I spent the holidays visiting family, and as a result I got a crash-course education in this relatively new genre of reality television I like to call “buying and reselling shit” or alternately “free market economics 101.” The best known of these shows is probably “Pawn Stars”, which follows the exploits of a family of pawn brokers (grandfather, father, and son) as they buy stuff from people and resell it for about twice what they just paid. The best part about Pawn Stars is how during an appraisal the stars will bring in an expert to value the item in question. Right in front of the customer, the expert will put a dollar value on the item. The pawn broker will then immediately offer to buy the object for around one quarter to one third the stated value. After some haggling, the broker and the customer either agree on a figure (almost never is this number more than one half the expert’s stated value) or the customer will simply decide not to sell at all.
Many people find this distasteful or even somehow wrong, and despite my decidedly libertarian leanings, after enough repetitions of watching this process, I can at least sympathize with the position. It sure doesn’t feel right, on a gut level, to pay someone $50 for something you intend to turn around and sell for $200. However, with a little thought, it’s easy enough to see what’s at the root of this feeling, and it’s basically a misunderstanding of the word “value.” The golden rule of free market economics is that something is only worth what someone else is willing to pay for it. There is no magic “intrinsic value” to be found anywhere. A thing is worth a dollar if and only if I can get someone to buy it from me for one dollar. It follows that value is subjective. Something I might be willing to spend $10 on might not be worth a plugged nickel to you.
So when the expert gives his appraisal, the “value” he is quoting is what he would expect to find the item priced at in a retail store, such as a thrift store or pawn shop. Or, in the case of more high-dollar items like antiques or collectibles, what the item might be expected to fetch at auction. So of course the pawn broker isn’t going to give you $100 for an item he expects will only sell for $100 after sitting in his shop for awhile. For him, the value of the item is the dollar amount he can pay and still be able to sell the item at a profit that allows him to pay his overhead (lease/mortgage, staff salaries, utilities and such) and still come out a little ahead. Nobody should walk into a pawn shop expecting full retail price for whatever it is they have. If you have a comic book you figure to be worth $1,000, don’t expect more than about $500 from a pawn broker, at best. And honestly, in today’s world, unless you needed cash absolutely instantly, nobody except a complete fool would take a rare collectible to a pawn shop to sell it. You’d list it on eBay or Craigslist, and likely get close to full “retail” value for it if it’s really a sought-after item. The power of the internet has brought the marketplace to you, rather than you having to sell to a middle-man. In a sense, you are acting as your own pawn broker, and thus getting to keep all the profits for yourself.
However, some people still find this distasteful. And the situation only gets worse when you add old people into the equation. The show “American Pickers” follows two antiques dealers as they drive around looking for junk piles to rummage through. What they tend to find are older, often retired or semi-employed people who have a lifetime worth of crap piled up in the garage or the shed or barn. They then paw through these items, pick out the good stuff, and offer to buy it for a fraction of what it’s “worth.”
The big difference between this and “Pawn Stars” is that in this case, the dealer came to the customer, not the other way around. When a customer walks into a pawn shop, he generally knows what he’s getting into. The rules of the road are pretty clear, so to speak–you have something you want to sell, and this guy here is in the business of buying. When someone shows up on your doorstep asking to look through your junk, the situation isn’t as clear. To be fair, the guys on American Pickers have a flyer they give to people which likely identifies them as antiques dealers looking to buy stuff–but since they don’t actually show the flyer in the show (that I’ve seen) that’s just a guess.
The big difference, though, is that often the people doing the selling haven’t the first clue what the retail value of their item is. Generally when you have something you intend to sell, you take some time to figure out what you should ask for it. You don’t want to ask $100 for something that usually goes for more like $30, because it likely wont sell and you’ll be wasting your time. Similarly, you don’t want to ask $100 for something that generally goes for $500, because you’ll be short-changing yourself.
Most people would agree that if you intend to sell something, you should do your homework first. If you put something on eBay with a Buy It Now price of $100 and it gets snapped up instantly and re-listed for $1500, well, you didn’t do your homework. Some people would still argue that the buyer acted immorally or was somehow “wrong,” but these people are what we call idiots. There’s no burden on the buyer to do the seller’s homework for him. However, what about the specific case of a person who isn’t looking to sell–someone just comes up to him and offers him $100 for his pocket lint?
Well, most of us would probably go through some kind of mental process similar to this: “$100 for pocket lint!? Is this guy nuts? Holy crap, I better take his money before he wises up! …wait a minute though, what does he know that I don’t know? Maybe I should google ‘pocket lint’ and find out if it’s suddenly worth a ton of money for some stupid reason…” Either way, though, you’re often unsure what to do. Take the $100 now, and worry about finding out if you got duped later, or spend the time to find out if you’re getting duped and risk letting the person come to his senses in the meantime?
This is basically American Pickers in a nutshell. Some guy comes to your door, and offers you $50 for a rusty tin can he found in your shed. Grab the money and run before he wises up, or risk losing the $50 because you took the time to go do some research to find out what rusty tin cans go for these days, and meanwhile the weird collector wandered away?
There is a certain class of people for whom this kind of thinking is especially difficult, however. We call these people “old people.” Old people don’t always think well in the first place. And even when all their gray cells are still in working condition, they often don’t have the tools at their disposal that other people have, because of a lack of knowledge about technology. This isn’t to say that all senior citizens are computer illiterate. Of course they’re not. But they do, as a group, tend to have less understanding of and ability to use things like Google in order to do a quick sanity check on the price of pocket lint.
So in this case, many people would consider that the pickers have an unfair advantage. They not only have knowledge the seller doesn’t have, but they have knowledge the seller has no reasonable means of acquiring. Add in the extra taboo of “taking advantage of the elderly” and you have a show that makes a lot of people uncomfortable. And honestly? I couldn’t do what these guys do. I don’t consider it wrong or even immoral, and yet… something about it just doesn’t seem right to me. If I saw something in an old man’s barn that would sell for $400 on eBay, I’d be more likely to tell the old man that than offer to buy it for $40.
But that’s just me. What do you think?
Another thing worth noting is that, confusing though it may seem, you selling your old junk to me-the-pawnbroker and me selling that same junk to collectors who want it are fundamentally inequivalent transactions. It makes no sense to allege that I “ripped you off,” because obtaining the higher price requires knowledge and connections you don’t have, and a whole load of additional labour and time. All of these are scarce resources. Therefore, I have invested my own capital into this product by finding and transporting it to the more lucrative market; it is, in an economic sense, a different good from what it was when you sold it to me.