Faced with budget deficits, many municipalities are looking to privatization to solve their financial woes. But these efforts are not without their detractors. For example, when the issue of privatizing fire and emergency medical services (EMS) in Lansing, Michigan, was raised, Lansing Mayor Virg Bernero said, “There are certain things government should do… . If you put a profit motive in them, the service might not be as good.” Similarly, a firefighter wrote on his blog, “The beancounters have turned to unconventional ways of replacing their fire departments with cheap and ineffective fire service. This after slashing fire departments to an all time low in relation to staffing, companies, stations, and everything else. Now they just get rid of us…” Are these claims true? Are private companies “cheap and ineffective”? Does government do a better job in providing services such as fire protection and EMS? Are these proper functions of government? Let us begin by looking at the arguments in favor of government provided services.
Some critics of privatization argue that “contracting out traditionally public functions—a practice that in the Iraq war has led to privately organized security details and troop support services—shifts accountability, can be more expensive and erodes people’s confidence in government.” To be accountable means to be responsible—to bear the consequences of one’s actions. But is government really accountable for its actions? When the postal service loses billions of dollars, does it go out of business or just dig deeper into taxpayers’ pockets? When government schools turn out functional illiterates, do they close their doors or enact some “reform” and demand more money? When a private business loses money, it changes its ways, or it goes out of business. When services are provided by private companies, consumers can hold a company accountable by taking their business elsewhere.
Few dispute the fact that government fire protection and EMS are money-losing endeavors. Advocates of these government services “argue that municipalities should not be in the business to make money when it comes to public safety programs like police, fire and EMS. And most taxpayers are OK with that and are willing to subsidize their police and fire departments.” But what about those taxpayers who aren’t OK with that? What about those taxpayers who prefer that private companies provide fire and EMS? What about those who prefer to spend their money on other values? Such individuals are forced to provide funding for these government services, regardless of their own judgment and desires. When government extends beyond its legitimate functions—the police, the courts, and the military—individuals are compelled to act contrary to their own judgment. When private businesses provide services such as fire protection and EMS, each individual is free to act as he thinks best.
“You have to start with the fact that it’s the sworn bound duty to protect and serve citizens. Start with that promise,” said a consultant to the Southeast Michigan Coalition of Governments. Protect citizens from what? From fires, natural disasters, and medical emergencies? What about protecting them from rising taxes, inflation, and ever expanding government debt? What about protecting the freedom of individuals to pursue their own values and happiness? What is the proper purpose of government? To answer this, let us consult the document that established the principles upon which America was founded—the Declaration of Independence:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men…
What does this mean? How do we translate the rights to life, liberty, and the pursuit of happiness into our own lives?
Fundamentally, these rights mean the freedom of each individual to live his life as he chooses, as long as he respects the mutual rights of others. It means the freedom to take the actions that he regards as best for his life, to pursue the values that bring him joy and happiness. The only moral purpose of government is the protection of these individual rights.
And how might our rights be violated? What could stop us from acting as we judge best? The answer is: physical force, or the threat thereof. Only force can stop you from acting as you think best for your life. Only coercion can prevent you from opening a business, or selling the products of your choice, or working for a wage you deem acceptable, or any other action.
In the context of our present discussion, only government force can prevent a private fire company from offering its services on terms that it judges to be reasonable. Only government coercion can stop individuals from contracting with such companies. Only the coercive power of government can compel you to provide financial support for services—such as fire protection and EMS—that you do not use or want.
Government does more than force you to pay for these services no matter your judgment on the issue. It also makes it more difficult for private companies to operate. For example, taxpayer subsidies provide public entities with an almost endless supply of money, while private companies must obtain their funds through the voluntary choices of consumers. As another example, federal labor regulations give exemptions to public fire departments regarding overtime pay, while forcing private companies to pay overtime. Such mandates give public fire departments a distinct competitive advantage. On one hand we are told that private emergency services cannot provide good service; on the other hand government makes it difficult for them to even operate.
In truth, private companies can and do provide high quality service for a lower cost than their public “competitors.” If you venture into the marketplace to purchase a cell phone, or a television, or an automobile, or virtually any consumer product, you will quickly discover that you have a multitude of options. Private businesses produce an extraordinary variety of the products and services that we want and need.
However, if you want to mail a letter, or educate your children, or purchase fire protection, you will find that you have few, if any, options. You will discover that private companies cannot legally deliver a first-class letter. You may find that because of taxation to support government schools, you cannot afford a private school for your children. And you will likely learn that, in the case of fire protection, your only choice is the municipal fire department. While few of us have the need of the fire department, the failures of the post office and government schools are abundantly clear. If government cannot properly deliver these services, why should we believe that it can deliver fire protection and EMS better than private companies?
Despite the obvious failures of the post office and government schools, many Americans cling to the idea that government must provide certain services. They believe that, even though government does a horrible job of delivering the mail and educating our children, private companies would be even worse. But is this true? Would we be left helpless and hopeless if government did not provide fire fighting and EMS? How would we receive such services if they were not provided by government? Before we answer this, let us examine one important fact about these services.
Fire protection and EMS are services that are needed rarely. Indeed, many individual go their entire life without ever needing such services. However, when such a service is needed, it is needed now—there is not time to shop around or consider one’s options. If your house is on fire or your husband is having a heart attack, searching Angie’s List is not an option. Government, it is argued, must provide these services so that they are available to everyone when they are needed.
Jeff Hadley, Kalamazoo, Michigan, Department of Public Safety Chief, estimates that fire fighters spend ninety-eight percent of their time sitting idle. How many businesses could afford to pay workers who are paid for forty hours a week, but actually produce only one hour a week? This is what we do with our public fire departments. They are, as Hadley says, a “very expensive insurance policy.” And this is the proper way to look at fire protection and EMS—they are “insurance” policies. We seldom need them, just as we seldom need auto insurance or hazard insurance for our home, but when we need them, we need them.
Left to their own choices, many individuals may not purchase fire protection “insurance.” So? If your neighbor does not have life insurance, does his death harm you? If someone chooses to forgo life insurance or fire insurance, his action does not stop you from doing so.
Life is filled with choices. We must choose our career, our spouse, and where we will live. We must choose whether to invest in stocks or “invest” in lottery tickets. Each day we must choose what shirt to wear, what to have for lunch, what television shows to watch, what route to take to work, and much more. Some people make wise decisions, and some people make decisions that others deem foolish. But government’s purpose is not to determine which choices are wise and which are foolish; government’s purpose is to protect our right to make choices, including foolish choices. Government’s purpose is to protect our right to live our life as we judge best, no matter what others may think.
These choices also pertain to insurance. Some choose to buy life insurance, and others decline to do so. Some choose to buy extensive automobile insurance, and others choose to buy the cheapest coverage they can get. Each of us has a moral right to make these decisions based on what we think is best. Should a young, healthy, single man be forced to buy health and life insurance when he judges such an expense to be of no value to him? Why should taxpayers be forced to pay for fire protection and EMS if they do not value such services?
At the same time, individuals must be responsible for their decisions. If someone decides that insurance is not a good investment, he is still responsible for the consequences of his choices. If he becomes ill and does not have insurance, he has no right to demand that others provide health care. If he does not have flood insurance, he should not expect taxpayers to rebuild his home after a flood.
So, if we did away with government fire protection and EMS, would our cities be constant infernos? Would our streets be filled with the sick and injured? Would private companies prey upon the unfortunate and seek to profit from those suffering from tragedy? To answer these questions, let us look at private companies that actually provide these services.
Throughout the developed world, government fire protection and EMS are the norm. However, there are examples of private companies providing these services, and they provide a stark contrast to their public counterparts. The private provision of fire protection and EMS provides everyone with more choices, lower costs, and most importantly, freedom.
The most common form of “privatization” is for a municipality to contract with a private company to provide services within a community. (While this is not true privatization—government still retains a level of control over the services, it does demonstrate that such services can be provided by private companies.) For example, nearly half of Denmark’s municipalities contract with Group 4 Falck to provide firefighting and ambulance services. In America, more than 450 communities contract with Rural/Metro Corporation for fire protection service, EMS, or both. Unlike government fire services, which focus on fire response, Rural/Metro focuses on fire prevention. A former mayor of Scottsdale, Arizona, which has used Rural/Metro for more than two decades said, “Scottsdale citizens are offered a much better balance between response and prevention than is available in most communities.” He added,
Our fire service does a superb job… The citizens of Scottsdale love it. I get compliments all the time on Rural/Metro’s performance.
Even more important, the kind of service Rural/ Metro provides is based on incentive and innovation. So our citizens aren’t subject to the constraints experienced with traditional municipal fire departments.
And what are those constraints? As with government schools, the postal service, and other illegitimate government services, fire protection and EMS become magnets for political favoritism. Specifically, unions fight efforts to improve efficiencies. Applying rational business principles to government services might lead to fewer work hours, lower pay, reduced benefits, or a combination. And for politicians, appeasing fire fighters’ unions is an important way to secure votes. “The unions would be against that (contracting work to private companies),” said one fire fighter. “It’s a union shop, and they want to have their guys doing the work.” In other words, providing a better, more cost effective service takes a back seat to political considerations.
While contracting a private company to provide community-wide service is the most common method of private fire protection and EMS, it is not the only way that private companies provide such services. For example, “Rural/Metro provides fire protection services primarily under a subscription-based model to individual homeowners and commercial property owners in unincorporated suburbs.” Insurance companies, such as AIG and Chubb, offer fire-prevention services in areas prone to wildfires. As an example, Chubb will spray fire-suppressing gels on homes, set up sprinkler systems, and remove brush and trees.
How do private companies offer a lower cost service? Do they, as critics claim, simply offer a lower quality service? As in any industry, when individuals are free to innovate, they endeavor to offer the best possible service for the lowest possible cost. For example, we previously saw that public firefighters are idle as much as ninety-eight percent of the time. Rural/Metro, on the other hand, uses a combination of full-time and part-time employees. The part-time employees work other jobs, and are called in when they are needed. Unlike government fire departments, Rural/Metro does not have to pay for idle employees, yet has the manpower it requires. And because it focuses on fire prevention, the company reduces the number of fires that it must suppress. Which is a better service: Putting out a fire quickly or preventing the fire from ever starting?
A private business succeeds only when it satisfies the needs and desires of consumers. If it offers poor service or charges outrageous prices, consumers will spend their money elsewhere. In a capitalist society, both producers and consumers are free to act on their own judgment. Producers are free to offer products and services at a price of their choosing; consumers are free to accept or reject those offers. The exchange is voluntary, with each party acting as he thinks best. And because they are motivated by profit, private companies seek ways to deliver their service as efficiently as possible.
Mercy Ambulance Service in Lansing, Michigan, provides an interesting contrast to government EMS. Founded in 1955, the company charges between $400 and $600 for its service, while the city charges between $600 and $725. While charging more than Mercy, the city loses about $1 million per year on its EMS service. The private company is profitable, while the city subsidizes its service with tax dollars. The private company depends on the voluntary choices of its customers, while the city uses coercion to stay in “business.”
We cannot begin to imagine what innovations free men will develop. Who would have imagined the explosion of improvements in cell phones, computers, and televisions? We have seen a few examples of how private companies offer better, less expensive emergency services than government. How much better might these services be if individuals were free to innovate and act on their independent judgment?
We do not live in a perpetual state of emergency. Life is not about dealing with a house fire or a heart attack. It is about achieving the values that sustain and enhance our lives. Restrictions on our freedom prevent us from achieving the values that bring meaning and enjoyment to our life. We have a moral right to pursue the values of our choosing, and that includes the services we will use in an emergency.