[Avodah] economics 101

[Arie Folger]

Dear felloow Ovedim,

I notice some posters are confusing two similar but unrelated sugyot, which
is why posters wonder how we can turn a profit and how prices are set.

There is a din Torah of prohibiting onaah. That concept is NOT RELATED TO
PROFITS, but to market proces, which is set by supply and demand. On items
for which there is a market price (milk, flour, fuel), one may not
overcharge or underbid by more than 1/6th.

Then, there is a different sugya, which is no longer in force, and that is
that our Sages wanted to guarantee that foods remain affordable AND
available. Hence, regarding some basic products, there is a prohibition to
earn more than 1/6th. Small items, however, like eggs, that cost too much
for handling and will otherwise not reach market, are freed from this
limit, and operate under a different regime of max., 1/2 profit.

Poskim have ruled that this takana is void nowadays, as it depends on the
particular needs of a particular market, and nowadays, markets operate
differently. See Pitchei Choshen for details. However, the spirit of this
taqana remains in force, in the form of maximum priceds for a slew of basic
products, at least in many countries.

The din of onaah, OTOH, is a deoraita, and always in force, AS LONG AS
THERE IS A REAL, LIQUID MARKET. E.g., there is no really liquid market of
all cars, as a Rolce Royce is not interchangeable with a Fiat Punto.
Instead, the market is semi liquid, as all Lincoln Town Cars of the same
year are pretty much the same car (let's ignore momentarily the optional
equipment), thus, one dealer in NYC may not sell such a car at 1/6th above
the price of the other dealers. Regarding items for which traders are
makpid on even small deviations from the price, there will be onaah even
with less than 1/6th, e.g. currency markets (but not the change agent at
the airport, who operates in a different market than the trader at a
currency exchange), stocks, commodities...  Pitchei Choshen also suggests
that where there is a price set by the manufacturer, anything above that is
onaah.

Kol tuv,
-- 
Arie Folger,
Recent blog posts on http://ariefolger.wordpress.com/
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