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Are You A Greedy Businessman?

By Theresa Fritz Camoriano

Consider your household to be a business enterprise.  As is the case in most businesses, you are both a producer, producing goods and services, and a consumer, purchasing goods and services. When you are a producer, you are acting as an employee, and, when you are a consumer, you are acting as an employer. 

Consider some of the situations in your role as consumer, making you a direct or indirect employer.  For example, you may directly employ a baby sitter to care for your children, someone to mow your lawn, or a plumber to repair your toilet.  You may indirectly employ a seamstress in China or Honduras when you buy a shirt, a factory worker when you buy a car, or a coal miner when you turn on a light powered by a coal-fired generator.

If you are like most people, when you are selling your good and services, in your role as an employee, you value them highly, and you want to receive top dollar.  On the other hand, when you are purchasing goods and services, in your role as employer, you want to pay as little as possible.  In other words, you want to buy low and sell high.  Does that mean that you are a greedy businessman?

When you hire a baby sitter or a lawn care provider or a plumber, why don’t you pay as little as possible - say $2 an hour?  You could offer to pay that little, but you would soon find that nobody who would provide good service would be willing to work for such a low amount.  You would soon find out that, in your role as an employer, you cannot “set wages” but rather are forced to compete for workers by offering wages and working conditions that will entice someone to agree to work for you. 

If there were suddenly a shortage of people who did the kind of work you do, would you jack up your asking price to as much as the customer would be willing to pay?  If so, would that make you a price gouger?  In that case, should the state attorney general sue you for price gouging as Kentucky’s attorney general has sued some gas station owners who raised their asking prices during a shortage? 

Should you be punished or regulated to prevent you from trying to buy low and sell high, or should you be free to strike up a deal with another willing party, who also wants to buy low and sell high, on any terms that are mutually agreeable?  Would it be sufficient to have a law that just required you both to keep your word – to pay what you promised and to produce what you promised – or should the law set the terms of your agreement?  And, if so, who should decide what terms are fair?

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