Тег: Pyrotechnics

Let’s consider a situation: someone builds a pyrotechnics factory in the city center, and everyone’s fire insurance premiums go up. But the factory owner has not violated the NAP, so he owes nothing to anyone (and no one can forbid him from building this factory). Do libertarians not consider this a problem?

anonymous question

To answer this question more fully, Alexei Tereshchuk aka @kamendant, leader of the Austrian School of Economics public page on VKontakte and the chat on the same topic in Telegram, was brought in as an expert. Below is a mix of his explanations and my own thoughts.

What is the difference between the case of a factory that pollutes the surroundings and a factory that raises the cost of property insurance for its neighbors?

In the first case, the factory causes direct damage to those around it, and this damage can theoretically be subject to compensation, even if the methods of calculating the damage are quite unreliable — after all, to set the price for a bunch of radishes for an old woman at the market, it is also not necessary to calculate its cost price in detail.

In the second case, it is only a matter of increased risks, and the very attempt to insure these risks leads to additional costs. Such indirect damage is not related to a violation of the non-aggression principle and therefore is not subject to compensation. Indeed, we are surrounded by many factors that increase our risks, but which we are forced to put up with if we want to maintain our current lifestyle.

For example, in the city, we have a higher chance of getting into a car accident than in the village; this increases the risk and, accordingly, the price of insurance for this event — but it is not a reason to make property claims against all drivers in the city — only against the specific one who caused the accident in which the victim was involved.

So, libertarians do not consider it a problem that it is impossible to demand money from a pyrotechnics factory located in the city center simply for the fact of its presence in the center.

It is another matter that the insurance cost for the factory itself will be much higher if it is built in the center than if it is on the outskirts — because the risk of claims from neighbors affected by an accident will be insured, which means it is more profitable for the factory owner not to have neighbors in the danger zone.

explosion at a pyrotechnics factory – fun and scary