Tuesday, March 19, 2013

Two Sides of Fairness

A friend recently returned from Nicaragua’s tourist-crazy Granada. He reported that while there he had an unsettling experience in an outdoor market.

He was looking for a toy to bring home to his grandson and spotted a hand-crafted bird in a stall. The price on the wooden, hand-painted toy was 70 cordoba or about $2.80, but when my friend started the inevitable bargaining with an offer of 50 cordoba, the merchant countered by raising the marked price to 100 cordoba.

“But that’s more than the price that’s on it,” protested my friend.

The merchant persisted, 100 cordoba. After more back and forth, the merchant refused to budge and my friend walked away in disgust.

My friend concluded that the merchant had a two-tiered pricing, one for the locals and one for turistas, and perhaps particularly for tourists from the States.

It all seemed blatantly unfair.

But was it really? I asked him. The price was still reasonable by our standards. Even at the turista price, the gift cost a mere $4.00. It was certainly worth that. So what if the locals were charged $2.80 or even less after bargaining?

But my friend argued that there was a principle involved.  Here in the States no merchant would ever have two prices, a lower one for the poor and a higher one for the wealthy. (Actually, you could argue that the poor do in fact pay more here. Or you could argue they pay less, what with food stamps etc...but that’s another story.)

My friend was accustomed to an egalitarian system of pricing. We consider that only fair.

But the merchant’s pricing was based on another understanding of fairness. The price should be determined by what the buyer can afford to pay.

To the merchant, inequality in pricing ends only AFTER equality begins — and we aren’t there yet, gringo.

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