May 10, 2009

Everyday Economy: Wanna trade?

By The Spokesman-Review
 

When Rob Butterfield needed to find someone to fix his ailing, 16-year-old Chevy Suburban, he thought he’d try something different.

It was the same something different that Karla Turk decided to try this spring, in an effort to have her teeth straightened before her July wedding.

Butterfield and Turk are trying to barter.

Barter – the world’s original form of economic exchange – is making a comeback during the recession.

Barter listings on craigslist.org are up more than 100 percent this year over last, according to the online classified service. And U-exchange.com, a Web site for people who want to barter, has shown increases in traffic approaching 200 percent, according to McClatchy.

Here are a few questions and answers about the practice:

Q: How do people get started?

A: Necessity is the mother of bartering. Someone needs something but can’t afford it or wants to save money. That was Butterfield’s position as he considered ways to have someone do some mechanical work on his Suburban, which is running but dying, he says. He talked to a guy at a yard sale who was bartering for a camper trailer. “I was thinking if he’s willing to do that, maybe there’s someone else out there,” he said.

So Butterfield posted an ad on craigslist last week, offering to trade his expertise and services in résumé creation, interviewing and other job-hunting skills for work on his truck, camping gear or a computer desk. He hadn’t gotten any bites by late last week but wasn’t giving up.

Q: What kinds of things do people barter?

A: Anything you can imagine. Turk knew she couldn’t afford the thousands of dollars to have her teeth straightened before her wedding day, and after she saw a TV news report about bartering she had an inspiration: Maybe she could swap her professional skills as an interior designer for some dental work. “I thought, ‘That’s an interesting idea,’” she said. She posted an ad on U-exchange.com several weeks ago but hasn’t had any responses. At least yet.

The range of other items up for barter is expansive. Here are some proposed swaps posted recently online: a motorcycle for an outboard motor; a camera for bicycle parts; an mp3 player for a tattoo; writing a family biography in exchange for a week at the lake. Some people just offer services, like handyman work, and say they’ll accept some bartered items in exchange.

Q: What’s the downside?

A: As Turk and Butterfield are finding out, it’s not so easy to find a situation where two people desire the precise item that the other has. Economists call this the “coincidence of wants” problem: If I have a chicken and you have a radio, and I want a radio but you don’t want a chicken, the deal breaks down. This, in a nutshell, is why we have money.

Q: Do you have to pay taxes on bartered items?

A: Under federal law, you must report items received in trades as income. “This even applies to farmers who trade their produce for another farmer’s produce,” Terri Helge, a Texas Wesleyan University law professor and former accounting firm tax manager, said in a McClatchy story. “There is no threshold for a minimum amount. If you barter services for services or services for property, you’re supposed to report it. It still surprises people, but it’s well established.”

Q: What is the history of bartering, and do you have any entertaining historical facts about the practice?

A: Bartering predates money, and is believed to have developed in the first human societies. In fifth-century B.C. Rome, the common barter good was the cow. Salt was a high-value swap all over the world. Bread and beer were paid as wages in ancient Egypt. Whiskey was a trade good in colonial America. An illustration from Harper’s Weekly in 1874 shows an abashed farmer trying to barter for his subscription to the “Weekly Podunk Bugle” with chickens.

The practice persisted in myriad forms and often in places or times when the economy was bad – it rebounded during the Depression, for example, and during the recession of the 1980s.


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