation of force.

When the non-aggression principle is violated, property is acquired in the third method: theft. Physical acts of violence or threats of violence against others are violations of a person’s right to self ownership.

Even if one rejects the doctrine of natural rights in favor of a utilitarian (ie, the common good) view, the non-aggression principle is still important.

Man is a social animal. For the most part, we seek to engage in activities which promote the social benefit. Activities which violate the non-aggression principle tend to disrupt the peace by inviting violent retaliation. For example, if I kill or harm a member of your family (or attempt to do so), you are likely to respond by seeking revenge on me. These types of feuds can spiral out of control and disrupt the peaceful cooperation on which society depends. The best way to keep the peace that is essential to the existence of society, is to adhere to the non-aggression principle.

Thus, whether you subscribe to natural rights theories or whether you support some sort of utilitarian view, it is in the best interests of both individuals and society that people adhere to the non-aggression principle.

As we have seen, violations of the non-aggression principle which are committed by individuals can disrupt the peace. However, violations of the non-aggression principle committed by the government are infinitely more eggregious. This is because the government grants itself the power to do things that no individual could ever be permitted to do.

Only the government (or those under the protection of the government) can confiscate money from people without their permission and give it to other people and call it “public policy.” Government redistribution of wealth and granting of special privileges is aggression because it prevents people from using their own property in a peaceful manner of their choosing.

Only the government can commit mass murder against civilians and call it a “defensive war.” A bombing campaign in a densely populated civilian area which results in civilian deaths is murder; it doesnt matter if the bombing was done by a rogue terrorist or by an Air Force member acting under order from the President. Murder is murder. It doesnt matter who does it.

Only the government can throw human beings in cages which are kept in horrible conditions for the “crime” of recreationally smoking a plant in their own home. Smoking marijuana on your couch does not violate the non-aggression principle; raiding someone’s house and confiscating their marijuana does.

It is essentially impossible for government to act without violating the non-aggression principle. This is because mandatory taxation is coercion, theft, and extortion. All of these acts violate the non-aggression principle. Taking people’s money without their permission is theft. Any business regulation, permit requirement, governmental zoning restriction, anti-drug law, restriction of consensual acts deemed to be “immoral,” etc. are violations of the non-aggression principle because they prevent people from using their justly acquired resources in a peaceful manner of their choosing.

Every government act involves a violation of the non-aggression principle. For, even when government is acting to stop one person from aggressing against another, it is doing so using resources that have been obtained via theft. When you violate the non-aggression principle, your actions may be devastating and cause harm, but they are limited by the amount of damage that one person can cause with whatever resources that you have available to use. However, when the government violates the non-aggression principle, it does so with other people’s money subject only to how much damage it can inflict before enough people get angry enough to either withdraw support or threaten revolution. It also does so under the guise of legality. But intelligent people know that an unjust law is no law at all.

Thus, the only way for government to act without aggressing on the rights of its citizens by violating the non-aggression principle would be for the government to set the exact policies that each individual would choose on their own and rely on truly voluntary donations to do so. In other words, the government’s best option is to do nothing at all.

In the words of the French economist, Anne-Robert-Jacques Turgot:

“The policy to pursue, therefore, is to follow the course of nature, without pretending to direct it. For, in order to direct trade and commerce it would be necessary to be able to have knowledge of all of the variations of needs, interests, and human industry in such detail as is physically impossible to obtain even by the most able, active, and circumstantial government. And even if a government did possess such a multitude of detailed knowledge, the result would be to let things go precisely as they do of themselves, by the sole action of the interests of men prompted by free competition.”

This isnt just the stuff of libertarian philosophers. The rapper Lil’ Jon famously uttered the phrase “Don’t start no shit, it won’t be no shit!”

This concept is remarkably simple: do not initiate the use of force against another person. Respect their right to engage in peaceful activities on their own property in any manner that they see fit.

Americanly Yours,

Phred Barnet

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I wanted to take some time and point out several of the things that I left out of yesterday’s article.

One important aspect of the model that I presented yesterday is the idea that insurance companies would likely bundle privately provided police and fire protection with homeowners insurance.  This would allow them to provide a basic level of a “public good” to the populace while charging paying customers extra for premium services.

A free market for the provision of police and fire protection could achieve many of the benefits of collectivization which exist in the current environment.  The main difference is that this collectivization would be voluntary, as opposed to the forced collectivization which is the main feature in the current model.  Furthermore, voluntary collectivization would likely occur within much smaller geographical areas than is currently the case, allowing neighborhoods and small communities to take advantage of economies of scale.

We can apply the homeowners insurance model presented yesterday to small collective units, such as neighborhoods.  Currently, there are a growing number of homeowners’ associations throughout the country which provide many of the same services which are currently provided by municipal governments.  These associations are able to provide residents with services like garbage collection, water, gyms, zoning regulations, and even fire protection and security services.  Members pay monthly or annual fees to their homeowner’s associations and are given such services in return.  In contrast to governments, homeowners’ association has every incentive to purchase services from the most cost effective provider.

Thus, it is not difficult to see that homeowners associations would be a great vehicle for expanding the number of people served by privatized police and fire departments.  In fact, forming homeowners’ associations within existing neighborhoods and apartment complexes is an excellent way for poorer people to pool resources in order to provide security and fire protection.

A great resource for those interested in the history of the provision of “public goods” by non-governmental entities is “The Voluntary City,” a book put out by the Independent Institute. This book is fascinating and leaves the reader wondering why we were never taught any of this in school (until the reader realizes that he went to a government school that had no reason to teach students that non-governmental entities can do good things).  The book deals somewhat with private law enforcement, but it also goes into great detail about the history of homeowners’ associations and the types and scopes of services that they have provided (and continue to provide).

The other major aspect that I neglected yesterday was the fact that municipally funded police and fire departments are relatively new phenomena.  The first government run municipal police force in the world was founded in London in the mid-1700′s.  This first police force was founded in a city which had managed to exist without a government police force–and without decaying into chaos for over 1500 years.

The oldest government run police force in the United States was founded in Boston in 1838–208 years after the founding of the city.  Boston has had a government police force for much less time than it went without one. Before the creation of the city run police force, Bostonians organized night watch groups, volunteer police departments, and even relied on the work of private detectives.

Surely, there are many major differences between the time before the 1830′s and today.  Thus, it would be unlikely that eliminating governmental support for and control of Boston’s (or any other city’s) police force would result in policing being undertaken in a manner similar to how is was done 200 years ago.

But, technological advances and a long and unbroken history of effective private security companies must provide us with optimism.  There are currently more private police officers than there are governmental police officers. Some of these police work as security officers, while many others work as private detectives.  The point is that they exist and they would continue to exist in a world where police provision was completely privatized.

Georgetown Law professor John Hasnas has done some interesting work on this subject.  His main point: look around at what goes on in the real world before saying that these ideas are not possible. To quote Hasnas:

“The proper response to the claim that government must provide police services is: look around. I work at a University that supplies its own campus police force. On my drive in, I pass a privately operated armored car that transports currency and other valuable items for banks and businesses. When I go downtown, I enter buildings that are serviced by private security companies that require me to sign in before entering. I shop at malls and department stores patrolled by their own private guards. While in the mall, I occasionally browse in the Security Zone store that sells personal and home protection equipment. I converse with attorneys and, once in a while with a disgruntled spouse or worried parent, who employ private detective agencies to perform investigations for them. I write books about how the United States Federal government coerces private corporations into performing criminal investigations for it.24 When I was younger, I frequented nightclubs and bars that employed “bouncers.” Although it has never happened to me personally, I know people who have been contacted by private debt collection agencies or have been visited by repo men. Once in a while, I meet people who are almost as important as rock stars and travel with their own bodyguards. At the end of the day, I return home to my community that has its own neighborhood watch. I may be missing something, but I haven’t noticed any of these agencies engaging in acts of violent aggression to eliminate their
competitors.

Ah, but that is because the government police force is in the background making sure that none of these private agencies step out of line, the supporters of government contend. Really? How does that explain London before the Bow Street Runners? The New York City police force was not created until 1845. The Boston Police Department, which describes itself as “the first paid, professional public safety department in the country”25 traces its history back only to 1838. What kept the non-political police services in line before these dates?”"

We can take Hasnas’ advice and “look around” to see the same thing with regards to private fire departments.  There are many volunteer fire departments in the United States.  New York City did not have a government run and funded municipal fire department until 1865–again, they have survived longer without a government run and funded than they have with one.  The volunteer fire department in Pasadena, Texas serves a population of 150,000 residents (a number that swells to over 1 million in the daytime).  In fact, this volunteer fire department is so well run that the Federal government even trusts them to provide fire protection to NASA’s Johnson Space Center.

While we may be years away from a political atmosphere that will allow serious discussion of privatizing police and fire departments, this is a very realistic idea with centuries of history to back it up.  Furthermore, given the dismal performance of our current police forces, this idea is certainly worth taking into account.

To quote Professor Hasnas once more:

“If a visitor from Mars were asked to identify the least effective method for securing individuals’ persons and property, he might well respond that it would be to select one group of people, give them guns, require all members of society to pay them regardless of the quality of service they render, and invest them with the discretion to employ resources and determine law enforcement priorities however they see fit subject only to the whims of their political paymasters. If asked why he thought that, he might simply point to the Los Angeles or New Orleans or any other big city police department. Are government police really necessary for a peaceful, secure society? Look around. Could a non-political, non-monopolistic system of supplying police services really do worse than its government-supplied counterpart?”

Americanly Yours,

Phred Barnet

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One of the main arguments that statists use to justify the existence of centralized government is the need for the provision of protective services.  These services tend to include national defense, judicial services, and police and fire departmental services.

Cities and states are facing large budget crises which are forcing these governments to make difficult decisions.  Many people are adamantly opposed to cutting any money from the budgets of police and fire departments.  Few people stop to think that completely eliminating governmental funding for police and fire departments could result in a large increase in public welfare and safety, while at the same time achieving massive reductions in the size of (or even the eliminations of) local governments.

The argument for government provision of these services takes the name of the “free-rider” effect and is repeated in economics and public administration and policy programs throughout the country.  The idea behind this argument is that if I were to purchase services from a fire department, but my neighbors choose not to, the fire department would likely put out a fire at one of their houses to prevent it from spreading to mine.  Thus, my neighbors have paid nothing and have received fire protection for free.  The supporters of this theory argue that over time, the numbers of “free-riders” would grow until the fire protection company could no longer make a profit and this would leave everyone in the neighborhood without protection from fires.  Therefore, to counter the effects of the free-rider problem and to ensure that the neighborhood receives adequate fire protection, a central government must provide this services.

But, it is apparent that this is not a realistic scenario.  Businesses are profit seeking enterprises and their owners are extremely unlikely to sit by and allow a free-rider problem to destroy their hard work.

Economists long assumed that there were certain goods which must be provided by the government in order to guarantee their provision in the face of the free-rider problem.  One such good is the lighthouse.  Economists and public administration professors love using the lighthouse as an example of good that cannot be provided by the free market, and therefore must be provided by the government.  After all, lighthouse operators seemingly have no way of capturing revenue for the service that they provide.  However, Roland Coase (a future Nobel Prize winning economist) demonstrated in 1974 that most lighthouses have historically been built by private groups and run for profit (and successfully so).  While this might seem impossible at first glance, deeper thought on the subject revels how this profit is made.  While it is obvious that the lighthouses cannot be profitable on their own, placing a lighthouse near a port and charging an additional port fee for the use of the lighthouse allows the owner of the port to provide the additional service and earn a profit for doing so.  This process works in the same manner that McDonald’s is able to give away ketchup and other condiments free of charge by pricing these free products into the costs of their menu items. In short, bundling a necessary but unprofitable service with a profitable service is a great deal for both the customer and the consumer.

If we apply these same principles to the provision of police and fire protection, it becomes clear that these services could be adequately provided in a voluntary manner on the free market.

I must begin by reminding readers that in a free market where individuals are free to enter into voluntary agreements with other individuals as they see fit, there is no way to predict what the actual arrangements will look like.  All we can say for sure is that the results of the process of voluntary exchange will accurately reflect the demands of the individuals that make up society.  If a good or service is “under-produced” in such a society it is because the people have chosen to use their resources to purchase goods and services which they deem more important than the “under-produced” good or service.  Thus if a community in a free society had minimal diets, but had an abundance of technologically advanced electronic products, we can only assume that the individuals in the society seem to prefer (ie, value) advanced electronic products over food.

Bundled Services

A key component to free market provision of police and fire services is insurance companies.  Homeowner’s insurance companies are a great vehicle for the bundling of many municipal services, including police and fire protection.  Instead of paying the municipal government for the provision of these services, people would likely pay an additional premium to State Farm, Allstate, or whatever other company they use to insure their homes.

It is further likely that rather than every insurance company operating their own fire department, numerous fire departments would emerge throughout the country and in any given geographical region.

Bundling fire protection with homeowners insurance allows fire departments to continue to put out fires at my neighbor’s house (even though he has not purchased fire protection from his insurance company), while still granting me an additional level of services not given to my free-riding neighbor, and thus eliminating (or drastically reducing) the effects of the free-rider problem; one of the most profound effects of a truly free market which recognizes an absolute right to justly acquired private property is that it has the effect of internatlzing externaltites.

One possible model for the private provision of fire protection through homeowners insurance companies is the bundle model which I presented above.  Under this model, a fire department would put out any fire in a neighborhood free of charge, regardless of whether or not the homeowner purchased fire protection insurance.  At first glance, this may seem to increase, rather than decrease the problems of the free-rider effect, however, bundling fire protection with insurance actually serves to eliminate these problems.

This is true because the insurance company would pay to replace the damages to the home and other property of its customers, but would not do so for those who had failed to pay.  Therefore, free-market fire protective services would offer everyone some level of support, but would charge customers extra fees for the service of being “made whole” following the fire.  This service is likely to be highly profitable for both the insurance company and potential customers, as the cost of rebuilding a $200,000 home, filled with furniture, computers, televisions, and many other valuable goods is likely to justify spending a little extra money on fire insurance.

Because the insurance company would like to minimize its own risk, it is likely to take steps to prevent the devastating effects of fires.  For example, insurance companies could save quite a bit of money by providing homes with complimentary fire extinguishers.  Furthermore, just as car insurance companies offer discounts to teen drivers who enroll in higher rated driver’s ed courses, homeowners insurance companies would likely offer discounts to customers who passed fire safety courses.

Private provision of police services could easily work in a very similar manner.  In this case, the homeowners’ insurance company would provide police paroling services to a paid customers.  Again, the neighbors who did not pay for this service would reap the benefits of this service when the private police squad drove by their home during a patrol.  Additionally, if an officer were to see someone breaking into the home of a non-customer, he would do whatever was in his power to stop the crime.  There would likely still continue to be a 911 like number for people to call for police assistance, whether or not they were customers.

The bundling mechanism plays an important role in the provision of police services as well.  For even though all residents of an area would be provided with a basic level of security regardless of whether or not they paid for the service, paying customers would receive additional premium benefits.  It is likely that insurance companies who offered customers policing services as part of an insurance package would bundle these services with other services like a high-tech burglar alarms which instantly alerted the police about intruders.  Similarly to the proposed fire protection bundle, insurance companies would offer their customers restitution for the damages caused by criminals.  This restitution take place relatively quickly, as insurance companies would need to do so in order to preserve their reputations.  Furthermore, this restitution would take place regardless of whether or not the police were able to apprehend and convict the perpetrator of the crimes.

But what of the areas inhabited by the poor which may not be able to afford to purchase any private police protection services?  Well, this is certainly an important issue, but there is every reason to believe that the market will provide some level of security to these people. Just as volunteer fire departments are common in this country, there is no reason to believe that in a free market, volunteer police agencies would not spring up to meet the demands of impoverished people.  We already see this somewhat, in the form of neighborhood watch programs.  It is not hard to imagine that there would be coalitions of off-duty or retired police officers who would volunteer their services for impoverished areas.  After all, doctors, lawyers, and other professionals currently do quite a bit of work for the impoverished on a pro-bono basis, and there is no reason to believe that police officers are any different.

Furthermore, homeowners insurance companies themselves might find it in their best interests to offer patrol services in these areas.  What better form of advertising could there be for a firm which offered police services than proof that their most basic level of services drastically reduced crime in an impoverished and crime-ridden area?  Providing potential and affluent customers with such a demonstration would be an excellent way to generate new business (as well as provide good will).  Furthermore, providing such services would have the necessary result of increasing the property values in the affected neighborhoods, giving some of these residents the ability to sell their properties and use those funds to move to a safer area and purchase additional security for their property.

Furthermore, consumers are not likely to subscribe to a police service which forcefully restricts their lifestyles.  For example, a marijuana user is unlikely to sign up with a police service which promised to arrest marijuana smokers who were using the drug on their own property.  Thus, such a system would necessarily focus on real crimes–crimes against life, liberty, and property.  Like all free market reforms, the privatization of policing will have the result of leading to a more prosperous society.

Unfortunately, this idea is not currently politically feasible.  Yet, I am confident that as our local, state, and federal budgets continue to spiral out of control and the government faces a populace increasingly hostile to taxes, ideas like this will be brought to the forefront of the public discourse.  It is important to lay the theoretical groundwork and describe how the market could provide for basic services like police and fire protection in the absence of governmental provision of such services.  An idea must be first be born and then developed before it can be considered feasible.  Following that, it must be discussed publicly as a viable alternative.  Thus, the purpose of this article was not to suggest a change which I expect will be enacted or even debated in the near future, but rather to demonstrate the feasibility and workability of such a proposal in the hopes that some day soon the citizenry will take the necessary steps to move towards a truly free and voluntary society.

Americanly Yours,

Phred Barnet

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