Advertising Your Competitors?

by Jimmy Akin

in Moral Theology

A reader writes:

As a recent businessman in the buying and selling of items on eBay, I have taken interest in the practice of buying low, selling high, and making profits. 

Okay, well, as a reseller, you wouldn’t be much of a businessman if you didn’t make a profit by selling higher than what you bought an item for. So far so good. You’re providing a service to your customers by finding out and then purchasing things at a lower price so that they don’t have to do this themselves. The profit you take is your compensation for being willing to go to this effort.

A recent debate began on a forum when a person was wondering whether it was morally acceptable to buy an item for Price X at the store, then resell it for Price Y on eBay..

I believe it is okay as buyers accept the price (either as a pre-set Price Y or a bid up to Price Y) without force and it is their choice if they want to order it online or get it in stores.  People may know how much it sells in stores, but they like the convienence of online shopping or they don’t want to wait in line or for the stores to get it back in stock.  Likewise, they may not know how much it sells in stores and think that Price Y is the "normal" price.

I would think it depends on an individual purchaser. In some cases, they might not know how much it sells for in their local stores, but maybe they do. I may know that a particular DVD sells for $14 on Amazon but I could get the same thing a the BestBuy across town for $12. Which is the better deal for me?

The answer will depend on questions like (1) how much disposable income do I have? (2) how keen am I on seeing this DVD as soon as possible? (3) how much time do I have on my hands, given that I would have to invest more in driving across town, finding it in the store, standing in line for who knows how long, and driving back rather than clicking a few buttons, and (4) how much is the gas it would take to drive there and back?

Though the copy at the local BestBuy is somewhat cheaper in terms of its sticker price, I might very well conclude that it is worth the $2 to me to order it on Amazon with just a few clicks, save myself the time and gas of going across town and back, and just waiting an extra week or so to get it in the mail.

What’s more, if I know that Amazon and the local BestBuy are generally within an acceptable range of each other, it may be worth my while to simply buy it on Amazon without even spending the time to call BestBuy, wade through their voicemail system to talk to a human, and find out if they have it in stock and–if so–how much it costs. It may just be easier (i.e., worth it to me) for me to buy online without even checking the local BestBuy.

In the current market, it will almost always be possible for me to find something at a cheaper price–if I’m willing to keep researching, or haggling, or taking a risk with a shady seller. But at some point it just isn’t worth it to me to keep trying to find a better deal, and it’s better for me to just go ahead and buy somewhere.

(NOTE: The latter is a technological limitation that I suspect will be cleared up in a few years. We’re already seeing technological convergence of information on this through price comparison sites and local "in stock"/price services. Soon I’ll be able to find out if the local BestBuy has it in stock and, if so, for how much–given no more clicks than it takes me to find out what Amazon wants for it, because both my local store and Amazon will be listed on the same site.)

So far I’m not seeing anything that raises alarm bells. You’re not in a position to know why a particular eBay bidder is bidding the way he is, and it’s reasonable for you to find things at Price X and then sell them for a markup so that the bidder doesn’t have to go to the trouble of finding them for Price X himself.

The reader goes on to write:

The debate however enters Catholic territory from this sections of the CCC:

"2409 Even if it does not contradict the provisions of civil law, any form of unjustly taking and keeping the property of others is against the seventh commandment: thus, deliberate retention of goods lent or of objects lost; business fraud; paying unjust wages; forcing up prices by taking advantage of the ignorance or hardship of another.191

The following are also morally illicit: speculation in which one contrives to manipulate the price of goods artificially in order to gain an advantage to the detriment of others; corruption in which one influences the judgment of those who must make decisions according to law; appropriation and use for private purposes of the common goods of an enterprise; work poorly done; tax evasion; forgery of checks and invoices; excessive expenses and waste. Willfully damaging private or public property is contrary to the moral law and requires reparation."

This raised the question of whether the seller was obligated to inform people of the fact that it can be purchased for a lower price elsewhere (in stores) so as to not take advantage of potential ignorance.  This too me seems a bit of a stretch.  That to me would seem like one business that sells something for Price A being forced to tell constumers another store sells the same item for Price B (or likewise lower their own price accordingly).   This to me would seem to force sellers to do research that consumers should do themself, but it was argued that regardless of what research is required of buyers, it is never o.k. to take advantage as a seller of a buyers ignorance.

The arguement is not whether buyers should do research themselves as that was agreed upon, but about what steps if any the sellers need to take to prevent "taking advantage of ignorance."  To sum it up, would a good Catholic be morally required to list how much an item can be purchased for elsewhere?  Likewise, as a good Catholic buyer, if they are purchasing something they know is worth a lot more (at a garage sale for instance) then asking price, are they required to inform, not barter for lower prices, or pay the seller a higher price due to this knowledge to prevent taking advantage of the sellers potential ignorance?  I think this assumes ignorance when there may be none, but still to error on the side of doing good what does the Catholic Church teach?

Ultimately what is most desirable is an clear explanation of what the CCC means with regards to those paragraphs.

I’d like to provide such an explanation, but I don’t know that I can. The CCC contains a substantial amount of material on economic matters that is not easy to cash out (pardon the pun) in concrete terms.

Part of the reason for this is that we are at an intersection between basic moral principles and how they are to be applied to real world situations in a way that requires the use of discernment. Part of the problem also is that the Church does not presently have a detailed theology of economics; it has a piecemeal system in which some matters are clearer than others, which has been developed over the course of time to address particular economic situations.

A fundamental problem, though, is that the folks in the hierarchy are not economists and are doing their best, based on real economic concerns, to provide pastoral guidance in an area that they don’t have extensive familiarity with. The result is that they often write in an unclear manner.

It would be helpful if they provided examples to illustrate what they are talking about in passages like this, but either due to the concision with which the Catechism needed to be written or due to the fact that they had trouble thinking up clear and indisputable examples, we don’t have any.

Neither does turning to parallel texts, like the Bible verses cited in the footnote or the Compendium of the Social Doctrine of the Church or the Compendium of the Catechism of the Catholic Church, help.

As far as I can tell, the clause in blue is simply de novo to the Catechism. It’s a first-pass attempt at expressing this, without clear parallels (at least ones that I’ve been able to find) in other relevant documents. (There may be some in papal encyclicals, but since these aren’t cited in the footnote, I don’t know where to look them up, and I am under an economy of time in composing blog posts, so I can’t just go read all the economic-related encyclicals and addresses.)

Taken in its most sweeping sense, the statement in blue could mean that the seller must either lower his asking price to that of his lowest competitor or must inform potential customers of what the lowest competitor sells for.

But this seems problematic for several reasons, among them the fact that this would put a burden on the seller to do research on what all of his competitors are selling for. While knowing what your competitors’ asking prices are is–to an extent–just good business practice, this is not where the burden of doing research fundamentally falls. It ultimately falls on the consumer to try to find the best price so that he can use his money wisely. It isn’t the seller’s job to do that for him.

Second, taking there may be reasons why a particular seller can’t lower his price to that of his lowest competitor. His lowest competitor may be much larger than him and able to buy in bulk and thus at even cheaper prices. Further, the competitor may even be taking a loss on the product (i.e., using it as a loss leader) in hopes of making more money on other things. Insisting that all sellers match their lowest competitor’s price thus would be destructive to the free market as it would tend to lead to market centralization and even monopolies, as the small sellers are unable to match the savings offered by the big ones.

The Church certainly doesn’t intend that.

What about informing customers of the cheapest competitor’s prices?

Again, this does not seem to be what the Church intends, and it would have the same effects of driving sales away from the smaller sellers to their larger competitors, again leading to market centralization and even monopolies. It would thus be anticompetitive.

It seems to me, therefore, that the statement in blue must be intended with some narrower sense than this.

On its face, it looks like it is a statement directed not toward typical business conditions but to atypical ones.

It includes, for example, reference to not just the buyer’s ignorance but to his hardship. That makes it sound like it is directed to the so-called "price gouging" that occurs when commodity prices rise in response to natural disasters.

It is also easier (for me, at the moment) to think of atypical situations in which one could gain a higher price by "taking advantage of the ignorance" of a buyer–or seller.

For example, if I am at a yard sale and discover that the impoverished people holding the yard sale are in possession of a Stradivarius violin that they want $5 for. If I am well of and I buy it for $5 from impoverished people who are in great need of money, this would seem to be contrary to the virtue of charity. Instead of buying it myself, I should tell them what it’s worth since they need the money more than I do (or at least I should set up some kind of profit-sharing thing with them).

I could set up a similar instance in which it is the seller who has the information about the truth worth (or worth-less-than-the-impoverished-buyer-thinks-ness) of a item, but the same principle would apply.

These situations–natural disasters, finding a Stradivarius at a yard sale, knowing for a fact that something will not do for your customer what he thinks it will–are exceptional cases and not normal business activity.

Hopefully at some point we’ll get some further doctrinal development on the matter at issue, but for the moment the clause in blue is unclear as to meaning and its plausible constructions are open to challenge.

For example, if we take the reference to the hardship of another as a statement regarding raising prices on particular commodities in times of natural disaster then the law of unintended consequences is likely to kick in.

For example, if hotel owners cannot raise their prices when a hurricane forces an evacuation then even bigger problems will result.

Why?

Because the hurricane–not the hotel owners–has caused a spike in demand for hotel rooms, and if that increased demand is not managed by price then it will be managed by something else, like who gets to the hotel first.

If I’m one of the first people to flee the hurricane and I bring my family with me then, if the hotel owner can’t raise his prices to anticipate increased demand, then I can rent one room for me and the wife and another room or two for the kids (depending on how many kids we have) and we will not be forced to economize by staying in a single room or stay with relatives or drive an extra few miles to find a cheaper hotel further from where the hurricane is going to hit.

The same applies to all of the other early arrivers.

So when the late arrivers get there, the hotel will be sold out and there will be "no room at the inn."

Whereas, if the hotel owner started raising his prices to meet anticipated demand then the finite resource of hotel rooms will be distributed more justly as those fortunate enough to be able to leave early won’t hog all the rooms with no restraint on this hoarding behavior. Instead, they may choose to rent fewer rooms or to stay with nearby relatives or to drive further.

I could discuss this further, and might in future posts, but ultimately it seems to me that the passage in the Catechism is unclear and needs further development to be cashed out in concrete terms.

It does not strike me that it is intended to apply to normal market conditions and that it is of potentially limited usefulness in atypical ones.

I also agree that whatever ethical constraints apply to the seller apply also to the buyer.

Ultimately, it does not strike me that a seller should scruple over a buyer’s motives or level of knowledge. If it is blatantly obvious that someone wants to buy a weapon to commit murder or if it is blatantly obvious that a poor person is using his money unwisely because he doesn’t know of a better deal, fine. Those are atypical situations in which the law of charity would suggest acting in an unbusinesslike manner. But as long as this kind of thing does not apply then the seller does not have a duty to advertise his competitors’ prices. Instead, he should assume that the customer knows what he’s doing, not try to second guess him, and let the market work out what the appropriate price range is for an item.

After all, we have no better method of determining the current "best price" for something than what it will fetch in a free and competitive market.

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{ 24 comments }

Bill August 19, 2008 at 7:17 am

Well, as a toy collector, here’s the concrete example that jumped out at me as soon as I read this post: In my neck of the woods you can go to ANY Target or Wal-Mart or Toys’R'Us at the exact time that they open and you will see at least one person waiting to get in that you can tell is “the dealer”. As soon as the doors open, he makes a beeline for the toy aisle (usually straight to the Hot Wheels). If any new or “hot” toys have been stocked, he’ll buy them all. He knows what’s coming out. He knows what’s valuable. He knows what to look for. And he won’t leave anything for anyone else.
He will then turn around and sell those toys on e-bay, or at the toy shows, for whatever mark-up he can get.
The problem for the rest of us who only collect a few things and have no interest in reselling is that we no longer have much hope of just going to the store and finding that one thing we want. If it’s special, they’ll be gone and we’re left to buy it on the dealers terms.
Now I’m not at all convinced that this situation violates “normal market conditions”, but I’d be interested in other peoples opinions ’cause it sure sticks in my craw.

Mick August 19, 2008 at 7:29 am

I would think the passage in the CCC is referring to a situation where someone is deliberately jacking up prices and further increasing the hardship of another.
For example, if a traveller in the desert was thirsty and came across someone who was willing to sell the person a bottle of water, but for $5000. The bottle of water may be of little worth to the seller, but he is exploiting the buyer’s need and charging an unjust price.
If a person wants to buy a dvd, for example, he or she understands that it is available at any number of locations. A dvd is a luxury item, not a basic need. I think you could post it on ebay for $10,000, if you wanted to, especially if it was a particularly rare item. You are placing an item on the open market, and the market will bear out whether that was a fair price.
Obviously, exploiting someone in need or someone mentally handicapped or someone completely ignorant of the market value of an item is sinful, but what this person is asking is whether it is sinful to be, in essence, a merchant. In addition, selling alcohol as a bartender to someone obviously intoxicated could be sinful as well, as you are taking advantage of their impaired judgement.

Ken August 19, 2008 at 8:19 am

I think the caveat about ignorance also applies in the case of the seller knowing something about the item that the buyer couldn’t know. For example, take the Stradivarius at the garage sale. The seller had it appraised, and found out that it’s fake, but is concealing that fact and has priced it at $50,000 (i.e., as if it was a genuine Strad). A buyer comes along and thinks it’s a great deal, and buys it on the assumption that it is a genuine Strad. That would seem, under the “ignorance” clause of the CCC, to be immoral.

Chris August 19, 2008 at 8:32 am

From this post, we can learn that Jimmy listens to Atlanta radio talker Neal Boortz, as this hotel room scenario is the exact example Boortz discusses on-air whenever there’s a hurricane and people flee the coastlines, and then the MSM inanely begins talking about gouging.
You could apply the same example to gas stations when there’s a coming natural disaster. If gas stations were forced to keep their prices level, you would potentially have people showing up not only to top off their tanks, but also to fill up large numbers of gas cans as they over-prepare to run their generators, chain-saws, whatever. The result? The gas station runs out of gas and people drive by it running on fumes, hoping to make it to the next station (which is also already sold out for the same reason.) Instead, the gas station raises their prices so that people will buy less – will buy only what they need to evacuate them from the coast, thus it takes longer to sell the same amount of gas, and more individuals can have their need met. Of course there’s a point beyond which if the price is raised, the public will drive by that station and look for a cheaper one…thus ultimately the market bears out what is a fair price (notwithstanding the fact that gas has been at record high prices this year – please pay attention to the fact that I am really only talking here about the economics of raising prices when demand is high such as in a coming natural disaster so that a scarce resource will be available to more individuals.)

Tim J. August 19, 2008 at 9:45 am

“From this post, we can learn that Jimmy listens to Atlanta radio talker Neal Boortz”
Or maybe Boortz listens to Jimmy Akin. Or maybe it’s just a common illustration that has floated around.

Paul H August 19, 2008 at 10:31 am

“From this post, we can learn that Jimmy listens to Atlanta radio talker Neal Boortz”
Or maybe Boortz listens to Jimmy Akin. Or maybe it’s just a common illustration that has floated around.

Or my guess is that they have both read Basic Economics by Thomas Sowell. I know that Jimmy has mentioned reading that book. Sowell may not use this exact hotel example, but he presents many similar examples of situations where scarce resources can best be allocated by letting the free market determine the price.

Bill Tingley August 19, 2008 at 10:55 am

Jimmy does a fine job of illustrating the problems of applying the E-Bay scold’s interpretation of CCC 2409 to the real world. We need to keep in mind that what CCC 2409 condemns are MALICIOUS transactions. Absent malice, the mere fact that a seller is selling at a higher price than others would to a buyer doesn’t make the transaction morally illicit.
Furthermore, transactions are two-way streets. I wonder if the E-Bay scold gave thought to how the same principles to be applied to sellers must also apply to buyers. For example, by his reckoning, the seller must let the buyer know that his wares sell for less elsewhere. But then the buyer must also let the seller know that others sell the same goods for more elsewhere. After all, buyers can exploit sellers too.
When it comes down to it, CCC 2409 isn’t that difficult to apply to our lives if we let commonsense and common decency rule. I agree with Jimmy that a theology of economics would be wonderful thing for the Church to provide us, but I think if we just avoid trying to skin each other in the marketplace, we’ll be in good stead with CCC 2409.
Regards,
Bill Tingley

David B. August 19, 2008 at 3:59 pm

I really would like to know if that “hoard and sell high” thing that Bill mentioned is wrong. When a bunch of private sellers stock up a $12 item from Amazon, sell it for $130, and continue to buy out the market, something smells funny.

Leo August 19, 2008 at 6:09 pm

CCC2409 must mean something substantive, its import cannot be whittled away to near-nothingness by a permissive analysis.
The point to note is that the Church does not accept that the market or property rights trump all other considerations.
In real-life hotel-hurricane examples are the owners increasing prices to achieve a fairer distribution or simply profiteering?
In the hurricane example a Catholic hotel owner could try to achieve a fair distribution by restricting the number of rooms which could be rented by one household. No casuistic self-deception is needed to justify profiteering. Shops sometimes restrict special offers to “one purchase per person” in non-emergency scenarios.

Mary August 19, 2008 at 7:06 pm

Now I’m not at all convinced that this situation violates “normal market conditions”, but I’d be interested in other peoples opinions ’cause it sure sticks in my craw.

Note that your knowledge does you no good at all.
What this dealer is doing is creating an artificial monopoly.
Have you tried asking the toy store if they can special order items for you?

Bill August 19, 2008 at 7:28 pm

Mary,
The stores can’t/won’t special order for you. In fairness to the “dealers”, the big stores are frequently able to undercut small comic stores that might carry some of this stuff, sometimes actually preventing small stores from getting shipments they (the small stores) have ordered in good faith. I suppose the dealers could see themselves in the role of the hotelier: that they’re insuring fairer availability to interested consumers. I don’t know.
I do think it’s a microcosm for what may happen as the internet (Amazon, etc.) continues to change the very nature of retail sales.

maiki August 19, 2008 at 11:36 pm

but bill, if the big stores were in the role of the hotel people, they would notice the increase demand– that the cars are selling out,–and raise prices. Making it less profitable for a dealer to buy out the stock since there is greater risk if the cars do not sell. Alternatively, big stores could carry more hot wheels, again, making it harder for a dealer to buy them out, since it is a great risk to have more product that one can move. Why they are not doing so is uncertain.
But the flip side, is to see if from the point of view of the dealer: there is this commodity in short supply that people are willing to pay more for for his effort. of camping out at the store, and doing research. So he does it. If people were not wiling to buy these rare toys from him on ebay, he would stop doing it. But since people are willing to pay more for the tiny cars, the market is bearing this increase in prices just fine. Consumers who do not want to pay the dealers prices can boycott him, until he lowers prices or ceases to monopolize tiny cars.

Bill August 20, 2008 at 5:39 am

I feel silly even talking about this but as I said before, I think it may have larger implications for other types of retail.
maiki,
A point about the big stores: it’s not that they’re selling out of Hot Wheels, it’s that they’re selling out of, say, 10 different types of Hot Wheels that may come in a case of 200. A Toys’R'Us manager can’t call up Mattel and say ‘please send more of these 10′, he can only order a whole new case. If he does that just to restock the 10 rare ones, he’ll be sitting on extra inventory of all the rest.
So the dilemma, as I think it applies to the discussion is this: On the one hand the dealer is just obeying the laws of the market, providing a “service” and making a profit that people are willing to bear; on the other hand, he’s providing a service that’s unnecessary (hoarding the toys) because the demand stays the same regardless.
To use the hotel analogy again (without the hurricane aspect since HotWheels are nonessential) : Toys’R'Us would be the hotelier, the dealer would be a guy who bought out the best rooms for whatever price the hotel was asking and then sold them on the street at a mark up. I suppose it’s like a ticket scalper.
ps – I’d love to hear from the ‘reader’ that started this to see how close we are to what he was talking about.

TerryC August 20, 2008 at 9:02 am

The point of the CCC concerns NEEDS. Toy cars are not needs. No one needs to buy toy cars. The most egregious example of the ebay mark up are Christmas toys, especially electronic items like the XBox which are often in short supply when they are introduced. Not cheap to begin with, twits go on ebay and pay four to ten times their store price just so they can have it now. The same conveys to hard to get concert tickets.
None of this stuff is a need.
My wife sees a similar situation as a habitual garage sale shopper. Dealers get to the sales early and buy a lot, and then resell at flea markets and antique stores. One egregious case was a sale at a local Bed and Breakfast. The day before the sale a group of dealers saw the advertisement for the sale the next day in the paper. This place is also a restaurant and so they went to tea the day before the sale and casually sought out the owner to ask what she was selling the next day, then offered to buy it all. Good deal for her, after all she might not sell everything at a garage sale, and she would have to spend all day out in the hot sun doing it. She wins, the dealers win, but all of the people who wake up early on the day of the sale and rush over to the place expecting a sale are losers.
None of this concerns needs, so is it covered by the CCC? I don’t know, but something about it just feels wrong to me. Maybe I just think a moral seller would have told the dealers to comeback the next day. Possibly more work for her, but then the easy thing is often not the right thing to do.

labrialumn August 20, 2008 at 10:10 am

In Lutheran teaching, all of our talents and relationships are callings from God. the purpose of these callings is to glorify God and serve our neighbor. Therefore the example of the individuals who purchase available stock in sales in order to resell at a higher price are in violation of their calling. They are not seeking their neighbors’ good (Luther’s commentary on the 10 commandments). True, making a living is important also, but in such situations where there is no value added, or where the value added is significantly less than what is being charged for that added value, sin against God and ones’ neighbor is involved.

David B. August 20, 2008 at 11:58 am

I guess it just comes down to decency: do you charge all you legally can, or do you mark up items within reason? The reader strikes me as falling within the latter.
Unfortunately, many people fall into the former camp. It doesn’t bother me as a buyer, because I don’t buy these toys. But it does bother me that a few folks exploit the whims of children.

Bill August 20, 2008 at 12:31 pm

I wouldn’t worry too much about the children, David. It’s mostly the big kids like me that are inconvenienced.
labrialumn,
” …but in such situations where there is no value added, or where the value added is significantly less than what is being charged for that added value,…”
Well put. I think that sums up what I was thinking.

David B. August 20, 2008 at 3:31 pm

I wouldn’t worry too much about the children, David. It’s mostly the big kids like me that are inconvenienced.
Well, I guess I should have added ‘and others’ to the last sentence, just to be fair. :-)

The Masked Chicken August 20, 2008 at 4:12 pm

Let’s break up the paragraph from the CCC cited by the original poster:
“2409 Even if it does not contradict the provisions of civil law, any form of unjustly taking and keeping the property of others is against the seventh commandment: thus…forcing up prices by taking advantage of the ignorance or hardship of another.191
Clearly, it seems to me, this paragraph refers to those types of activities of forcing up prices that are tantamount to stealing. Does the word, “forcing” as a human activity in this context, always imply stealing? Since to steal is to take something from someone that they have a right to, it would seem that forcing up a price is only stealing when it impinges on the rights of someone to own something. What does right of ownership entail? It would seem to me that if one could assert the statement:
if I had known such and so about what I owned before I sold it (either a condition of the object or a fair market value), I would not have sold it,
then one has a claim under ignorance. Likewise, if one could make the assertion:
if I had any other way to obtain item X than selling it for this price, which I cannot really afford, I would have
then one has a claim against hardship.
I may be (probably am) wrong in my simple analysis. This paragraph would mean that people like pawn brokers might be in dangerous waters if they prey upon those in need by paying them too little because of hardship or ignorance (the negative case).
The Chicken

Eric August 22, 2008 at 5:27 am

Well, I humbly believe that it does not matter which candidate wins. Both parties are brought and paid for by the globalists. We don’t have a candidate that represents the people of America anyone. The two party system is a sham and I will not be voting this year. And I’m not into the whole “vote for the lessor of evils” nonsense.

Martin August 24, 2008 at 11:42 am

My wife sees a similar situation as a habitual garage sale shopper. Dealers get to the sales early and buy a lot, and then resell at flea markets and antique stores. One egregious case was a sale at a local Bed and Breakfast. The day before the sale a group of dealers saw the advertisement for the sale the next day in the paper. This place is also a restaurant and so they went to tea the day before the sale and casually sought out the owner to ask what she was selling the next day, then offered to buy it all. Good deal for her, after all she might not sell everything at a garage sale, and she would have to spend all day out in the hot sun doing it. She wins, the dealers win, but all of the people who wake up early on the day of the sale and rush over to the place expecting a sale are losers.
In this case the seller lied. She placed an ad saying she would have items for sale but, at the time of the sale, she didn’t. To be honest she would have to wait until the announced opening, then she would be free to sell it all in one lot. Overall though, if a buyer is willing to make such a deal you’ve probably underpriced you item

CT August 24, 2008 at 12:37 pm

As JA seems to briefly acknowledge implicitly in a way that is perhaps not apparent, there are other ways to manage the scarcity such that consumers of the scarce resource when the resource becomes more scarce take appropriate measures that effects its societal conservation or efficient distribution. One method is to use some kind of rationing scheme where the number or kind of room made available is limited based on various factors.
Someone mentioned a book by TS; I am not familiar with it but much of economics is theory in need of empirical verification. For example, Milton Friedman’s Permanent Income Hypothesis is something that would need empirical verification. Natural Rate of Unemployment was a theory that has since been revised/criticized on the basis of empirical data.
There is some interesting work that has been done that criticizes the use of GDP as a measure of true economic health or growth. Some links for those interested (including a nice chart)
http://www.nytimes.com/imagepages/2005/10/03/science/20051004_HAPP_GRAPHIC.html
http://www.nytimes.com/2005/10/04/science/04happ.html
Unfortunately none of this is taken into account in technical economic concepts like “social efficiency”

Susan Peterson August 26, 2008 at 2:52 pm

My husband buys old 78 records at yard sales, thrift stores, auctions, and from individuals, and then resells them on Ebay. He has had to make me shut up when I blabbed in a friendly way that he was going to resell them. I have learned not to do it.
On the other hand, when he bought a box of records for $20 from a charitable agency (nongovernmental) and resold the contents for over $500, he gave $100 of his profit to the agency. He had the knowledge to know he could find sellers, and also had the work of describing the records, not as easy as your think as they must be related for appearance and sound, in some cases photographing them, then packing them safely (they are very brittle) and shipping them. So he deserved a profit. But he felt he ought to give something back.
There is nothing wrong as a general principle with buying low and selling higher, but of course there are those humane exceptions mentioned above.
Susan Peterson

Interlocutor August 30, 2008 at 8:06 pm

The catechism seems to be a blueprint for anarchy.

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