Monday, November 26, 2012

Machan's Archives: Ethics and Gouging

Machan's Archives: Ethics and Gouging

Tibor R. Machan

    During most emergencies there are those who could certainly use quite a
bit of help and it is on such occasions that complaints about gouging
surface most vociferously. The recent storms and hurricanes in
the Northeast and elsewhere saw many people having to board up their homes and
businesses and evacuate the area for safer regions. Some did not prepare
for these times prudently enough and now depend on the help of others who
have or who are in the business of storing up and selling the materials
such times require. Some just couldn’t plan ahead.

    The usual complaints on such occasions have to do with gouging—with
people, including private parties and businesses, charging much higher
prices than in times of less inclement weather for the materials that are
needed to cope with the emergency. And there is something to these
complaints, even if taking legal measures against them are completely

    In a free society whoever is selling something is free to ask whatever
price he or she desires. Of course, when emergencies hit and the materials
are immediately needed by many people, the unusually high price will
usually have to be met or one must go without. And this makes it appear
that there is something wrong with asking the higher price.

    The truth is, however, that there is no universal principle for how
people should act in such emergencies.  Yes, there are some who ought to
be generous, at least to those who have been hit hardest and had the least
warning of the impending disaster. Others, however, who ought to have
known better and thus been well prepared, do not deserve such
generosity—they brought the problems they face on themselves and have no
moral justification for demanding that others bail them out. They will
just have to pay in order to be the Johnny come lately folks they have
elected to be.

    Exactly what is the proper way to relate to those who face these kinds of
emergencies is something one cannot tell from afar. Here is an instance
when local knowledge, with only the most general notion of propriety to
back it, is the only kind that will inform one of the facts needed to
determine what course one ought to take. Neighbors may know each other
well enough to judge whether those unprepared for disaster are negligent
or innocently ignorant or have been prevented from being well prepared by
unavoidable circumstances—say some family illness made preparations
impossible this time.

    Economists tend to defend gouging based on their view that prices are a
matter of what the market will bear. In other words, if one can sell one’s
goods or services for a high price, it is only sensible, rational to do
so. Carpe diem, as the saying you—seize the day! Any good entrepreneur
will have sympathy for this attitude and, in moral terms, it is often
quite proper since one ought to make the most of one’s assets so as to add
to them through trade.

    Yet, of course, there are circumstances in which prudence is not the
highest of the virtues to be practiced. Generosity and charity are
virtues, too, mostly for special occasions. Life is not a scene of
perpetual emergencies, at least not in relatively free societies where
people have their right to order their lives reasonably well protected.
They are sovereign, not under involuntary servitude, and so can be
expected to govern themselves.

    Given that life does confront us with occasional emergencies of various
sorts, our self-government needs to involve preparing for such events, not
expecting others similarly challenged to come to bail us out. Yet there
are also cases of really unforeseen challenges—people can be struck down
by multiple adversities all at once and on such occasions those close to
them, sometimes even strangers, have good reason to come to their

    It is when some take advantage of those hit with such multiple
emergencies by failing to be considerate that the charge of gouging makes
sense and people should avoid doing it. Exactly when this is cannot be
said ahead of time, nor from afar, but everyone who isn’t blind to the
vicissitudes of human life will know what I am talking about.

    The bottom line is that these are matters of human choice and there is no
universal principle to guide us all to a one-size-fits-all policy.
Discretion, good judgment, is what are needed, certainly not some
politicians and bureaucrats rushing in where even fools won’t dare to
tread.  Certainly bringing in the state—the police, in other words—is wrong and tends to lead to malfeasance since it mixes human emergencies with coercive force, a bit like a marriage between the Salvation Army or Red Cross and the Mafia.