Price Gouging and Morality

My position:

  1. Price gouging is sometimes less than optimally moral and efficient.
  2. The status as immoral or inefficient depends in part on the degree of gouging.
  3. It should be legal anyway.

Common sense pro my position:

  • Price gouging is probably not bad if the recipient is happy after all
  • If they aren’t happy you may be a dick, and dick moves are generally not morally optimal
  • All things in moderation, goldilocks usually in middle: optimal is prob between perf gouging and charity

More rigorous:

  • Argument from coercion
    • If alternative is buy or die, coercion is being conducted.
    • Smaller degrees of harm also count as coercion.
    • Some people think coercion is morally suboptimal and/or inefficient
      • Although personally I don’t necessarily think that’s the case.
  • Argument from charitable utility
    • My personal favorite argument against price gouging.
    • It could be that (omg no way) giving a starving guy food for free is morally optimal and/or efficient.
    • Some non-heartless people actually get utility from such things as helping others
  • Argument from religion
    • What is the best thing to do in a price gouging situation? First, realize that “best” is a moral or normative term and requires a justified moral framework to answer in a rigorous way.
    • Divine command theory (or divine will theory) is perhaps the best moral framework.
    • If certain religions are your moral standard then gouging is immoral.
    • Usury is considered immoral in Christianity, and while usury is technically a lending consideration, there is a general moral principle along the same lines which is don’t take advantage of the weak or needy.
    • However, foregoing earnings or being irresponsible with wealth is also condemned in the Parable of Talents in the New Testament. So it’s not clear that perfect charity is ideal either.
  • Argument from empathetic guilt and/or subjective value
    • Personally I would feel guilty charging $10k for a gallon of water to a guy dying of thirst.
    • If my conscience is a guide to the morally optimal choice then charging as much as possible is not the “best” thing to do.
    • If value is truly subjective, then that is not the efficient thing to do either.
    • Also, guilt itself is a reduction in utility, so charging less would be better inclusive of charitable utility. Morally and in terms of utilitarian and economic efficiency.

Rebuttle of pro opposition arguments:

  • Incentives argument is true, but perfect gouging not needed for these incentives; only partial gouging
  • Going to hell is a solid incentive as well
  • Efficiency is not a clear moral standard. Divine command or will theories are better.
    • Not that clearly efficiency is clearly immoral either. It seems morally neutral. That is not a way to determine which choice is best.
  • Efficiency depends on perceived or anticipated costs and benefits, not accidental ones.
    • Accidental earnings are shocks which cause calculation issues and actually inhibit efficiency.
    • If you intentionally aid a disaster area though, that is different.
    • So gouging in a shock scenario is opportunistic and unnecessary, not efficient, but planned “gouging” is the natural working of the market when demand rises.
    • However, planned gouging presupposes available information which will likely lead to competition among suppliers, dampening the severity of any price increase.
    • Shock scenarios of spiked demand with limited supply prevents proper competition from dampening the severity of price increases. In effect, an opportunistic gouger can act as a monopolist, which is neither efficient nor morally optimal.

Why should it be legal anyway?

  1. Efficiency: Calculation problem. What degree is optimal? Government is a bad calculator.
  2. Moral: Laws should be based on a moral truth. The moral status here is variable, not certain.
  3. Pragmatic: Laws in general should be minimized. If we aren’t sure of a law, don’t have it.
  4. Slippery slope: give government an inch and they will take a mile. don’t empower them.
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