It's not the payment that was specifically dirty, it's that privatized firefighting was a dirty job historically in America. Like competing companies brawling in the street on the way to a fire, dirty.

https://en.wikipedia.org/wiki/Broad_Street_Riot

Here is a comedian's take on it in podcast form: https://thedollop.net/wp/episode-138-dollop/

" the company might negotiate the purchase of the burning property at a steep discount."

This creates the perverse incentive to demand an outrageous price so they can get an property for cheap. Next step would be setting fires to buy even more property.

Without their offer, the market value of the property is zero. Who is going to buy a house that has no fire insurance and is currently on fire? Is a steeply discounted price really outrageous? They might perish in the fire, they might fail to save it. Firefighting back then was no sure thing.

Now, if two crews showed up and bid against each other, things start to get interesting.

If two crews have to show up for a fire... That means higher prices because most of the time there is no fire, so they just sit around waiting -- more people higher cost.

It also means it might be that nobody shows up, because it's a holiday, so nobody was on duty.

> It also means it might be that nobody shows up, because it's a holiday, so nobody was on duty.

Well surely public services are more incentivized to display this behavior

Public services are often incentivized to create more work to protect their jobs. Famous examples include whatever department was enforcing prohihbition in the 20s to find other things to prohibit when alcohol prohibition was repealed. In Japan it's common to see unneeded road work because if the entire budget it not spent it will be reduced.

Simply because it's the best that can be expected, doesn't make it not an awful experience for everyone involved.

>Why is this dirty?

Sabotage and physical fights broke out between fire companies while fires burned. That's a pretty gritty situation.

Allowing fire sales gives way to perverse incentives, like the profitability of arson and predatory pricing of fire fighting fees such that certain portion of victims will always have to sell their property at a discount.

In theory, all of this also applies to a public "firefighting department", no? They too could do a really, really poor job. If this is the culture in a society, where people want to screw each other over, you are likely to get this poor outcome regardless.

But suppose that you have an honorable firefighting department run by an honorable man. Why could he not have set up a private firefighting company instead, doing pro bono work when required? Given the honorable behavior of his company, why would consumers not want to prefer him for insurance than shady competition, which may be cheaper but is also more likely to screw you over when you most need them?

Government-run agencies can be good or bad; private companies can be good or bad. There is no silver bullet and much depends on the prevailing culture. But government can use the threat of force to compel you to pay for their services. If a private company attempts the same, we would call it an organized crime group.

Also fire companies notoriously would collect insurance payments then go bankrupt.