Thursday, April 16, 2009

Free Markets (8) - Cheats and Crooks

In a fallen world, dishonest people will penetrate the free market.

Sometimes the person selling the product will know more about its quality than the person thinking about buying it (economist call this asymmetric information). John may know that his car has a serious oil leak. If Bob knew about this problem, he might think that the car was not worth $5,000. He might have walked away from the deal. In a few situations, they buyer will know more about the market value of the goods than the person selling (the little old lady selling antique furniture to an experienced dealer).

The Bible condemns those who use deceit to take advantage of other in the market. The worst case is the person who uses false weights to cheat people when they are buying or selling.

Do not have two differing weights in your bag—one heavy, one light. Do not have two differing measures in your house—one large, one small (Deut 25:13-14).

The LORD detests differing weights,
and dishonest scales do not please him (Prov 20:23).
Those who deliberately cheat in the free market lose the blessing of God.

Those who can prove that the seller has cheated them can demand restitution, because the seller is guilty of theft.
A thief must certainly make restitution (Ex 22:3).
Unfortunately, in most situations, the buyer will have difficult proving that the other party took advantage of them.

The best protection against cheats and crooks is to be alert. The person who is doubtful about the quality of a product on the market should get and expert to check it out. The wise person purchases from people they know to be trustworthy. We live in a sinful world, so innocent people will sometimes be ripped off. They will sometimes be able to get redress, but often they will be disappointed.

Good information provides protection to buyers. Many markets provide information about the reliability of the person who is selling goods. eBay publishes buyer and seller feedback to expose people who are dishonest.

In most markets, all offers are made public. People can see what is being offered.
Dishonesty can be observed by other people.Don’t buy that, it’s over priced.
You can get that cheaper at Walmart.
Fee markets tend to expose dishonesty, because they are public.

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