This is a story on a guy who went around to small stores and cleaned the shelves of the supplies people are panic buying, and re-sold then online at much higher prices. Of course, he’s being castigated, including by some who claim to be fans of Rand. The supplies he bought would have quickly sold out anyway, and his business provided customers the opportunity to buy things they couldn’t get to the front of the line to get themselves. He did the work, and took the risk to buy all that stuff when there was no guarantee he could re sell it at high prices. The stores he bought from didn’t have a policy against anything he did. I say he’s innocent. Unfortunately for him, he failed to anticipate Amazon’s and Ebay’s PR moves, which resulted in him getting shut down. But does any Objectivist have a problem with this?
I can’t think of a rational reason to be against reselling things in this way. I mean, they aren’t even life or death products, and price helps manage supply.
Of course he did something wrong, he failed to anticipate Amazon’s and Ebay’s PR moves.
To be precise:
Morally Wrong NO.
Mistake(nly) Wrong YES.
One thing an Objectivist should never do is try to capitalise on other’s misfortune or a crisis unless they can add Value, otherwise something must be being stolen somewhere.
Its really very simple. They made themselves a middle man between the creator/seller and the buying public. They didn’t add any value to the product, they didn’t do anything to earn what they sought to take from that product, they are vampiric moocher. What Value do they have for sale? What did they add? Was it a mutual trade for mutual advantage?
No.
And a person who conducts their affairs in that way may be free to conduct their life as they will, but they will take the consequences of it when people choose to avoid them in future. That is the payment they will have to make.
Turns out those toilet rolls weren’t such a bargain after all.
What about a supermarket which raises its prices of products in a ‘crisis’? I know someone who owns one and has had enormously increased costs and overheads during this pandemic - delivery, supply, higher staff salaries, in-store sanitary measures - but - has only raised his prices a bare minimum. He’s taking a loss. Even so, there are those types of customer who call his increases “gouging”. WTH? Is he and his business to be “a service to the community”, as they say, sacrificial, because of a crisis of the government’s making?
The “vampiric moocher” who has cornered a supply of necessary products must still price them according to market demand. If you’re willing and able to pay the price, you are receiving value for value. Yeah I wouldn’t like him much either. But there’s a lot of products and services in a capitalist economy one mightn’t approve of - while equally defending the right of someone to do those things..
I agree, but also the person who has to raise their costs to make the same profit is giving value for value and if he could guarantee supply that would be a value too that might command a premium. But if a businessman takes the mickey and goes too far they will pay with those who won’t shop in the future.
The world has a way of repaying theft, and he will pay it back or go bust.
Moral principles guide your actions when part of an integrated view of existence. While a moral principle is focused on a very narrow question, such principles can’t be trivially applied by dropping knowledge context.
There is no principle of Objectivism that says “I should charge as much as I can”, but arguable there is a principe that says “I should charge as much as I can consistent with reality and my long-term goals”. Market-backlash is an example of a quasi-rational consideration, that is, it is irrational to pretend that people do not behave irrationally. Any non-coerced transaction adds value (i.e. not gunpoint sales), but they also have a cost – the question is whether the transaction adds net value to the seller. The buyer, likewise, has to consider whether the transaction adds value for him. Neither party should care about the rationality of the other party’s decision to engage in the transaction. But, both parties should consider whether a disadvantageous transaction for the other party will in fact turn out to be disadvantageous for themselves. This is why I patronize a local hardware store that charges a bit more for stuff, but also provides invaluable technical assistance that is not available at cheaper outlets.
The value-computations that have to be performed are very complicated, and ultimately depend on fragmentary knowledge (is it even possible to buy toilet paper for less money at another store). A business has to operate with awareness of the quirky views of customers, and cannot rely on the thinking “we’re the only game in town”, which may be true today but in a free market is an invitation to competition. Customer irrationality is part of what it means to “do business”.
The problem in the OP is a consequence of poor planning and bad assumptions by an erstwhile businessman. You have to read the lease carefully; or, in the case of E-commerce, the terms of service. When you sign up for a service that retains the option of evicting you and putting you out of business, you either accept that risk, or get a different landlord who doesn’t retain arbitrary social-justice rights to your life.
On 4/28/2020 at 8:15 PM, Lawrence Edward Richard said:
I agree, but also the person who has to raise their costs to make the same profit is giving value for value and if he could guarantee supply that would be a value too that might command a premium. But if a businessman takes the mickey and goes too far they will pay with those who won’t shop in the future.
The world has a way of repaying theft, and he will pay it back or go bust.
That’s why a monopoly is moral and legal. “Profiteering”, the smear word.The monopolist by definition is the only game in town, he has a corner on some product which nobody else makes, or makes of a higher quality at lower costs than anyone else can. And, in theory, can price the goods as high (or low) as we wants. Of course that’s a temporary state of affairs in a free market. When the demand is perceived by other businessmen who see this product to be a profitable investment which their ingenuity can improve upon at less cost, the monopoly ends.
But you raise the moral question of monopoly related to a state of emergency, or “gouging”. Someone, lets imagine, who owns an unlimited water source in a countrywide drought, and charges astronomical prices for it. I suggest that would be irrational and immoral.
Men don’t live in a state of emergency (although that’s feels less certain right now…)
On 4/28/2020 at 7:00 AM, Lawrence Edward Richard said:
What Value do they have for sale?
I agree that this is the important question.
Perhaps some of the business people were not really adding anything, merely reselling, but I don’t it’s actually true that nothing was added. In the article, some people went all around the country to buy the supplies, and then resold them. The value they added was finding the products to provide them in a more timely manner. They literally had to go the extra mile to acquire the products. In other words, they acted as distributors who knew how to acquire the products when people ask for them, while other distributors were unable to provide the products on demand.
If you take a basic economics class, you’ll learn about arbitrage. People who take advantage of price differences add value in two ways: (a) smoothing out supply differences between geographical areas, and (b) ensuring supply is available at a different time. Both a and b prevent shortages and sharp price fluctuations.
People who look at this and simply conclude “he’s not adding value” are considering value from a physical labor perspective, incapable of considering value as an abstract relationship. Don’t be a Marxist simp. The guy did nothing wrong.
With the greatest of respect 2046 if I find people are buying up supplies that are already being panic purchased and that there is no toilet roll to be had, and then I find some fool trying to sell it online for 5 x the price then I won’t purchase it then either. Most people won’t. There is such a thing as a moral economy that predates modern capitalism and marxism.
I don’t believe the local jokers on Facebook who purchased up what toilet roll was in the shops and tried to sell it for stupid money:
A. Got anyone to be STUPID enough to pay them, it was ridiculously overpriced.
B. Added any value in terms of geographical deliveries or availability to those who were desperate and would pay more.
A seller cannot be both the creator of shortage and the saviour. You can’t stand over someone having removed a product that was not yours to sell in the first instance by having bulk purchased and then stand over a person who is desperate to have a crap going, ‘You’ll pay that £20 for a roll of Andrex now…’ It won’t work for long.
You are FREE to try any innovation you wish, but you don’t get to hide from the judgement of others or consequences. Yes Objectivists should form their own judgements but they can’t force others to give them money. That’s the beauty of it.
@LER, I think you are missing the contextual nature of moral evaluation. If I have a choice between buying 5x toilet paper and having no toilet paper at all (returning to the sponge on a stick days), I will spend 5x on toilet paper. The proper question is not whether the law of supply and demand is overridden by some theory of non-governmental price controls, the question is why my supply (of money) is and what my demand (for TP) is, and how that relates to supply and demand of other people (stores and online sellers). Where the supply is very low and the demand is high, you expect the price to go up. If you actually have TP in your store, that changes the supply equation for you, so of course you would not spend 5x on online TP, you would only spend 1.5x to buy it at the store. The reality is that the shelves are still bare (ymmv).
Your analysis of the situation is wrong, when you imply that the online seller is the creator of the shortage. This implies that there is some constant natural force which provides our needs without any effort on our parts, which the “speculator” has unnaturally interfered with. If you want to assign blame, you can blame the store for not getting more TP, or the manufacturers for not making more TP, or your neighbor for buying TP (whether it is in ordinary amounts or in horder amounts). It is morally inconceivable that blame should be assigned to a person simply because they recognized an opportunity to make a buck. This goes for TP as well as eclipse glasses. Temporary shortages exist all the time, and in a free market are generally solved when the producers increase production. That TP on the shelf is the property of the store owner. It becomes the property of the bulk-buyer when he puts it in his cart and pays for it. That TP is not your, until you actually buy it. It’s a risky business, reselling.
There is no such a thing as a moral economy that predates modern capitalism: “moral economy” is the same as and came into existence as modern capitalism.
No David, I point you to E.P. Thompson - left winger though he undoubtedly was. https://en.wikipedia.org/wiki/Moral_economy
The natural force is the market! The natural force is the creator and his distribution or distributors. A redistributor who inserts himself in the middle of this is just a moocher. Did he make it? No. Does he distribute it? No. It was in the shops anyway. Did the redistributor cause the shortage? No, he just contributed to it.
If the maker of the toilet paper has an increase in demand he can make more. If his sales department or the shops selling it want to then they will charge more. But here is the part you miss. You miss the opportunistic parasitical motives of the gouger. Their long term plan is not to sell toilet paper per se, just to live off the perceived need for things that people are panic buying or fall into short supply, and to aggravate that. Like all parasites if it kills its host it loses. So if they charge too much they lose their money. If they annoy the majority of buyers by clearly putting the price up on something that confers no benefit with that price increase, then they will lose their money. It is a natural justice.
What is really funny here is that you can state that they are free to do it. Yes they are.
You can state there was no natural force that meant those supplies should always be there. No there isn’t but there is a natural force that is the judgement of other men, and in England that means fair play. Its deep rooted and might fly in the face of what is… but it seems to take an effect on those who don’t recognise it.
But if there is a certain amount of food on a table and someone who not just takes what they need but also as much as they can grab to sell to others at inflated prices they wouldn’t have paid, is a hypocrite. I hear what you are saying, its very interesting.
I would not pay them a penny and did not.
I do not choose to trade with parasites rather than creators. I will do without first.
(At the end of AS Rearden says Dagny’s freight charges will take the shirty off his back but is okay with it. Why? Because Dagny will due to her brilliance be the only game in town. A gouger is more like Orren Boyle. They will take another’s work and try to make it pay for them regardless of whether in the longterm it will lead to disaster. A business that is not planning to stick around except to show up for short periods to rip people off isnt a business at all.)
The intelligent answers from deep thinkers on here make the debate worth it, especially when I don’t agree.
2 hours ago, Lawrence Edward Richard said:
A redistributor who inserts himself in the middle of this is just a moocher. Did he make it? No. Does he distribute it? No. It was in the shops anyway. Did the redistributor cause the shortage? No, he just contributed to it.
If you read the article, this is not what happened.
What you are imagining, I think, is that there was an existing supply, someone bought the supply, then created scarcity which did not exist before by only selling a small portion of that purchased supply. Morally speaking, this could be a problem because they would be trying to make a shortage on purpose. Although it’s not as simple as that, because sometimes reduction in supply is a desirable thing. So, this kind of action is not inherently wrong, it just depends on their motivation. You might have a point if we were talking about food supply in Venezuela, but I don’t think it applies here about toilet paper and masks.
What happened is that these people went around the country to buy toilet paper and masks and other supplies like that all around the country, then sold them on Amazon. They didn’t buy the products on Amazon then resell the products on Amazon. Basically, these people moved existing supply to where this supply was more in demand. A convenience store in western Kentucky might have more supply than they even need in that area, so they might be glad to sell their toilet paper for resale because they would be sitting on their supply anyway.
I just noticed that the link doesn’t work anymore (it was posted on MSN although the same article is in the NYT), so maybe later I will post the relevant text since I have access to the original article in the NYT.
On 4/28/2020 at 7:00 AM, Lawrence Edward Richard said:
One thing an Objectivist should never do is try to capitalise on other’s misfortune or a crisis unless they can add Value, otherwise something must be being stolen somewhere.
In voluntary exchange value is always added as between the parties. When one capitalizes on anything, including misfortune, one IS adding value… that is how voluntary exchange occurs.
Being first to buy a product, to resell later is not theft in any way shape or form.
On 4/28/2020 at 7:00 AM, Lawrence Edward Richard said:
Its really very simple. They made themselves a middle man between the creator/seller and the buying public. They didn’t add any value to the product, they didn’t do anything to earn what they sought to take from that product, they are vampiric moocher. What Value do they have for sale? What did they add? Was it a mutual trade for mutual advantage?
No
This is a straw man. There are two transaction here.
The so-called “moocher” as you label him, is the buyer in the voluntary transaction with the creator/producer. This so-called “moocher” is then the seller to his customers in those separate voluntary transactions.
No sale occurs unless there is mutual advantage in that transaction. If the something is worth less to the potential buyer than the money which is to be traded for it, the sale simply wont happen.
On 4/28/2020 at 7:00 AM, Lawrence Edward Richard said:
And a person who conducts their affairs in that way may be free to conduct their life as they will, but they will take the consequences of it when people choose to avoid them in future. That is the payment they will have to make.
Turns out those toilet rolls weren’t such a bargain after all.
Absolutely. In fact, the so called moocher’s relationship with the producer also suffers, if ultimately the price or quantity of products sold suffers. In fact, unless the producer has been conducting business so poorly that he has failed to maximize his profits, it is unlikely the middle-moocher (let’s call him that from now on), will be able to sell more at a higher price either, not long term. As sales suffer, the producer should limit sales to the middle-moocher, and ensure distribution to others.
It likely is in the producer’s long term interest to ensure that its regular customers are happy, i.e. that they get the product they want when they need it, and if that means adjusting the downstream distribution however necessary, then so be it.
On 4/28/2020 at 2:15 PM, Lawrence Edward Richard said:
The world has a way of repaying theft, and he will pay it back or go bust.
Raising prices during an emergency is not by any valid conception, theft. If unnecessary, it IS incredibly stupid.
5 hours ago, Lawrence Edward Richard said:
With the greatest of respect 2046 if I find people are buying up supplies that are already being panic purchased and that there is no toilet roll to be had, and then I find some fool trying to sell it online for 5 x the price then I won’t purchase it then either. Most people won’t. There is such a thing as a moral economy that predates modern capitalism and marxism.
I don’t believe the local jokers on Facebook who purchased up what toilet roll was in the shops and tried to sell it for stupid money:
A. Got anyone to be STUPID enough to pay them, it was ridiculously overpriced.
B. Added any value in terms of geographical deliveries or availability to those who were desperate and would pay more.
A seller cannot be both the creator of shortage and the saviour. You can’t stand over someone having removed a product that was not yours to sell in the first instance by having bulk purchased and then stand over a person who is desperate to have a crap going, ‘You’ll pay that £20 for a roll of Andrex now…’ It won’t work for long.
You are FREE to try any innovation you wish, but you don’t get to hide from the judgement of others or consequences. Yes Objectivists should form their own judgements but they can’t force others to give them money. That’s the beauty of it.
These futile attempts at cornering the market fail because these people cannot hide from the reality of the market… they simply cannot sustain such a business.
These people are not moochers. No force has been used in any transaction.
They are, however, “exploiting” irrationality, insofar as it is present in the free market during an emergency.
But irrationality is exploited in almost EVERY market, all the time. Here you identify a few shady players making a buck off of people’s temporary high degree of unreasonableness, other markets, like the beauty industry, the gambling or psychic/fortune telling industries (for “entertainment”), a huge swath of pop “culture” (debatable whether it could be called “culture”), and much of the luxury goods industry, capitalizes on the permanent, small degree of unreasonableness in most people in modern society.
Can we blame them?
Not really.
No free transaction is forced, and the last thing we need is the injection of more force upon transactions (yes in mixed economies many transactions and arrangements are already rife with regulations - i.e. force).
On 3/15/2020 at 10:11 PM, happiness said:
This is a story on a guy who went around to small stores and cleaned the shelves of the supplies people are panic buying, and re-sold then online at much higher prices. Of course, he’s being castigated, including by some who claim to be fans of Rand. The supplies he bought would have quickly sold out anyway, and his business provided customers the opportunity to buy things they couldn’t get to the front of the line to get themselves. He did the work, and took the risk to buy all that stuff when there was no guarantee he could re sell it at high prices. The stores he bought from didn’t have a policy against anything he did. I say he’s innocent. Unfortunately for him, he failed to anticipate Amazon’s and Ebay’s PR moves, which resulted in him getting shut down. But does any Objectivist have a problem with this?
Your OP asks whether it is “wrong”. Recall what morality IS.
No Objectivist has a “problem” with the morality of anyone else’s conduct as long as it does not involve initiation of force or fraud, which clearly this is not.
The standard to apply here to determine whether the actions were moral is whether they were conducive to this guy’s flourishing over the long term. A quick buck can lead to flourishing over the long term, but not at the expense of reputation, or spiritual wellbeing. A monetary loss, along with the reduction of reputation and spiritual wellbeing, is certainly not conducive to living.
The actions are likely morally wrong, but I cannot have any problem with them. Here there is no force or fraud. The immoral actor who acted wrongly is by definition the one who has a problem… he has acted against his own life.
Its interesting to read the various replies here.
Strictly Logical makes a list of good points. Can’t argue with it.
Very very well thought out.