How the Buying & Selling of 'Pre-Owned' Goods Can Save the Economy

"Thus Something and Nothing produce each other..." ~ Lau Tzu

As I was recently (and reluctantly) doing some routine organizational work around my office, I ran across a business software program that I bought a few years ago when I first started my investment advisory firm.

What makes this business software program noteworthy is that I never used it!  Fully confident in my simple, yet effective, means of organizing electronic files and generating financial reports (and admitting to myself that I had made a hasty purchase) I decided to place an ad in the classified section of a local newspaper to sell it.

To my surprise and delight, someone called with interest in buying the business software program at my full asking price!  My delight, however, began shifting toward disgust as I sat and waited for the buyer (he was an hour late) to meet me at the agreed upon place to make the exchange of software for money.  Disgust started shifting back to delight as I sat in a quiet car with nothing to do but think, which produced this post!

I began thinking of how this business software program was just sitting in my office, producing nothing.  My thoughts soon expanded to how many other people likely have things of value just sitting in their office or home, producing nothing, and how many more people are looking for a particular means of producing something but they don't have much money to spend at this time.

As you may have guessed by now, my thoughts expanded further to the idea of...

How the buying and selling of pre-owned goods can save the economy:

Pre-owned goods are assets that produce a "return:" Most people don't see things laying around their office or home as "assets" that produce a "return."  If you have something that provides some form of utility (whether in the form of a financial return or in the form of simple enjoyment of the thing), then it is an asset producing a positive return.  If this asset is sitting there doing nothing, it is producing nothing -- a zero return.

Converting zero returns into positive:  One man's trash is another man's treasure.  Get some cash for your trash!  Your "asset" may be worthless to you but it just might be exactly what someone else wants or needs.  It's almost irresponsible to keep something you're not using when someone else can receive and/or produce a return from it.  Sell the item and convert a zero return into a positive one! 

Preventing the expensive (and often overlooked) opportunity cost:  If the pre-owned good is worth something to someone else then, not only do you have an asset producing a zero return, you possess an asset that has potential to produce something for you and to produce something for someone else!  Foregoing an opportunity -- this potential for gain -- actually has a cost -- opportunity cost.  Don't overlook these costs!

Creating a type of multiplier effect:  Let's say the pre-owned good sells for $100 but a new one sells for $200.  The $100, to the seller, represents a cash in-flow of $100 from an asset that was previously generating zero return and can now be reinvested and go back into the economy in some shape or form.  The $100, to the buyer, represents an expense -- a cash out-flow; however, the buyer "saved" $100 by buying a pre-owned good that can produce a return potentially greater than the cash alone could generate. 

As you one may easily deduce, this simple exchange of a pre-owned good for cash enables both the buyer and seller the potential to earn a greater return than if the exchange never took place. 

My anecdotal observation is quite simple; however, I am confident that there are thousands of transactions like this taking place every day -- significantly more than even one year ago -- and that the cash produced for the seller and the utility produced for the buyer combine to make opportunities for both sides... and to make this economy stronger (or at least more sound) than it has been in a generation. 

Now go find those "assets" laying around your house, sell them for a reasonable price to a worthy buyer and use your newfound cash to produce a return!  You just might aid in saving the economy!

Comments

[Jonathan Vaudreuil]

I've been thinking about this a lot lately, having just moved last weekend. There are a number of items I've either given away or plan on selling, things someone else will be able to use. I've also used craigslist to see if I can find the items I'm looking for the new place with some success.

Not everything needs to be new, and we could all benefit from cleaning some things out of our homes (and lives).

[Kent @ The Financial Philosopher]

Great point Jonathan! If more people make a conscious effort to be both seller AND buyer of pre-owned goods, both the cash and utility remain where it is needed most -- the private sector.

Perhaps this is a "trickle up" form of prosperity?

Thanks for the thoughts...

[Deb Braidic]

I couldn't agree with you more!! I love to sell things that I am no longer using and see the sheer delight on someone else's face for getting such a great deal for something that I am no longer using.

It has brought me such joy and . . . I must add here . . . long live Craigslist!