Adam Smith Rescues Funding for Emergency Services

1
Adam Smith Rescues (Funding for) Emergency
Services

• Simon Hakim, Andrew J. Buck and Erwin A.
  Blackstone
• Center for Competitive Government and Department
  of Economics, Temple University
• Philadelphia, PA 19122
• January 4, 2007

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Problem

• According to data provided to task force by
  emergency responder professional associations and
  leading emergency response officials from around
  the country, America will fall approximately
  98.4 billion short of meeting critical emergency
  responder needs over the next five years if
  current funding levels are maintained, The
  Rudman Report

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Sources of Savings for emergency services

• Shedding of non-public-goods currently provided
  by government
• Contracting out public-goods exposing public
  goods to markets

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Shedding of non-public-goods

• Goods that do not have pure public good,
  externalities, natural monopoly, or equity
  characteristics. Elimination of non-public
  services will generate private provision.
• Police 36 million false alarms a year, 94-99 of
  all burglar alarm responses are false, 50 cost
  per false response plus traffic accidents.
  10-20 of patrol officers time. Other
  non-public services unlocking cars, escorting
  funerals, checking on indiv welfare, motorist
  assistance, animal control, civil standby service.

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• Fire 2.2 million false alarms a year or 58
  responses of total are false, 365-1050 cost per
  false response. Other non-public services
  unlocking cars and homes, animal rescue, pumping
  water out of basements, alleviating smoke
  conditions in the absence of actual fire.
• Ambulance 8.5 million false alarms a year or 25
  false of total, 100 cost per false response.

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Economic optimal solution

• Charge at cost, no free responses, allow
  private entities to compete. Verified response
  for burglar alarm. For ambulance-contracting out.

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Why isnt the efficient solution adopted?

• No player except the provider has an inherent
  interest in solving the problem.
• The beneficiaries of public provision of a
  private good gain a substantial amount compared
  with the per capita cost to the community through
  taxes.
• Industry devotes a substantial efforts to
  maintain existing free police responses.

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Annual Savings from Eliminating Non-Public and
Contracting-Out Public Goods
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Annual Savings from Eliminating Non-Public and
Contracting-Out Public Goods (Continued)