NO MONEY DOWN:
Can barter system's cashless transactions
catch on?
By Ken MacQueen, Southam News
COURTENAY, BC
- As the federal government pushes ahead with
its pervasive goods and services tax,
a group on Vancouver Island
is marketing a computerized barter system
meant to reduce the
need for money altogether.
Proponents of
LETS (Local Economic (jct:Employment) Trading
Systems) says the trading networks aren't
a tax avoidance scheme,
just an alternative to currency. (jct:
Interest avoidance)
"Money, the nasty stuff," says Geoff Slater,
turning up his nose
as though the smell of cash was leaking
from a visitor's wallet.
"It has no sense of morals whatsoever."
Slater, 49, is sitting in
the ground floor office of a home in the
scenic Vancouver Island
community of Courtenay, sorting a steady
trickle of inquiries
from around the world.
It was here on
Johnston Avenue - during the depths of the
recession seven years ago - that an under-employed
MBA graduate
named Michael Linton developed the LETS
system. He and his young
family had no money. A huge swath of Vancouver
Island residents,
including Geoff Slater, had no jobs. Linton
devised an elaborate
community work exchange program and a
mythical currency called
"green dollars."
The system goes
beyond the typical suburban baby-sitting
exchange, or a one-to-one barter, where
Tom builds Jerry's fence
in exchange for Jerry fixing Tom's truck.
Linton's system
recognizes that the chance of Jerry needing
a new fence at the
same time that Tom's truck is broken is
remote. Instead, services
are exchanged among a group. Debts and
credits (measured in green
dollars) are tracked in a computer and
registered against the
network at large.
Slater, who is
working with Linton, 44, in an uphill battle
to market the non-profit system, offers
a typical example of a
cashless transaction. Unable to afford
a piano for his teenaged
children after he was laid off from his
job as a store manager in
Duncan, B.C., he bought one from a LETS
member for 400 green
dollars. Slater, in turn, paid his debt
by working in the
community, installing wood stoves and
delivering firewood for
other members. He later sold the piano
to people on Cortez Island
in exchange for accommodation when he
visits the island, music
lessons and lessons in harvesting seafood
and shellfish.
To many economists,
such systems are the financial
equivalent of cold fission, producing
more bubbles than heat. To
the government, such systems are part
of the dreaded underground
economy, a world of under-the-table cash
transactions and
bartering that escapes the clutches of
the tax man.
Linton says that
proponents of LETS aren't avoiding taxes,
they are trying to avoid money. Traders
in the system are advised
that their transactions in green dollars
are as taxable as those
conducted in real currency. In practice,
however, many of the
smaller transactions go unrecorded.
Linton's system
has received national and international
attention. It was featured on "Venture,"
CBC's television
business show. It has been profiled in
magazines as diverse as
"Canadian Living" and the California-based
"Whole Earth Review."
It has not, however,
caught fire.
At one point
during the recession, there were 10 LETS
networks on Vancouver Island. A food bank
and church in
Charlottetown, P.E.I., received a federal
grant to establish a
system in 1987. Many of those networks
have withered in today's
more prosperous times as wage jobs are
easier to find.
Still, Linton
has exported the concept to several
communities in Australia. And he has spent
much of September in
Toronto, where he hopes to start a network
by the new year. For
$25 - real dollars - he sends out a start-up
package including
the computer disks needed to establish
an accounting system.
The concept has
the endorsement of Abraham Rotstein, an
economics professor at the University
of Toronto who has studied
alternate economies. He says the creation
of a second local
economy should be encouraged by government,
especially in areas
of high unemployment. "They can mobilize
and involve people and
resources that otherwise get left out
of the main (economic)
system because of lack of income or lack
of jobs," Rotstein says.