A Very Nice Chat

Yesterday over on ChroniclesMagazine.Org Scott Richert posted a comment in which he said that I’d attributed someone else’s words to him and that he’d asked me to correct it and that he assumed I would. Thing was, I never got the e-mail and so figured he might be using an old or otherwise bad address for me. Since I couldn’t find his e-mail, I called him, because I wanted to make sure that I got any misattributions corrected. He told me that, on further examination, he saw that I hadn’t misquoted him.

The two of us had a very nice chat. Mr. Richert was a real nice guy, and he said that, although he hadn’t meant his post the way it was taken, he could see why someone would take it that way. I therefore consider that aspect of the matter closed, and no hard feelings.

He also said he looked forward to seeing my interaction with the rest of his post so . . . onward!

(BTW, I want to apologize for the excessive wordiness of what follows. Since I said I’d try to have this today, I wrote it in a hurry, and it covers some fairly technical ground. Looking over it this morning I see that it really needs to go on a word-reduction diet, but I don’t have time to trim it before work.)

In his post, Mr. Richert took exception to a number of things I wrote. After
quoting the conclusions in my original post, he affirms my first
conclusion, which is drawn from the Catechism, and then says

His [Akin’s] second and third points, however, simply come out of the blue, and
both hinge on Akin’s term “natural price point”—a term that is not used
in the Catechism, nor in any of the Church’s social encyclicals (not
even in Centesimus annus, often seen as more “pro-capitalist” than, say, Rerum novarum), nor, as far as I can tell, in the writings of any of the Fathers or Doctors of the Church.

I’m
not sure why Mr. Richert says some of my conclusions come out of the
blue since there is a long section in my post developing and explaining
them. He may simply mean that they are not stated in the Catechism or
other documents of magisterial, patristic, or "doctoral" (to coin a
usage) character.

Unfortunately, the Catechism writes with such brevity that it often doesn’t answer all the questions you want to ask. When that happens, as it did here, you’ve got to do the
best you can to take what the Catechism states and relate it to the
real-world situation that led you to consult it in the first place. That often means going beyond the langauge of the Catechism
itself.

It’s true that "natural price point" is not found in recent encyclicals on economics, such as Centesimus Annus, but then you can’t expect a technical term to be used in documents
that don’t address the question ou are trying to
answer (sharp price spikes in the wake of natural catastrophies). Indeed, when it comes to how prices should be set, it’s hard to find anything in recent magisterial documents more than a general endorsement of some kind of free market.

And it would be
unreasonable to expect a contemporary technical term to crop up in
works of any nature that were written before the term was
coined.

The "this term isn’t found in the Catechism, the encyclicals, the
Fathers, and the Doctors" objection thus is not that weighty on its own. You might as well fault a person who is considering whether a theistic
version of punctuated equlibrium is consistent with Church teaching on
the grounds that the Catechism, the encyclicals, the Fathers, and the
Doctors don’t use the term "punctuated equilibrium" in their
discussions of evolution.

Of course, if there is an established terminology that the
Church uses in handling such questions then the thing to do is use it,
and Mr. Richert next seeks to build a case that I have neglected such a
terminology, writing

What is
used in the social encyclicals and in the writings of such doctors of
the Church as St. Thomas Aquinas is the term “just price,” and anyone
who has read the encyclicals or Aquinas knows that the “just price” is
not simply another way of saying the “natural price point.”

Whatever
the merits of the notion of the just price concept, I don’t see an obligation for a contemporary interpreter to use this concept when trying to solve the question I was answering.

Regardless of how prominent the just price concept may have been in the past,
developments in the Church’s social teaching have been so extensive
that, out of the thousands of documents on the Vatican web site, there are exactly four that use this term. Of those, it’s not clear that all of them are using it in scholastic sense.

For example, in Centesimus Annus, John Paul II refers to "a just
price, mutually agreed upon
through free bargaining." That sounds more like using the market
mechanism as the dominant factor in determining price rather than the
strict guild-and-prince price control system that undergirded the scholastic just price concept.

The term, at least in the desired sense, thus does not seem to
appear in the most recent economic encyclicals. It fails to appear
altogether in the Catechism. And an examination of the Compendium of
the Social Doctrine of the Church fails to turn it up
(though I couldn’t search this electronically since it’s not online).

However important the just price concept may have been in the past,
the economy and the Church’s economic thinking have changed so much
that it seems that the Church doesn’t regularly use this concept in its authoritative documents.

If an
individual interpreter wishes to use the concept, that’s fine. But the fact
that the Church has had so much to say about economics in recent years
and has used this concept so little (if at all) in authoritative
documents suggests that there is no positive obligation for the
interpreter to use this concept.

(NOTE: For those wanting a brief discussion of the history of the just price concept, SEE HERE and HERE.)

It thus seems to me that there is considerable liberty on this
point. The Catechism indicates that one cannot morally "forc[e] up
prices by taking advantage of the ignorance or hardship of another,"
and I can think of at least one circumstance in which that can happen
that is relevant to the question I was answering (i.e., restricting
supply that is in high demand due to a disaster). But–and here’s the
important point–the principle that the Catechism is articulating is
not spelled out in sufficient detail (in CCC 2409 or elsewhere in the
work) to mandate that the interpreter use any particular price-setting
mechanism in his overall view of economics.

Thus an interpreter is at liberty to use the natural price point
concept or the just price concept or some other concept. At present the
Church is only articulating general principles in this area and leaving
it to individuals to work out the practical consequences of this on the
concrete level. In other words, the Church does not mandate an overall
economic theory any more than it mandates an overall scientific theory
or an overall philosophical theory. It sets general parameters for
legitimate Catholic belief, but within those parameters there is
considerable latitude.

It seems to me that the concept of the natural price point is an
important one that is relevant to the situation of post-disaster price
spikes. By the term "natural price point," I mean that price for a good
or service that (a) the market will tend to converge on, (b) in a
particular, concrete economic situation, (c) though the market
mechanism, (d) without government-mandated price restrictions in place.
(At least that’s a first pass at what I mean. I reserve the right to
revise and extend my definition if further thought or discussion makes
me see a need to clarify it.)

This is not quite the same as Mr. Richert’s summary of the concept
of the natural price point as "the going rate" since the going rate may
be affected by things like government-mandated price restrictions, but
it’s close enough that we can let that pass.

Mr. Richert goes on to say:

[F]or the Christian gas-station operator or grocer or motel owner,
setting his price at the going rate may not, in fact, be the moral
thing to do.

True. I can think of situations where that is the case. He may be
charing the going rate out of an inordinate desire for money, or he may
be charing the going rate for something he ought not be selling at all
(e.g., abortions, prostitution services).

Nothing in Catholic social teaching indicates that he is
obliged to sell at a loss,

Under normal circumstances, no, but in certain circumstances, maybe.
The Catechism indicates that there can be situations in which the right
of private property is to be regulated or suspended altogether, and in
such circumstances it might be morally obligatory to sell at a loss
(e.g., your town is an economically isolated unit; you paid a bunch of
money for grain to put in your granary; then a famine hits; the town
does not have enough money to keep you from selling at a loss; it thus
becomes morally obligatory to do so or even to give the food away).

but he is required to exercise moral
restraint in determining his level of profit. 

Here we run into a significant difficulty. In a competitive market, no seller determines his level of profit. He can set his prices where he hopes
they will make him a certain amount of profit, but if he guesses wrong,
he’s out of luck. Despite his best efforts, he may make negative profit. That’s why there’s so many business failures, both
large and small.

There’s still a genuine insight here, but it needs to be
significantly reformulated in order to be true. I think that I see how
that can be done, but it’ll have to wait for a future post. Perhaps Mr.
Richert would care to try as well.

That competitors may be reaping greater profits than you are is not moral justification for mimicking their behavior.

True. If they are motivated by bad desires or doing bad things then you certainly are not justified in imitating them in these.

Assuming that’s not the case though, it is not immoral to charge the going rate.

Because, sometimes, people just plain get greedy, and avarice is one
of the seven deadly sins.

Yes. This is quite true.

In the wake of Katrina, gas-station owners in
Georgia raised their prices dramatically. One station owner in Stockbridge, Georgia—almost
500 miles away from New Orleans—jacked his prices up as high as $6.079.
 

Okay, though I don’t know if that was due to greed or not. It might
have been due to fear. The guy may have had an inordinate fear of
disruptions in his supply chain. He may have feared that there would be
runs on all the local gas stations and they’d all be sucked dry and
then there would be no new gas arriving due to the hurricane damage.

Or maybe he wasn’t greedy (i.e., motivated by a disordered desire for
money). Maybe he was motivated by a perfectly ordered desire. Suppose
his wife is going through chemo and he’s got three kids in college and
he took a loss the last two quarters on his business and is desperate
for cash in order to make ends meet.

Or maybe he was partly motivated by greed and partly by fear and partly by a genuine need to raise cash.

I dunno.

Seeing an overnight tripling of prices certainly raises the question of
greed in one’s mind, but since I can’t read his mind, I don’t know for
sure. To the extent he acted on a motive of avarice, that was sinful.

Interestingly, when Georgia “Gov. Sonny Perdue signed an executive
order authorizing state sanctions against gas stations that gouge
consumers,” prices dropped back down to the three-dollar level (about
where they were everywhere else in the United States)—even though no one was cited under the order.

Libertarians might claim that the drop in gas prices is simply proof
that businessmen are so afraid of government that they will commit
economic suicide rather than face governmental sanction.

I’m not a libertarian, but I think that is a quite plausible explanation, at least in part.

In the combox of his blog, Mr. Richert suggests that such gas
station owners may have dropped their rates because they were ashamed
and knew they had done wrong. That also may be true in part.

I’d also offer other reasons that may have played a role: (a) social
pressure was put on them by the media and their customers, who objected
to this, (b) friends and relatives told them how bad it looked and how
they didn’t want to hurt their business long-term by alienating their
clientele, and (c) they just misestimated what the market would bear and as soon as they found out nobody was willing to buy $6 gasoline, they dropped the price.

Catholic
apologists, however, might better consider that the three-dollar rise
in gas prices was (like the looting in New Orleans) proof of the
doctrine of Original Sin.

Since Mr. Richert has indicated that this should not be taken in the
snarky way it is phrased, I’ll pass that by and simply note that this Catholic apologist does recognize the evidentiary value that sudden price spikes may have for original sin.

Reportedly, Thomas Sowell used to have a bet with his students where he’d give them an A if they could find any place in The Wealth Of Nations
where Adam Smith had good things to say about capitalists. None of his
students were ever able to do so, for Smtih, like Sowell–and like me
for that matter–recognized all too well the businessmen can have
disordered desires for profit.