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If I charge my neighbour $100 to chop some wood and he charges me $100 to paint a fence then the economy booms. If we barter it the economy doesn’t notice. If

If I charge my neighbour $100 to chop some wood and he charges me $100 to paint a fence then the economy booms. If we barter it the economy doesn’t notice. If we do the wood/fence ourselves the economy diesnt notice If we charge $1000 each the economy booms more than charging $100 each.

ffgjgf1 3y ago
> If we barter it the economy doesn’t notice. It does. Of course it might not be properly reflected in the statistics but it still creates additional value in the economy.
- adhesive_wombat 3y ago
  The best way to generate value will be if you both get done for illegal trading of services without training or licenses and generate a few hundred thousand to a million in GDP via the legal fees, plus remediation though approved service providers. Now you're thinking with Line Go Up!
- steve1977 3y ago
  Not really IMHO. It only would if those goods get traded later on. One could probably even argue that it destroys value, as the labor is not bought on the market.
- kbelder 3y ago
  Right. People are mistaking the map for the territory. Barter absolutely is part of the economy, and benefits the traders to the same degree a monetary transaction would; it just isn't included in most economic measures, because they're imperfect.
koliber 3y ago
That’s right. It’s because of taxes. In the first example there are various taxes that you will pay. Income tax. VAT or sales tax. Maybe license fees. These taxes go to the government, who in turn uses that money in some way. In the latter two examples tax revenue does not go up.
- nradov 3y ago
  Barter income is taxed at fair market value. Some people cheat on their taxes by failing to report barter income, but let's not conflate tax fraud with GDP issues. You can't legally avoid income taxes by asking your employer to pay you in firewood or diamonds or whatever instead of fiat currency. https://www.irs.gov/taxtopics/tc420 https://www.irs.gov/taxtopics/tc420
  - koliber 3y ago
    You are technically right. I don’t have the stats handy, but I am fairly confident that a large portion of the barter income is not reported.
firejake308 3y ago
Someone remind me, what's that joke about the economist who pays his friend to consume excrement and claims the GDP has increased?
- ducharmdev 3y ago
  Two economists are walking in a forest and they come across a pile of shit. The first economist says to the other “I’ll pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit. They continue walking until they come across a second pile of shit. The second economist turns to the first and says “I’ll pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit. Walking a little more, the first economist looks at the second and says, "You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can't help but feel like we both just ate shit for nothing." "That's not true", responded the second economist. "We increased the GDP by $200!"
nradov 3y ago
GDP statistics include barter transactions at fair market value. However, sometimes small barter transactions aren't reported in a way that can be counted in official economic statistics.

ffgjgf1 3y ago

> If we barter it the economy doesn’t notice. It does. Of course it might not be properly reflected in the statistics but it still creates additional value in the economy.

adhesive_wombat 3y ago
The best way to generate value will be if you both get done for illegal trading of services without training or licenses and generate a few hundred thousand to a million in GDP via the legal fees, plus remediation though approved service providers. Now you're thinking with Line Go Up!
steve1977 3y ago
Not really IMHO. It only would if those goods get traded later on. One could probably even argue that it destroys value, as the labor is not bought on the market.
kbelder 3y ago
Right. People are mistaking the map for the territory. Barter absolutely is part of the economy, and benefits the traders to the same degree a monetary transaction would; it just isn't included in most economic measures, because they're imperfect.

koliber 3y ago

That’s right. It’s because of taxes. In the first example there are various taxes that you will pay. Income tax. VAT or sales tax. Maybe license fees. These taxes go to the government, who in turn uses that money in some way. In the latter two examples tax revenue does not go up.

nradov 3y ago
Barter income is taxed at fair market value. Some people cheat on their taxes by failing to report barter income, but let's not conflate tax fraud with GDP issues. You can't legally avoid income taxes by asking your employer to pay you in firewood or diamonds or whatever instead of fiat currency. https://www.irs.gov/taxtopics/tc420 https://www.irs.gov/taxtopics/tc420
- koliber 3y ago
  You are technically right. I don’t have the stats handy, but I am fairly confident that a large portion of the barter income is not reported.

firejake308 3y ago

Someone remind me, what's that joke about the economist who pays his friend to consume excrement and claims the GDP has increased?

ducharmdev 3y ago
Two economists are walking in a forest and they come across a pile of shit. The first economist says to the other “I’ll pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit. They continue walking until they come across a second pile of shit. The second economist turns to the first and says “I’ll pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit. Walking a little more, the first economist looks at the second and says, "You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can't help but feel like we both just ate shit for nothing." "That's not true", responded the second economist. "We increased the GDP by $200!"

nradov 3y ago

GDP statistics include barter transactions at fair market value. However, sometimes small barter transactions aren't reported in a way that can be counted in official economic statistics.