Barter is as old as human history. According to a story in the
Wall Steet Journal, it is yet practiced as a facet of the
21st century global economy. Germany, for example, “sends coal to
Brazil for coffee, and imports cattle from Denmark in return for
agricultural implements. Finland sends timber to the U.K. for coal.
Argentina trades grain to Spain for railway equipment.” And so
on.
Farmers markets and yard sales are certainly popular in small
town America. Every summer weekend in Texas features some 200 towns
with farmers markets. Here in Salmon, Idaho, three summertime
produce markets are a welcome respite from the tyranny of our
single grocery store. The local radio station has a morning
weekdays show called “Swap Shop,” where goods and services are
noted, and listeners call-in with their own for-sale items,
queries, and promotion of services. The common theme is the lack of
a middleman, and transactions in cash or barter. This time of year
firewood is a big commodity. And following a recent heavy snowstorm
here, I shoveled an elderly lady’s driveway, walks, and wooden back
deck. Roughly one hour’s labor: $12; and since she was pleased with
my work, a bonus cup of coffee.
The Internal Revenue Service definitely has guidelines for
conducting such commerce, and these are mostly ignored: “The fair
market value of goods and services exchanged must be included in
the income of both parties.” According to Stephen J. Dubner,
writing on Freakonomics.com, the current underground economy
(both licit and illicit activity) in America makes for a “tax gap”
of $345 billion annually, and the IRS mostly can’t touch it. Though
estimates vary, beyond our shores it seems that up to a staggering
25% of the global economy is underground, the Third World being
especially adept at evading the tax man. For instance, most of
Africa clocks in at around 40%.
Growing up in the New York area, I remember the newspapers and
TV media occasionally ran stories about the trials of mafiosi being
prosecuted and convicted of tax evasion. Wiretapping was certainly
necessary to compensate for the fact that the wise guys usually
lacked Social Security numbers and left no paper trail of their
daily dealings. Throughout their lives everything they purchased
from a cup of coffee to a car or a home, to a hit on one of their
evil comrades, was paid for in cash. And they had top-flight legal
talent like Roy Cohn representing them. I guess Mr. Cohn collected
his fees in cash. Hollywood has always romanticized the good fellas
as America’s idealized violent swashbuckling entrepreneurs,
although I doubt the likes of Carlo Gambino, Vito Genovese, and
Frank Costello ever bothered to read Ayn Rand.
I once knew a river dredge gold miner in Northern California
named Harold Jones. At some point in his life he acquired the
nickname “Cash.” He made gold jewelry (rings, earrings, etc.) in a
basement workshop, and sold it as a vendor at county fairs and flea
markets. Cash never took checks because he didn’t trust most people
who wrote them. Credit cards were so alien to him that he just
laughed when a customer happened to broach the subject. During such
transactions he’d joke: “Sir, my name is Cash.” Cash passed on some
years ago, but I think I know how he would have functioned
financially had he lived to see the Age of Obama. “Sir, my name is
Cash.” Did Cash even have a Social Security number? It’s likely
that he did because he worked at regular payroll jobs during his
lifetime.
But is it possible as Barack Obama’s second term proceeds apace,
that many upstanding citizens (not just crooks) will start to
conduct their financial lives in much the same way? Is all the
doom-and-gloom we’re hearing concerning the Fiscal Cliff and the
specter of Obamacare on the horizon enough to make people do that?
Isn’t this how capitalism was conducted (underground) in the old
Soviet Union?
Many of us remember the last decades of the Cold War, when
Russians and other poor denizens of the East Bloc had to line-up at
government stores for rare foodstuffs and even toilet paper, always
in short supply thanks to a sclerotic state-run economy. The black
market found behind the Iron Curtain at the time provided life’s
necessities or luxuries for the right inflated price along with the
common greased-palm political corruption. Toilet paper or
champagne, bread or caviar, were available to those with the means
to bypass the bureaucracy. Milton Friedman famously said : “If the
federal government took over the Sahara Desert, in five years there
would be a shortage of sand.”
We’re already reading in media reports that the coming of
Obamacare promises a spike in “concierge” medical services, that
is, patients (consumers) paying for services with cash, with an
initial annual fee or retainer of $500 to $5,000, and extra fees
depending on services rendered. This leaves much of the government
medical bureaucracy out of the equation. The leviathan nature of
Obamacare makes for fertile ground not only for bureaucratic waste
and malfeasance (read: 16,000 new IRS agents), but for subterfuge
both legal and illegal from the private sector as well. “Sir, my
name is Cash.”
It’s going to become commonplace for people (especially small
businesses) to try to beat the tax man, more so than just around
April 15th every year. They will use cash, barter, and exchange of
services to better oppose the official corruption of a federal
government that is increasingly seen as a criminal enterprise that
Messrs. Gambino, Genovese and Costello would be in awe of.
As for me shoveling driveways in Salmon, Idaho, this winter?
“Ma’am, my name is Cash.”
