[This topic is also treated in Modes of the Finite, Part 6, Section 2, Chapter 7.]

11.1. The entrepreneur

We now have our potential businessman in a society, with a bare minimum for survival, where there is money, and where all the rest of the property has already been claimed. He also wants to do more than merely survive. What does he do now?

He goes into some kind of business, of course. Let us assume first that he doesn't go to work for some person (either by becoming a worker in a firm or by becoming Mr. Jones's gardener), but starts a business of his own. He then becomes an entrepreneur.

DEFINITION: An entrepreneur is a person who offers a service or product to the public.

DEFINITION: A firm or business is a social entity which offers a service or product to the public.

DEFINITION: The public is the set of those people who might find the service or product of value to them.

DEFINITION: The consumer is one of the public.

The idea behind the definitions above is that a person is an entrepreneur, not when he works for some definite individual (then he's a worker), but when he promises that he will "work for" some undefined segment of the population at large: specifically, anybody who wants this particular service. When he does this, he is in charge of a firm, whether he is the only one in that firm or not. He takes on the responsibility for what the firm does.

Observe that what is said in this chapter applies to all firms, although we will be treating the subject as if the firm had no one in it but the entrepreneur alone.

Note first of all that a firm is not a "something" that a person can own as a possession, because it is essentially a relation to a set of people. When you own something, it can be used for whatever purpose you want to use it for; but you can't use a relation with others for whatever purpose you want, because others have rights. Thus, the entrepreneur has "his" business, but it doesn't "belong to" him in the sense that his shoes do. Even if you "buy a business" from another person, you buy, perhaps, the building, the stock, the machinery, but also the "intangible assets," such as "good will"--which will not be the same once you take over. What you have bought as "good will" is the firm's reputation: the fact that the public recognizes this firm as doing work or having a product of a certain value. This is obviously likely to change as you start serving the public.

Secondly, one goal of the firm as such is always the service of its public. The entrepreneur may want to make money; and making money for the entrepreneur can be a goal of the firm also. But the service of the public is, for the firm, not a means to making money for the entrepreneur; it is the goal of the firm as such.

Thus, there can be firms that make no profit, and are committed to making no profit (non-profit organizations), and thus do not have as their purpose making money for the entrepreneur; but there can be no firms that do not serve the public. Hence this is always a primary goal of any firm, not something subordinated to some other goal.

Notice that even if the firm makes a product, what it is doing is transforming something into a state where it will have a certain value for the public; and so it is the transforming act that is the essence of the firm; and this transforming act is its service to the public. The members of the public buy the product (for its value); but from the point of view of the firm and the entrepreneur, the product is the embodiment of the firm's service to the public.

Hence, all firms serve the public, either directly or through the service of making a valuable product. This will be important when talking about prices.

What the firm essentially is, then, is a promise to the public that, under certain conditions, a certain service will be performed. The person who begins a firm creates certain expectations in the public that they can count on him to do certain things for them--in return for compensation.

This is another reason why you don't own a business; you are responsible for fulfilling a promise; you don't own it.

11.2. Advertising

So far, then, we can see that the firm has two relationships: to the public it serves, and to the entrepreneur who controls it. The public wants something from it (the product or service), and so does the entrepreneur (money so that he can pursue his individual goals and self-fulfillment). Let us look first at the relation to the public, and then get into compensation and profit.

A firm is acting inconsistently with itself if it does not perform the service it claims to perform to the public.

In that case, it is offering a service which it does not perform; a contradiction.

The first thing the entrepreneur has to do is make the claim that he is performing a certain service (producing a certain product) for the consumer. Obviously, the public has a right to know what it is buying from the firm.

Therefore, it is morally wrong for a firm to misrepresent the product or service it is offering to the consumer.

This, of course, is obvious. To communicate that the product will do such-and-such when it won't is to communicate as true what is not true, which is clearly inconsistent with the act of communication. But there are complications here.

Even if what is said is (in the strict sense) true, if the advertising is calculated to give a false impression, it is morally wrong.

Therefore to choose to advertise in this way is immoral.

If, for instance, instead of saying "aspirin," you say, "the pain reliever doctors recommend most," then you are giving the impression that you are talking about something really potent and not simple aspirin. Even though what you said was true, what you communicate is something else; and in morals, what is communicated is what is relevant, not the literal meaning of the words.

It is not sufficient to hide behind, "But everyone knows that what we're talking about is aspirin"; because why not use the word in that case? If everyone knows it, then there's no point in the circumlocution; if not everyone knows it, then it is objectively misleading.

It is morally wrong to conceal information about dangers or defects which would not be generally known by the public, and which would be relevant to a rational decision to buy the product or service.

If you know that the product has to be used very carefully or the user could get poisoned (by toxic fumes, for instance), and you don't mention this, then the consumer can legitimately assume that as far as you know the product is safe, and doesn't have to be used under special conditions. This is misrepresentation, even though you haven't actually said anything at all. Lack of communication sometimes communicates (that there is nothing relevant to be said).

Dangers that everyone, by and large, knows about need not morally be mentioned; but it is obviously a good thing to mention them, in case a given consumer would be unaware of the danger.

It is morally wrong to present something as a necessity when in fact it is not.

This is actually the most efficient way to advertise. People are not too anxious to be better off; but they certainly don't want to be badly off. If you can persuade them that without your gizmo they can't do "what just about everyone" can do, then you can get them to buy your gizmo.

A great deal of advertising is of this sort. It says that it isn't that you'll be healthier if you eat this breakfast food; but that if you don't, you'll be unhealthy. It isn't that if you use this soap you'll be more attractive, but that if you don't, you'll be repulsive; and so on.

Now some products do in fact prevent evils; but if a product simply makes a person better off, then it is misleading to give the impression that without it one is deprived.

It is morally wrong to create a situation in which the consumer is forced to buy what is in itself a value.

The notorious case of Nestle's infant formula is an example. Before Nestle stopped doing this, it sent people into hospitals in third-world countries and gave free samples of infant formula, which the people used, not realizing that the mother's natural milk would dry up before they ran out of the free sample, and then they would have to buy the formula--which most could not afford.

In general, the use of threats (whether imaginary or real), where the consumer buys because he is afraid not to, is morally wrong.

If what is offered is a necessity, such as health care, legal advice, or "utilities" such as heat, then the consumer is in fact forced to buy (though not necessarily from a given entrepreneur). Here, the consumer is already under a threat, and so the entrepreneur must walk more cautiously in advertising his services. Generally, the problem here will not be one of advertising, but of prices charged; and we will treat this later.

On the other hand, it is not morally wrong to point to the particular quality the product has that makes it of value to the consumer.

That is, the value of something is often an intangible aspect of it; it is what makes it useful for the owner's goals. For instance, an automobile is not simply a means of transportation. A sports car has a beauty and carries a social status with it that a family-type sedan does not have. There is nothing misleading or wrong in pointing out that a certain car will enhance one's "image" in a given direction (provided it is in fact something that has that quality).

This sort of thing sounds misleading, but it is actually calling attention to aspects of the product that the consumer might not be aware of. If anything, this is not only not wrong, but laudable.

Nor is it wrong to attempt to persuade the consumer to buy the product.

If the product is a value and not a necessity, then the consumer is free to buy it or not; and it is legitimate to paint the product in as good a light as possible, consistent with the facts, pointing out how much better his life will be with the product.

It is not morally wrong to conceal information from the consumer (a) if this information is not really relevant to the value for him of the product or service, and (b) if the disclosed information would make the product seem of less value than it really is.

That is, information can mislead also. If you have a house that had minimal termite damage (i.e. you had termites, but they were taken care of before any real harm was done), then you do not morally have to bring up the subject in selling the house. If you do, then your disclaimer that they didn't do any real damage will be taken "with a grain of salt," and the damage will seem significant, when in fact it is not.

This is obviously a tricky area. Telling all about a product, including all its "warts," in the name of honesty, is misleading, because people are assumed to represent the product in its best possible light. But by the same token, you must not conceal defects that are really there, and which make a difference to the consumer--as we said above. Where is the line? Conscience draws it. Put yourself in the consumer's place; what would you expect as a duty?

It is not morally wrong to claim that your product or service is better than the competition's.

The reason for this is that no sane person would imagine anyone advertising himself as worse than his competition, or even the equal of it. Hence, statements such as this are not misleading; people understand them as a way in which people let others know that they have a service or product to offer. The statements about the product or service must not be calculated to be misleading; but this does not mean that we have to assume that everyone is a literalist without common sense. In general, value judgments expressed are assumed to be subjective.

But if facts or studies are alleged as proof that the product is superior to the competition, they must be true, and they must in fact prove what they say they prove.

For instance, it is misleading to claim that a given type of vacuum cleaner is better than others, and "back up" the claim by having a home owner vacuum a small area of carpet, then go over with the model to be sold, and reveal how much more dust was picked up after the first vacuuming. This leads people to believe that the dust was the result of a less efficient vacuum cleaner, when in fact if the two had been reversed, the same thing would have happened.

11.2.1. Government's role

This is the moral obligation of advertisers. Suppose they don't comply with it, or comply fully; what then? Since the consumer has a right to know what he is getting (which includes a right not to be misled), the government can step in.

The general rule in all government intervention is that the government may not pass laws until abuses have actually occurred.

That is, the Principle of Subsidiarity demands that people be let alone unless there is a good reason for not doing so. The fact that abuses can occur is no reason for legislating against them, nor is the fact that they may likely occur. When there is a doubt whether the people will act morally or not on their own, they must be given (by government) the benefit of the doubt, or the government is meddling in people's private affairs.

The temptation to pass laws "just in case" is very great in government, because government does its job by passing laws. Government loves to justify its existence by passing law after law. But then the people get "protected" against a host of evils that do not exist, and even a bunch of them that could not exist in any real world--and what happens is that the people get so "regulated" that they can't breathe without filling out a form proving that they haven't polluted someone's air with the garlic they had for dinner.

With that said, if there are abuses of advertising, then, depending on how widespread and serious they are,

The government may, and usually must, pass laws against false or misleading advertising.

These laws, however, must not be such that they legislate what is good advertising; they must do no more than protect people against violations of their right to know what the product is.

Thus, the government exceeds its authority if it legislates against advertisements in bad taste (so long as they are not pornographic). It may be better for such advertisements not to exist; but no one has a right to hear only what is in good taste.

This is not to say that people can't do anything about advertisements in bad taste. They can write letters of complaint to the advertisers and boycott (even organize boycotts of) the product, and so on. The point is that it is not the government's function to perform these tasks, because no one is being dehumanized by the advertisements.

11.2.2. Advertising in "the professions"

It is currently (or at least was, until recently) regarded as "unethical" for doctors and lawyers, dentists and optometrists, and so on, to advertise; but the barriers against this are coming down. Is there any reason for saying that such people shouldn't advertise?

In general, people engaged in a service which provides a necessity for the consumer should not advertise beyond letting the public know that the service is available and what it is.

Why is this? Let us take health care. People don't want health care; they need it. That is, people seek out a doctor because they are sick and in a dehumanized condition; and what they want is not to be in perfect shape, but to get rid of the sickness--to be back to zero, as it were.

11.3. Providing the service

Once the entrepreneur has offered his service, then consumers approach him to avail themselves of it. Does he have to take on all consumers, on the grounds that he has offered his services to "the public," and that "one person's money is the same color as anyone else's," or can he refuse to serve certain types of people just because he doesn't want to (say, if he doesn't happen to like black people)?

In general, an entrepreneur has no obligation to provide his service to everyone who seeks it. He can even refuse it on purely arbitrary grounds.

Remember, we are talking pure morality here, not social policy (that will be treated in a moment). The reason is that no one has a right to receive this particular service from this particular entrepreneur. Even advertising himself as available to "the public" does not mean that he has promised to serve everyone indiscriminately; obviously, it carries with it no promise to serve those who will not compensate him.

If he does not like the color of a person's skin, then, he is not depriving that person of the service by refusing (and so violating a right) unless (a) no one else can perform a comparable service for the rejected consumer and (b) the service is a necessity. If the service is a necessity, and no one else will provide it, then the entrepreneur is dehumanizing the consumer, because his offer to "the public" then makes him someone against whom the consumer has a claim to a necessity of life.

Thus, a doctor prejudiced against black people would in general have no obligation to serve them. But if there were an emergency, and the black person would be harmed by not receiving the service, which in practice could not be performed by anyone else (no other doctor could be found in time), then for the doctor to refuse would be tantamount to causing the harm he could have prevented.

Services that are necessities must be provided to those that need them if not providing them deprives them of the necessity.

If a person owns a high-class restaurant, he can refuse to serve people who are not dressed as he wishes, even if there is no other high-class restaurant that will serve them either. The reason here is that no one has a right to the kind of food and so on that you get in a high-class restaurant; and so there is no dehumanization in the whole class of ill-dressed people's being deprived of it.

11.3.1. Depriving classes of citizens

This would seem to imply that the government had exceeded its authority in the United States when it forbade restaurants from refusing to serve Black people. But in fact, this was legitimate, in spite of the fact that no individual has a right not to be discriminated against.

If citizens are in fact engaged in a conspiracy (whether they intend to be conspiring or it "just happens") to deprive a definite class of other citizens of some service, based on some characteristic over which the class has no control, then government may and sometimes must step in to prevent this deprivation.

The reasoning goes this way: Even though an individual has no right not to be discriminated against, still if the society is so set up that a whole class of people can't receive some service, then the society is saying that this class of people cannot do some particular act (the one implied by that service). Thus, the society in the South was saying that Black people, just because they were black, were not capable of eating in "good" restaurants.

This is not quite the same as saying that people who don't wear jackets and ties aren't "capable" of eating in "good" restaurants, because this situation is correctable. But there's nothing a Black person can do to "correct" his particular "incapacity" of skin color. So the society in this case is saying that he can't do something which in fact he can do. That is, a Black person has nothing in his blackness which makes him any different from a White person insofar as the ability to eat in restaurants is concerned.

In this case, the society is contradicting the person's nature, and asserting that the person who belongs to a class does not have a power which he has. This is clearly unjust, even though no individual right of any individual member of the class is being violated by this invidious treatment of the class as a whole.

That is, when a given individual restaurateur refuses to serve Black people, this violates no right of anyone, on the assumption that if a Black person can't eat at this restaurant, he can eat at a comparable one. The class of Black people, perhaps, is being kept out of this restaurant, but it is not being kept out of this type of restaurant. That is, there is no conspiracy here to deprive the class of a class of service.

Thus, the denial in question occurs only when there is a conspiracy, and (for practical purposes) all the members of the class are deprived of all instances of the service in question. Then, people are asserted in practice to be something other than what they are in reality; and this contradiction is unjust and must be corrected.

In correcting this contradiction, the government may impose quotas or other measures to assure that the conspiracy is broken up, even if this deprives some individuals of the other class of the service in question.

The reasoning dealing with this is as follows: There is an objective injustice in the society. The function of the government is to prevent this sort of thing; therefore, it must break up the conspiracy. If the course of action that makes the least demand in doing this is to set quotas, then quotas may be set. If the quotas imply that certain members of the other class are deprived of the service in question, this does not violate any right of these members, because they have no right as individuals not to be discriminated against, and the other class as a whole is not deprived of the service.

When the injustice has been corrected, then the measures to correct it must be withdrawn.

That is, quotas and other corrective action cease when in practice the class in question can not receive the service. Individual cases of discrimination can be allowed to exist, as long as there is no longer a conspiracy in effect.

Thus, there was evidence that there was a conspiracy to prevent Black people from being educated as doctors. There were medical schools that admitted Blacks, but there were so few that for practical purposes, Blacks as a class could not receive the education necessary to become doctors.

The government imposed what were in effect quotas in admitting Black students into formerly all-White medical schools. Alan Bakke, a White, who was more qualified as a medical student, was kept out of medical school because a less-qualified Black had to be accepted in order to meet the quota. He sued.

It is not the point here to discuss what actually happened in the case. Was the government morally within its rights in preventing someone like him, more qualified than a Black, from receiving a medical education, in order to "redress the wrong" done to Blacks?

Yes. Alan Bakke had and has no natural right to be a doctor. This is a value, not a necessity, however much he might desire it, and however competent he might be. So there is no contradiction of his reality if he is deprived of a medical education.

"Reverse discrimination," then, violates no right of anyone, unless the whole class is "reversely" discriminated against.

The government was making a demand on Bakke as a citizen to perform a cooperative act to break up the conspiracy against the Blacks. True, Bakke had taken no part in that conspiracy; and so he is not being "punished" for it, nor for the "sins" of those who did. He is asked to perform an act not for his benefit to correct an evil in the society; and society has a right to make such demands. Just as society can demand that certain citizens put their lives in danger in time of war to protect other citizens (in spite of the fact that these young men had nothing to do with starting the war), so society can "recruit" people to redress wrongs within it, even if these people had nothing to do with perpetrating the wrong--as long as this is the least demanding way of redressing the wrong.

So Bakke has no moral case against the government. Note that he would have if the anti-discrimination laws were based on a "right" individuals have not to be discriminated against. But we saw earlier that such a right makes no sense, either theoretically or in practice.

This is a good example of the reason we had to do all the preliminary spadework of the early chapters before we could actually get down to cases. There is no real way to settle things like the morality of the Bakke case on the intuitive level. You can't really say that the Blacks as a class have the right not to be discriminated against, because in fact only individuals have rights; and so if the question is phrased in terms of rights, then Bakke has a case. But the conspiracy in fact asserts that Blacks are not what they are; and thus "reverse discrimination" against individuals is legitimate.

I might point out, however, that the "quotas" involved in various positions should not represent simply the ratio of people in the positions as against the ratio of the people in the society at large, but rather as against the ratio of those seeking the position. If Blacks, for instance, are making no effort to be philosophers (i.e. for every two hundred Whites taking graduate philosophy courses and seeking a job teaching philosophy there is one Black), it would be stupid to expect a ratio of, say, 5 Whites to 1 Black in a university's philosophy faculty just because this reflects the number of Whites to Blacks in the population at large. There are difficulties with this (in that Blacks may be being discouraged from studying philosophy), but they can be handled, and the problems are less severe than the other kind of quota system.

11.3.2. Malfeasance, misfeasance, and nonfeasance

Once the entrepreneur and the consumer make an agreement, the consumer then has a contractual right to the performance of the service as advertised or agreed on. And this implies, of course, that the entrepreneur has the obligation to do what he promised, even if unexpected difficulties crop up.

In general, the entrepreneur has an obligation to live up to his contract, unless it is in practice impossible for him to do so.

Before discussing the implications of this, here are some definitions of ways in which the entrepreneur might fail to live up to his obligations to the consumer.

DEFINITION: Nonfeasance is not performing the service agreed on.

DEFINITION: Malfeasance is performing the agreed service badly.

DEFINITION: Misfeasance is doing something other than what was agreed on.

The terms here do not necessarily have exactly the same significance as they do in law; though the meanings are close. But, for instance, if a person agrees to sell a chair to a consumer and then doesn't deliver the chair as promised, this is moral nonfeasance. If he delivers a damaged chair, this is moral malfeasance; if he delivers a sofa when a chair was ordered, this is moral misfeasance.

The point is that you can't just perform a service to the consumer; you have to perform the one you agreed on. And if it is hard to perform that service because of unexpected difficulties, then tough.

Note that what the consumer has a right to is the result of the service, not the means the entrepreneur uses to get it done.

Thus, if I go to a play, I have a right to a certain quality performance. But this gives me no right to dictate to the stage-manager how he is to set up the stage, or to the director how he is to block scenes, and so on. On the other hand, if the play is, say, Hamlet, and the director has some far-out idea and changes it so that the performance has no real resemblance to Shakespeare's play (which is what it was supposed to be), then I would have a right to complain--because the result was not what I had been led to expect. This would be malfeasance or misfeasance.

On the other hand, if Nicol Williamson is advertised as the Hamlet, and he gets sick, and when I get in I am notified of this and see his understudy in the role, I have no real complaint, because the contract could not in practice have been carried out.

But when the contract can be carried out, though with more than ordinary difficulty, "the show must go on." The reverse of the coin of my not being able to dictate to the director is that he is to produce the service even if it costs him more than he expected to. What I am buying is the results, and how he achieves them is up to him.

Thus, the amount of effort in performing a service is irrelevant, once the agreement has been reached.

Presumably, the entrepreneur has anticipated difficulties and taken them into account in the price he wants for his service. If he has not, then that is his problem, not the consumer's.

Still, he cannot be held to the impossible; and this includes the impossible in practice; that is, what is so difficult that no reasonable person would have anticipated it as a "difficulty."

It is not morally wrong, if difficulties arise, to renegotiate a contract; but if one of the parties is unwilling to renegotiate, the other one is held to the contract, if it is possible to fulfill it. Bankruptcy

This works both ways. If the entrepreneur cannot fulfill the contract except with difficulty and at a loss, he can be held to fulfill it, if the consumer still wants it done anyway. But by the same token, if the consumer finds himself faced with financial reverses and able to pay only with difficulty, he can try to renegotiate the contract, but can be held to it if the entrepreneur wants full pay.

But if the fulfillment of contracts is so difficult as to be in practice impossible without severe dehumanization, then the government can step in and pass laws in which the party in difficulty can perform only part of what he owes to the other party.

DEFINITION: A person or firm is bankrupt if he or it is legally permitted to perform only a fraction of his or its obligations to others.

Thus, the firm is bankrupt if it can't renegotiate its contracts and can't perform them without dehumanization of the members of the firm. The government then prevents the dehumanization by finding out the limit the firm can do short of dehumanization. It then "parcels out" this total service to the creditors in proportion to the amount the firm owes them (so that each one gets, for example, a service equivalent to "ten cents on the dollar" owed). Legally, certain forms of bankruptcy can involve not paying the debts at the moment, but postponing them until later. There are all kinds of legal complications connected with bankruptcy, which fortunately need not concern us here.

Similarly, if the consumer can't pay without dehumanization, the government finds out how much in total the consumer can pay without actual dehumanization, and then parcels this out among the firms to which he owes money.

Notice that the creditors have a contractual right to the full amount of the service or money. But they don't get it. The government is preventing them from exercising this right, because (though the contracts were freely entered into) the exercise would in fact dehumanize the other party; hence, in this case, the right ceases.

And, though the money or the service is owed, it is not wrong for the government to release the debtor from the totality of his debts, because it has the right to make demands on the creditors as citizens to perform cooperative acts to prevent the dehumanization of others.

Thus, declarations of bankruptcy are not morally wrong. Contractual rights are not absolute.

11.3.3. Forbidding services

Can a person get into any kind of business he wants, or can certain businesses be forbidden because the society realizes that they would be harmful to the public, even if the public wants them? What I am referring to is the entrepreneur who wants to grow and sell marijuana, or the pimp who wants to provide prostitution services, the pornographer, and so on.

If the government has evidence that a given service would be harmful to those who receive it, then it may and sometimes must prevent people from providing the service to the public.

Since a person is self-determining, then government in general exceeds its authority in preventing him from harming himself. It can educate him and make him realize what he is doing to himself, but if he knows what he is doing and chooses to do himself damage, the government must allow him to do this--provided the damage he is doing to himself does not deprive others of something they have a right to.

Thus, for instance, if a person wants to gamble away all his money and starve, and knows that this is what he is doing to himself, he can be prevented from doing this if he is also gambling money that his family has a right to for support. Or if he wants to get drunk every night, or stoned, he could be prevented from doing this only on the grounds that his drunkenness does damage to his family, his coworkers, and so on.

Hence, laws against the "immoral" acts themselves can be passed, but only on the grounds that the act does damage to others, and so the prohibition protects the rights of others; the government has no right to legislate against what is even clearly morally wrong on the sole grounds that it is morally wrong or damaging to the agent himself. That would deny self-determination.

Nevertheless, since providing a service which involves helping people do damage to themselves can be legislated against, even if the recipients are the only ones harmed, and even if they want the harm. The reason is that making the service available (a) will inevitably result in having it presented by the entrepreneurs as attractive and not as harmful, and this will be calculated to mislead others who would not be aware of the extent of the damage to themselves--as has happened with tobacco, for instance; and (b) the government's allowing such things will be taken as approval of the act in question, as if the society thought that it "really wasn't" harmful, when in fact it is.

Therefore, even in cases where the act (such as extra-marital sex between consenting adults) cannot be legislated against without exceeding the government's authority, the government can legislate against providing these things as a service to consumers (such as prostitution).

The government must in general pass laws against things like this to the extent that the damage to the recipient is great, and the attractiveness of the damaging act is great. Thus, there must be laws against at least the really dangerous drugs, such as heroin, and alcohol.

Alcohol? Yes. It is perhaps the most dangerous drug in our society, and causes enormous damage to enormous numbers of citizens.

Unfortunately, it was discovered that when legislation was passed against providing it, the laws were found to be unenforceable, and the harm to the society (from organized crime) was greater with the law than without it (because people disobeyed it more or less systematically). Hence, using the Double Effect, at least in our society, at least until people can be educated to the true nature of alcohol, the society must not legislate against it. In theory society not only has the right to forbid providing it (though not necessarily using it if you can get it), it has the duty to do so; but in practice, it must permit the service of providing it in order to avoid greater social harm.

114. Pricing the service

We have assumed that the entrepreneur and the consumer have agreed on what the service is to be, and how much is to be paid for it. What are the ethical implications in the pricing aspect of the agreement?

In general, a person goes to work or becomes an entrepreneur because this is the only way he can escape from bare survival (which, as we saw, society has the obligation to provide) and become someone who can develop himself and pursue individual goals. But human beings are self-determining, and so have the generic right to do more than barely survive.

This implies that the entrepreneur has the right to "make a living" from his service: that is, to provide for himself, not only the necessities of life, but the means to be able to achieve the individual goals he sets for himself. And since there is no fixed limit to those goals, then there can be no fixed limit placed on how much he can earn from his service.

That is the general rule. Since the entrepreneur entered business so that he could live the kind of life he wants to live, then he has a right to charge the kind of price for his service that will enable him to live this kind of life. And since he might want to live the kind of life that Aristotle Onassis lives, there is nothing in itself wrong with his wanting so much for his services that he becomes filthy rich--provided he doesn't dehumanize anyone by charging these prices.

DEFINITION: Compensation is the price of a service insofar as it makes up for losses incurred in performing the service.

That is, it is that part of the price that ensures that the entrepreneur is no worse off for having performed it. If he is not compensated, then the consumer has in effect enslaved him, because he is paying him so little that he is dehumanizing him.

DEFINITION: Profit is the price of a service insofar as it is greater than merely making up for losses incurred in performing it.

That is, profit is the part of the price that enables the entrepreneur to make a positive gain by performing the service, so that he is better off by performing it than he would have been if he had spent his time in selfish activity.

Profit refers to the "gain" of a firm or an entrepreneur, not of that part, for instance, of a worker's wages that do for him the same thing that profit does for the entrepreneur. Workers have the same right to gain by their work as the entrepreneur to gain by his service; it is just that the worker's gain is not called "profit"; in fact, it has no name (possibly because until recently it didn't really exist).

This term, by the way, is not exactly the sense that is used in some schools of modern economics, where "profit" has to do with the "equilibrium price," or the price at which supply meets demand. I think this particular sense is a smokescreen that was put up to make palatable an invidious term. My definition more or less corresponds to "return on investment," which is factored in as a cost in modern corporations (and so would be included, technically, in "compensation" in my sense of the term).

But generally speaking, profit is taken to mean that when you make a profit, you gain, or are better off than when you stay where you would have been if you hadn't done so. Hence, I stand by my definition.

It is perfectly legitimate for a firm to make a profit, even an enormous profit, as long as no one is dehumanized by it.

If you produce electronic calculators, and they cost you a dollar apiece to produce, and you can sell them for two hundred dollars apiece, then you don't have to charge only a dollar or two for them; you can charge the full two hundred if you want. No one has to have an electronic calculator; and so it is a value. If people are willing to pay two hundred dollars for it, then they, presumably, are gainers from the transaction (they consider that they are better off having it than the two hundred--or what it represents); and you certainly are the gainer.

There is no law, of course, that says that you can't sell the calculators for ten dollars apiece, in spite of the fact that you could sell all you make for two hundred apiece. It depends on what you want to do; it is a free choice. You won't become rich that way; but if you can achieve your goals that way, you don't have to amass money that you have no use for.

The seller-value of a service is what will allow the server to reach the goals he has set for himself, not what merely compensates him for his losses in performing the service. He may, however, morally ask for prices that are above, even far above, this value.

That is, the real measure for the entrepreneur of the seller-value of his service is not what the market will bear (the highest price he could get), but the amount of money he needs to reach the goals he has for his life. Beyond this, any money that comes in is really useless for him. It may be that for various reasons (e.g. competition can force a person to charge a higher price sometimes or give the impression that his service is inferior) he gets more of a profit than he can use; the point is that there is nothing wrong with this, but that getting all you can squeeze out of the public is not really the goal of the firm.

11.4.1. Service, price, and necessity

The above applies if (a) the service is a value to the consumer, and (b) to serve at this particular service is not a necessity for the one who serves. What is said here, then, especially in the second part, applies not only to entrepreneurs, but to workers also, or in other words anyone who serves others for a living.

If the service is a necessity for the consumer, the entrepreneur may not ask a price greater than compensation and a decent profit.

What a "decent" profit is here is one which allows him to live the way most people in society can live: to be more than just barely human, and able to pursue human goals, but not so rich that few others have resources comparable to his.

The reason for this is that, when the service is a necessity, the consumer has to have it (or he is dehumanized), and since he has to pay for it, he has to pay whatever is asked under pain of staying dehumanized. As we saw in the preceding chapter, the service has no finite value for him, and so haggling over the price is not possible.

For the entrepreneur to become rich under these conditions is for him to exploit the consumer for his own superhuman desires. Hence, although the entrepreneur can set goals for himself, because it contradicts entrepreneurship to be in business serving others just to survive; still, if he provides a necessary service, his goals cannot morally be extravagant, or he is exploiting the consumer.

Thus, if a person wants to become rich by providing a service, he must stay away from services which are necessities for the consumer.

This is a hard saying, because the most efficient way of becoming rich fast is precisely to do the opposite: to pick a service that is a necessity. Then, you can charge prices that are way out of line with bare compensation, because--since the consumer has to have them at any price short of greater deprivation from impoverishment--he will pay them, and you can get rich. But you are getting rich by threatening him with deprivation (of whatever is implied in his not having the service), and this is morally wrong. You are depriving him of his right not to be dehumanized, because you are forcing him to pay more than is necessary for a service which is necessary.

For this reason, in the case of necessary services, if those providing them are exploiting the consumer and charging prices that make them rich, the government can step in and force a ceiling on their prices.

To be specific, I think that doctors have an obligation not to charge prices that will make them rich. An income above (in 1990 dollars) the equivalent of a salary of $70,000 a year is an income that is exorbitantly high for anyone providing a necessity--and the median income for doctors is above $100,000 a year. This is far out of line.

Hence, the doctors must either regulate themselves and their pricing policies, and get out of the notion that they can charge whatever the market will bear, or the government can (and should) tell them "We will not allow you to make more than $70,000 (or even $60,000 or $50,000) a year."

That is, socialized medicine, where the doctors work for the government and get a salary, is not the answer. Doctors can legitimately be entrepreneurs, and offer their services to the public. But they must not be allowed to gouge the public, because the public they serve cannot refuse morally to avail themselves of their services.

Doctors--and lawyers, for the same reason--are the most blatant examples of this abuse of the pricing aspect of capitalism; but the same reasoning applies to any firm that supplies a necessity to the consumer: drug companies, oil companies, electrical companies, water companies, etc.

I would caution here that costs must be taken into account in discussing what is normally called "profit." Oil companies, for instance, need large sums of money to be able to explore for more oil (or develop alternative sources and make them competitive), and drug companies need large sums of money for research on new drugs; so much of their "profit" isn't really making the entrepreneurs richer, since it is used to run one necessary aspect of the business.

But with that said, it should be noted that it must first be recognized by the suppliers and the public at large that this is basically a moral issue. The restriction of prices should be voluntary, taken by the organizations (like the AMA) involved. If not, and if government tries simply to force things like this on people who honestly think they are being moral, then they will try to circumvent the laws or will balk and strike--and once the government has capitulated (as it would have to, because the service is a necessity), the last state would be worse than the first.

By the same token, if it is necessary for the entrepreneur (or the server in general) to perform the service, the consumer cannot accept it at a price so low that the server barely stays alive by performing it.

This is the other side of the coin. Let us consider a small dairy farmer in a poor country, who for practical purposes can't do anything but sell the milk his herd produces; if he sells the herd and looks for a job, chances are that his family will starve before he finds one.

For others, who know this, to refuse to buy the milk from him except at such a low price that he can barely survive is for them (assuming that they could pay a higher price) to make him their slave.

He might be better off than his friends who went away from the land into the city (and actually did starve), but the fact that he is "willing" to work for bare survival only means that he doesn't want to die or get sick working under still worse conditions; in other words, he is "willing" to work only to avoid greater evil. And to force a person into a situation like this is dehumanizing.

In cases where those who serve are given no more than a bare minimum for survival for their service, government can intervene to insure that they can make a decent living for their service.

How the government accomplishes this depends on the situation. It must, as always, take the course of action that makes the least demands on the fewest citizens, and the one that leaves people as free as is consistent with preventing the consumers (in this case) from dehumanizing those who serve them.

In some cases, this could be by providing subsidies; in other cases, it could be by legislating minimum prices (or in the case of workers, minimum wages).

11.4.2. The market

The usual argument against this is that "the market" should be allowed to take care of prices, because "supply and demand" will reach an equilibrium where everyone is happy--or at least where no injustice is done.

This is false. In the case of necessities, supply and demand can and do reach an equilibrium which dehumanizes the one who is subject to the necessity.

This is not the place to go into a long analysis of the market and supply and demand; but something has to be said on the subject, to see why laissez-faire free enterprise should not be tampered with in some cases, and must not be allowed to work in other cases.

The idea of supply and demand is this. In the case where there are a large number of people supplying a given type of service, and a large number of people who might avail themselves of it, then, "other things being equal" (as they never really are in practice), if a given entrepreneur charges a higher price than what most are charging, he will lose customers, because they will go to the others who are charging lower prices. Hence, he will be forced to lower his price. That's the "supply side" of the equation.

On the other hand, if a given customer doesn't want to pay what most people are asking, he will be unlikely to find anyone who will perform the service; and so he will have to be willing to pay more. That's the "demand side."

The "equilibrium price" is the price at which all the people who want the service (at that price) can get it, and all the people who want to supply the service (at that price) can supply all they have. Sounds like everybody's happy.

If, for some reason, there is an increase in supply (as when someone invents a way of producing more widgets for less), then the "equilibrium price" is lowered (since this entrepreneur can sell at a lower price and he sells all his, and the others have to lower their prices or get stuck with a large inventory); if there is a decrease in supply, as when widget-gears become more expensive, then the equilibrium price gets higher.

But the equilibrium price goes up or down also depending on demand. If people decide they don't want as many widgets as before, then this would lower prices; and if many more of them want some, then this tends to raise prices.

Well, there are all sorts of permutations and combinations of this; but the upshot of it all is that the equilibrium price is the price at which everybody's happy; all the customers (who want to pay that price) get what they want and all the suppliers (who want to charge that price) sell out.

There are obviously customers who would love to have widgets if they were ten dollars cheaper, and they are dissatisfied; but they don't matter, the theory says, because they can shift their desires to something cheaper. And similarly there are suppliers who will be damned if they will supply widgets at such a ridiculous price; but they don't matter either, because they go out of the widget business since not enough people will pay their higher prices.

So it isn't that the equilibrium price is the only one around; it's that it's the one that allows all the people who want to perform the transaction at that price to be satisfied. Other prices are offered and charged; but only some of the people who do so get satisfied--and the farther one is from the equilibrium price, the fewer people get satisfied.

Therefore, supply and demand establishes a "normal" price for a product or service, under the conditions prevailing at the time.

Note that the equilibrium price is not the "price that reflects the value" of the product or service.

It does not reflect the seller-value of the service, because it is just the compromise that most people are making between seller- and buyer-value; and it may be above or below what the average seller who sells at that price considers will allow him to achieve his goals (what he would like to get). Nor does it reflect the buyer-value, since it is just the compromise that most buyers are making, and happens to be the one where all the buyers willing to make this compromise can get the service or product. But they might be willing to pay more; it's just that they don't have to.

Theoretically, of course, if the buyers are willing to pay more, the equilibrium price will shift upward, because it is assumed (a) that the sellers will in fact charge the highest price they can consistent with selling out, and (b) they know that the buyers would be willing to pay more. But neither of these assumptions actually has to be true, or is in fact true in practice; each may be very far indeed from the truth. (It is also assumed, by the way, that buyers will offer as little as they know they can get away with, which again is false--sometimes, sellers would be willing to take something below the buyer-value, and then the buyer wouldn't buy it, because he thinks it's too cheap).

So there is no such thing as the market-value of a product or service. The equilibrium price reflects no value at all, let alone the "true" or "objective value" of the product or service. And that is why the equilibrium price can fluctuate all over the place.

It is first of all a fiction. There is only in theory a price at which all customers are or will be satisfied and all suppliers will sell out. It may be that if you raise the price a penny, you lose so many customers that no sellout is possible; but if you don't, you leave some unsatisfied. There is no law of nature that says that there always will exist a price at which all producers sell out and simultaneously is going to leave all consumers willing to pay that price satisfied.

Secondly, there is no relation between the equilibrium price (if it exists) and a "just" price for the product or service (as is tacitly assumed in market-economics, whatever they say about normativeness). Essentially, it is the "sellout" price, and presumably the highest price at which there is a sellout. But some of those who pay that price actually value the product or service at much more, others at some more, and others at just that price; it does not follow that all the buyers are unwilling to pay a higher price, just that they don't have to. So for them, it is less than the "just" price, because it is lower than the value they put on it.

And if the equilibrium price is much much higher than the cost of production (as it can be and was with the early calculators, for instance), then the sellers can sell out at a very high price, though they would be willing to take considerably less. It is just that they don't have to. So for them, the equilibrium price is more than the "just" price, because it is higher than the seller-value--and it may be higher than the seller-value for everyone in the industry. Higher than average profits are made in this industry, then.

So in what sense is this price the "right" price for the product or service?

Now of course, the market economists say that it is the "right" one because it is the one that the price "gravitates towards"--on the assumption that sellers want to sell out, and not get stuck with unsold inventory (of products or time).

But this is true only if entrepreneurs are trying to make as much money as they can for their service, and so charging the highest price they think they can get away with and still sell out. If entrepreneurs (as is the case with many if not most small businessmen) are simply interested in making a decent living, it doesn't follow that, for instance, an increase in demand will be met with an increase in price if supply does not increase. Why should the entrepreneur raise his prices, if he's already making enough to satisfy his wants?

Hence, the market "tends toward" the equilibrium price only on the assumption of (a) infinite greed on both sides, and (b) collectively perfect knowledge of how far you can go before the other side balks. Neither individuals nor groups fulfill either of these conditions. In most cases, suppliers are too busy to be sounding out the limit of what demand will bear, and consumers can't be bothered shopping around until they find the lowest-priced widgets they can get.

Hence, there are no grounds for saying that interference with market-set prices (the equilibrium price) is either morally wrong or bad economics.

Nevertheless, it should also be said that there is no reason, in general, for interfering in market-set prices.

They are the prices that are arrived at freely by people's own evaluation of what they want and what they are willing to pay or take. That is, there is no magic about the equilibrium price or supply and demand, and no special "justice" or something about it either. But in general, there is nothing wrong with it, which would justify government interference.

However, when a necessity is involved, the market-set price tends to reflect the power the value-side has over the necessity-side, and it tends toward dehumanization of the necessity-side. When this happens, the market must not be allowed to determine price.

What I am saying is most easily shown by doctors. Even barring monopolies, medicine is enough of a disagreeable profession that you aren't going to find vast numbers pursuing it; and those who do pursue it are apt, simply because they are providing a necessity that involves specialized knowledge, to have the attitude (a) that what they are doing is an immensely valuable service to mankind (and that they are great benefactors), (b) that they know a terrible lot, (c) that they suffer great hardship in providing the service (more than garbage men, for instance?); and that they therefore "deserve" not only respect, but lots of money.

Hence, even absent an AMA and a monopoly on the supply, you will find that doctors in general are apt to expect to live quite comfortably, thank you, for their services; and so the asking price will be very high.

But since the buyer-value for their services is infinite, then the equilibrium price will be just what the doctors in general ask. No one is going to haggle and risk having the doctors say to him, "Look, if you want to cause a fuss, stay sick or go to someone else. I can't be bothered. If you don't think it's worth three thousand dollars, then that's your problem."

Hence, the equilibrium price in the case of necessities is almost bound to be a price in which the supplier of the necessity makes himself rich by exploiting the group on the other side of the transaction.

And notice that if an individual doctor, say, lowers his prices down to where he makes about $35,000 a year, people will tend to shy away from him (given an equilibrium price that puts doctors' income at $150,000 or so), because they will think there must be something wrong with him for charging $2.50 for an office visit instead of the usual $20.00. Hence, an individual doctor may very well have to charge a morally wrong price just to stay in business, if the market-set price is allowed to prevail.

Similarly, if workers need to work and don't have entrepreneurial skills (as is the case with most people), and the free market is allowed to set wages in industry (as it was in England in the nineteenth century), then what happens is that the wages get so low that people can barely survive.

And an individual businessman cannot afford to pay a just wage, because that would make his costs so high that he would be forced out of business by those who are paying what workers are "willing" to accept.

We are having something of this problem in the United States today. Our wages are higher than other countries'; and so we find it difficult to compete in international markets in automobiles and steel. The question is whether their wages are dehumanizingly low, our ours are exorbitantly high because of the monopoly power of unions. Probably something of both. Monopolies

Incidentally, there is nothing morally wrong with monopolies and monopolistic prices either, when values are what is being talked about. The problem in all cases comes in necessities. But the necessities can be on both sides: the seller-necessity (as in wages for workers) and the buyer-necessity (as in patients of doctors).

What is supposed to be wrong with monopoly is that a monopoly interferes with competition, and so doesn't let "the free market" work. All it really means is that the supply is in the hands of one firm (true monopoly) or a few (oligopoly), so that they can set prices as one supplier to the whole group of consumers, who aren't organized and can't haggle, and therefore have to take it or leave it. So by cutting down on the supply, they can reach the consumers who want to pay the high prices, and can still sell out. The equilibrium is at a higher price, in general (supposing infinite greed and all the rest), than it would be under "free competition."

In "the free market" (free competition), the supplier can't charge as high a price as a monopolist, the story goes, because competitors (who want to sell out) will charge less, and he won't sell out; so he has to lower prices.

Two remarks. First, lower prices may be nice, but who says that they're the best thing? Suppose the monopolistic control allows the monopolist to pay very nice wages, and free competition forces the entrepreneur to cut wage-costs as much as possible (as it does, in fact). Which is better for the society?

Secondly, who says that the monopolist will necessarily charge the highest price he can get away with? "Oh, come on, Blair," you say. "Wait a minute," I answer. Economists have so long hammered at the idea that the purpose of a firm is to make as much as possible that people have got the idea that big firms are necessarily going to try to make as much for the investors as they can, and hang the public, hang quality, and hang the environment and hang the society in general. That's supposed to be the "rational" way businesses behave.

But there's nothing rational about it. Why shouldn't corporate executives be concerned about producing quality products at low prices consistent with decent wages, care for the environment, and a reasonable return on investment? Why do we have to assume that investors all have goals that would put J. Paul Getty in the poorhouse by comparison? And I submit that there's a lot of this in business, even big business. There are many businesses that have a conscience, and whose boards of directors are looking to the consumer and the society as well as the stockholders. They may not make a big noise about it because no one on the television newscasts will believe them, and the economists will laugh at them; but there's evidence that they're there. Let them come out of the closet; I'm telling them they're not doing a disservice to their stockholders by being concerned about the people they're serving also.

The point is that there is nothing wrong with monopoly or oligopoly in itself, nor is there anything wrong with bigness in itself; in fact, big businesses can often take advantage of economies of scale and produce more more cheaply than having a lot of competing little firms. It's a question of goals. If monopoly has setting the highest prices possible and paying suppliers and workers as little as possible as its goal, this is bad; but it need not; and then the monopoly can even be better than the much-touted "free market."

Obviously since monopoly has control over supply, it has to be carefully watched; since, although people can be decent, they also can be greedy. And even with values, prices can be so high as to be exploitative--when the firm gets such power that it becomes a social force dictating to large segments of society.

Hence, regulation by government of large businesses, especially monopolies, is not morally wrong, since what they do can affect huge segments of the society.

Chrysler's mismanagement, for instance, would have thrown the country into economic chaos if it had been allowed to go bankrupt. If that danger exists, the government can take steps to see that it doesn't happen.

But now let us look at the firm and the worker more closely.

Summary of Chapter 11

An entrepreneur is a person who offers a service or product to the public. The public is the set of people who might find the service or product of value; a consumer is one of the public. A firm or business is a social entity that offers a service or product to the public; hence, the entrepreneur has (or heads) a firm. What is said in this chapter applies to all firms, even those with employees in them; but here we concentrate on the firm itself and its relation to the public.

First, a firm is not a possession which the entrepreneur can own, because it is essentially a promise of service, and you can't own a promise. One of the goals of the firm (irrespective of the motives of the entrepreneur) is to perform the service; it may not morally be looked a purely as a means toward making profit for the entrepreneur, but as a coordinate goal; otherwise, the entrepreneur is contradicted as providing a service.

The general obligation of the firm as such is to perform the service it claims to perform.

In so doing, it must let the public know what it claims to do; this is advertising. The firm must not misrepresent its product or service, even if what is said is literally true, if it communicates a false impression (to a "normal" person). It is morally wrong to conceal relevant information; but a firm may use common sense and not provide information which a normal person would know anyway. It is morally wrong to present as a necessity what is not a necessity, and it is morally wrong to manipulate the consumer in such a way that he is forced to buy a value (by making him dependent on it). Threats of harm are morally wrong.

But it is not morally wrong to point to intangible but true values in the product or service that may not be obvious. It is not morally wrong to conceal irrelevant information, especially if its revelation would be misleading. It is not morally wrong to claim that one's service is "better" than the competition, because goodness is subjective; but alleged proof of this must be true. Government must pass laws against real abuses, not those which might occur. As to those providing necessities, they may advertise indicating what the service or product is, but must not promote it as "better" than the competition, because of the nature of necessities.

An entrepreneur need not serve everyone who asks for it, unless the service is a necessity and there is no one else to get it from. But if the entrepreneur is part of a de facto conspiracy to deny a whole class of people a service (even of a value), then the conspirators are saying that this type of person can't do what this type of person can do, and this is morally wrong. Therefore, government can force the opposite on them, even using "reverse discrimination" (which does not exclude the whole other group from the service), until the conspiracy is in fact broken up--at which point government's intervention must stop.

Once the entrepreneur agrees to perform the service, he has entered an agreement with the consumer; and so he must live up to the contract unless it is humanly not possible to do so. Nonfeasance (not doing what was contracted), malfeasance (doing the service badly), and misfeasance (doing something other than the contracted service) are all morally wrong. The consumer has a right to the results of the service, but not to the means to achieve those results. If difficulties arise, the contract must still be fulfilled; it may be renegotiated, of course.

But if fulfillment is so difficult as to be impossible without dehumanization, the person cannot morally be held to complete fulfillment, and government may pass bankruptcy laws, indicating how much of the contract is to be fulfilled.

Government may sometimes forbid products or services from being offered to the public, if significant harm may come to the citizens from them. People should not, in general, be "protected from themselves" by government; but government may prevent others from helping them damage themselves, because the service or product may be a temptation to the damage.

An entrepreneur may ask for compensation for losses incurred, plus profit over this, so that he can by his service, advance toward his own goals. There is no moral limit to the profit a firm can make if (a) it is offering a value, and (b) no one is dehumanized by it.

If the service is a necessity for the consumer, however, the entrepreneur may not morally set goals which are extravagant and demand a price which would enable him to achieve them. He has a right to a decent living, but no right to be rich from his service, because the buyer is in fact under a threat and must have the service. On the other side, when the seller needs to perform the service, the buyer may not set the price so low that he dehumanizes the seller.

The "market" is the number of buyers who want a given product or service and the number of sellers who provide it. The supply is the number of sellers willing to sell at a certain price; the demand the number of buyers willing to buy at that price; the "equilibrium price" is the price at which all the sellers sell all they have and all the buyers at that price buy all they want: the "sellout" price. In general, if values are involved, the market must be allowed to determine prices; but with necessities, the market must not be allowed to do so (since the price will be dehumanizing).

Monopolies (one firm controlling the supply) or oligopolies (a few firms doing so) are not in themselves morally wrong. They only mean that the entrepreneur controls the supply, and therefore can set the supply side of the price. If values are involved, there is nothing wrong with this; nor does it follow that he must set an extravagantly high price. There are dangers with monopolies even when they provide values; but this does not necessarily mean that they should automatically be "regulated." There is no magic about competition, since it also has dangers; it can force entrepreneurs to cut costs at the expense of employees and quality.

Exercises and questions for discussion

NOTE: These questions are to be answered on moral grounds, not legal ones. We are not interested in what the law is here.

1. Is it morally legitimate for government to pass laws requiring disclosure of dangers due to abuses of a product that is advertised, and to hold the firm liable for misuse of its product?

2. Do you think that the correction of racism has reached the point where "reverse discrimination" and quotas and so on are no longer called for? Why or why not?

3. Is it consistent with government's function to "bail out" large firms that have been mismanaged (like banks) and to allow smaller firms to go under?

4. May the government prohibit the sale of marijuana or cocaine? Alcohol? Pornography? Child pornography? What would be your arguments for or against the government's right to do this?

5. What can government do about the enormous waste in hospitals, the fabulously high income of doctors, and the enormous expense in the health-care industry in general (which in 1990 took up over 12% of the gross national product: 12 cents on every dollar everyone spends)--if anything?