[Avodah] economics 101

Micha Berger micha at aishdas.org
Thu Jan 10 07:01:12 PST 2013

On Thu, Jan 10, 2013 at 02:36:51PM +0100, Arie Folger wrote:
: Profit is markup above cost, while onaah is markup above going price.

I will concede the possibility that the Me'iri could have used the word
"ona'ah" not as a halachic buzzword, but "profiteering" in a colloquial
sense. (But then I blame him for any confusion I might be having.) We
also have to explain why the Rosh on our amud ends up in the middle of
the SA's discussion of formal (buzzword) ona'ah.

(FWIW, I think of the profit of the sale as the difference between
the money and the value. The difference between cost and value is the
unrealized P&L of the initial purchase of the item and/or of the labor
invested to complete the product, or just change in market pricing. Not
part of the profit of the sale.)

Now, on to what I am still not on the same page as you with:

This issur is also in relation to sha'ar, not cost. As the Rosh notes,
between the deOraisa and Shemu'el, the limit on charging for essentials
that take significant work in shipping and handling ends up being 1/3
of the sha'ar.

I see Shemu'el in terms of preventing that smarmy informercial and
magazine ads of announcing a price of $19.99 and then in buried in
fine print (after the gov't required it) you find out that there is
another $7.99 for "shipping and handling". Similarly, there is a sha'ar,
and there is fair shipping and handling, but don't take a necessity,
with an inelastic demand curve, and force people to pay through the
nose for S&H.

And this is entirely the profit of a seller. Production is part of the
value of the product. E.g. no one suggests that a farmer can't sell
his flour for more than 1/3 above the price of his seed grain. That's
figured into the sha'ar.

Zev's original point, that you can make any money you want on the labor
involved in sales except for selling food -- modified to read staples
-- is essentially accurate. However, there was still a limit on profit
on other merchandise, and still a limit on profit on staples today, in
cases where the effort involved in a sale isn't big enough to be billable.

And I still believe that Shemu'el's 1/6 is measured the same way as the
first deOraisa 1/6, and therefore comes to 1/7 in today's language, not

Tir'u baTov!

Micha Berger             Mussar is like oil put in water,
micha at aishdas.org        eventually it will rise to the top.
http://www.aishdas.org                    - Rav Yisrael Salanter
Fax: (270) 514-1507

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