Trading Meat for Tires as Bartering Economy Grows in Greece | Hacker News Reader

Trading Meat for Tires as Bartering Economy Grows in Greece

nytimes.com

59 pointsMz52 comments

This is an interesting side effect of the capital controls. It reminds people once again that currency is really just a stand-in for goods and services produced in an economy. I particularly liked that generic barter (like time for time) was seen as problematic with this quote : "But many of those systems were plagued by inefficiencies. Time banks discovered that one unit of a doctor’s time was more valuable than a unit of a babysitter’s, complicating trades."

All of which just seems to highlight that Greece's monetary policy is out of whack, not its basic economy. It would be interesting to see a two currency economic model, where one currency was priced by durable goods and services, and the other by government services.

The exchange rate should give an interesting window into where the challenges are.

Greece's monetary policy, if we can call it that, isn't the only problem in Greece. The Greek labor market is over-regulated, favoring the older generation over the younger, and corruption in government is widespread. Greece's government debt overload, and subsequent default, are just symptoms of this state of affairs.

It certainly doesn't help, though, that the Greek people are practically forced to use their government's debt as money (Euros backed by Greek government bonds).

> favoring the older generation over the younger, and corruption in government is widespread

This describes just about any Western capitalist democratic country.

And by implication you're saying this would not affect non western or non capitalist countries? So, in Cuba, Mongolia, Russia, Japan, Bolivia these things don't express themselves? Corruption, seniority, traditionalism....

I think degree matters a while lot. Yes, you can find all ills in most places, the question, is, is paralyzing, does it force or encourage people to leave or search for better places?

Calling the Greek economy "capitalist" is really marginal. It's nothing like the European economies, but very similar to badly reformed ex-communist economies (think Russia, not Poland).

The online barter systems seem to be de facto creating an alternate currency. IIRC, the one profiled in the article uses "points" that are the equivalent of Euros (scanning, I can't verify this atm, but I read more than one article before submitting this one, so maybe I read it elsewhere). So if you have 600 points in your online account, you have the equivalent of 600 Euros to work with.

I think it isn't Greece's monetary policy that is out of whack. I haven't really studied it, but my impression from casual reading is that the economy is being crushed by things like high benefits packages for government workers. So when you engage in barter, you side step that. You trade THIS thing for THAT and there is no cost tacked on for putting money into a retirement account or paying for disability insurance etc. You just need tires and need food or you have meat and need tires, and you make the trade to meet your needs in the here and now and let tomorrow worry about itself, thus you don't reduce the value in the here and now of what you traded by setting aside one of your four tires "in case something happens" and driving on three good tires and one bad or whatever. (Trying to come up with a goods based equivalent of the overhead of retirement and so on benefits.)

Anyway, I thought it was neat that a) barter is being facilitated in part by online services b) those services are engaging in some of the same practices PayPal engages in to make sure it is secure and c) it is de facto creating a virtual currency without any intent to create currency. In fact, the intent is to side step the need for currency. Nonetheless, the tracking of points that you can spend is the essence of a currency. The single biggest real value money has is it lubricates trade by creating something universally accepted so you don't have to ask dozens of people if they will take Thing You Have in exchange for Thing You Need. You can just sell it to Person Who Needs It and then turn around and buy what you need.

D) evading sales tax

I thought about this overnight. I don't know Greek tax laws, but in the U.S., if you earn less than (iirc) $600/year from one source, you do not need to report it on your taxes. If you earn more than that, even from barter, you do need to report. A lot of people will not, a lot of people won't even realize they should, but at least in this country, you are supposed to.

If you are using an online service for this, there are records. That makes it easier to report or to be caught if you didn't report. So I am not going to automatically assume that all people engaging in barter a) need to report it (maybe they are below the reporting threshold) or b) won't report it.

Also, given that you can only get 420 Euros/week out of the bank, it looks to me like the main thing barter is doing is getting around that bottleneck. These transactions would not be happening at all without barter. So while in some sense, yes, it may make it easy to skirt around the question of taxes, it is not like it is some tax loophole and people are doing this to actively hide profits. They are doing it because they straight up do not have access to enough money to get their needs met.

Perhaps over time the tax issue will get worked out. Perhaps not. But these folks are just trying to survive in spite of economic collapse impeding their ability to do so. I see no reason to act like they are just criminal scum, trying to screw the government of tax dollars.

This.

>"criminal scum trying to screw the government out of tax revenue." Umm, so you feel the same way about American Colonists with that whole Boston Tea Party thing, right?

well there was a war about that and winners decided it was fine :D

we'll know how this play out in the next decades.

“Greeks are aware there are devastating consequences of being in a single currency, like capital controls,”

Then they are aware of the wrong thing. Capital controls are not the issue. My guess is that without some form of control capitals would leave the country making things even worst. Of course they should get worst, capital control is BAD, but it serves a purpose. Bartering is working because people are trading existing assets. It won't work when it comes to buy those goods from other countries, which is the real issue Greece has. Greece could stop paying debts and use feta cheese as currency and it would be great, if they could produce all they need without imports. As a matter of fact, they can't, thus they have to deal with other countries, thus they have to produce things people want to buy and that's the issue - Greece does not produce enough stuff that people buy to cover its expenses.

As long as the strong countries (e.g. Germany) control the value of Euro then countries like the size of Greece will be always in trouble. I am Greek and the biggest mistake that we made was to enter the Eurozone. Euro is good only for very strong countries, but even those countries can have problems sometimes. A very good example is Finland and Sweden. The former has problems because of Euro but the latter thrives because they control their currency. And Greece may not produce cars for example, but our agriculture is strong. Because of the globalization though every country nowadays relies on other countries. See for example Iran's problems because of the sanctions. Iran is huge compare to Greece and they don't even have to import gas, but their economy on the other hand is weak.

"A very good example is Finland and Sweden. The former has problems because of Euro but the latter thrives because they control their currency."

There are several reasons for this - many of which are likely more important than the Euro - such as Finland having relied mainly on the declining paper industry and Nokia for exports while Swedish exports are more diverse.

Nokia are Finnish though.

That's the beauty of having your own floating currency though. Independent of what the problem is, your trade balance evens out automatically. If a country's forestry exports tank, imports will become more expensive and exports will become more competitive though currency depreciation. And people will eat more domestic cheese vs imported, stimulating domestic demand.

Aside from going to school for economics, what do I read to grok this concept much better?

> Greece does not produce enough stuff that people buy to cover its expenses.

It's more complicated than this. The real issue is that Greeks don't control their own currency. When a country has its own currency, the balance of trade automatically adjusts with the FX ratio (well, kind of - e.g. Swiss and US currencies are overpriced, because people trust them). If Greeks had Drachma, its value would fall (relative to e.g. Euro), the imports would get more expensive for Greeks and thus decrease, the exports would get cheaper for the world and thus increase, and the balance of trade would return to zero. In EU, Germany and Greece share the same currency, but Germany more than it imports, while Greece is the other way. As a consequence, the German currency (Euro) is undervalued, while the Greek currency (again Euro) is overvalued. If

Considering the habitual non-reporting of income that has been present in the Greek economy, my first thought is this is just another way to buy and sell stuff while avoiding VAT taxes.

Depressing, if true. Are there any signs that the Greeks are learning to pay taxes as a patriotic duty to enable the supportive government they have come to appreciate?

Honest question: how do you teach a corrupt society to start paying taxes? The economy there works with the assumption that your tax load is light, so things like rents and price of goods reflect that. It would be difficult for people to go from paying 10% tax to a Eurozone typical 44% tax overnight. The economy would collapse instantly.

I supposed you can slowly bring it in, but how? Who has the political capital? And if you do how long would it take to do this safely without hurting the already damaged economy? A decade perhaps? Two?

I don't envy the policy makers there right now. The people don't want to be responsible, at least a majority considering how easily Syriza keeps winning and more moderate parties keep losing. Ironically, if they want low taxes they should shoot for a low regulatory, small government, small social services US-style model instead of the welfare state Euro model they're aiming for. Yeah, Germany and France can get way with it because not only are these countries incredibly wealthy, but the people there actually pay their taxes. You can't have Somalian tax loads and French lifestyles.

Honest question: how do you teach a corrupt society to start paying taxes?

As a Greek citizen I can tell you that the general sentiment here is that the state has to show that they respect taxpayers' money. Which among other things means that the government will genuinely try to fight corruption (this hasn’t happened so far), red tape will be significantly reduced, corrupted public servants will go to jail and their properties will be confiscated etc. There is a huge mistrust between citizens and public sector and this up to a point motivates people to not pay what they should.

Of course from a certain perspective this can be perceived as a poor excuse to justify tax avoidance but as always the truth lies in the middle. In Greece there is no sentiment for common good, each one is on his own and that reflects in the way we perceive our obligations to the country. We’ll pay up to the point that we’ll have no problem with the law. If tax laws are not too strict, which was the case up to a few years ago, then people will look the other way.

Fortunately, the memorandum is forcing the government to take certain steps in solving many of those issues. Of course it will take time, but the path has been paved.

A supportive government would have weakened the currency and not pushed austerity on the Greeks. Also, the Eurozone is not a government, it's a monetary union [1].

[1]: https://en.wikipedia.org/wiki/Eurozone

If this was anywhere else it would be called "disruption".

>supportive government

And which one would that be? This is kinda the problem. The Greek government is so rotten people don't pay tax to it if they they can get away with not paying.

Some governments make their citizens rich, while other ones make them poor. Greece's definitely belongs among the latter.

I'm sort of a socialist and my hypothesis is that society benefits from good governments being big and bad governments being small. Greece's government is horrible and should therefore be tiny.

So, when stocking my bunker, what should I put in there that will have high barter potential?

Something with high utility. Tools are the first thing that come to mind. Storage containers like water jugs and backpacks? Warm clothing? Weapons for sure.

Laundry detergent might be good to stock.

> Law enforcement officials across the country are puzzled over a crime wave targeting an unlikely item: Tide laundry detergent.

> The obvious question — why? — has a pretty simple answer. Tide is recognizable, easy to steal, hard to track, and can be re-sold for $5 to $10 a bottle.

Besides, its shelf-stable.

http://www.npr.org/sections/money/2012/03/12/148448368/peopl...

Alcohol. Both disinfecting-strength and recreating-strength.

Traditionally? Alcohol and Cigarettes. Although I think if you put an alchohol still in your bunker then you'd basically be able to print (pour?) your own currency over the long haul.

Yep, one of my friends is learning to brew beer, distil spirits, and farm his own food, so he'll be set for when the zombie apocalypse occurs.

Tampons would have a high barter utility in a doomsday scenario. Alcohol and cigarettes would be in high demand too, I would imagine. Just think of household items people use on a daily/weekly/monthly basis that they couldnt live without.

Tampons would eventually be phased out with reusable fabric or a diva cup like device (silicone reservoir).

Not only that, but if the body weight of a woman (particularly her fat reserves) drops too low, her periods become sporadic. So if women are starving, periods become less of an issue. Something about evolution designing for not getting women pregnant when they don't have the resources to feed themselves, much less nurture an infant. Mother Nature is weird like that.

Nail clippers, useful materials and quality consumables.

Phoenix Downs, and Cups of Lifenoodles.

Alcohol. Definitely alcohol.

.22 caliber bullets--they are used for small game hunting and last forever.

Firearms and ammunition should be first or your stuff won't be your stuff for long ;)

Otherwise clean water and Soylent.

The thing that makes this question interesting is that the answer is "Whatever other people didn't think of stocking that they'll need".

Depends what you're preparing for.

If you're preparing just for a few days/weeks without "the grid", then obviously the most useful items are everyday consumables:

- toiletries: toilet paper, tampons, razors, soap, toothbrushes, toothpaste (although hard soap works as well), lenses & glasses

- medicine: antibiotics, plasters, vitamin C (and other vitamins), water filters or water purification tablets, first aid & trauma kit

- heat & light: lighters, matches, candles, flashlights (including headlamps and wind-up flashlights), batteries, solar chargers, clothing, gasoline, portable generators

- entertainment: radios, books, board games, alcohol, cigarettes

- food (obviously): rice, flour, pasta, honey, canned meat, canned & pickled (or otherwise preserved) food

Especially noteworthy are cigarettes (or cigarette boxes); IIRC, there were historical examples of societies using cigarettes as money - cigarettes are rather small and light, last for a long time, are hard to falsify, easy to verify, and have real-world utility.

For long-term "lawless" society, other things would be useful as well, such as seeds, guns & ammunition, communication equipment (walkie-talkies), books that explain how to do stuff ([1], [2]), all kinds of tools, instruments and equipment.

WARNING: all of the above is purely theoretical.

[1] https://en.wikipedia.org/wiki/Where_There_Is_No_Doctor

[2] http://www.amazon.com/Where-Women-Have-No-Doctor/dp/09423642...

  - bottled water     - canned foods      - baby formula
  - diapers           - toilet paper      - ethanol
  - tobacco           - opiates           - matches
  - lighters          - tampons           - candles
  - bar chocolate     - coffee, tea       - toothpaste
  - batteries

  - water filters     - freeze-dried food - multivitamins
  - porn magazines    - antipyretics      - disinfectants
  - analgesics        - antibiotics       - charcoal
  - suture kits       - bar soap          - knives

  - Ca(ClO)2          - ammunition        - seeds
  - salt              - tube socks        - gloves
  - lye               - iodine            - baking soda
  - lamp oil          - playing cards     - dice
  - rat snap traps

shoes

>analysts said new instability could reappear if Greece cannot carry out structural reforms demanded by its lenders.

The sad thing is that this is basically unavoidable. The Greek bureaucracy is so corrupt it's outside the reach of the central government. Greek politicians couldn't change the system if they tried, which they won't, since they too are corrupt.

The orderly countries that are Greece's creditors have limited understanding of the Greek government's thorough corruption, or at least that was once true; now I think they are just kicking the can down the road until the next election. Some day we will have to write off Greece's debt. The Greek government will never pay back, unless they can do so on the back of the poor and those without political influence, which is of course what they're trying to do right now.

This kind of feels like an opportunity to use bitcoin or another digital currency, doesn't it?

Bitcoin has too high a barrier to entry for normal people, especially impoverished citizens of Greece.

Attempts were made with Local Exchange Trading Systems (LETS) which from the sound of it were adhoc swap meets / bartering exchanges which would peg an alternate currency unit [ (Greek: Τοπική Εναλλακτική Μονάδα ("Alternative Monetary Unit"); abbrv: TEM ] to the Euro and in some cases debt was accepted between individuals.

TLDR; a ledger/local credit card system might be useful for these communities.. BTC would not help because none of these people could be expected to mine or purchase the coins to begin with.

Hmmm. I was gonna call BS on poor greeks not having computers, but http://greece.greekreporter.com/2014/07/15/one-in-three-gree...

That's fair, a ledger system would be more helpful here. But for BTC it's not a matter of them needing to mine or purchase bitcoin with money. You just need to bring in a couple people who already have bitcoin and then you buy bitcoin for your meat or tires. Once you have bitcoin, it's possible to turn that into USD in accounts that are external greece, or into another hard currency via that BTC-meetup website.

BTC adds too many layers of complications at which point the issues with exchange in these small local market systems might as well acquire normal tangible currency like Dollars or Euros. And very few people want to trade food, tires, or liquid assets for currency because currency, be it BTC, Euro, Dollar or gold, seems worthless compared to the food or tires.

The main issue BTC and Euros can't solve in these situations is the prerequisite of acquiring the money units to begin with in order to facilitate the exchanges and local economy - thus the reason why the swap meets were using TEMs which facilitated a form of debt and exchange medium.

I suppose that Greeks could begin selling their production for export at some discount to foreigners for BTC and then use that BTC for local trade. The people outside cities who have land and use that land to create food (plants and animals) could eventually bring enough BTC into the hands of Greeks to make the economy work in a somewhat normal fashion.

All the disadvantages of the Euro - low inflation, no control over interest rates - with extreme volatility of demand thrown in?

The upshot of BTC is that there isn't a real governing body that has political goals. If you're in the euro you've effectively outsourced monetary policy. With BTC there isn't any.

Expectations are a huge deal when dealing with money as that's the only thing that gives it value; other people's expectations. So if your currency is one that everyone expects to fluctuate wildly over time they will behave differently than if they expect it to be very stable.

Except, you know, Bitcoin is actually liquid and Greek EUR deposits are not. You can send $1 million in Bitcoin outside the country and buy an apartment somewhere stable or a stack of gold bullion. Not so with Greek EUR deposits.

Not to mention EUR deposits in screwed up countries have volatility that puts Bitcoin to shame: http://www.rt.com/business/cyprus-crisis-bailout-deposit-631...

http://www.newsbtc.com/2015/05/14/increased-liquidity-on-bit...

My perspective on tax: "Tax is the cost of using money (printed) by the government"

If the structure of using money breaks down, then it boils to trust, which the barter system adequately provides. The problem, now boils down to the quantification of barter units. Maybe time will solve that.

paywalled

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