Preventing Price Gouging

Each week Rabbi Yoel Domb writes about issues of business ethics related to the Torah portion of the week.

Anyone who was not totally exhausted from the exertions of Pesach cleaning probably noticed that the prices of many household items sharply increased prior to the festival. When the shopkeepers were questioned about their exorbitant prices, they claimed that two factors caused the increase: – manufacturers were eager to capitalize on the pressing need for kosher Pesach products and marked up their regular prices accordingly, while Kashrut inspectors also demanded extra wages for Pesach supervision. Most people responded to this information with calculated indifference, not realizing that the issue was already addressed by Chazal, who provided a bold solution to the problem of price gouging.

In this week’s portion the Torah details the sacrifices brought by a woman who has given birth, including the obligation to offer a pair of doves. It once happened in Jerusalem that the price of a pair of doves rose to a gold dinar, which obviously was far above the regular price. Rabbi Shimon Ben Gamliel promptly entered the Beth Din and taught that if a woman had five children she is only required to bring one offering and may then partake of sacrifices. At this point the price of a pair of doves fell to a quarter of a silver dinar each. (Mishnah,Keritut 1:7) At first glance it appears that Rabbi Shimon contravened a law in the Torah for the welfare of society. Rashi (Rabbi Shlomo Yitschaki,1040-1105) explains that this was a temporary enactment. Rabbi Shimon feared that woman would be discouraged from bringing their obligatory sacrifices due to the high price. This which leave the women in an impure state, and this could lead to their eating other sacrifices while impure. He therefore intervened and forced the prices down in order that these sacrifices should continue to be brought.

The Talmudic sage Shmuel adopted a similar tactic to protect consumers against price gouging for earthenware pots. Many people followed the opinion that earthenware pots in which Chametz was cooked before Pesach cannot be used again after the holiday, and consequently bought new pots after Pesach. (During Pesach the custom was to cleanse the other pots which could be ritually cleansed and use them.) The vendors sensed the surge in demand for earthenware pots after Pesach and naturally raised their prices. Shmuel was disturbed by this price hike and threatened the vendors that unless they reduced their prices he would issue a ruling that the old pots could be used after the festival. This caused an immediate drop in prices of earthenware pots.

The sagacity displayed by these prominent leaders reflects a finely tuned moral concern for economic exploitation and a willingness to use their legal clout to combat such injustice. The Torah’s deep concern for the weak and the downtrodden found its expression throughout history in the economic sphere, as Rabbis often intervened to prevent monopolies from charging unnecesarily high prices. In the sixteenth century the Gentile fisherman created a cartel which raised the price of fish in Moravia. This caused great distress to Jews who have a custom of eating fish at their Shabbat meals The Tsemach Tsedek , the leading halachic authority at that time, knew that releasing Jews from observance of this tradition would not help the situation because the rich would continue to buy fish irrespective of the cost while the poor would continue to insist on eating fish on Shabbat just like the rest of the community. Therefore he took the drastic measure of pronouncing all fish “treifa” (unfit to be eaten) for that week and the monopoly disappeared. (responsa Tsemach Tsedek no.28)

In our own times Rabbi Simcha Alter, the Rebbe of the Ger Chasidic sect, realized that apartment prices in the popular towns of Jerusalem and Bnei Brak were becoming prohibitively expensive. He also noticed that weddings were becoming very lavish and the halls were taking advantage and charging steep prices. Rabbi Alter decided to establish Takkanot (regulations) which would enable less affluent people to purchase an apartment and have an affordable wedding party. The first regulation put the maximum permitted cost of a wedding at 8,000 dollars, while the second allowed couples to purchase an apartment worth 40,000 dollars or less. This latter decision forced his Chasidim to leave the costly towns and search for cheaper housing, and as a result of this they set up flourishing communities in Chatsor, Arad and Ashdod, without paying exorbitant fees to contractors.

Perhaps it is time to follow in the footsteps of our sages and initiate a ceiling on prices for Pesach items before we are forced – in the spirit of the Tsemach Tsedek’s dramatic decision- to declare them Chametz and refrain from buying them until the price becomes more reasonable.

    Sources:

  • Case Studies in Jewish Business Ethics, Aharon Levine, 2000, pp 223
  • With All Your Possessions, Meir Tamari, 1998, pp 93.

Rabbi Yoel Domb is a graduate of JCT and a member of the faculty of the JCT Bet Midrash. He was awarded a fellowship from the Center for Business Ethics for the academic year 2000-2001. He is currently researching topics of business ethics in Jewish Law and is preparing a curriculum to facilitate the teaching of these topics in Rabbinical seminaries (Yeshivot).