Great place to learn economics? Try a pawn shop.
TV shows about pawn shops are becoming increasingly popular, and they're surprisingly enlightening, too
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In American Restoration, Rick Dale and his crew restore classic pieces of Americana including vending machines, toys, and old cars. Often, collectors bring their own items for Dale to repair, knowing his reputation for quality work. Customers spend anywhere from several hundred to several thousand dollars to have antiques returned to their original luster. Additionally, Dale acquires items from pickers (people who earn a living buying and selling unrestored antiques), then repairs the goods and sells them to other collectors.Skip to next paragraph
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Dale's shop performs nearly all of the work, but he occasionally requires the expertise of another company. Here, the principle of comparative advantage can be seen. Though Dale could do all of the work, at times it's more efficient to subcontract some of the restoration. In one episode he was under a strict time limit from one customer, and in order to ensure that all of his clients were pleased, he hired a neighbor to do specialized work. Comparative advantage is a crucial part of the production process. When individuals and firms are able to produce particular goods more efficiently than others, and trade the surpluses, wealth is created.
Owners of antiques are sometimes reluctant to part with their money in the beginning, but upon seeing the completed work, they find increased satisfaction in their property. This is yet another enjoyable aspect of the show: Dale's primary focus is on creating a product that brings joy to its owner. Many of his clients bring childhood toys that are well worn, and the look on their faces when the toys are made to look new again is wonderful to see. Aside from the nostalgic value, another benefit of the work is that the items could fetch even higher prices if their owners decided to sell. So in a very real sense, wealth is generated in each exchange.
Both shows constantly focus on the concept of mutually beneficial exchange. Quite often, sellers on Pawn Stars walk away with as much or more than they hoped for. At times we see people accepting less, but they only do so willingly, showing they have gained something nevertheless. If neither party feels they are benefiting, the trade is off, and both leave peacefully. The same benefits of voluntary trade can be seen on American Restoration; no one is coerced, and no trade takes place where one feels he is being taken advantage of.
There are many great shows like these that feature the same basic economic principles. They entertain us, for sure, but they also demonstrate the benefits of trade, how prices are determined, and many other concepts that I am sure to have missed. When you examine the programs and see the concepts playing out in real time, you find that economics is more than a patchwork of disjointed theories. Each concept is neatly interwoven into ordinary life, as if to spontaneously regulate human activity in such a way as to maximize economic prosperity.
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