Business As Usual (plus Price Gouging) in Parts of Haiti

Business ethics is mostly about the extra-legal rules that apply in the world of business. Though the study of business ethics often involves thinking also about what sorts of laws and regulations ought to apply to commerce, for the most part business ethics takes for granted a more-or-less-stable set of laws, a background against we ask questions like, “Yes, that’s legal…but is it ethical?”

Business owners in Haiti, right now, don’t get to think about things that way. From what I understand, for all intents and purposes, there is no stable, generally-enforced body of law in Haiti right now. There may be a nominal government, but the importance of that is more symbolic than practical. And Haitian law-enforcement agencies leave much to be desired on a good day; post-disaster, they’ve got their hands much more than full maintaining even small pockets of law and order. The enforcement of laws governing commerce is presumably not a terribly high priority.

This opens up a whole range of interesting questions about what ethical rules apply to business in the absence of law and order.

For an interesting glimpse at the world of retail as found in Haiti this week, see this story from The Ottawa Citizen: Decadence amid devastation. One interesting bit of the story raises a clear business ethics issue, namely price gouging:

About 30 per cent of gas stations in Port-au-Prince have opened, and officials say there is no longer a fuel shortage. But prices have tripled from pre-earthquake levels.

Now, huge increases in the prices you charge to desperate people during an emergency may seem like an ethical no-brainer (and in most places in North America, for example, it’s against the law). But ethically it’s actually not so straightforward. My friend Matt Zwolinski has argued, for example, (in “The Ethics of Price Gouging” Business Ethics Quarterly, Volume 18, Issue 3) that many instances of price gouging should not, in fact, be thought of as unethical. I won’t rehearse Matt’s entire, carefully-laid-out argument here. But basically he argues that price gouging isn’t always coercive or exploitative (though it sometimes is) and that to forbid price gouging may a) be unfair and b) have very bad consequences. It may be unfair in that it puts a heavy burden on merchants, who in time of crisis may face exceptional challenges and additional expense in obtaining anything to sell in the first place. (And note that many merchants, especially in a place like Haiti, may be far from wealthy themselves). And forbidding price gouging may have bad consequences for all concerned if it leaves merchants with little choice but to close their doors and stop providing goods to consumers in a time of need. Now, that’s an abstract argument about price gouging in general, not a defence of any particular instance of price gouging. But it’s thought-provoking, and serves to remind us that many ethical issues — particularly ones related to people’s behaviour in an emergency — are more complex than they appear at first glance.

One last thought about perceptions and appearances and moral judgment.

Take a look at the opening paragraphs of the story quoted above:

While tens of thousands of Haitians struggle in horrific conditions, it’s business-almost-as-usual at one store in the Port-au-Prince suburb of Petionville, where fresh vegetables, meat, cheese and wine are available to those with money to spend….

At the Big Star Market in Petionville, a relatively affluent Port-au-Prince suburb, Jean Robert Lebrun emerges from his first grocery trip in 11 days with half a dozen baguettes under one arm and bags of rice and cooking oil under the other….

That bit alone makes Mr. Lebrun sound downright spoiled. Baguettes? Bags of rice? Wine and cheese? This is Haiti we’re talking about, right? The place where people are bleeding and starving? How (one might jump to ask) can anyone eat so lavishly while their neighbours are starving?

The answer: that’s not what’s going on here. But you have to read to the end of the story to find that out:

Lebrun’s home was “completely destroyed” by the earthquake, and his street was so choked with rubble that he could not drive out until Friday. There are 25 neighbours living in his tree-covered garden. They have no shelter. But they have a charcoal stove and, now, a few items of relative luxury.

“So far, no one has come to help. We need tents, and so far we can’t find them,” says Lebrun, who had planned to return to Big Star later Friday with more cash. “Before the tremors, my wife had made provisions for a month. So that is why we have been able to help the people.”

This is not a story of greed or insensitivity. It’s a story of generosity and compassion. The lesson: it’s dangerous to reach conclusions based on incomplete understanding of the facts. Sometimes, we need to reach conclusions quickly because the need to act is pressing. But when it comes to judging the actions of people in the middle of a crisis, from the comfort of our armchairs, we are obligated, I think, to exercise caution.

12 comments so far

  1. hartwomen on

    I am astonished, shocked, that the journalist opted to use the word “decadence” in the title of the article. It proves the point of your final paragraph.
    LPH

  2. Chris MacDonald on

    I agree, though from what I understand it’s editors, not journalists, that make that call.

  3. jpbauer on

    To assume there is something unethical going on in Haiti merely by looking at only one factor, namely that the filling stations are selling the petroleum products at 3 times their normal price is potentially misleading and possibly inaccurate. From my reading of the newspaper articles describing the vast devestation and destruction afflicting many parts of Haiti, could not the increase in selling price be justified due to the higher costs of acquiring the supply of product? I don’t know for sure, but I would assume the cost of distribution has to have gone up considerably for everything because of the lack of normal transporation vehicles and routes etc.

    As you mentioned in your blog, it is critically imporatnt to look at the entire picture and not just one aspect of it.

    Great Post!

  4. Chris MacDonald on

    JP:

    Absolutely correct.
    Anti-price-gouging laws often don’t allow for those kinds of factors. They simply forbid the behaviour!

    Chris.

  5. Nurglitch on

    Thanks for the link to the article on price gouging!

  6. kalamazoo on

    I flew on American Airlines to Santiago,DR Jan 24 as a medical relief team with a group of 8 others.we were charge $1200 roundtrip; Typically, before the quake I could fly for about $600 rountrip; They charged us $100 for each bag over 2 bags; we brought 30 with medical supplies. Sounds like price gouging to me!

  7. Chris MacDonald on

    Kalamazoo:

    Thanks for your comment. Very interesting example!
    Of course, we’d need more information to verify that this is price gouging, as opposed to normal fluctuations in airfares (which do often vary by more than 100%).

    And if it’s actually price gouging, there’s still the question of whether it was ethically a bad thing or not.

    Chris.

  8. kalamazoo on

    The flight was 9am from Dallas,Tx to Santiago,DR coach fares. Other people on the same flight from cities further away weren’t charged more than $600 roundtrip. I don’t know if it was price gouging but odd for sure. And others on the same flight said they weren’t charged anything for excess baggage if they were on medical relief trip; Even stranger..I was allowed to bring scissors, scalpels and needles as carryons even after I showed them what was inside. Never questioned my story of being a medical worker.

  9. [...] Business As Usual (plus Price Gouging) in Parts of Haiti [...]

  10. [...] Pricing. The topic of price-gouging often arises during and after a natural disaster, though I haven’t heard any reports of this [...]

  11. [...] I’ve written before, raising prices during a disaster isn’t always unethical — sometimes higher prices [...]

  12. [...] stores need to be careful to stay on the right side of the law — most jurisdictions have anti-price gouging laws that put limits on just how much you can raise prices in the wake of [...]


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