“Price Gouging” and Catholic Social Teaching

Up at the Register, I’m talking about why price gouging is wrong:

Catholics don’t reject free market economic principles out of hand, and yet most of us instinctively understand that price gouging in a crisis is morally wrong.

There are two reasons for this, and both of them are related to a fundamental respect for free markets. The first is that the economic power of capitalism is intended to serve the needs of men, not the reverse; the second is that the situations where price gouging occurs are nearly always situations where markets are not truly free.

We get into both an economic and a moral analysis of the situation — the former is what illuminates the latter.  Something I only mention in passing is the state’s interest in preventing price gouging:

As far as governments are concerned, price gouging needs to be curbed in order to prevent civil unrest and to assure the survival of citizens.

To which end, here’s a funny story: The hinge of the article was a meme floating around that compares the cost of bottled water at Disney to the cost of bottled water charged by (accused) price gougers in the Houston floods.  But the other summer I took my kids to Local Massive Amusement Park  — not Disney, but the sort of place that takes all its pricing cues from Disney.  Even there, the long arm of the law demanded that free cups of tap water be given to patrons on request.

Will many people prefer to spend $5 on a soda instead?  Sure.  Fair enough. But between not wanting people to die of dehydration and heat exhaustion and recognizing that amusement park patrons are a captive audience, the state’s solution isn’t to prohibit rules about not bringing in drinks, nor to prohibit single-entry tickets, but only to require that water be offered.  People need water.

File:Lots of bottled water.JPG

Lots of Bottled Water, photo by Brett Weinstein, CC 2.5 via Wikimedia.

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