Is It Greed?

Inflation is real.  And it can hurt.  Lately, though, I have been seeing people repeat the complaint that high prices are due to corporate greed.  I’m not a fan of the system of incorporation, but those complaining never explain what they mean by “greed.”  If it means “wants the most one can get,” then corporations are indeed greedy—but so are non-corporate businesses and each of us as individuals.  If that’s what it means, the complaint is uninteresting. 

There is nothing immoral about wanting the most one can get. If I’m selling my home, my car, or anything else, I want to sell it for the highest price I can.  You do too.  (Each of us might be willing to sell the item for less money than we could if we get some other benefit—including the satisfaction of helping someone we care about—but that is simply to change the currency in question, not to say we don’t want the highest payoff.) Wanting the most one can get is not blameworthy and not worthy of complaint.

Presumably, the complaint about corporate greed is not just a complaint that corporations want the highest price they can get for their goods.  Presumably, the complaint implies something more—something indicating the actions by the businesses in question are immoral.  The complaint seems to be that these corporate businesses wrongfully charge more for their goods than they should.  (We leave aside how anyone knows how much those firms should charge.)  This understanding of the complaint, though, is implausible.

Consider the following sequence of events:

• Seller provides Good for $10, has lots of customers buying Good.

• A pandemic (or something else) happens and costs to Seller increase.

• Seller raises price of Good to $15 to cover those increased costs; if Seller did not do so, they’d go out of business.

• Many customers continue to buy Good from Seller at increased price.

• Costs partly decline and Seller could reduce price of Good to $12.

• Seller thinks “well they were willing to pay $15, why not keep the price there?”

• Seller keeps price at $15.  First set of complaints made.

• Some customers stop buying the good.

• Seller reduces price to $14.  Second set of complaints made.

I assume everyone will agree that the initial raising of the price to $15 wasn’t wrongful. Had the price been kept lower, Seller would have gone out of business and no one would get Good.  If that’s true, though, it’s hard to see how it’s wrongful not to reduce the price when the costs decrease, when the first complaints are made.  People were willing to pay the higher price and at least some still are.  If all previous customers kept buying Good at $15, the price would stay there.  As it is, Seller does reduce the price some.  It’s hard to imagine the price reduction, when the second complaints are made, is wrongful.

I assume some will challenge my claim that it’s hard to see how it’s wrongful not to reduce the price when the costs decrease.  Some will insist it is wrongful.  But why?  Should the price be lower just because customers will be happier or better off?  If that’s the case, it’s not clear why we wouldn’t be wrong to sell our homes, our cars, or anything else for the highest prices we can.  If we can do that—and not sell those things for lower prices to make the buyers happier or better off—it’s not clear why any business can’t do the same.  That is greed, I suppose, but its greed in the first, uninteresting, sense. The complaint is then nothing more than an expression that one isn’t getting what one wants.

(As time passes, the price of Good is likely to decrease to a new equilibrium price, but that is not to the point here unless there is something specific that wrongfully allows Seller to keep the price higher. If there is, we ought to complain about that. Government intervention might have that effect, for example.)