Sandel - Justice: whats the right thing to do?

Liberalism and the Limits of Justice(1982; 2nd ed., 1998)
Liberalism and Its Critics, editor (1984)
Democracys Discontent: America in Search of a Public Philosophy (1996)
Public Philosophy: Essays on Morality in Politics (2005)
The Case Against Perfection: Ethics in the Age of Genetic Engineering (2007)
Justice: A Reader, editor (2007)

WHATS
THE
RIGHT THING
TO DO?

MICHAEL J. SANDEL

FARRAR, STRAUS AND GIROUX
NEW YORK

For Kiku, with love

In the summer of 2004, Hurricane Charley roared out of the Gulf of Mexico and swept across Florida to the Atlantic Ocean. The storm claimed twenty-two lives and caused $11 billion in damage. It also left in its wake a debate about price gouging.

At a gas station in Orlando, they were selling two-dollar bags of ice for ten dollars. Lacking power for refrigerators or air-conditioning in the middle of August, many people had little choice but to pay up. Downed trees heightened demand for chain saws and roof repairs. Contractors offered to clear two trees off a homeowners rooffor $23,000. Stores that normally sold small household generators for $250 were now asking $2,000. A seventy-seven-year-old woman fleeing the hurricane with her elderly husband and handicapped daughter was charged $160 per night for a motel room that normally goes for $40.

Many Floridians were angered by the inflated prices. After Storm Come the Vultures, read a headline in USA Today. One resident, told it would cost $10,500 to remove a fallen tree from his roof, said it was wrong for people to try to capitalize on other peoples hardship and misery. Charlie Crist, the states attorney general, agreed: It is astounding to me, the level of greed that someone must have in their soul to be willing to take advantage of someone suffering in the wake of a hurricane.

But even as Crist set about enforcing the price-gouging law, some economists argued that the lawand the public outragewere misconceived. In medieval times, philosophers and theologians believed that the exchange of goods should be governed by a just price, determined by tradition or the intrinsic value of things. But in market societies, the economists observed, prices are set by supply and demand. There is no such thing as a just price.

Thomas Sowell, a free-market economist, called price gouging an emotionally powerful but economically meaningless expression that most economists pay no attention to, because it seems too confused to bother with. Writing in the Tampa Tribune, Sowell sought to explain how price gouging helps Floridians. Charges of price gouging arise when prices are significantly higher than what people have been used to, Sowell wrote. But the price levels that you happen to be used to are not morally sacrosanct. They are no more special or fair than other prices that market conditionsincluding those prompted by a hurricanemay bring about.

Higher prices for ice, bottled water, roof repairs, generators, and motel rooms have the advantage, Sowell argued, of limiting the use of such things by consumers and increasing incentives for suppliers in far-off places to provide the goods and services most needed in the hurricanes aftermath. If ice fetches ten dollars a bag when Floridians are facing power outages in the August heat, ice manufacturers will find it worth their while to produce and ship more of it. There is nothing unjust about these prices, Sowell explained; they simply reflect the value that buyers and sellers choose to place on the things they exchange.

Attorney General Crist (a Republican who would later be elected governor of Florida) published an op-ed piece in the Tampa paper defending the law against price gouging: In times of emergency, government cannot remain on the sidelines while people are charged unconscionable prices as they flee for their lives or seek the basic commodities for their families after a hurricane. Crist rejected the notion that these unconscionable prices reflected a truly free exchange:

This is not the normal free market situation where willing buyers freely elect to enter into the marketplace and meet willing sellers, where a price is agreed upon based on supply and demand. In an emergency, buyers under duress have no freedom. Their purchases of necessities like safe lodging are forced.

The debate about price gouging that arose in the aftermath of Hurricane Charley raises hard questions of morality and law: Is it wrong for sellers of goods and services to take advantage of a natural disaster by charging whatever the market will bear? If so, what, if anything, should the law do about it? Should the state prohibit price gouging, even if doing so interferes with the freedom of buyers and sellers to make whatever deals they choose?

These questions are not only about how individuals should treat one another. They are also about what the law should be, and about how society should be organized. They are questions about justice. To answer them, we have to explore the meaning of justice. In fact, weve already begun to do so. If you look closely at the price-gouging debate, youll notice that the arguments for and against price-gouging laws revolve around three ideas: maximizing welfare, respecting freedom, and promoting virtue. Each of these ideas points to a different way of thinking about justice.

The standard case for unfettered markets rests on two claimsone about welfare, the other about freedom. First, markets promote the welfare of society as a whole by providing incentives for people to work hard supplying the goods that other people want. (In common parlance, we often equate welfare with economic prosperity, though welfare is a broader concept that can include noneconomic aspects of social well-being.) Second, markets respect individual freedom; rather than impose a certain value on goods and services, markets let people choose for themselves what value to place on the things they exchange.

Not surprisingly, the opponents of price-gouging laws invoke these two familiar arguments for free markets. How do defenders of price gouging laws respond? First, they argue that the welfare of society as whole is not really served by the exorbitant prices charged in hard times. Even if high prices call forth a greater supply of goods, this benefit has to be weighed against the burden such prices impose on those least able to afford them. For the affluent, paying inflated prices for a gallon of gas or a motel room in a storm may be an annoyance; but for those of modest means, such prices pose a genuine hardship, one that might lead them to stay in harms way rather than flee to safety. Proponents of price-gouging laws argue that any estimate of the general welfare must include the pain and suffering of those who may be priced out of basic necessities during an emergency.

Second, defenders of price-gouging laws maintain that, under certain conditions, the free market is not truly free. As Crist points out, buyers under duress have no freedom. Their purchases of necessities like safe lodging are forced. If youre fleeing a hurricane with your family, the exorbitant price you pay for gas or shelter is not really a voluntary exchange. Its something closer to extortion. So to decide whether price-gouging laws are justified, we need to assess these competing accounts of welfare and of freedom.

But we also need to consider one further argument. Much public support for price-gouging laws comes from something more visceral than welfare or freedom. People are outraged at vultures who prey on the desperation of others and want them punishednot rewarded with windfall profits. Such sentiments are often dismissed as atavistic emotions that should not interfere with public policy or law. As Jacoby writes, demonizing vendors wont speed Floridas recovery.