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March 2009 - Posts - Main Street Meltdown
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Main Street Meltdown

March 2009 - Posts

  • Bartering is Back

     Despite the advances we have made in today's society, when times get tough people often look back to the old tried-and-true methods of coping with problems.   Case in point:  bartering.  

     With many people strapped for cash, bartering is making a big comback.  Bartering has been around since before there was such a thing as money.  During the Great Depression, people often exchanged the performance of work for food, hence the age-old sign "Will Work for Food" held up by the down-and-out, or those who want you to think they are down-and-out.  

    What is bartering?  Basically, you exchange something you have for something that you want.  Money doesn't change hands.  Most forms of barter involved exchanging one personal service, such as babysitting services, for another, such as mowing a lawn.  People also barter personal possessions for something else they want, such as trading clothing for a toaster oven.  You get the idea.  

    Bartering is nothing new in the business world, either.  Radio stations often barter free ads in exchange for something they need, such as office supplies, furniture or even a company vehicle.  When the Soviet Union collapsed, Russia had to barter with other countries to get the goods it needed because its currency couldn't be converted to dollars or pounds or yen.  It traded something it had, such as vodka (which could be resold for cash) for something it needed, such as grain or electronic items.  

     With credit in short supply and money tight, many people are turning to the Internet to help them facilitate their trades.  Sites such as Craigs List and u-exchange.com feature long lists of proposed trades.  A recent browse through a Craig's List turned up a photo studio willing to shoot wedding for free in exchange for cleaning services, re-roofing services for the installation of an in-ground pool and someone willing to trade a bunk bed for a TV set.  With bartering, the possibilities are endless, and best of all it doesn't cost you anything other than your time or an item you don't need or want anymore.  

    Ready to barter?  A few tips to keep in mind:

     1.  Don't be greedy.  Only barter for the things you need.  Conversely, don't give away anything that you really want to keep.  That will really sour a trade.

     2.  Keep good records.  Be sure to note your trades.  Yes, these can be taxed by the IRS, especially if you trade for something of significant value.

     3.  Reach an agreement and stick to it.  Be very specific about what you are trading and work out the details ahead of time either by phone or email before actually carrying out the trade.  Remember, the trade should be beneficial to everybody.  The items you are trading with each other don't necessarily have to be of equal value, but both parties should be happy with their trade.  

    Bartering can be very basic.  Are you good at baking cakes?  You might swap your expertise and bake a wedding cake for someone in exchange for vegetables grown in their garden. This summer, I plan to swap organic herbs grown in my garden in exchange for other items I don't grow in my garden.  

    Everybody has a skill or an unwanted item they can trade, and that means they have something of value.  Now all you have to do is put it to use.

    Good luck, and happy bartering!

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  • The Case for Buying American

     I'm a big believer in free trade.  Free trade is responsible for the United States becoming the economic powerhouse of the world.  Without free trade, we certainly would not benefit from the best products at the best prices that the rest of the world has to offer.  These days, however, there is a new case to be made for buying American-made products and American-provided services.  

     The auto industry has certainly suffered as a result of people buying cars manufactured overseas.  The major auto-makers in Detroit are teetering on the brink, and it's entirely possible GM or some other American auto-maker won't be around this time next year without government intervention. During better times, I would have been inclined to say let the companies fold.  If a company can't remain competitive in a free market, then natural selection would dictate that the company either needs to adapt or die.  

    These days, I am taking a different point of view.  With millions of Americans losing their jobs, and many small and major American businesses shuttering their doors, I have made a new pledge for 2009.  Whenever possible, I will not only buy American, but I will buy locally-produced goods and services.  Although I may be accused of protectionism or isolationism, I see it as a way of keeping my dollars in the local community and in my country, helping local businesses and in turn preserving local and American jobs.  

    The problem is that I will be hard-pressed to find something that is completely American-made.  Many American companies have outsourced the manufacturing of their products to other countries.  The other problem is that even when I can find an American-produced product, it will likely be more expensive than foreign products  Granted, I don't plan to make many large purchases this year, but when I do I will look first for something produced by an American company.  If that isn't possible, I will at least purchase it from a local, or "mom and pop" retailer.  

    There are ways of finding American products, if you are willing to do your research (which many don't.  They opt for convenience).  

    1.  Look for "Made in the USA" label.  If you're not sure where a product is made, check out the label.  In some cases, a product may be manufactured overseas with components made in the USA, or vice-versa, but this is usually noted on the product.  

    2.  Do your research.  There are web sites which list products completely made in the U.S., such as buyamerican.com, unionlabel.org or buydirectusa.com.  There are many, many others.  A little extra time and research before making a major purchase will turn up American-made alternatives if they are available.  

    3.  Shop locally.  I'm guilty of driving into the city to purchase items from the Big Box stores for the cheaper prices, but this year I will be more inclined to purchase items from the stores in my own local area, where my neighbors are employed.  Even if you can't find American-made products in these stores, at least you are supporting a locally-owned and operated business.  This also goes for buying products online.  If I'm buying a product online, I'm sending my dollars elsewhere.  This doesn't help my community and our local economy. 

    Not everyone will share my endorsement of giving preference to local and American goods and services.  The Ayn Rand Institute, in an article titled "Buy American is U-American", says:

    "International trade is not mortal combat but a form of cooperation, a means of expanding worldwide production. The benefits of international trade flow to both trading partners, even when one of the countries is more efficient across the board. This is the "Law of Comparative Advantage," covered in every economics textbook. Free trade does not destroy but creates employment."

    They are correct, of course.  This IS taught in every economics textbook.  However, this is my personal choice. The United States is suffering a crisis of conifidence in its economy by its own people.  Banks aren't giving out credit, and people aren't buying.  If this continues, the recession will only deepen further.  If the recession worsens, and lasts for an extended period of time, then the United States faces a depression.  In the 1930's, people didn't spend money.  The less money that was spent, the more businesses suffered.  As businesses suffered, more people found themselves out of work.  After people lost their jobs, they had no money to spend, and so the cylce continued.  

    Americans have become very good at spending their money.  Where they spend their money has become all the more important during these troubled times.  

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