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What a Mechanic in a Hot Spring
Taught Me about the New Economy
The economy isn't a very interesting subject to most people,
and probably wouldn't have been Jack's favorite thing to talk
about. Instead, we talked about classic cars and the internet.
I met Jack in a hot springs pool near Canon City, Colorado, where
we live. He's an auto-body guy and mechanic who had recently
discovered the internet and Ebay.
"I would find a car every year or so," he told me.
"Something classic, you know, just sitting there waiting
to be restored and sold. There might be a 1964 Buick Convertible
parked behind some guys barn, for example, and I'd hear about
it and drive 50 miles to see it, and maybe buy it for $2,000
or so. A month later, I might have spent another $1,000 on parts
to restore it, and then I'd sell it for $10,000. But I had a
problem. I could drive all over the state on my days off work
and still only find one or two each year."
A couple years ago, however, Jack discovered the internet,
and he saw the potential in sites like Ebay. He put all his spare
auto parts up for sale online, and made over $20,000 for cleaning
out his garage in this way. Prior to this, he might have spent
a lifetime trying to find the right people to buy those parts.
Soon he was finding classic autos that people had for sale
on Ebay as well as on the various classified advertising web
sites. There were deals to be had within a 100 miles of him,
and almost every week or two. Instead of making $6,000 or $7,000
on just one or two cars each year, he now could do it every month,
so he said goodbye to his job.
"I could hardly turn on a computer two years ago,"
he said. "But the internet has changed everything for me."
And for me. I didn't know what HTML was three years ago, and
now I get to sit here and make a living sharing stories like
this. Good for me, and for auto-restorers too, but as I listened
to Jack, I realized how big a deal this really was.
A New Economy
I've often wondered how our economy has continued to do so
well with more debt and more government spending than ever before
in history. It has been a mystery to me. In the hot springs that
day, I realized that this "new economy" based on instant
information might just be one of the most important pieces of
the puzzle.
Think about those auto parts in Jack's garage, and the thousands
of cars sitting behind barns and in fields all over the country
for years. This is capital, but it was locked up before, just
barely accessible. For example, if Jack had a door for a 1969
Ford Mustang, the six people in the country that could use it
might all live a thousand miles from him. Local advertising wouldn't
sell it, and advertising all over the country would cost too
much, so the door was destined for the junkyard. Now, however,
Jack can advertise all over the world for free on Craigslist.com
or any number of other classified advertising web sites. The
door can once again be useful instead of being junk.
Another example: I was in a fixer-upper with some investors,
and they suggested tearing out the wood flooring in a bedroom.
It might be expensive, I mentioned, and one of them said, "Oh
no. We'll just put it on Craigslist and someone who wants free
parquet flooring will remove it for us." A wrought iron
door they replaced was sold online as well.
Prior to the internet, you couldn't justify the effort to
sell an unusual door that might get $80 at most. It would take
too much time and trouble to find someone who needed it, so you
would pay money to bring it to the dump. But now you just sit
at the computer for a few minutes, enter an ad, and wait for
the phone to ring. Want to get rid of that old fireplace insert?
Do it online. In fact, I'll bet if you go online right now, you
can find someone selling used bricks.
The internet is turning garbage into real wealth. Look at
any of the major online auction or classified web sites, and
notice the variety and volume of things being sold there. Some
of what you'll see there had no real value until the internet
made it possible to find the person who could use it.
Are these small examples unimpressive? It isn't such a big
deal that a mechanic doubled his income and quit his job due
to the internet, or that I tripled mine simply by providing information
and stories online perhaps. But then again, multiply these stories
by the millions of people online, and you'll start to understand
the power of this new information-age economy.
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