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Does it make any difference what the extra profit is used for such as charity, employee...

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lboone21 | Student, Undergraduate | eNoter

Posted July 16, 2012 at 3:38 PM via web

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Does it make any difference what the extra profit is used for such as charity, employee raises, or expansion in the scenario below?

 Assume you are a business person with an opportunity to make more money by meeting with competitors and fixing prices, conduct which is illegal.

 

 

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speamerfam | College Teacher | (Level 2) Senior Educator

Posted July 17, 2012 at 12:40 AM (Answer #1)

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I have eliminated most of your questions because only one question may be answered at a time.   The others are good questions, too, and you might one to re-post them, one per posting.

Now, suppose I am a bank robber, a highly principled bank robber, whose motive is solely to fund charitable organizations.  I do not carry a weapon, and I am always quite courteous when I do my work.  Does this make bank robbery okay?  I think not.  It is still against the law, for one thing, and the law does not care that I have a charitable motive.  A security guard might panic and hurt someone, even if I don't have a weapon.  A teller might die of a heart attack because she is being robbed.  And even if no one were to get hurt physically, there are other ways of doing harm.  A great deal of the money that I take is insured, which means that all the taxpayers in the country are paying for its replacement, a burden created by my crime.  The bank will hire additional security, perhaps, which means that the bank has less money to invest in the community. 

There is a reason that price-fixing is illegal. It harms everyone because competition is eliminated, because it takes away the motivation to be more productive and efficient, and because it is against every principle of a capitalistic society, which is meant to thrive on competition.  Consumers have no legitimate choices when price-fixing goes on, and no matter what the motivation is for the price-fixing, it is nevertheless, an illegal act.

Now, there are no doubt markets and economies in which price-fixing is legal and beneficial, for example, the way public utilities were at one time.  However, the price-fixing of public utilities was highly regulated so as not to gouge consumers, and it was intended to assist public utility companies to attract investors, so that these companies, who had the burden of creating infrastructure for their utilities and who have also had the burden of exploring for natural resources that were costly to "mine," would continue to remain in business, pay dividends, and serve consumers.

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