Minnesota Twins Collection

Friday, April 10, 2009

The Market Is A Cold-Hearted Beast

It is a day removed from the tragic death of Angels rookie pitcher, Nick Adenhart. There is nothing more that I can add that has not already been said or written about the promise of a young man in his rookie season or his potential after the best start of his career or even the havoc of drunk driving or the idea that anyone of us could be in this situation because of someone else's carelessness.

After the death of an athlete, demands for his memorabilia increase, items start going up on eBay and prices go up much higher than they would otherwise. The questions are always asked: Is this moral? How can someone profit from his death?

I remember the day Kirby Puckett died. Kirby was in a hospital in Scottdale, AZ from complications from a stroke. On the local TV stations, updates continued to stream at the bottom of the screen. Kirby Puckett is in a coma. Kirby Puckett's condition has worsened. Kirby Puckett has been read his last rites. Kirby Puckett has passed away. Kirby Puckett was my baseball hero when I was growing up. Although I had never met Kirby, it was as if I was there as he was leaving this world.

Almost immediately, Puckett cards and memorabilia flooded eBay. Thousands of one-day listings popped-up and very common baseball cards were selling for exorbitant prices. Rookie cards which could have been easily had for less than $5 were selling for over $50. Again, the questions were asked: Is this moral? How can someone profit from his death?

I would pose these questions:

If selling collectables and memorabilia after a person's death is immoral, then who is the guilty party?

Should the seller be guily for taking advantage of this demand? It is assumed that the seller is in the wrong because he is the one selling the product. However, if you are selling through eBay, ultimately it is the buyer that determines the final price. This is how auctions work. (Even if a seller has a high opening bid, the buyer is the one who decides to bid.)
If a Puckett rookie sold at $5 instead of $50, nobody would think the seller was taking advantage.

Should the buyer be guilty for creating this demand? After all, one could argue that a seller is offering Puckett items to meet the demand. A buyer could have just as well looked for items before the player's death or wait later on when prices fall to normal levels. (Although, there is the notion from some buyers who think that, now he is gone, they can buy high and sell super-high later on.) However, I think most buyers are reacting based on their affinity for the deceased player.

I think people need to see the market for what it is. That is, the market doesn't care who dies and it doesn't care about morals. The market thrives on demand and a supply is created to meet that demand. (If you really want a good example of how economics really work, again, look at eBay.) A demand is created based on a life event (the death of a baseball player), values rise and a buyer is willing to pay more for an item. Because of the increased demand and increased values, sellers are driven to provide a supply for that demand (collectables and memorabilia of the baseball player.) Likewise, if there is no demand for a good, values are lower, buyers are willing to pay less and there is less incentive for a seller to provide goods.

Once you see the market as it really is: a cold-hearted beast, then you can get past the idea of a guilty party and let it all play out.

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