Ethics and Gouging
By Tibor Machan - December 13, 2012

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 wrong.

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 the 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 assistance.

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 is 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 and the Mafia.

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