Saturday, April 8, 2023
#98 / Panda Dunks
"Panda Dunks," for those who don't know, are a kind of tennis shoe manufactured by Nike. I knew nothing about Panda Dunks until I read an article in The Wall Street Journal on Wednesday, February 8, 2023. The article was titled, "Nike’s Panda Dunks Were a Collector’s Dream, Until Everyone Started Wearing Them."
It turns out that people were buying Panda Dunks not because they were good tennis shoes, but because the purchasers believed that they were going to be a "scarce item," and thus would have what amounts to an "investment value," above and beyond any "use value" they might possess.
If you see any similarity between Panda Dunks considered as an investment and cryptocurrency, you are tuning in to an issue I have been writing about in this blog for some time, now.
"Value," in our economic system, is measured mostly in money, and the "value" of anything is what people will pay for it. However, when considering how much someone will pay for something, it makes a difference to know "why" the person will pay whatever amount that person will pay. Generally, it is thought that the price someone will pay for something is ultimately determined by the "use value" of the item at issue. However, values are sometimes established based not on "use value," but on a speculation on how much someone else will pay for the item, later.
And so it was for Panda Dunks. Purchasers thought that Nike would only make so many, and since they were "cool," the value would increase, since there would be a growing demand as the "coolness" factor began taking hold, and the lack of supply continued as a fact.
Whoops! Nike decided to make more. Now, people are buying Panda Dunks because they think they are a good tennis shoe. Price is determined by "use value," not on the basis of a speculation that a Panda Dunk shortage will drive the price ever higher.
This is something to think about when you contemplate paying a premium for your next pair of tennis shoes!
And in other contexts, too. Click here for more on cryptocurrency!