The poor will suffer from price gouging

Following the declaration of a state of disaster by President Cyril Ramaphosa, Trade, Industry and Competition Minister Ebrahim Patel gazetted regulations to strengthen the ability of the Competition Commission and the National Consumer Commission to protect citizens from being abused by unscrupulous stores that are increasing the cost of essential products to take advantage of the Covid-19 coronavirus emergency.

This phenomenon, known as price gouging, is not new and has been observed in other parts of the world that have been hit by disasters, and the proactive manner in which our government has responded must be commended. It demonstrates a consciousness about business behaviour and that the state is not going to sit back and watch as it happens.

Michael Sandel, in his book Justice: What’s the Right Thing to Do? narrates how, in 2004, Hurricane Charley swept across Florida, US, claiming 22 lives and causing $11 billion (R198 billion at today’s exchange rate) in damage.

Prices of essential goods and services, such as bags of ice needed in the absence of electricity, chainsaws to clear fallen trees, generators, roof repair supplies and hotel rooms rose by no less than four times the price they were preceding the disaster. Floridians were outraged and filed complaints, some of which led to successful lawsuits.

Sandel argues that the debate that ensued raised questions not only about how individuals should treat one another, but also about the law and about how society should be organised – questions about justice.

In South Africa, the Competition Commission and the National Consumer Commission are collaborating to deal with cases of price gouging, and have thus far received more than 30 complaints of alleged inflation of prices on essential goods such as face masks, hand sanitisers and toilet paper.

Read: At least 11 businesses being investigated for price inflation amis Covid-19

They have commenced investigations into some large retailers and pharmacies. Government has warned that those found guilty face severe punishment, including sizeable fines and imprisonment.

To complement law enforcement, it may well be that we also need to pay attention to the morality of price gouging. We must have discussions about specific and concrete matters such as price gouging to help shape the debate on who we are as South Africans.

It has been suggested elsewhere that, after the hardship, suffering and pain caused by Covid-19 globally, we might emerge transformed mentally – more inclined towards compassion, human solidarity and cooperation compared with the dominant self-centredness. I hope this transformation will be widespread.

During his address to the nation about the lockdown, the president said: “I want to make it clear that we expect all South Africans to act in the interest of the South African nation and not in their own selfish interests … I call on all of us, one and all, to play our part; to be courageous, to be patient and, above all, to show compassion.”

Read: Covid-19:Ramaphosa announces 21-day lockdown for SA

Unlike what transpired in Florida, where some free marketeers defended the business practice of price gouging, no one has gone public and made a case for it here.

Sandel quotes the Attorney-General at the time, who had rejected price gouging, as saying: “This is not the normal free market situation where willing buyers freely elect to enter the marketplace and meet willing sellers, where a price is agreed based on supply and demand. In an emergency, buyers under duress have no freedom.

Their purchases of necessities like safe lodging are forced.”

Here at home, as long as no one comes out in public to defend price gouging, I will assume that South Africans seem to understand that it is wrong to exploit another’s suffering by profiting from their hardship.

It’s greed and there is no virtue in such a business practice. It would also have a disproportionate impact on South Africans due to our different social positions. The low-income earners and the poor would be the most hard hit by inflated prices.

There have been concerns raised by some retailers and pharmacists that have been accused of price gouging that they had no option but to raise prices because their suppliers had already inflated their prices.

Whatever the case may be, we await the outcomes of the investigations by the relevant authorities.

There has been a substantial increase in demand for medical equipment and protective gear, and suppliers have had to scramble to secure such products domestically and internationally.

As far as I know, there haven’t yet been any complaints regarding the cost of protective gear except for masks, however, as government has directed, prices will have to be monitored very closely.

Although there is a huge shortage of expensive medical equipment like ventilators domestically and globally, this emergency must not be exploited to such a degree that these products are sold at inflated prices that have no relation to the cost of production.

In his address, the president did not forget to mention that there would be unscrupulous businesses or people who would see an opportunity to steal during the emergency public procurement of goods.

He said: “We will therefore act very strongly against any attempts at corruption and profiteering from this crisis.”

These are trying times, but surely this is a good time to contribute to the debate about the true South African identity.

At the centre of that debate should be the question of what kind of society we want to build as envisaged in the Constitution, and how the economy should be organised in a manner compatible to that society.

From this brief discussion on price gouging, that organisation of the economy would certainly not be founded on unfettered markets and the absence of virtue.

Tsengiwe is former chief commissioner ofthe International Trade Administration Commission of SA

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