The Grenfell Tower Fire in London was a horrendous and preventable disaster that, as of this writing, has claimed 79 lives. In a libertarian free market based society, this tragedy would have been avoided.
From what we know, a small fire broke out in one of the apartment units and spread rapidly. The rapid spread of the fire appeared to be fueled by a recent renovation that left the building with sub-par cladding. This cladding apparently was not fire resistant and may have even been quite combustible. This, along with the complete lack of a sprinkler system in the individual units, doomed the building and its unfortunate inhabitants to suffer the tragic consequences we all witnessed.
Whenever something like this happens, especially when it claims innocent human lives, my thought goes to “Could this have been avoided?” My second thought is usually “Would the outcome have been any better in a libertarian free market society?”
After looking into what we know so far, it’s clear that government incentivized the neglect necessary for this terrible event to happen. Here are four reasons why this would not have happened in a libertarian free market society.
1: The Grenfell Tower Was Government Owned
In a totally free market, there are no government owned assets. When the government owns something, no one is directly responsible for its proper or safe use. There are people who oversee its use, of course. And in the case of The Grenfell Tower, a government funded non-profit property management group known as KCTMO was tasked to oversee the everyday operations of the Tower. But the buck doesn’t stop anywhere.
With government owned housing, no one put up their personal wealth to build it. No one stands to lose money or clients if a building is managed poorly or engulfed in a preventable fire. No one is held accountable. Worst case scenario for the government is that someone loses their job. Even then, they could easily use their contacts and friendships within government to get another cushy gig.
In most cases, citizens aren’t even allowed to sue the government in these situations. And if they do end up getting some kind of settlement, it’s not coming out of the pockets of the people responsible for the mismanagement and negligence, it’s coming from the taxpayers.
This overall lack of accountability incentivizes negligence, corner-cutting, favoritism, and bribes.
In a free market, whoever built such a building would have to risk their own money, credit, assets, and reputation. If their building is unsafe or is ran negligently, they stand to lose the millions of dollars they invested. They could also be sued. Their reputation could also be tarnished to the point of being put out of business permanently. In a free market, incentives are in place to insure that people build safe buildings.
In spite of all these incentives to do right in a free market, what if someone does want to build an unsafe building?
Insurance companies would be a huge problem for the perspective builder of unsafe buildings. In a free market, insurance companies would have a lot more latitude than they have today in deciding who they choose to insure and under what terms.
With that in mind, can you imagine an insurance company risking potentially tens of millions of dollars without sending a team of inspectors to assess the safety of a building? Not just for fire risks, but any number of risks that could cause harm to customers which could lead to lawsuits that the insurance company would have to cover.
I view this as the biggest check and balance against unsafe building in a free market society. Any insurance company that insures unsafe buildings would quickly be bankrupted with claims. And with no government to bail them out, they wouldn’t be able to stay in business to continue insuring unsafe buildings.
When people think about a world without government, one horror they imagine is a world without building codes and inspectors. They imagine people and companies cutting corners in their construction in order to save money. However, I see the opposite happening.
Today, government has a monopoly on building codes. If their department puts their stamp of approval on a building, we assume it’s safe. But because it’s a government monopoly, it can’t go out of business. If they employ a building inspector that is incompetent, or lazy, or just going through motions and passing buildings that are unsafe, we’re stuck with it. Same goes for cases of bribery or favors to friends of those in power.
In a free market, building inspectors would face competition and would be judged on their track record. For example, if a building inspection company gave The Grenfell Tower a passing grade on fire safety, chances are they’d be out of business right now. Not only that, but since they are obviously incompetent and/or untrustworthy, all their former clients would have to get re-inspections immediately from a more reputable company in order to satisfy their customers. After all, if my building had a seal of approval from the same company that gave The Grenfell Tower a seal of approval, I’d be demanding a new inspection immediately or threatening to move out. Wouldn’t you? Today, we don’t have that luxury. Some government agency signed off on The Grenfell Tower at some point, and that same agency is out right now signing off on another building.
But if the government isn’t there to force buildings to be inspected, why would greedy owners pay money out of their own pocket to get them inspected, you ask?
First, we go back to insurance companies. In order to get the best possible premium, insurance companies could offer discounts based on how often buildings got inspected by trusted inspection companies. Plus, it’s safe to assume that insurance companies would have their own inspectors on staff doing their own due diligence. And if a building owner refused to get inspections, how many insurance companies do you think would insure them? My guess in none, unless the owners are willing to pay outrageous premiums, which would defeat the entire purpose of cutting corners in order to save money.
Second, to attract customers. If you’re looking for an apartment and you find several that are similarly priced, but some have a very recent seal of approval from a reputable inspection company, and others have no seal of approval or approvals from ten years ago, which building would you want to live in? Or one may have a seal of approval from a reputable company, and another from a company that just got caught taking bribes and approving unsafe buildings. Again, which would you trust? Apartment buildings would compete with one another to prove how safe they are to you.
4. Personal Liability
For centuries, wealthy businessmen have been finding ways to use the coercive power of government to protect their assets and businesses. Perhaps one of the most effective policies they’ve managed to put in place is the idea of limited liability. This means that when someone goes into business as a corporation, they are now personally off the hook for any losses, debts, lawsuits, and any other possible negative consequences from the action of their business.
So if a wealthy person had owned The Grenfell Tower, the victims of his neglectful business practices couldn’t sue him personally. They could only sue the actual corporation that owned the Tower. And if the corporation’s assets were limited to the Tower and the land it sat on, the victims would be fighting over scraps while the owner’s other assets would be shielded from lawsuits. This lack of personal liability makes it easier for an already wealthy business owner to engage in potentially risky and negligent business practices. Practices they would never imagine engaging in if they were personally on the hook for any harm that these practices caused to innocent people and property.
In a libertarian free market society, there is no government to shield business owners from liability. If your negligence causes great harm to other persons and property, you are responsible. It doesn’t matter if you do it as an individual or as a business owner.
Fear is a wonderful motivator. If business owners were afraid that their actions as a business owner could possibly harm their personal assets, we can easily see that that business owners would take greater care in running their businesses.
But Couldn’t It Still Happen?
We can never say for sure that something wouldn’t happen under different circumstances. All we can do is speculate on how people would act given different incentives. We can clearly see that a free market would greatly disincentivize the type of negligence that was necessary for a Grenfell Tower type of tragedy to take place. And if someone did happen to build such a building, they and everyone involved in building, insuring, and inspecting this building would be quickly put out of business and their personal fortunes would be subject to lawsuits from the victims of their negligence. Nothing can bring someone back from the dead, but at least in a market based society there wouldn’t be a government to stop victims from seeking full restitution and there wouldn’t be government monopolies that prevent bad actors from going out of business.
Originally published on Mike’s website here. Check out his blog levelheadedlibertarian.com for more!
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