Pop Culture is wrong about Barter

This is the red paperclip that Kyle MacDonald started with on his bartering adventure.  Some of you may have heard about it because it was very well publicized.  Back in 2005 he started making trades with this paperclip and he ended up with a house.    You may have also seen the TV show Barter Kings that has been on for a year or so now that shows the hosts trading low valued products/services for those of higher value.  I have a bone to pick with these stories.  It’s not that the stories aren’t true…I’m sure they are.  My issue is that these are the stories that are now ingrained into pop-culture about how barter works.   This is what people outside of the “barter sub-culture” think barter is all about.  And… it’s TOTALLY UNTRUE.

Barter is NOT about finding a way to create an un-equal trade.  Barter is about making trades of equal value.  It’s not that traders are slick salespeople that out-negotiate or trick their barter partners into a deal that benefits one party more than the other.   In “the real world” of barter, the value of the products/services for trade is usually pre-established.  The benefit of the trade isn’t that you receive something of greater actual value, but that you receive something of greater value to you specifically.  More than anything else this personal value usually has to do with supply.  For example, if I have more chewing gum than I could ever use or sell, I might be happy to trade some of it for something I didn’t have like candy bars.  Because I traded $1000 worth of gum for $1000 worth of candy bars, from an accounting point of view there was no profit, but none-the-less, the trade greatly benefited me.

There is profit to be made in barter, but it is earned EXACTLY the same way it is in the cash world.  You can make a profit on a trade if you can acquire the product/service that you are trading at below market value.  The most common way to do this is by buying wholesale or by producing the product/service yourself at costs that are lower than retail value.  For example, because my business is web development, I produce websites at my wholesale costs, then trade the service at retail value to someone that would not have been able to hire my firm for cash.

So…you might ask, how did Kyle MacDonald trade a paperclip up to a house?  The answer is quite simple.  He was trading more than just a paperclip.  He was selling an adventure.  He was selling a story.  People that were bartering with him were willing to make trades that appeared not to benefit them because being part of the story held value to them.  The same is true for the Barter Kings TV show.  I would encourage you to enjoy these types of stories but keep in mind that REAL barter is about the exchange of goods/services of equal value.

Major upgrade to IMS website

IMS rolled out a major upgrade to their website today. I haven’t gone through everything yet, but it looks like there is some really good stuff in there.

* On most search results pages (like the marketplace for example) you can choose how many results you’d like to see.
* Marketplace images are now larger. It doesn’t look like you’ll need to re-upload images if you posted large images pre-roll-out.
* Bugs in transaction history “pagifying” have been fixed.

I haven’t tested yet, but I’m hoping that this upgrade also included real-time transactions. Previously it would often take a day for transactions to show up on the website. IMS technical staff in the past said this was something they were working on so I’m guessing that it was included in this roll-out. I’ll find out for sure next time I post a transaction.

I’m still seeing some new roll-out bugs, but that is to be expected with such a big upgrade. I’m sure they will sort it out in a few days. If you are having difficulty with the site in Chrome, give Firefox a try.

The politics of barter

As a barter fanatic that is politically conservative I find myself sadly disappointed in my fellow right wingers and their lack of interest in barter.  But I’m starting my story at the end instead of the beginning.

It all starts a couple years ago when I started bartering as a business strategy.  I live in California which is of course known for it’s liberal leanings.  Within this generally liberal atmosphere there are also pockets of folks that lean even further to the left.  That is the case with a town about 15 miles from my home town.  It’s proud of it’s leanings to the far left, has a sign on the way into the town declaring it a “nuclear free zone,” and it has a greater share of vegetarian restaurants than anywhere I’ve been (all tucked neatly between the organic wholefood stores, the smoke shops, and the yoga studios).  Of course I was (and still am) happy to barter with anyone regardless of their political affiliation.   But a funny thing happened over the years.  Even though I happily traded with all comers, I continually found that a significantly larger percentage of my trades happened with business in this extremely liberal town than anywhere else.  Although I’ve lived in the same county for almost my whole life, historically I’ve never spent much time in this town, but now I find myself constantly in this town to work with clients/vendors that I barter with.  Keep in mind that the barter exchange I use  the most is in my home town, not this neighboring town I’ve described.

I can’t help but come to the conclusion that liberal folks are more pro-barter than right wingers.  Based on the huge volume of evidence that I have, I can’t come to any other conclusion.  Where it becomes interesting is trying to figure out WHY.  I currently have a multi-pronged theory about this.  My conclusions are totally unscientific and cannot be proven, but I think they are worth considering.  Here’s what I came up with:

  1. Liberals are more open to out-of-the-box ideas like barter than conservatives.
  2. Liberals feel that big business is evil.  Barter is intrinsically folksy and relationship based.  It is true that giant multi-national companies barter, but for the most part the companies that you and I are most likely to barter with are small.  I think that liberals feel that barter brings “power to the people” and that by using trade they are “sticking it to The Man.”
  3. Liberals unconsciously (or maybe even consciously) think that money is evil.  I think that somewhere in the backs of their brains  liberals think that physical currency, the green-backs themselves are dirty and will somehow defile them.  So…the idea of commerce w/o cash is very appealing.

What is the take-away here?  What is there to learn?  Honestly I have no idea.  This article is just my observations.  Am I crazy?  Have you readers run into this too?  Please comment back and give me your feedback.

Too much barter?

Last article I mentioned that one of my favorite ways to spend barter is on my kids. I love the fact that I can give my kids just about anything that is on barter. I hate the fact that they know it. Entitlement. It’s a very ugly word. And it’s oh-so-easy for kids to feel entitled to whatever they want if you set the pattern.

Honestly I’m in uncharted territory here because historically my kids haven’t felt entitled to anything. I don’t even give them an allowance. They have their own small businesses and earn their own spending money. But when I talk to them about how an expensive summer camp was that we sent them to (see my last article), they are very causal about it. They say it was fun and that they guess they would like to go again in the future. They also talked about how long they had to wait around for lunch and that the pool was cold. Give me a break! When I was a kid, we did a Polar Bear Swim at camp where the whole point was that it was fun to freeze your butt off!

I haven’t decided quite how to handle this one yet but I’m pretty sure the correct solution has something to do with earning privileges rather than handing out the good-stuff to my kids simply because it’s on barter. Maybe I need to set them up in business earning the barter credits that they want to spend. That’s food for thought. More later.

IMS smart phone app in "Beta"

You may recall that back in January of 2011 I posted a wish list of all the things I would like to see in a barter exchange’s smart phone app.  I’m pleased to announce that IMS now has a beta smart phone app for BOTH iphone and android that you can download from the App Store (for iphone folks) or Google Play (formerly Android Marketplace).   The app has a lot of the functions that I asked for.  The folks over at IMS were kind enough to give me a heads up about the new app that you should be able to find for download by simply searching for “IMS barter” where you normally download phone apps.  Please note that this is a beta version so you should not expect perfection yet.

Overall I’m quite pleased with IMS’s first attempt.   It’s a little slow to start when you first click on the application, but other than than the functionality seems flawless.   I’m an Android man so I was able to test it on an Android phone and tablet.  I did not conduct any iphone testing.  I should also mention that it is a FREE application.  The main functions are:

  • Restaurant Search (complete with interactive map)
  • Authorization Request (like the website it is for a seller only)
  • Account info
  • Transactions
  • Contact IMS (makes it easy to contact your broker)

Of course I’m already looking forward to the next version.  I’d like to see:
  • Blue-tooth payment (a buyer could wirelessly send credits to another member running the application)
  • Full member directory look-up (ideally with interactive map)
  • Easy marketplace post (where you snap a picture with your phone and post the item straight from there)

Tide: The criminal element of barter

Criminals have a vested interest in barter.  It’s simple really.  Barter transactions are harder for enforcement agencies to track than cash.  I’ve mentioned in the past that the alternative electronic currency known as bitcoin is known to be used by drug dealers in an attempt to hide their business.  Now there may be a new and much stranger alternative currency that the underground economy is using:  Tide laundry detergent.  That’s right!  Based on the news articles I’ve been reading (just Google “Tide theft”) criminals have been specifically using Tide as an alternate currency.  If true, I’m sure this is just breaking hearts over at Proctor and Gamble.

Although there is some debate as to the voracity of the news reports about this (snoopes) I think the concept is still interesting.  There is no good reason why we should be trading government issued pieces of paper to buy and sell products/services especially seeing that the paper is a fiat currency that is backed up by no real assets and has no “real” value.  As such a jug of Tide is arguably much more valuable than US dollars.  When you combine that fact with the declining confidence that many Americans have in the Federal Reserve System it makes perfect sense that people are going to look for an alternative currency with real value.

More than anything else I would take these news reports as a sign of the times as to the current openness of folks to accept payment in barter.   As such I recommend to strike while the iron is hot and do your best to recruit as many of your vendors/customers/friends/enemies/etc. into the Cult Of Barter.

Barter Kings TV Show

OK…what I really want to know here is who told A&E about my idea??!!!


Seriously though…a friend and I came up with a similar idea about 6 weeks ago.  There is a difference between our ideas though.  Based on the article above it sounds like they are going to try to do the whole “trade a  paperclip up  to a house” type thing.  I understand why they are taking that route.    It’s a popular story that people love.  I wouldn’t do it that way though because that doesn’t reflect the real barter sub-culture.  Real traders aren’t going to limit their resources and try to trade a single item up as much as they can.  Real traders are always bartering everything.  I think a better framework for a show would be to show how people live every day  with as little cash as possible.  I’ve heard of people that depend on barter for 80 or 90% of their income.  That’s what I’d be interested in seeing.

BTW…thanks to Paul for the heads up on this one!

Craig's List Potheads

Am I the only person that is sick and tired of people trying to trade pot in the barter section of craigslist.org?  Come on people!  In my area it feels like 10 to 20% of all posts in the barter category are folks that are either looking to score some weed or looking to sell it.  Of course they usually use colloquialisms to refer to it.  They call it “215” or “420.”  Listen pot-heads:  Even in the liberal state of California it’s illegal to sell pot.  And bartering is selling.  Just ask the IRS.  Please get a life and stop cluttering up all the good barter listings on craigslist.

Speaking of which, I spotted this listing on craigslist last week in the barter category:

wife for trade – $70000 (santa rosa)
annoying wife for trade or sale. I’m tired of her you can have her.
rv quads ps3 games what you got?

So… is it just me or does this poster need a lesson in salesmanship?  He says that his wife is annoying, but then wants $70,000 for her.  Also I’m having a hard time trying to imagine how many ps3 games it would take to be worth $70,000.

Improve your financial statements with barter

As all of you fellow barter fanatics know, being taxed on barter transactions is unavoidable if you want to stay on the right side of the prison door.  So with that in mind I think it’s worth while to mention that there is definitely a positive side to reporting all your trades:  Including your trades in all your books makes your financial statements look better!  In these times with great deals on loans, but so few people who qualify, keep in mind that every trade you make shows up on your P&L statement and makes you look that much more attractive to lenders.  If you belong to a barter exchange you will definitely need to include your exchange account on your balance sheet as well.  In the same way that inflated barter prices can hurt you on tax day, it can help you on the day you close your new lower home or business loan.  Additionally if you are looking forward to a loan you need in the future, or you want to start working on selling your business, it’s never too late to start bartering to improve your financials.