Urban Jacksonville

Springfield residents who cheered the closing of a Main Street pawn shop last month will be sad to learn that pawn shops actually thrive in a economic downturn. I assumed the closing had to do with the economy or the Main Street construction.

What you can’t see in the picture below is that the pawn shop actually relocated to Arlington. It’s possible changing neighborhood demographics in Springfield are making the pawn business less lucrative. Or maybe not as lucrative as the crumbling outer-ring suburb of Arlington.

After looking into this more I’ve determined pawn shops in Springfield will thrive during this economic downtown and will serve a vital purpose. What many people fail to realize is pawn shops serve as financial institutions for many in the neighborhood who can’t get bank account or who don’t trust banks to lend them money. So I don’t see these businesses leaving anytime soon.

“We’re a community bank. There’s no question in my mind that we are important. We are a small community bank,” says Mark Lax, president and owner of Pawn 1 Inc., a Spokane-based chain of a dozen pawn stores. Lax says Pawn 1′s business is growing, and he plans to open six more stores in Idaho over the next three to five years. – Soft economy gives pawnshops bump

While they do provide a needed service, unfortunately Pawnshops prey on neighbors down on their luck with excessive interest rates and high fees. So here’s how a pawn shop works:

A person brings a something to a pawn shop, say a TV, and receives a load in exchange for cash and the promise to repay the money borrowed plus fees and interest. Example:

on a $100 loan, for example, there is a $16 loan origination fee, and $3 in interest accrues every 30 days, so at the end of 90 days, which is the minimum time a pawnshop must give a borrower to repay a loan, the total cost to the borrower for the loan would be $25. If the loan isn’t paid off, the item becomes the property of the pawn shop, which puts the item up for sale.

So you were able to borrow 100 dollars for $25 dollars, basically a 25% interest rate, without a credit check. Not a very good interest rate, but at just $25 it’s still a pretty cheap loan.

Opinions on pawn shop are pretty strong around the neighborhood so it was an interesting exercise to take a look at the interesting relationship between them, the current economy and the residents of Springfield. I’m happy there is one down, four to go. To me it’s a sign of progress to see a pawn shop pack up. Hopefully it won’t be replaced by a check cashing store…

photo credit: flash5

This post was written by contributer Jon Bosworth

I’m old enough now to admit there is a shitload of stuff I don’t know. There were a good number of years where I was so certain about everything. Not just the teenage years; I was sure straight through my twenties that I knew what was happening in the world. Everyone else was a moron. But while listening to NPR this morning, I heard a high school student in Portland, Oregon explain the affect of credit default swap systems on our global economy in a way that made me understand a fundamental truth about our capitalist system that I had never understood before. Free market means there are no rules. Free market means you can rip people off as long as you adjust the wording to keep anyone from paying attention to what you do. Money comes to those who market well. It isn’t about product; it’s about language.

Then it happened to me again. My twelve year-old daughter had arranged to babysit a friend’s child while that friend and my wife went out for drinks up the street. My daughter’s best friend also ended up being there while she babysat. As good girls do, they both helped watch the younger child. When everyone was back home, the parent of the watched child tried to pay my daughter, who she had the agreement with, and then all of the parents started getting involved. They started talking about hurt feelings and shared responsibility. It became a big issue among friends.

As I was walking with my daughter later that evening, I asked her if she thought the babysitting money should be split up. She explained that her friend had been a big help and she had planned to give her friend half of the money regardless of the entire parental panic.

Sometimes things that seem like a big deal that we need to do something about (and the national financial crisis is definitely something I support doing something about), can actually have an organic effect that is beneficial. Sometimes natural selection happens on the positive side too. Human cognition can create an environment that has a palpable impact on the whole of globalized society. That’s a heady concept.

So tonight, as I walked through our neighborhood with my daughter, I thought for a minute about how I wanted to be at Burrito Gallery downtown having drinks with my friends. I thought about how I wished I could go see Hip Hop Experience at Café 331. But the fact is: I didn’t have the money for a night on the town. I could afford to walk down our neighborhood street with my firstborn. And then she taught me about economics. If no one tried to rip anyone off, if fair was fair among individuals, our economy would be solid. Like the bank in Spain. Instead of trying to buy and sell the “market,” whatever that is, they ran a bank.

But on top of that, I started to listen to our neighborhood as we walked. We live in Avondale, and the people that live in our neighborhood are young, reasonably affluent, and like to do things. Many of them are young couples with kids, but they hire babysitters and attend local plays, the symphony, local country bands’ shows, art openings, all sorts of things. But tonight, as we walked through the neighborhood, it seemed as though everyone was home. There were people drinking beers on their front porch. I heard people playing saxophone and trumpet on a back porch on the next street over. Our neighbors were laughing and talking and discussing the economy. We are all broke. None of us can afford to go out, but suddenly our streets are alive with the sounds of the interesting people I live around.

I can’t help but wonder, could this economic crisis force me away from my Facebook long enough to really get to know people? Could I make real, flesh-and-blood friends, rather than just virtual ones?

As we walked the rest of the way through that incredible October night to the front door of our house, I realized how lucky I am. How lucky I am that Wall Street has collapsed and the world is in economic turmoil. How lucky I am that my natural affinity for consumerism was curbed by the fallacy of greed through every party and politician. Because suddenly I know what it means to be an American. It means we can get out of our homes and not be afraid of the person next door. They may vote for McCain, but they make a great dirty martini.

I guess the wisdom is: when the things we think are the most important in the world are destroyed, when we “hit bottom,” we are finally allowed to see people for the people we are and we can realize that systems only pull us apart. It takes humans to stand upright, asses who we are, and then do something to make the two work together.

There may be a lot of things I don’t know, but some things are pretty intuitive. It’s obvious to me that the more we Americans get to liking each other, the better this country will be. So I give a big shout out to my Obama brothers and sisters, and I am wicked stoked that my McCain folk are out there. As usual, I apologize to those good folks in the third party category. But no matter what happens in November, I will be glad to play some kickball with you all come a broke ass 2009.