A great, short video explaining the moral and economic case why price gouging is arguably moral – – but particularly why it should not be illegal.
John Stossel’s quick take (with a very similar generator scenario to the video above)
Moral — most people would agree that any valid moral principle will apply to all parties equally. Let’s take the price gouging concept to a couple other common scenarios which are essentially the same principle.
- Is it immoral for you to take a higher salary because the hiring company is particularly desperate to obtain your skillset (e.g. you’re a IT security expert and they just experienced multiple/severe hackings)?
- Is it immoral for consumers to price gouge in reverse and pay far less than a product is worth (“low-ball”) because a company is desperate to sell (e.g. going out of business sales)?
- At a base level, almost everyone is naturally inclined to buy at the lowest possible price, while selling at the highest possible price. Is that immoral?
I submit that by making price gouging illegal, the government agents are necessarily committing an immoral action. They are stopping two self-owners/individuals from acting upon their own free will and according to what they believe is their own interest. By making price gouging illegal, government and its advocates are basically stating “We know better than you; we have the right to own and restrict part of your free will, body, and property as we see fit”. As in the case of the video – – government agents believe it is better that your diabetic child not have insulin so that they can make sure someone doesn’t make an extra $500 in profit.
On a personal story, my family and I were in Orlando during Hurricane Charley. Our house was one of many which incurred substantial damage to the roof. Thanks to price gouging laws (and licensing laws), roofing material and labor were simply not available. For weeks, we and thousands of others had to sit by as subsequent weather added damage to our homes. The blue sea of tarps on the roofs were symbolic of the false government ‘virtue’, whereas an unhampered free market would’ve at least given us a choice. Do I want to pay the extra $X thousand to fix my roof now, or do I wait until prices drop and hope my tarp holds up?
Regardless of whether we agree or not on the morality aspect, the economic benefits of price gouging are almost without dispute (even among most liberal economists).
but…
A Communitarian like Michael Sandel might concede many of these points – – price gouging does serve a beneficial economic allocation of resources. Price gouging does involve two self owners acting voluntarily. BUT…do we really want a society that permits excessive greed and cases where people profit off other’s desperation? As he writes in ‘Justice‘
Greed is a vice, a bad way of being, especially when it makes people oblivious to the suffering of others. More than a personal vice, it is at odds with civic virtue. In times of trouble, a good society pulls together. Rather than press for maximum advantage, people look out for one another. A society in which people exploit their neighbors for financial gain in times of crisis is not a good society. Excessive greed is therefore a vice that good society should discourage if it can. Price gouging laws cannot banish greed, but they can at least restrain its most brazen expression, and signal society’s disapproval of it. By punishing greedy behavior rather than rewarding it, society affirms the civic virtue of shared sacrifice.
We do not have space to cover every aspect of Sandel’s argument, Communitariansim or Socialism in general, but we will touch on a few points.
What is virtuous?
First, why is it more virtuous to sacrifice the health or lives of the few (e.g. the diabetic child in a post-hurricane area) so the concept we call ‘society’ can send a message that excess greed is not OK? I think the child and their family might have a different perspective than Mr. Sandel.
Let’s now carry this shared sacrifice principle over to the realm of healthcare. Many Communitarians and Socialists advocate government provide single payer healthcare to all (e.g. Universal Healthcare) as the virtuous answer. The reality however is that every instance of universal healthcare implemented must rely on some degree of rationing. This is because the government distorted the economic price, supply and demand of healthcare goods (selling a good at prices lower than they would be on a free market). Supply will often decrease, while demand increases relatively unhampered (i.e. think of lines of people you see anytime someone is giving away free stuff). Since demand is higher than supply, rationing is necessary. This rationing often means a country will consider cost/benefit calculations before approving treatments. These approvals could make a literal life or death sentence to individuals in certain scenarios. People requiring these denied life saving treatments now have two basic options. Comply and die, or attempt to acquire treatment in other ways. Those with the financial ability will often pay out of pocket for the treatment. But this can result in a two tiered healthcare system which many claim is also unfair and non-virtuous. The rich get treatment and live, while the poor can not. Is the fair and virtuous answer then to make it illegal for everyone to obtain non-approved treatment? If yes, all desperate people will die equally (regardless of their financial status). Couldn’t it be claimed more virtuous to allow free people the right to acquire/exchange legal property in any way possible to save their own life? Isn’t it more virtuous to give people the right to “rage rage against the dying of the light”?
Another final philosophical consideration on the subject of virtue – – can virtue exist without free will?
- Can the medieval wife wearing a locked cast-iron chastity belt claim the virtue of fidelity?
- Can the doctor with a gun to his head claim the virtuous act of giving his services for free to the injured criminal?
- Can a person forced to give via taxation claim the virtue of charity?
Can a society claim to be good and virtuous if all its actions are guided by the force of law (and ultimately the barrel of a gun?)
Role of Government
Second, what is your view of the proper role of government?
- Is it proper for government to protect us from ourselves?
- Should we outlaw fatty foods, alchohol, cigarettes, marijuana, skydiving…etc?
- Is it proper for government to promote virtue?
- Should we outlaw sexual infidelity, imprison those not giving to charity, and assign you a large fine for lying to your friend about why they weren’t invited to your party?
- Or is the only arguably legitimate role of government to protect our individual rights and property from infringement by others?
- Outlaw murder, rape, theft, fraud and the like? All of which rely on property rights and the non-aggression principle.
Hey Harvard boy, what the hell you smoking?!
And finally, precisely how and who sets the rules of the good/virtuous society according to the Communitarians? Sandel doesn’t explicitly explain, but it seems to rely on a partnership of the virtuous masses (e.g. majority rules/democracy) and a group of enlightened philosophers, judges and legislators. Based upon the 262M killed in the 20th Century alone due to statist belief in the supremacy of the collective over the individual, this is at best a very risky proposition.