mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Sunday, September 07, 2008

If it's wrong to make money off other people's misery, I don't want to be right...

Consumerist has a recent post on getting deals at pawnshops, which has led to a number of commenters saying they don't want to take advantage of other people's misery.

I don't usually go to pawnshops, but not because I have any qualms about their business. Sure, they make a profit off people who really need money, but nobody forces people to use them - people instead make a rational decision that pawning something is better than, say, having their power turned off, and that a high interest loan from a pawnbroker beats a loan from the local loan shark who will break his legs if he doesn't pay. I don't go to pawnshops because the few times I have, I've found the prices to be very high - and because there aren't any pawnshops near enough to me to make it worth making frequent visits. Most of the pawnshops near me also sell on eBay, which means they know how much stuff is worth, eliminating the opportunity for arbitrage.

But if it's wrong to make money off of misfortune, than I'm a major jerk. I've bought stuff from bankruptcy and business-closing auctions, and made a nice profit off of it. I've bought stuff from yard sales, including estate sales and from people who were in foreclosure. I've bought dead laptops from people who broke them. Hell, the way to make money on eBay is by information asymmetry - when I buy something from someone, it's because I know (or think I know) that it's worth more than they think it is.

So does that make me an evil, horrible person? Maybe. But in ecosystems, there are animals that are scavengers - catfish that feed on garbage at the bottom of the river, buzzards that eat dead animals in the desert. They may not be popular, but they serve a need, they keep the ecosystem clean.

And so does the pawnshop customer, the estate sale buyer, the bankruptcy auction bidder. They are helping people get rid of things in situations where liquidity - where fast sale of something - is more important than the amount of money they get for it. There are plenty of businesses that do this professionally - and these businesses exist because there is a need for their services. Like the customer at the pawnshop, the business that sells to an odd-lot buyer or liquidator does so because it's the best alternative in a bad situation.

So I don't think I'm completely evil - and I still plan on making money off other people's misery.


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