web analytics
November 22, 2014 / 29 Heshvan, 5775
At a Glance
Judaism
Sponsored Post
IDC Herzliya Campus A Day on Campus

To mark IDC Herzliya’s 20th anniversary, we spent a day following Prof. Uriel Reichman, IDC’s founder and president, and Jonathan Davis, VP for External Relations, around its delightful campus.



Price Freeze!

Business-Halacha-logo

Hurricane Sandy had knocked down the power lines to Noach’s house. After three days with no electricity, he heard that a neighbor had a spare generator.

“I’m happy to lend the generator to you, but it has no gas,” said his neighbor. “I have jerry-cans for you to fill; you’ll have to wait in line to buy gas.”

Noach had seen the lines at the gas station. The hurricane had severely disrupted fuel distribution and very few stations were open. The line of cars waiting for gas stretched many blocks. Even the line of people with jerry-cans stretched all the way around the corner.

After Noach waited five hours, it was finally his turn to fill up. He was pleasantly surprised to see that the price of gasoline was the same as before the hurricane, even though this was the only gas station operational for miles around. The government had imposed controls to prevent price gouging, requiring the stations to maintain their former prices.

Later in the week, Noach met Mr. Gassner, who operated the gas station. The storm had been a boom for his business. His team had worked hard, dispensing gas non-stop, 24 hours a day, for three days, until other stations reopened.

“It was considerate of the government to freeze the gasoline prices,” Noach commented.

Mr. Gassner, however, was furious about the price control. “It wasn’t fair that the government required us to keep regular prices,” he complained. “People were crazy to buy even a small amount of gas, and the supply was so limited. By market theory of supply and demand, I could have easily charged three times the price. People would have walked away happy that they got anything!”

Noach was surprised to hear this opposing perspective. “It would be interesting to hear what halacha has to say about this issue,” he said to Mr. Gassner.

“Do you really think halacha has what to say about this?” asked Mr. Gassner.

“I’m sure it has something to say,” said Noach. “Let’s go ask Rabbi Dayan!”

The two went over to Rabbi Dayan. “Is there any source in halacha for government regulation of prices?” Mr. Gassner asked.

“This case is reminiscent of a fascinating halacha,” said Rabbi Dayan, “which emphasizes the need for control of the market on critical items.

“The Gemara [B.B. 90a] states that a person should not earn a profit margin of more than 1/6,” explained Rabbi Dayan. “This means that if the item cost him $100, he should not sell for more than $120, which would provide a profit greater than one-sixth of the sale. This regulation is limited by the Rambam and Shulchan Aruch to items that entail chayei nefesh – staple food items – such as wine, oil, and flour.” (C.M. 231:20; Pischei Choshen, Ona’ah 14:8)

“But what about the store’s overhead and labor costs?” asked Noach. “If a store were to charge only 20 percent above its purchase cost from the supplier, it would never break even, forget about a profit!”

“The overhead is added to the cost, as well as basic consideration for time and labor,” explained Rabbi Dayan. “Thus, if the food itself cost $100, the proportional share of overhead is $20, and basic time and labor amounts to another $5 – the base cost is $125 and the store would be entitled to sell for $150.”

“But if other, non-Jewish, stores do not follow this halacha, it’s unfair to limit the individual’s profit,” argued Mr. Gassner. “They may easily mark-up 70-100 percent.”

“This halacha applies only when a beis din has control over the entire market and can force all the sellers to follow suit,” said Rabbi Dayan. “However, if the other stores sell as they please, an individual store owner is not required to curtail his profit margin.”

“What about other items?” asked Mr. Gassner. “Is there any profit limitation for gasoline?”

“The SM”A [231:36] explains that staple food items have a one-sixth limitation, as mentioned,” said Rabbi Dayan. “For items related to food preparation it is permissible to charge double the cost, and for items unrelated to food the store can charge whatever mark-up it wants.”

“So where does this leave us about the price freeze imposed on the gas?” asked Mr. Gassner. “Would halacha view this a fair regulation?”

“As we mentioned, the actual limitation is only to food items where there is a predominantly Jewish community,” answered Rabbi Dayan. “However, it stresses the importance of legislative control to enable staple items to be affordable. The Shulchan Aruch adds that a beis din is permitted to punish one who price gouges.” (231:21)

“Given the need for gasoline in our modern setting,” concluded Rabbi Dayan, “it seems appropriate that the government stepped in to impose a price freeze on gasoline to prevent price gouging.”

About the Author: Rabbi Meir Orlian is a faculty member of the Business Halacha Institute, headed by HaRav Chaim Kohn, a noted dayan. To receive BHI’s free newsletter, Business Weekly, send an e-mail to subscribe@businesshalacha.com. For questions regarding business halacha issues, or to bring a BHI lecturer to your business or shul, call the confidential hotline at 877-845-8455 or e-mail ask@businesshalacha.com.


If you don't see your comment after publishing it, refresh the page.

Our comments section is intended for meaningful responses and debates in a civilized manner. We ask that you respect the fact that we are a religious Jewish website and avoid inappropriate language at all cost.

If you promote any foreign religions, gods or messiahs, lies about Israel, anti-Semitism, or advocate violence (except against terrorists), your permission to comment may be revoked.

No Responses to “Price Freeze!”

Comments are closed.

SocialTwist Tell-a-Friend

Current Top Story
Colleagues of the hanged Arab bus driver whose death continues to be referred to as murder despite autopsy finding of suicide. These are Arab drivers of Egged buses, claiming they suffer discrimination by Israelis.
Arab Pathologist Singing New Tune: Murder (By Jews) Not Suicide
Latest Judaism Stories
Rabbi Avi Weiss

Yitzchak thought the Jewish people needed dual leadership: Eisav the physical; Yaakov the spiritual

Weiss-112114-Sufganiot

According to the Sefer Yetzirah, the nature of the month of Kislev is sleep.

Teller-Rabbi-Hanoch-NEW

Though braggarts come across as conceited, their boasting often reflects a low sense of self-regard

Nimchinsky-112114-Learning

Not every child can live up to our hopes or expectations, but every child is loved by Hashem.

Leaders must always pay attention to the importance of timing.

While our leaders have been shepherds, the vast majority of the Children of Israel were farmers.

Maimonides himself walked and prayed in the permissible areas when he visited Eretz Yisrael in 1165

If a man dies childless, the Torah commands the deceased’s brother to marry his brother’s widow in a ceremony known as yibum, or to perform a special form of divorce ceremony with her known as chalitzah.

Dovid turned to the other people sitting at his table. “I’m revoking my hefker of the Chumash,” he announced. “I want to keep it.”

Ever Vigilant
‘When Unworthy, One’s Number Of Years Is Reduced’
(Yevamos 50a)

Question: My young daughter was recently diagnosed with autism. She does not function well socially and is extremely introverted, but we have noticed that she reacts very well to small animals. We reported this to her therapist who suggested that we get a dog or cat as a pet. We know that most religious people frown upon having pets, but we hate to see our daughter suffer and want to do anything that would make her happy. Would it be okay to own a pet in the circumstances we described?

Her Loving Parents
(Via E-Mail)

Ramban interprets Korban as self-sacrifice, each Jew should attempt to recreate Akeidas Yitzchak.

Dr. Schwartz had no other alternatives up his sleeve. He suggested my mother go home and think about what she wanted to do.

Why does Lavan’s speaking before his father show that he was wicked? Disrespectful, yes. Rude, certainly. But a rasha?

We find that in certain circumstances before the Torah was actually given, people were permitted to make calculations as to what would better serve Hashem, even if it were against a mitzvah or aveirah.

More Articles from Rabbi Meir Orlian
Business-Halacha-logo

Dovid turned to the other people sitting at his table. “I’m revoking my hefker of the Chumash,” he announced. “I want to keep it.”

Business-Halacha-logo

“That’s what I thought, so I returned the money to Aharon,” said Reuven. “But this morning, Shimon, who owes me $70, told me he left $70 for me under the table last week! Now I don’t know whether the $70 was connected to the note, and was Aharon’s for the purchase of sefarim, or was repayment to me from Shimon, unrelated to the note.”

On Tuesday, Mr. Ross picked up the bris kit. While driving home, he was stopped by armed thugs. They forced him out of the car and drove off with the bris kit inside.

“ ‘We’re almost out of stamps,’ I said. ‘I’ll be happy to run over to the post office and pick up a supply.’ ”

Noach felt a tug, and then heard a rip. His jacket had been caught on the nail, and the beautiful suit had a tear.

Shimon started adjusting the branches on the roof. In doing so, a branch fell off the other side of the car and hit the side-view mirror, cracking it.

Some seforim on a nearby bookcase toppled over and knocked the esrog out of Lev’s hand. It fell to the ground and a piece broke off.

Mr. Fisher contacted Rabbi Dayan. “Am I allowed to use money of ma’aser kesafim to pay the shul for an aliyah that I bought?” he asked.

Printed from: http://www.jewishpress.com/judaism/halacha-hashkafa/price-freeze/2012/11/14/

Scan this QR code to visit this page online: