Monday, July 1, 2013

community currencies and local governments

Recently there have been several comments and propositions - for instance Jem Bendell at a UN conf - referencing the significance of the local government as a potential focus for development activities, in contrast to expecting anything from higher levels of government.

There are many obvious reasons why local government may be more accessible than higher, and should be brought into the use of local and regional currencies, and why soon would be good. 

But if this isn’t done right it can be very wrong and three things are to be particularly avoided

  • bad currency systems,
  • local governments issuing money, and
  • the quest for local money tax acceptance. 

These are three negatives, but there's no problem - there are better ways to approach this.

0) Cash-backed “complementary currencies” are not a useful medium - they do nothing.  

This is item 0 as it applies across the board, not just to local government

Any currency project that tries to assure the value of their issue by promising cashout is going to end up holding their own paper when the cash is gone.

While this can be useful in some particular applications - for instance for short demonstrations - it can’t be a long term strategy.   

This should go without saying, and maybe one day it will.   And don’t take any wooden nickels either.

1) The issue of currencies by government institutions is basically a bad idea - that way lies madness.

Governments may use peoples’ money, and should do, but to set it up the other way is a recipe for opportunistic behaviour from an institution not know for taking responsibility.   No government should be encouraged or indeed allowed to issue any significant amount - any opportunity for local “quantitative easing” carries the risk of the usual political games.
Governments are however in the “business” of service delivery - often charging user fees - and so can in those areas project earnings with some reliability, which would in turn enable some limited issuance tied to those particular services.   

Candidates will vary from place to place, but may include such services as venues, facilities, housing, transportation, materials re-use and/or recycling, public education and public health, energy rationing, parking tickets and library fines.

Also, infrastructure projects could be very properly financed with local bond issues, where the bond were also a functioning currency in the community.

Some 20 years ago the LETSystem Design Manual had recommendations that still apply, and will do for some time.

2) Getting tax payments in local money will be hard.

While it must always be a core of any long term strategy, community currencies to pay taxes is almost certainly going to be just that - a long term strategy.   Does anyone think this is going to be simple, or easy or soon?   Given the variety of vested interests and institutions highly averse to change, what are the chances?

And who knows what concessions might be required to conform to their world?  Approval by the authorities isn’t easily gained, and is generally on their terms.  And given they have no idea what this is all about, it seems a procedural quagmire to play their game on their field.

Those who think this is a useful pursuit are of course encouraged to take on the task, of course, and to please report on progress.

But those who see government as a mountain not coming to us, see also that we have to take the game of currencies to them.  Local authorities need to be shown there are simple applications they can adopt now, without any legislative wrangling or bureaucratic tangles, that generate value in excess of any costs incurred.

There’s a basic premise that needs to be tested - that local governments can do more with their resources when they use circulating currencies (good ones, that is).   If there’s no clear tangible and accountable benefit, then there’s no point in pursuing any tax plans.   So why not do that first, and perhaps save a lot of time and work and confusion?

If a local currency system is well designed - for instance backed by local business undertakings to community causes, and therefore strongly assured - then a local government can certainly spend such money in their general budget.  They can then justify buying the local money from local community groups to double the effect of the tax $ or £.

And there’s no red tape.