Alex Tabarrok, at Marginal Revolution, has a post about firefighters and their work. In it, he notes that the number of career firefighters has doubled over the last 25 years while the number of fires has halved. To put it another way, it’s highly probable that the market has reached its saturation point for firefighters.
Thus, now may also be a good time for privatizing firefighting since the risk of fires is declining while the cost of fighting them is increasing. To put it another way, the need for firefighters (and presumably the direct demand) is declining while the practical cost is increasing. We have an inefficient market since the government serves as the middle man, and payments are indirect and cannot be opted out of. Thus, privatizing firefighting should help to significantly reduce costs without significantly reducing the amount of actual firefighting service provided.
To address the practical objections, I imagine that the most probable way of handling privatization would be to handle it through insurance companies. For example, home insurers would likely make subscribing to a firefighting service a requirement for a policy. Alternatively, home insurers might offer discounts to people who subscribe to a firefighting service because that indicates conscientiousness, which in turns indicates a lower risk of having the fire in the first place (for if one takes some pains to address fires, will he not also take others?). Or insurers could sell subscriptions as a form of insurance (if your house starts to burn, you’ll be guaranteed that some company will come put out the fire). This line of reasoning also extends to landlords as well. Furthermore, the continued presence of volunteer firefighters suggests that even those who are too poor to subscribe to a firefighting can still be reasonably assured of help, much in the same way that poor people used to be assured of charity health care.
In any event, privatizing firefighting is very feasible. Not only that, the risk and transitory pains are, at this point in time, likely the lowest they will ever be. Maybe it’s time for a change.
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