posted on Oct, 16 2011 @ 03:29 AM
Originally posted by ShortMemory
you trade goods for other goods and services. it worked for hundreds of years.
It works for the elite who have lots and lots of goods and serf labor to trade. It doesn't work so well for the poor and the unskilled, who tend to
remain poor and unskilled in a barter economy. There are just too many inefficiencies in the barter system to make it work for most people.
Say you're a farmer; you grow vegetables and have some livestock. You get cancer and you need a medicine made only in China. China doesn't want your
vegetables and livestock; they can grow their own. They don't want any services from you; they have their own farmers. So you have to arrange the
trade through some sort of middleman. And he has to arrange not only the purchase of your medicine, but its transportation, meaning he has to have on
hand something that both a Chinese pharmaceutical company and a freight company want. Not all pharmaceutical companies or freight companies will
accept what he's willing to trade, so the best deal available may be a bad deal. Maybe the trade ends up costing you half your farm, which the
middleman will give to a real estate developer who will provide the middleman with raw steel, which the middleman will give to another middleman for
ten million boxes of toothpaste, which he will trade to the Chinese for your course of treatment, after which they will trade sixty in-flight
defibrillators to an airline to fly it to Los Angeles. From there, your middleman arranges for you to trade the output of your remaining farm to have
another freight company which will fly your medicine to you. You die while all this wheeling-dealing is going on.
Here's an alternate scenario: You're a wealthy plutocrat. You own a wheat distribution company and buy all the wheat in America. You don't give the
farmers very good exchanges for the wheat, because you don't have to. The business of multiple-exchange bartering is so complex the farmers can't get
out of their relationship with you, and no one else can break into the barter lines you've created. You get cancer and need a medicine made only in
China. You contract directly with the Chinese to send them eight million bushels of wheat for your course of treatment. The Chinese send you the
medicine and you recover and live a long and healthy life. The wheat farmers, because they must deal only with people who buy wheat, continue to be
your virtual slaves.
A third scenario: You're a farmer. You get cancer and need a medicine made only in China. You contact the manufacturer over their web site and
initiate an electronic transfer of money. They use an electronic transfer of money to pay a shipping company to deliver the medicine to you. You
recover and live a long and healthy life.
Money works and it's fair because it's simple and everyone agrees (more or less) on its value. Anyone with money can do business with anyone who wants
money. You don't have to hunt down obscure barter items like a quest in some video game, you just call up a trade partner and ask them how much they
want for whatever they're selling. And it's very easy to compare competing offers: if you sell grain, you know that $8/bushel is better than
$7/bushel. Under a barter system, you have to compare the values of the unlike objects and services. Which is a better deal: one set of curtain rods
per bushel, or a pair of gently used children's pants? To know the answer to that question, you have to know how many curtain rods or pants it would
take to acquire the goods and services you need, probably after a middleman takes his cut. And let's not even get into emergency expenditures,
necessary exchanges you cannot possibly anticipate or plan for.
edit on 16-10-2011 by FurvusRexCaeli because: .