Kid trades iPhone for a Porsche

I saw on the blog that Jalopnik, the car enthusiast site, has a story about a 17 year old who acquired a Porsche Boxter by trading starting with an old iPhone. Using barter ads at Craigslist, the kid was able to go from a cell phone donated by a friend of his to a nice Porsche car:

Starting with an old cell phone that was given to him for free by a friend, Steven [Ortiz] used the “barter” section of Craigslist to move up to a better phone. He then traded the phone for an iPod Touch, the iPod Touch for a dirtbike — which was turned around several times for other, better dirtbikes — and then a MacBook Pro arrived, which opened the door to vehicles.

…The total number of trade transactions between old cell phone and Porsche Boxster? Fourteen.

This example gives us a wonderful illustration of subjective theory of value to use to explain the concept to young people and to progressives. (we will have better luck with the young as they can still think) The example shows that each of these trades was voluntary and that both sides of each of the 14 trades believed that they were making their own situation better. No one was forced or intimidated into trading with this young barter expert.

People have differing value scales and personal situations, and that allows trades between two individuals to leave both thinking that they are more wealthy than they were before the trade took place. You and I don’t have to agree with either party on their subjective valuation in any of the trades and we most likely would not agree with one side or the other in most of them. But this difference of subjective opinion is exactly what makes the market work as the Austrian School describes.

I once wrote a post called, “Free Markets: how can both sides win in a trade?” where I attempted to outline why the human subject value allows for trades to be win-win. I wrote that in any voluntary exchange, both sides of the trade undertake the exchange because each expects to gain from it. If both sides are happy with the trade they may well elect to trade again next time. If the trade does not yield the results that one side or the other expected (we do make mistakes after all) then there may be no trade next time.

I think stories of kids using Craigslist to barter are going to be great teaching tools for those of us struggling to find ways to explain our thinking to the up and coming generation. I am glad that LCR brought this one to my attention.


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