What should you charge for a ventilator, medical mask, bottle of hand sanitizer? Should you sell it for as much as you can get? Sell it for cost? Give it away, like Elon Musk? How do you determine a just-right markup? Or, do you make states and hospitals engage in bidding wars, driving the price up, advantaging the wealthy over the poor? The way we answer has life and death implications. These are justice issues.
In response to the needs created by the pandemic, we see both heroic, self-sacrificing efforts to help as well as egregiously predatory efforts to exploit the situation. We see businesses giving things away or pricing them as low as possible. We also see that prosecutors are busy fielding complaints of price gouging of the goods we need due to the pandemic. Amazon reports it has removed more than half a million of its product listings because of price gouging.
“Why are you helping so generously?” “Why are you taking advantage of that person?” The answer to both is the same: “Because I can.” Both the desire to help and the urge to exploit are built into us as human beings. Both have evolutionary value. It is helpful to understand that.
Regarding how to price goods and services, social norms are tilted to favor exploitation. The standard in setting prices? Charge what the market will bear. In times of scarcity and great need, people who can will pay a lot more. So, the norm is, you are a fool if you do not charge more. But can we adopt a different standard and be economically sound?
When my wife and I were planning to remodel our kitchen, we got quickly discouraged by the cost of cabinets with wood that we liked. We felt that we could only afford something we wouldn’t really like. Someone recommended a cabinet maker they said was affordable. We were skeptical but decided to have him give us an estimate. He started by showing us samples of wood and asked what we liked. My wife said, “What do they cost? I don’t want to fall in love with something I can’t afford.” “Oh, they cost the same.” Seeing how incredulous we were, he explained. “They all cost me the same, so I just add my standard markup.” Well, now we could afford something that gives us joy every day.
To price your goods and services as low as possible rather than as high as possible means more people can benefit from what you have to offer. But that is a different ethic. The purpose of a business would be to do good in the world, not its purpose being to make as much money as possible. On a personal level, think of how many more people could afford to own homes if we didn’t sell them to the highest bidder. Let’s consider that when we sell ours.
Many of us are hoping that as individuals and as a society we will come through this pandemic better than we were before. More compassionate. More just. Having our standard behavior be more in line with our best values.