private security guards check people’s personal belongings for contraband food and drink. Food, beverages, and fuel at service facilities within tollway systems which are captive markets are unfairly high. Special events such as college football games, conventions, and special sporting events are also situations were temporary captive markets are artificially created where hotels, restaurants, transportation service providers and parking service providers raise prices to unjust and unfair levels. Once the event is over, the prices return to normal, fair levels.
Another example of a captive market that exists every day is last minute air travel. Many people are forced to make last minute plans to travel by air because of family emergencies or business necessities. The airlines know that they have a captive market with these people and charge unjustly high prices. Besides unjustly high prices for last minute travel, airlines charge change fees ($150 and up), luggage fees, standby fees and fees to get on the plane first. It is not the fees themselves which are unjust but the amount of the fees that are unjust. Airline now also charge a price difference between the original ticket price and the last-minute travel ticket price when a person wants to take an earlier flight on the same day as the original reservation even though there are open seats on the plane. The airline companies see an opportunity to literally get something for nothing (they are charging a fee and there is no cost on their part—it is 100% profit) and they feel no guilt in this. It is outrageous, but no one expresses outrage.
Gasoline stations raise prices before holidays knowing people are going to be travelling. They raise prices solely for the sake of profit, there is no other reason. Is that fair, is that just? It is not.
Businesses are also victims of unjust prices within captive markets. If there is only one supplier within an area from which the business has to purchase, the supplier usually sets unjustly high prices knowing that the business has no choice. Do businesses within captive markets have to charge unfairly high prices? Certainly not! Amoral capitalist economy theories support and encourage the practice of setting excessively high prices in captive markets. The owners of the corporations that do so don’t care that these prices are unjust and counter to the objectives of the US economy.
Extreme changes in price (interest rates are prices) are very detrimental to a balanced economy and need to be prevented. Consumers and business customers cannot adjust to extreme price changes. From 2003 through 2008 the price of petroleum derivatives almost doubled. This extreme increase had a severe impact on the transportation industry, on virtually every industry relying on the transportation industry as well as on consumers. Consumers and businesses cannot adjust to such an extreme change in prices. The balance of the entire economy was altered because of the unjust, unfair, and sudden increase in the price of petroleum products. And this also has happened for steel, copper, rice, wheat and many other commodities. In order to be fair and have little to no impact on the economy, price changes need to be gradual and they need to correspond to the market’s ability to adapt to such changes.
Stable and fair prices are certainly good for the economy, certainly good for consumers, and actually good for businesses. Price controls (upper and lower limits on price changes) are good for businesses in that they provide stability in planning and prevent ruthless competitors from trying to drive them out of business through unfair, subsidized prices. Unfortunately, fanatical capitalists will cry and scream about price oversight just like the school yard bully who is told that he can no longer bully people. They will employ propaganda campaigns and use tactics to scare people into thinking that price oversight is not good for consumers, not good for business and not good for the economy. But the opposite is true. Price oversight benefits 99 percent of the population. It is good for consumers, good for businesses and absolutely necessary for a stable, growing, efficient and effective economy.
It is clear that pricing can be unjust and unjust pricing as a business practice is widespread. Christian economics holds that pricing can be unjustly high, unjustly low, and that rapid changes in pricing can be unjust. And one of the most notorious practices of unjust pricing occurs within captive markets. Unfortunately, current amoral capitalistic economic theories support unjust prices (though these theories do not refer to them as unjust since everything done by a business is amoral, that is, it is neither right nor wrong, it is just business). Unjust prices violate two of the most basic principles of Christian economics: ’good is to be done and promoted, and evil is to be avoided’ and ‘love your neighbor as yourself’. When will Christians wake up and realize that the economic philosophy and principles that they are following are not Christian? Christians engaged in business must consider what they are doing in the context of Christian principles and not in the context of amoral capitalist principles. People in business actually cheat customers through unjust pricing but don’t consider it cheating because capitalistic economic theories say that it is an acceptable business practice. It is not.
Is capitalism and Christianity compatible? Yes, they are—but not the form of capitalism prevalent today. Christians must be a light to the world, the business world, and help Christianize capitalism, its philosophy and its principles.
Interest, the Price of Money
Money, like other goods, is bought and sold. The price of money is called interest, though there are also other prices such as late fees, over-limit fees, special handling fees, etc. The price of money like all other goods and services can be unjust. There can be unfairly high interest rates and monetary fees, excessive interest rates and monetary fees within captive markets, and extreme shifts in interest rates and monetary fees—all of which negatively impact the economy.
Banks and other financial institutions borrow money from people, from other banks, and from other financial institutions. This price that the bank or other financial institution pays for money represents its cost, similar to the cost that a distributor pays for the goods that it sells. The bank or financial institution then sells the money that it has bought at a higher price generating a profit. The difference between the cost of money that the bank pays and the price that it sells the money for is called its gross profit. After subtracting its operating expenses, its marketing expenses, its general expenses and its administrative expenses; the remainder is called net profit. Subtracting taxes from net profit gives what is income for the bank or financial institution. Banks and financial institutions are corporations which currently have the sole goal of profit maximization within the context of current amoral capitalistic economic theories. Could banks and other corporations seek a maximum profit within the constraints of a Christian economics system where business actions are moral and subject to Christian principles? Certainly! Obviously, the profits would be maximized subject to moral and Christian constraints and would be less than the profits realized without any moral constraints whatsoever.
The price of money (interest) must be fair to both buyer and seller. The price of money (interest) must be the balance point between benefits to the buyer and benefits to the seller. In order for the price of money to be fair, it needs to be set within the context of all the costs and expenses within an individual’s budget. Interest cannot be so high that it reduces an individual’s ability to pay other necessary expenses. Nor can interest be extended out over such a long time that the individual is prevented from being able to retire.
The cost of money to a bank over the last 10 years, that is the price that a bank pays for money, has varied between zero and 2 percent, with the current price being approximately 1 percent. The current interest rates that consumers are paying for money that they are buying from banks and other financial institutions range from 4 to 600 percent. Mortgage rates range from 4 to 8 percent. Auto loans, furniture loans, and household goods loans range from 4 to 18 percent. Credit card loan rates range from 12 to 36 percent. Personal loan rates range from 20 to 600 hundred percent. All of these rates do not include the additional price of money associated with late fees, over-limit fees, loan origination fees, special handling fees, etc.
The financial institutions are paying 1 percent for money that they are buying and then turning around and selling that money for 6 percent, 12 percent, 24 percent, 36 percent, and even 600 percent.
