Pawn shops and chainsaws

Yesterday Hurricane Sandy spared us, but for two downed trees in the yard and an evening of interrupted internet service. I tried picking up my neighbors' WiFi until my roommate snapped me out of it. "When else do you have a perfect excuse to not get anything done?" Of course he was right. So I made a pot of tea and read Gabriel Garcia Marquez's Memories of My Melancholy Whores, which you can finish in one sitting. Today's task was to clear the two crest-fallen elms sprawling over the backyard. First I'd need a chainsaw. I called a buddy—his won’t start. So I'd need to buy one. A-ha! A customer choice problem—basically what I learned about in my Customer course this week with Prof. Sudhir. My decision process: First I called my grandfather—get an 18” bar, he counseled me, and keep that chain well-greased. Then I researched and price-checked online: Lowe’s, Home Depot, Sears. Then I drove to Lowe’s. And lo and behold—empty shelves. Everyone and their mother needs a chainsaw after a hurricane.

Down the block I went—to Superior Exchange at 1311 State Street. When a pawn shop doesn’t want to call itself a pawn shop, it becomes an exchange. Yes, they have used chainsaws. No, I can’t try that one. No, I can’t bring it back if it doesn’t work. I walk out. I walk back in. What the hell. $99 and I’m the proud new owner of a 1997-vintage Craftsman chainsaw.

I spent four hours wrestling with trees. Now the yard looks fine. I even met my neighbor from over the back fence, Miss Sandra. She has lived in her house for 41 years, and she invited me to visit the black church up the block. Over dinner my roommate and I got into a surprisingly heated conversation about urban poverty. He started it. The urban poor eat fast food instead of salads because Big Macs are cheap and available. And they use usurious check cashing services and pawn shops because of inadequate access to bank branches, he argued. I was in a pawn shop today, and I don’t think this latter argument holds. A Bank of America branch provides good checking and savings services, but it won’t solve your short-term liquidity problems. It’s hard to imagine a bank making an unsecured loan to someone with no or low credit, and banks aren’t in the business of making small-scale secured loans. That’s exactly what pawn shops do. At Superior Exchange this morning there was a steady stream of customers borrowing and re-paying secured loans. We can legitimately argue about pawn shops’ rates and lending practices, but the multi-millennial success of the business model proves the market need.