Swop-o-nomics, economic gaffer tape.

So why did we set up Swop-o-nomics? Why do we think it’s time to dust off good old barter?

We’re all sick of hearing the word ‘Recession’, it’s being thrown around a lot lately – by the Irish more than most. We all know what caused it, any group of 5 year olds can now discuss the perils of the subprime mortgage market and risky tax regimes of Lenihan and Co.

The simple explanation (so the 3 year olds can understand) is that the market broke, and we don’t know how to fix it. The law of Supply and Demand seem to have become  more of a suggestion than a law. People are hearing of job cuts > think “Geez, what if I lose my job too!” > Stop spending and start saving their money just in case > companies can’t sell their stuff > they have to lay off staff to cut costs > more people stop spending money, etc… kind of reminds me of a song

Anyway… our little scenario there was caused by a change in demand, but the change in demand was caused simply by a fear of not being able to consume in the future, so the people reduced today’s consumption. This has pretty much left people only spending money on things they can’t avoid paying for. So the whole country is sitting at home, all these extremely skilled people who trained or practiced for years are waiting for money to come in so they can consume again. That’s where we come in, to try and smooth this whole thing over.

There are accountants sitting at home looking at their broken bathrooms planning on fixing them any day now, there are plumbers who lost their jobs unsure how to best re-structure their finances.  In normal times, imagine the plumber would pay €200 for some financial advice and the accountant would then pay €200 to get the bathroom fixed. But now they just sit at home looking for money to do this zero-sum transaction… How does that make sense? Why not just skip the money bit!

Our goal in this is to help people allocate their skills as efficiently as possible, if the plumber does the plumbing and the accountant does the accounting… everybody’s better off.

Now, say you earn €30,000 per year and you spend say, €5,000 on things which you could have bartered. House painting, plumbing, financial and legal advice… anything. You now have an extra €5,000 than you would have had, and you can spend as you wish. What you have essentially done, is earned an extra €5,000 that year by doing what you’re good at in your free time. It was probably much less than €5,000 worth of free time, but your service was worth much more to the other person than your free time was to you. The net result of this is you have consumed more than you would have previously and increased the amount of goods and services traded within the economy (GDP) by €10,000 instead of €5,000.

Now, obviously this can’t be scalled up to live on barter alone, work and jobs play a very important role in gathering people who are good at a particular thing together to work together and provide the service better than each of them working separately. But as an aside from your job or if you’re unemployed, barter can help smooth the bad times and boost the good.

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