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Totally disagree. Do you think pawn shops, payday lenders, and high-interest credit card issuers would benefit if their customers became wealthy enough to not n
by lutorm 10y ago
Totally disagree. Do you think pawn shops, payday lenders, and high-interest credit card issuers would benefit if their customers became wealthy enough to not need their services?
- WillPostForFood 10y agoPayday lenders would probably (thankfully) go away, but other businesses could benefit. Credit Card issuers will do well. Interest rates go down, but credit limits can go up. A pawn shop makes money selling stuff, so if there was more money in the neighborhood, they could sell more. They may need to acquire products in new ways, and rebrand as an antique store, or general store.
- ashark 10y agoUnless I've misunderstood all these years how pawn shops work, they would indeed have trouble operating under the same business model as average wealth in their area increased. Resale shops and such would be fine, but the difference is that they don't sell stuff they've acquired when people defaulted on what amount to short-term secured loans.
- WillPostForFood 10y agoYes, they'd have to change their product acquisition methods, but at their core they are basically used goods resellers, and that can work just as well as a wealth increases.
- ashark 10y agoRight, but then they're not a pawn shop. Payday loan places would do fine, too, if they turned into traditional banks.
- WillPostForFood 10y agoIt's a much bigger step for a payday loan business to turn into a bank (basically impossible due to regulatory barriers to becoming a bank), than for a pawn shop to switch suppliers. Look at it this way, when people move out of poverty, their need for payday loans goes down, but their ability to buy stuff goes up, so a pawn shop has some potential to capture the increased purchases.
- WalterBright 10y agoI patronize the local pawn shop all the time. I don't need to, but it's a way to easily sell things I no longer need, and buy things fairly cheap. It's a great place to pick up an inexpensive laptop, for example. I bought my favorite e-reader there.
- jdietrich 10y agoEvery pawnbroker and payday lender would rather be a venture capitalist or a private banker. Every shady used car dealer would rather be selling Bentleys and Lamborghinis. Every trailer park owner would rather have a portfolio of Manhattan property. There are market opportunities in doing business with the poor, but none of them are particularly attractive.
- lutorm 10y agoDo you state that based on evidence or ideology? I don't think it's true, any more than it's true that every worker wants to work at whatever job hapens to have the highest salary. People are not fungible seekers of maximal profit.