Wednesday, January 23, 2008

Itz’s Pawn Shop

I just finished an interesting book, Gang Leader for a Day: A Rogue Sociologist Takes to the Streets. The book relays a University of Chicago graduate student’s five-year immersion into the culture of a south-side housing project and its controlling gang. Life in the projects – and as a member of the gang – is sobering and simple.

The gang (the “Black Kings”) charters all economic activities within the project and neighboring community. It’s a diversified, multi-faceted conglomerate, engaged in illicit and legal businesses; the gang has its eyes and hands on everything that occurs. A few examples of the micro-economy:

  • Neighborhood shops pay a “security” fee to the gang, a monthly tax in consideration of the project’s residents shopping at their shop.
  • Need a room? The gang controls who stays where and for how much, whether you’re a long-term tenant or a one-hour brothel customer. (Prostitutes, of course, pay a fee too.)
  • The gang expertly manages – from supply procurement to manufacturing to distribution and in-field sales training -- the sale of crack, representing a lion's share of their revenue.
  • Tenants who sell candy and other goodies from their apartment revenue-share with the gang.
  • Need a new set of brakes? The gang manages auto repairs in the adjacent park.
Gang Leader for a Day is a telling portrait of inner-city life. What’s most revealing is the organized supply (or value) chain of commerce. No matter how disdainful the gang leaders are, their business skills are admirable, let alone their ability to manage and support a community. Read the book … it’s worthy.

The book reminded me of a recent (legal) eBay purchase of a used set of golf clubs. After winning the auction, I learned the seller would not accept PayPal; personal or certified checks only. Smelled fishy. I snail-mailed a few hundred bucks to the seller and, after a few weeks, the clubs arrived (mangled, BTW, in a bevy of boxes). The seller’s mailing label: Itz’s Pawn Shop, Deerfield, FL.

Two thoughts: First, a combination of guilt and remorse sank in as I gripped my new clubs. They were pawned, perhaps legally (desperately), more than likely illegally (stolen and sold). Bad karma; great economics (thought two). The seller opened my eyes to eBay’s value for pawn shops. There are tens of thousands of pawn shops in the U.S. (think of two Long Tail forces: democratize distribution [get it out there] and connect supply and demand [help me find it].). Pre-eBay, their market was regional, a small demographic and geographic segment of drive-up customers. With eBay, pawn shops can now sell their junk (and golf clubs) to a universe of millions -- distribution and sales are ubiquitous.

(Jaw-dropping anecdote: eBay boasts 220 million users who conduct 2.2 billion transactions per year, making it the world’s largest marketplace with the population of the world’s 5th largest nation. Almost three-quarters of a million Americans are considered professional eBay sellers, using their eBay sales as their primary or secondary source of income. Another 1.5 million Americans use eBay to supplement their income.)

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