I use a lot of books in my line of work. I can get a lot of them from the library. I use Amazon’s Kindle app to download a lot of books and organize my notes on them. Some books—like F.A. Hayek’s Individualism and Economic Order—are available for $0 download or on a website like EconLib. Some books, alas, aren’t so easy to get, and there are some books I want to mark up—a big no-no with library books. Where, for example, can I get a copy of a relatively obscure and out-of-print academic book our library doesn’t have and that isn’t available for Kindle download?
Enter Amazon. I buy tons (literally) of used books from Amazon. They’re always interesting when they arrive. Many are library discards. Some are sold by charitable organizations like Goodwill and the Salvation Army. I was delighted to open my “new” used copy of Walter Williams’s South Africa’s War Against Capitalism to discover that it’s signed by Williams.
Amazon’s market for used books creates wealth by turning one person’s trash into another person’s treasure. I teach MBA economics from Luke Froeb, et al.’s Managerial Economics: A Problem Solving Approach. They write:
Wealth is created when assets move from lower- to higher-valued uses.
A copy of Ekelund and Tollison’s Mercantilism as a Rent-Seeking Society sitting on the library shelves at the University of Texas-San Antonio was in a lower-value use. The same book sitting on my desk is now in a higher-value use.
How do we know? It’s revealed in action—specifically, UTSA’s library discarded the book, and I was willing to pay a seller, Amazon, a bank, and a shipper to go to the trouble of shipping the book and processing the payment.
The art of business is the art of creating wealth. Here’s how Froeb et al. put it:
The one lesson of business: the art of business consists of identifying assets in low-valued uses and devising ways to profitably move them to higher-valued uses.
What are businesses doing? They are moving assets from what they think are low-valued uses to what they think are higher-valued uses. A restaurant owner, for example, might think a loaf of bread, a few pounds of meat, cheese, vegetables, and sauces, and his Wednesdays are more valuable when they are combined to produce sandwiches in Birmingham, Alabama than they would be if they were used for anything else. If she’s right, she earns a profit. If she’s wrong, she suffers a loss. The innumerable actions of buyers and sellers in markets for sandwiches, bread, meat, cheese, financial capital, knives, steel, electricity, light bulbs, soda dispensers, plumbing services, payment processing, security, aprons, plastic gloves, hair nets, mayo, tomatoes, soup, wrapping paper, Styrofoam containers, paper containers, pickles, potatoes, labor, pimentos, toothpicks, graphic design, laminators, salt, pepper, napkins, and an infinite array of other things up and down the supply chain combine to tell the sandwich maker whether she is choosing wisely or choosing poorly.
So it is with Amazon and other peddlers of used goods. They are identifying books and other things in low-value uses and taking a risk based on their belief that they can move those books and things into higher-value uses. When they succeed, they turn one person’s trash into another person’s treasure.