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Dallas, Texas, United States

Saturday, July 28, 2012

Predatory Exchange

Ideally, in a voluntary exchange, each party is better off as a result.  Since neither party is forced into the trade, neither has any motivation to proceed with the transaction unless it is to their individual benefit.  I trade you my excess apples in exchange for your excess oranges.  Now we both share the fruits of our labor.

There is a subset of voluntary exchange, however, in which one party is consistently worse off.  That is to say, they would have been better off not engaging in the trade at all.  Why do they do it?  Because they expect to be better off even though they will not.

When the other party knows it, the relationship is predatory.  I would call it cannibalistic except that the predatory party never considers the exploited class to be of their own kind.  Since there is no coercion involved and the victims are outside of their group, the predators do not view their behavior as unethical.

While no force is involved, there is often fraud.  The snake oil salesman is a classic example.  The priest is another.  I trade you my excess snake oil in exchange for your excess apples and oranges.  I trade you supernatural life after death in exchange for your tithe.  Now we both share the fruits of your labor.

Another form of predatory exchange involves neither force nor fraud.  Instead the predator relies upon the ignorance of the prey.  "Caveat emptor", they rationalize.  Some victims eventually wise up but there is always another generation:  "There's a sucker born every minute".

If you are engaging in a transaction with another member of the human race and you know that the other fellow would be better off not doing the deal, stop.  If you are committing fraud, you are clearly in the wrong.

If you are merely exploiting the ignorance of others, you are still in the wrong.  You might be able to still do the deal with a clear conscience if you can explain to the other party what they need to know to make an informed decision.  If they still want to proceed, at that point you have to wonder what they know that you do not.