For instance, let’s say you have a company. You want to have profit as everyone else. A company it’s not a charity organisation. However i find it a bit selfish to enrich at the expenses of others. One thing is to have a new idea and enrich, or work hard for something, another is to exploit the needs of people, and extract as much money as they can, even if it means regular people will have to cut money on clothes and food.
I’m asking this because on my country gas prices are too high, and the main oil company here is having huge profit. Lots of people need a car to go to their jobs, and many have to lower their style of life because these people want more money in their pockets. Even the police is having troubles with the gas prices.
I think it is morally objectionable to exploit a need to make lavish profits. How rich do we need to be? Still, the next question is , what’s the solution? Is it morally correct to control profit margin? I suppose if the choice is between the two then controlling profit margin and setting some marker as excessive is certainly better than keeping people in abject poverty. It does present it’s problems. As the other poster asked, who decides?
Do we set a limit on profit or do we set a limit on profit margin? How do we decide that fairly?
I also agree that it’s morally objectionable to exploit needs to make lavish profits, though I want to qualify this. If, instead of immediately returning profits to shareholders and handing out fat bonuses, the company invests its earnings into research to produce more and better new products, that may be morally preferable to keeping prices lower. These things would ideally be balanced in some thoughtful way.
In principle, when a company gives people a choice between buying its products and not participating, it can’t really do wrong by offering those products, because people get to choose between two virtual situations, in one of which the company doesn’t exist. So, products are only ever sold because people prefer to part with their money to have them.
But this breaks down in a number of ways, such as when the product has been so ubiquitous and necessary to living an ordinary life. Fuel for vehicles in a mobile society has pretty much reached that situation.
You don’t necessarily want a law to enforce every choice that has a moral component, but it is legitimate to consider the option for every such choice.
But oil companies aren’t arbitrarily choosing a price at which to sell gasoline. A decision to sell gasoline below market prices in some locations is the economic recipe for shortages in those locations, since rising prices are the market mechanism for dealing with growth in demand or shortage in supply or the combination thereof. Ultimately, I think rising prices are preferable to subsidization leading to shortages.
And why are oil companies making record high profits? Because they invested in exploiting oil on the basis of making a profit at, say, $35, $55, or $75 a barrel. If the world demand pushes the price of oil to greater levels, of course oil companies are going to make greater profits. That’s not greed, that’s return on investment.
So perhaps the OP needs to explain why oil companies are “exploiting the needs of the people” when oil companies do not have free will to set global demand of their product, and therefore prices.
Hey, someone is bitching about someone else making large amounts of profit and all they have to do to join in is buy stock freely on the market. It is simple.
Yeah, gas prices are high. If they really want to stick it to the ‘man’, then buy less gas. Get a smaller car. Car pool. Take a bus. What have you. It has been done to death.
I thought this thread would touch more upon the added expense of being poor/living in a poor neighborhood. For instance, a poor person in a bad neighborhood, with limited access to transportation, probably pays more for groceries because they buy from a local convenience store rather than a large supermarket that is farther away. Also, perhaps it would be cheaper in the long run to shop at a place like Costco and buy things in bulk, but if you don’t have a car to carry that big pallet of toilet paper home, or the cash on hand to buy that much at once, or room in your small apartment to store the stuff, it does you no good. Now, I don’t think the convenience store is necessarily preying on the poor. After all, even in a good neighborhood, convenience store food generally costs more. However, the option is generally available to go somewhere else.
Another example is check cashing places. When I get paid, my paycheck gets deposited in my bank account, and I get all that money. Someone who doesn’t have a bank account, who is more likely to be poor, goes to a check cashing place and they take a fee. If that person doesn’t have enough money to make it to the end of the pay period, they can get a payday loan, which gives them an advance on the paycheck. If they can’t pay it back right away, they get charged an exorbitant interest rate. If I got a loan from the bank, the interest rate would not be nearly that high. However, a poor person with bad credit would not get any money from the bank at all.
So, is this OK? The banks won’t lend anything to people with bad credit. The large supermarkets avoid bad neighborhoods. There are businesses to fill in the gaps, but they charge more. I would guess some of this comes from the higher cost of doing business, which would be morally OK IMHO. But perhaps not all of it does. Perhaps there is a bit of preying upon a fairly captive population. However, this happens even when the people involved aren’t poor. Just look how expensive it is to buy snacks at a movie theater. However, you can choose not to go to the movies, or not to buy snacks. You can’t really choose not to eat at all.
People saying, “Just buy stock in oil companies” really have no idea what it’s like to be poor. Stock certificates can’t get you to work or feed your family. People living paycheck-to-paycheck generally don’t have slack for things like that.
Partialy yes. On the other hand, at least here in Portugal, Galp, the monopolizer oil company had the biggest profits of all companies here last year. So even though they have to rise the prices due to shortage of oil, they rise even more to gain more profit, and this is where i was wondering if you thought it was right.
Please show how you know that the monopoly is rising prices in excess of the rising price of oil. I have no idea whether that is true or not, but it is an interest allegation that should be explained further.
Your premise is flawed. Every economic transaction that is made enriches both the buyer and the seller. No one buys something unless he or she thinks that the benefits from buying outweigh (or equal) the price they are paying. You don’t buy something thinking that you will be worse off once you complete the transaction.
How is anyone being “exploited”? People make the decision to buy goods and services. No one forces them to do so.
In America, high oil company profits aren’t the reason gas prices are high. In fact, taxes levied at the state and national level contribute more to the price of gasoline than do oil company profits.
A large profit margin indicates that there is money to be made selling goods and services in this particular area. That signals other businesses to enter the market to capture some of that profit. If you start using the government to tinker with this situation because it violates some abstract concept of “fairness” then all you are doing is interfering with the mechanism that will lead to lower prices in the long run. Profit isn’t a bad thing. It’s a necessary part of the market. The market is dynamic and people should be left free to buy and sell without government trying to pick winners and losers.