Josh Bearman, circa 1980, at the Grand Canyon.
Josh Bearman's third-grade snack food scheme provided him with an abundance of Rice Krispies treats and other prized snacks.
Josh Bearman's third-grade snack food scheme provided him with an abundance of Rice Krispies treats and other prized snacks. iStockphoto.com
Today, Josh Bearman has gone straight. He's a successful writer in Los Angeles. But he was briefly a criminal mastermind — in 1980 — when he transferred to a new school in Minneapolis and joined the third grade.
It was a fancy school where all the kids had fancy snacks like chewy granola bars and Rice Krispies treats.
Bearman himself grew up in a spartan home with no sugar.
To make matters worse, kids wouldn't just eat their lunches — they'd flaunt them. Every day, a brisk trade in lunch snacks would take place. Kids would pile all their best items onto one main table and start bartering.
"People would say, 'Oh, well listen, I've just had my fill of Rice Krispies treats for two weeks in a row, straight. Why don't I have some of your Fruit Roll-Ups?' And so they would trade it all around," Bearman recalls. "And it actually is a pretty efficient system. Everyone got what they wanted. It kind of all worked out for them. It didn't work out for me at all because I was totally outside of this economy. Because my peanut butter and jelly sandwich had no currency value in this market whatsoever."
And so, Bearman came up with a plan. A scheme. A lie. He told his classmates that every year, on the last day of class, his mother would bake a cake. A huge cake. The most delicious cake you've ever tasted.
"So what I said was, 'Listen, that's going to be a great day. But in the meantime, I can offer you this special opportunity. And what we can do is, if you give me those Cheetos now, today, you can lay a claim — you know, on a share of this future cake. You can have a deposit, and have a piece of this cake when it comes.' So, basically, I developed this sort of derivative lunchroom market for delicious cake futures."
This idea took hold and spread, totally disrupting the old lunchroom economy. Bearman's classmates would line up in front of him at a new table: One Fruit Roll-Up bought a share worth one slice of cake; one chewy granola bar was worth two slices.
To keep up appearances, Bearman would dutifully record the transactions in his Trapper Keeper. He'd even customize them. If a fellow classmate had a snack Bearman really wanted, something with giant-sized marshmallows for example, he'd say they could specially request what kind of cake they wanted — red velvet, chocolate or angel food.
"Even, at a certain point, I believed in the cake, even though I'd made it up. Because I just imagined the hero's welcome I was going to receive when they wheeled this Technicolor, baked colossus into the schoolyard, and how incredible it was going to be," Bearman says. "So there was this mutually reinforcing psychology: We all just bought into the idea of this cake."
Well, not all. One kid named Spencer, who had been the king of the old lunchroom economy because of all the delicious treats he regularly pulled out of his lunch box, was suspicious of Bearman and the ever-expanding ledger in his Trapper Keeper. Suspicious, and good at math.
"Mr. Fundamentals, Spencer, is over there saying, 'Hey, the numbers don't add up,' " Bearman recalls.
Lessons From The Old Lunchroom Economy
And here, Bearman's third-grade financial confidence game took on the exact contours of many of our current financial scandals. There's the group, taken in by the promise of a glorious future, and then there's the skeptic, saying this all doesn't add up.
These two viewpoints tussle for a while, but eventually, the truth wins out. The dynamics are as true today as they were at a third-grade lunch table in 1980.
"Listen, I was giving the people what they wanted," Bearman says. "They wanted — they liked the idea of this cake. And also, they figured they were too far in. They were into this cake for 40 bags of Cheetos and 20 Nutter Butters. And so they couldn't walk away from all their investment!"
Eventually, the regulator, the school administration, who had previously turned a blind eye on the whole fraudulent enterprise, got involved — long after, it must be said, anything could be done to help the victims.
Bearman was punished but, as he says, those Cheetos and Nutter Butters, they were never coming back.