“That is just wrong,” posted one commenter in response to a story out of Los Angeles which raises vital questions about the morality of the market. From Ubergizmo:
A businessman in L.A. took scalping to a whole new level, when he picked up about 100 homeless people from Skid Row in Los Angeles. He promised to pay them if they waited overnight in the line outside Apple’s retail store in Pasadena, California. Since Apple allows customers to purchase no more than two units, he would have had 200 iPhones, all while paying each hired hand $40 for the trouble.
The operation did not proceed as planned. When the employees within the iPhone store heard what was happening, they refused to sell to the hired buyers. The scalper then refused to pay those who were unable to deliver iPhones to him. That upset the homeless crowd and aroused a disturbance which prompted police to escort the scalper away for his own protection.
Heads shake and fingers wag in reaction to this scheme. This scalper exploited homeless people, the story goes, proving himself to be a jerk at best and perhaps even a criminal.
The incident evokes a similar story involving Trader Joe’s. A guy from Canada drove down through California to buy inventory from the grocer which he then resold back home (where no Trader Joe’s stores exist). We used to call that an import business. Like Apple, when Trader Joe’s discovered his operation, they refused to do business with him. Yet it’s not entirely clear why, because he was helping them get their product to a market they have not otherwise reached.
Likewise, in the Apple case, the iPhone scalper was providing a value to all parties concerned. Obviously, the homeless people were getting income they otherwise would not have. Apple was moving its inventory. And the scalper’s end-customers had access to a rare and desirable product without having to wait in line. Whom did this hurt exactly? How was anyone’s access to trade unjustly restricted? There is no right to purchase a product at a particular price under particular circumstances. That’s why the police rightly deemed this a “business issue” and not a crime.
It may be tempting to scoff at the scalper’s refusal to pay those who were unable to purchase phones. Then again, we may safely presume that the agreement was for orders fulfilled, not attempted.
Discussing the incident on social media, one commenter asserted that people should be compensated for their time regardless of whether they were able to deliver the phones. Why? Of what value is their time, and to whom? These are homeless people we’re talking about. What else were they going to be doing?
That may seem crude, but actually goes to the heart of the matter. Value lies in the eye of the beholder. If these homeless folks valued their time, they should have negotiated for it rather than for phones delivered. Then the scalper could account for the associated risk in his value calculation. One way or the other, somebody was going to bear the risk of time wasted. Either the contractors would retain the risk, or the scalper would agree to assume it by paying them regardless of outcome.
Such assumption of risk occurs in business all the time. Even when compensated with a wage, you still bear responsibility for getting to and from work, along with the risk that something will happen to you along the way. If you run into construction, or an accident, or get pulled over by a cop and show up late, is your employer obligated to pay you “for your time.” Of course not, because you’re not really being paid “for your time.” You’re being paid for your productivity. Time is just the chosen unit of measure. What if you showed up and just stood around all day and didn’t do anything? Should you be paid “for your time.” We all know the answer.
What about the fact that these people are homeless? Should that factor into our value judgment? Was the scalper exploiting their desperation?
That’s the argument against so-called “price gouging.” For some reason which has never been clearly articulated, charging a premium in times of disaster “exploits” customers. Yet, such premiums incentivize providers of products and services to respond to desperate need. Otherwise, what’s in it for them? They might as well ply their trade locally.
Craig Biddle, editor of The Objective Standard, adds an even more essential point:
More important than the economic case, however, is the moral case: Individuals have an inalienable right to contract voluntarily, on mutually agreed terms, including price, at any time, so long as the transaction (or trade) doesn’t involve the initiation of physical force or fraud against anyone—that is, so long as it doesn’t violate anyone’s rights. The moral and the practical go hand in hand. This principle can be summed up in two words: free markets.
The same applies in the case of the iPhone scalper. Assuming he was up front with his terms, he took advantage of no one. Personal circumstances – like homelessness – always affect our value calculations. Very few people find themselves working in an occupation they truly enjoy. We do what we have to do because our circumstances call for it. That does not mean that those who employ us are somehow exploiting our circumstances. They are providing us with an opportunity we would not otherwise have.
Instead of taking offense at someone offering unproductive people an opportunity to be productive, we ought to be offended that anyone would seek to inhibit that process. This scalper should be admired for his vision, not condemned for trying to make people’s lives better and see some profit in the process.
Of course, we should acknowledge Apple’s incentive to control its brand. If they desire to sell their phones under certain terms, such as an agreement that the phones not be resold, they retain that right. It could certainly be argued that the scalper engaged in fraud to the degree he was attempting to circumvent Apple’s two-phones-per-customer rule. Then again, it could just as easily be argued that the homeless folks he hired were legitimate customers abiding by that rule. Ultimately, Apple decides.
A final point arises worthy of consideration. While this scalper’s actions may prove objectively moral, are they “Christian”? One commenter asks:
I believe that the commandment to love one’s neighbor as oneself applies even in commercial transactions, although I don’t believe that the secular state has any business enforcing that commandment.
What does it mean to love your neighbor as yourself in commerce? Does it mean you should abstain from opportunities to profit when the market presents you with an advantage? Religion remains a matter of personal conscience. Yet logic suggests that loving someone as you love yourself does not translate into placing them above you.
If you were truly putting everyone else’s interests ahead of your own you would never have an iPhone. You’d yield your place in line to all comers, and then work to purchase phones for everyone else on Earth who doesn’t have one before you. That, of course, would be ridiculous, and certainly isn’t biblical.
What’s biblical, and rational, is recognizing in each individual the right to pursue their own value. What’s biblical, and rational, is trading value for value in an honest manner. Don’t steal. Don’t cheat. Don’t lie. Deal with others through reason and persuasion and consent, and you love them as yourself.