Exploring Speculation

9. Five hundred years ago there was no one more unpopular in times of famine the speculator. When people were desperate for food, the speculators appeared, charging exorbitant prices for food. There was a widespread belief that it was immoral to profit from people in dire straits. However, economists do not share that common opinion--they argue that even if speculators are not very nice people, they are socially useful and good to have around. How can they defend people who make their living on the misfortunes of others?
(Here is an alternative way to get to ask this question. Several hundred years ago, the cities of the Netherlands were fighting Spain. Spain had blockaded one of the cities, food stockpiles were very low, and people were losing weight much faster than they wanted to. However, there were people who decided to take advantage of this desperate situation. They found ways to evade the blockade and bring food into the city, which they sold for whatever prices the market would bear. The city leaders were so outraged at this "war-profiteering" that they made it illegal. Was making war-profiteering illegal a wise decision or a foolish one? Explain.)


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