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The Rise of the Barter Economy

Online trading gains momentum in Boise

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Squinting in the early evening sun, I spotted the dust-flecked sign for Black Cat Road in Meridian and slid into a hasty right turn. I glanced anxiously at the clock, then at my delicate passenger—a box full of warm, homemade vegetarian food. A few days prior, I had phoned Heather Mark, a professional cake decorator who posted an ad in the bartering section on Craigslist. We settled on an exchange—I'd cook dinner for her sister-in-law's family and drop it off at their house by 6 p.m. In return, she'd whip me up a fancy chocolate raspberry cake adorned with the Boise Weekly logo, which I'd also pick up. No cash involved.

Standing on John, Kristina and Jozia Mark's front porch at 6:15 p.m., holding a box of neatly stacked Tupperware containers containing tomato basil bisque, focaccia, kale salad and pesto-stuffed mushrooms, it sunk in just how strange this all was. I'd just spent the afternoon cooking a meal for a family I'd never met; a family I would probably never see again. Now my kitchen was a wreck, my car was low on gas and, suddenly, I felt self-conscious about my cooking skills. Bartering, it turns out, is more difficult than just sliding cash across a counter.

According to Craigslist, use of its bartering section has rocketed up more than 100 percent from April 2008 to April 2009. Defined by the IRS as the exchange of goods or services without the exchange of money, bartering has found a flurry of new friends in the current economic climate. Proponents of bartering tout benefits like increasing disposable income, gaining an appreciation for the true value of the goods and services, and finding an increased sense of community. But, as I learned during my foray into bartering, without the use of a common currency, it can be hard to know if you're getting a good deal.

Pelts for Powder

Bartering is by no means a new concept. In fact, Idaho was first populated largely by prospectors who flocked to the area for a piece of the lucrative fur trade. In James Henry Gilbert's book Trade and Currency in Early Oregon, he paints a picture of the unfair deals struck between fur traders and natives:

"Forest and stream abounded in what seemed to be an inexhaustible supply of fur-bearing animals and the natives could be induced to take and sell the skins for a trifling compensation. At the outset, traders found that a beaver skin might be had for a half-pound of glass beads, a half-pound of [gun] powder, a comb, a small looking glass or a quart of brandy."

Without any way to judge the value of their trades, Gilbert goes on to explain, early Idaho Native Americans oftentimes got screwed.

"The sheer lack of competition and the dependence of the natives on British traders for what soon assumed the importance of necessaries in their sight--firearms and ammunition, not to mention blankets, beads and spirits--enabled the company to establish and to maintain a favorable tariff."

While the essential concept behind bartering remains unchanged from Idaho's earliest days, Native Americans were at an unfortunate disadvantage back then--they couldn't comparison shop on Google. The advent of social networking sites Facebook and Twitter, combined with the ever-increasing popularity of Craigslist, has led people to be both more discerning and more specialized in their bartering ventures.

The New Fur Trade

A recent post in the barter section of Craigslist read: "Experienced auto mechanic willing to trade repairs for a Persian kitten." Not three hours later, mechanic Luke Thornhill snapped a picture holding a tiny squished-nose kitten, a sliver of black grease under his fingernail contrasting the cat's downy white coat.

"We basically couldn't afford the kind of cat we wanted, and I'm a mechanic, so I got to thinking that I could trade my services for one," said Thornhill. "Just about everybody needs car repair. We got one good [response] and we found a kitten. They needed a brake job on their Ford Explorer. So, it all worked out."

Thornhill and girlfriend Theresa Hendricks had been in the market for a pet to entertain their three young kids. After trying to adopt a stray kitten living under their house and subsequently getting mauled by its tiny claws, the two decided to get a cat with a bit more class. Though Hendricks had owned Persian cats in the past, she was unaware they carried such a hefty price tag.

"We looked online, and I had no idea they were $300," said Hendricks. "And I was like, 'Maybe we can find someone who will take payments or something?' Then Luke came up with the idea of offering his services. We put the ad on there and not even two to three hours later, we got a call. She is beautiful. She's white, has a little bit of gray in her ears and a smashed face. We're going to name her Molly."

And while a pedigreed cat-craving auto mechanic might seem a bit random, it's niche needs like this that the Craigslist bartering section caters to. Scroll through the constantly expanding list of postings in the Treasure Valley and you'll run into someone in Meridian with a heavy duty DeWalt radial arm saw seeking a complete smog control set up for 1986 Chevrolet, or someone in Emmett with a "McD's size fry box" full of blue plums looking to trade for another kind of fruit. In addition, there are tons of dudes offering up man toys--cars, four wheelers, tractors, campers--and almost all of them mention being willing to trade for guns.

What you got?

One rule at the heart of bartering is that you have to have something of value before you can trade it for something else. Whether that is a vintage armoire or the ability to scribble Russian poetry, you need an item or talent to offer that someone else considers valuable. During the soaring inflation of the 1980s, George W. Burtt penned a bartering how-to guide, The Barter Way to Beat Inflation, in which he spelled out this concept:

"The most important consideration at the outset is that you already have a steady source of livelihood in cash before you begin to trade. (If this is not the case with you, then before doing any other sort of trading, negotiate a cash deal for your services so that at least you have income enough for the necessities)," he wrote.

Like the cash economy, which generally offers more money to people with advanced skill sets, the bartering economy also favors those with more specialized talents. Eagle-based acupuncturist Tony Burris and his wife own their practice. Though they used to barter more when they were living in California, Burris explained that having two kids to feed and house payments means he can't be as free with his extra cash as he once was. Burris already barters with his patients--for things like a bike trailer, massage and even microdermabrasion--and he also recently waded into the Craigslist pool.

"I can't really say I do it for humanitarian reasons. It's really more of an item that we are interested in for our family," said Burris. "Like I put on the Craigslist ad, I'd like a guitar. That's an extravagance for me at this point. I have two kids and a mortgage, so that's not something I'm going to spend my cash on. I usually do about $80 an hour, so we kind of agree on what the thing is worth and go from there."

Amy, a health-care professional who prefers not to use her last name, is something of a wedding ring bartering expert. After her husband lost his second wedding band, she decided to scour Craigslist for a replacement. She soon found a recently divorced man willing to trade his basic white gold band for Amy's laptop computer from grad school.

"The first time around when we got our wedding bands, we were totally sentimental about it. But that actually was the second time that [my husband] had lost his," remembered Amy. "A part of me was like, 'Well, it's coming from someone who's divorced.' Then I was like, 'Screw it. The point is to have a wedding ring.'"

When Amy recently stumbled across her engagement ring, which she's scarcely worn during her 10-year marriage because it constantly gets snagged on things, she went back to Craigslist. This time just for fun.

"Finances are not tight; it's just purely kind of a fun thing. In my household, I tend to be a person who, if we have too much stuff around, I'll start selling it off and get rid of it," explained Amy. "I used to sell stuff on ebay--get rid of skis or whatever--but I feel like it's changed a lot. It's become more of a business, where the individual seller is kind of a minority ... So I started using Craigslist more. To me, it's kind of fun to get rid of stuff and see people get a good deal."

Though it's the exception and not the rule, Craigslist does present opportunities for some industrious traders to climb the have-not ladder into Havesville.

Red Paper clip

In 2006, Canadian Kyle MacDonald pocketed the keys to his brand new house on Main Street in Kipling, Saskatchewan, Canada. One year earlier, he had started with a single red paper clip, which he had traded on Craigslist for a fish-shaped pen, then a doorknob, then a camp stove, until he ended up with a speaking role in a Hollywood movie. Finally, he traded the rights to the acting role with the City of Kipling and got a two-story farmhouse in return. MacDonald's bootstraps-y story was splattered all over the news, garnering him countless interviews, a book deal and a healthy number of copycats--like 19-year-old Boise Bench resident Cory Atkins (nephew of BW's Amy Atkins) and his pal Chris Ross.

"It was our way to make time go by in the summer," said Cory Atkins. "We each started out with a paper clip ... then we went pencil, pen, we got some matches, then we took a step back and got another pen. It was kind of a long process."

After around 30 trades, during which time a kayak, a golf club, a box of medical lotions and a gas grill all passed through their hands, Atkins and Ross decided to call it quits. In the end, their bounty included a compound hunting bow, a "really, really nice" color printer and a massage chair, which someone threw in at the last minute for good measure. Though Atkins and Ross were satisfied with their loot, they couldn't help but hope for more after hearing MacDonald's story. "We were kind of hoping for a college education out of it," Atkins laughed.

But, obviously, a paper clip doesn't hold anywhere near the same value as a college education. In a follow-up e-mail, Atkins explained that he and Ross had offered people more than just office supplies; they'd offered them a chance to participate in a unique social interaction.

"When we're talking about playing a game meant to take you further and further in your own gains, the only thing I can think of to make it an equal exchange is that we offered people a chance to be entertained, to empty their garages a bit, and to be a part of something that could potentially snowball," Atkins wrote.

But bartering isn't all fun and games. In this economy, it can be a last resort for many folks. Heather Walschon recently found out she's getting laid off. In order to boost her confidence when she re-enters the job market, she decided she needs a new haircut and color--something she hasn't thought of doing since she had a baby last April.

"Lately, especially with the way that the economy's been--my husband's been on and off unemployment this year, and I just got word that I'm getting laid off--I thought, 'If there's someone out there that needs their house cleaned or if they need cooking done or whatever, I think that would be a fair exchange for getting a hair service done,'" said Walschon. "How many of us truly like house cleaning?"

In addition to bringing a jolt of self-confidence, Walschon thinks her new hairdo will also have added value to her since she'll have worked hard cleaning or cooking to earn it.

"Women like to feel pretty and attractive, and I haven't had any extra money to go buy myself a new purse. Sometimes that type of thing really helps people to feel good for the moment at least," said Walschon. "But if I were to get my hair done, I can look at it every day and know that I put something into it. Instead of just giving them 50 bucks and saying, 'Here, it's done,' I have to work for this. So it will be a little bit more appreciated, too, on my part."

Local Networks

And while it seems like a no-brainer to associate the recent rise in popularity of bartering with the economic downturn, Boise barterer Whitney Rearick has a different hypothesis.

"I think people are more willing to talk about [bartering], but I can't tell if it's because of the economy or if it's because of social networking and more and more people using social networking," said Rearick. "[With] Facebook, and as more and more people are using listservs, it's a lot easier to reach a bunch of folks."

A self-professed gardening nerd, Rearick trades her fresh eggs and extra produce with friends in exchange for house-sitting when she's out of town. But she also uses the Internet to expand the number of people in her trading network. Rearick recently posted an ad on Veggie Trader saying, "I have ragged jack kale coming out my ears. Want some? Am open to whatever trade works." Veggie Trader, an online community where gardeners can barter their excess veggies with others nearby, has been slow to catch on in Idaho.

"Nobody from Idaho has registered on Veggie Trader. I guess people haven't heard of it. I did my best to let folks know about it. I listed it on a couple of gardening blogs and posted it on Facebook, but I haven't seen any response," said Rearick.

Though the king of the local bartering marketplace is undoubtedly Craigslist, other sites like Veggie Trader, Trashbank and the worldwide U-Exchange are slowly amassing users. One Boisean is even trying to disassociate bartering with the random and disconnected world of Craigslist and bring it more local. At a presentation she gave at Ignite Boise, real estate agent Kim Metez laid down her case for a creating a tighter knit bartering community in Boise.

"What I really wanted to spark with Ignite is, 'Don't forget, we have all these skills.' When you're feeling really desolate, we all have skills; we all have stuff; we can all take care of each other in the community," said Metez. "The whole world is not coming to the end right now because of the economy. We just have to remember that this is an option and go out and do it."

Metez, who also runs the Abundance Project, which matches up excess produce with local refugee families in need, is in the process of creating a locally run bartering Web site called Barter Boise.

"I think the format of Craigslist works really well for a lot of things, which is the 45-day turnaround. When you post something, it lists for 45 days and it keeps making its way to the bottom of the list," said Metez. "But for barter, that's a pretty small window of opportunity to find someone who has exactly what you want for what you need. I think it could be out there locally, but the database is not held long enough to make a good match."

Though Metez is still in the beginning phases of launching Barter Boise--she's still seeking the right Web developer--she hopes it will bring together a local bartering community that will last long after the recession ends.

"It works better in small groups where you really know and trust the people you're going to be bartering with," said Metez. "Especially since there's some tax implications to bartering."

The Tax Man

Lest you consider setting fire to your Federal Reserve notes and embracing bartering as your sole means of survival, note one thing: The tax man always wants a piece of the action. The IRS explicitly states that "Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter--barter for another's products or services--you will have to report the fair market value of the products or services you received on your tax return."

"It has been my experience that the IRS pursues bartering aggressively because it can be considered earned income," said CPA Aldon Holm. "If a business owner or individual provides a service or product that normally would be considered taxable, they have the responsibility to report that income and pay the appropriate taxes. Whenever an individual or company is audited, part of the audit is to discover barter income. They know it's out there and growing, and they want their share."

Also, don't be fooled by Craigslist's relative anonymity. They're always watching.

"The State Tax Commission has employees who scour Craigslist for unregistered businesses," explained Holm. "If they find someone who is operating a business without reporting to the state, they will pursue that person or business and seek compliance with all income and sales taxes laws."

In addition to these cumbersome tax requirements, barterers should also be aware of possible legal ramifications. To explain a potentially troublesome bartering situation, business litigation attorney Paul Stark set up a mock scenario: a plumber decides to barter his services with a Web developer.

"So, the plumber receives a benefit, which is the equivalent to income by getting free Web development for his plumbing business. But he has an expense that's going out, which is his plumbing services," said Stark. "As long as those are of equal value so on the fair market value--he does $500 worth of plumbing and he gets $500 of Web developing--there's not a lot of problems because it's for the business and it should essentially be a wash."

But issues start to arise when people begin trading their professional services for personal benefit.

"The problem comes ... when it's not a business service. In other words, the plumber gets his wife's fillings done. That's where you get into trouble because that is a benefit to the individual. At that point, that's where the liabilities can arise," explained Stark.

Which raises the question, when bartering your skills or hobbies outside of the confines of your business, how do you calculate the exact value of your time?

Piece of Cake

Heather Mark, who's been making cakes for friends and family for seven years, usually charges around $2.50 per slice for her larger designs. The cake she made for me, she guessed, would probably run around $50 retail. I, on the other hand, spent close to $30, including Tupperware, on dinner supplies. That amount didn't include the time I spent preparing the meal, cleaning up my wrecked kitchen or driving out to Meridian to drop off dinner and then booking it to Eagle to pick up the cake. It also didn't factor in a final important consideration--the enjoyment I got from cooking the meal and sharing it with others.

Though Mark said the economy factored into her decision to barter, she also said it's been an easy way to get something of value in exchange for doing her hobby. Win win.

"Partially it's the economy and partially it's because I like to share something I can do that doesn't take me very long--that might take somebody else a long time--for something that they have that would work," said Mark.

Cutting into the perfectly smooth buttercream frosting on Mark's cake and lifting out a thick wedge of chocolatey richness, I was immediately overwhelmed by a sense of guilt. I think I might have gotten the better deal.

To get involved with Barter Boise, contact Kim Metez at kimmetez@gmail.com. To barter (or pay) for a cake, contact Heather Mark at hlmarkthecakelady@gmail.com.

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