— Bay Area Community Exchange

The Great Recession and the slump that followed have triggered a jobs crisis that’s been making headlines since before President Obama was in office, and that will likely be with us for years. But the American economy is also plagued by a less-noted, but just as serious, problem: Simply put, over the last 30 years, the gap between rich and poor has widened into a chasm.
Gradual developments like this don’t typically lend themselves to news coverage. But Mother Jones magazine has crunched the data on inequality, and put together a group of stunning new charts. Taken together, they offer a dramatic visual illustration of who’s doing well and who’s doing badly in modern America. The poorest 90 percent of Americans make an average of $31,244 a year, while the top 1 percent make over $1.1 million.

To see lots of graphics that break down the gross inequalities see Mother Jones’ article.

Oakland North
The late Neldam’s bakery is reborn, with workers in charge and treats as diverse as Telegraph Ave.
By: Alyssa Fetini | September 11, 2010 – 12:00 pm

There is a new bakery in town—sort of. When recession-related woes forced Neldam’s Danish Bakery on 34th St. and Telegraph Ave to close its doors in July after 81 years in business, its longterm employees banded together to give the Koreatown staple a fresh start.

“When Neldam’s closed, I thought to myself ‘what am I going to do now?’” said Mark Davis, who had been a baker at Neldam’s for 37 years.

Less than three months later, Davis has an answer. With the help of the building owners and investors Kevin and Sukhee Yoo, Davis and twelve of Neldam’s former employees, many of whom have worked together for decades, have formed a co-op to reopen the bakery under a new name: Taste of Denmark.

The new, employee-run Taste of Denmark, which opened for business on September 9, will give the employees a stake in the business — an added incentive to see it succeed.

“Now the former employees can not only have their old jobs back, but be owners and put more passion into the bakery,” said Sukhee Yoo.

The veteran employees and new managers say they hope their perspective on the changing needs of their customers will help Taste of Denmark avoid the same fate as Neldam’s. “Before, it was a very Danish style bakery but now we realize that we need to cater to the Asian- American community, the black community and Hispanics,” said Yoo, referencing the area’s increasingly ethnically and culturally diverse population.

Though Taste of Denmark will feature all of Neldam’s standard pastries, such as croissants, turnovers, cakes and (of course) danishes, plans for Asian pastries, tres leches cakes, and sugar and gluten- free options are underway. “We’d like to think that anyone can come in here and ask for something, and although we might not have a lot of it, we’d at least have something for everybody,” Davis said.

Oaklanders have already welcomed the bakery back with open arms. By 8 a.m. on opening day, Taste of Denmark was already full of customers—some new, eager to try out the free samples on the counter, and some faithful devotees. “I’ve been coming here since the 1940’s” said self-proclaimed regular Madeline Wells. “The people here are amazing. The pastries are like nothing I’ve ever tasted. This place is in a category all its own.”

A Taste of Denmark is located at 3401 Telegraph Ave. The hours, as of Sept. 9, are 7 a.m.-6:30 p.m. weekdays; 8 a.m.-5 p.m. Saturdays; 10 a.m.-4 p.m. Sundays.

New Videos on Participatory Budgeting in Argentina & Brazil
Feb 16, 2011
The Bertelsmann Foundation has posted short videos (in English) describing the seven finalists for the 2011 “Vitalizing Democracy” Prize. 158 democratic innovations from around the world were submitted, and three of the finalists are cases of participatory budgeting. Each case also uses technology in innovative ways, for SMS-voting, internet voting, electronic ballots, or online forums.

- La Plata (Argentina): Participatory Budgeting uses SMS-voting and electronic ballots.

http://bit.ly/laplatavideo

- Belo Horizonte (Brazil) Co-Governance: part of Belo Horizonte’s participatory budgeting includes Internet and interactive voice response (IVR) voting.

http://bit.ly/belovideo

- Recife (Brazil) Participatory Budgeting: includes electronic ballots and Internet voting.

http://bit.ly/recifevideo

E-participatory budgeting:
innovative practice in Belo Horizonte (Brazil)
One of the most interesting e-participation experiments
is the e-participatory budget of Belo Horizonte, in Brazil.
With 2.35 million inhabitants, this city is the sixth largest
in Brazil and an important political centre in the country.
Its PB is one of the oldest in Brazil: it began in 1993 and
its methodology has been innovative. Most notably, it has
included an autonomous housing PB designed to deal with
this especially important issue. It is based on a two-year cycle,
a feature that has tended to inspire other experiments in
Brazil, and places emphasis on popular control over the real
execution of the public works that have been chosen.
In 2006 a digital PB was added as a third pillar, which was
repeated in 2008 and 2010. The digital PB has three objectives:
to modernise PB through the use of ICTs; to increase
citizen involvement in the process, and to include big investments,
concerning the whole city, in the participatory
budgeting process. In fact, most Brazilian PBs face a double
problem: participation remains relatively limited (1 to 3
percent of the people in cities, somewhat higher in smaller
towns) and the biggest investments tend to remain outside
their reach.

The idea is to organise an online vote open to all residents
older than 16, in order to prioritise some investments that
require much more than the amounts available at the district
level. In order to participate, citizens have to access the
e-voting platform through the city‘s official website, where
information on the various public works is provided. The
decision is made through majority rule, with no preference
given to socially disadvantaged areas. In 2006, 25 million
R$ (around 14 million US$) were made available to the digital
PB. The amount was increased to 50 million (28 million
US$) in 2008, so that one public work (a beltway around
a very important square) could be selected. In comparison,
around 80 million R$ (44 million US$) were given to the
district PB in 2007-2008, and 110 million R$ (around 61
million US$) in 2009-2010. (In this last round, 110 public
works were selected, which means that the average amount
was 1 million R$, around 550,000 US$.) The methodology
was somewhat different in 2006, when voters could cast
9 votes, one per district, and 2009, when voters had only
one choice and it was also possible to vote by phone.
173,000 persons voted in 2006 (nearly 10 percent of the
Belo Horizonte electorate), and 124,000 in 2008 – compared
with 38,000, 34,000 and 44,000 voters for the district
PB in 2005/2006, 2007/2008 and 2009/2010. The increase
in participation with online voting has been a clear success.
However, the deliberative dimension has been virtually lost
(only 1,200 contributions were made in the online forum in
2006), and the digital participatory budget looks more like
a ‚light‘ referendum than a ‚traditional‘ PB. This peculiar
success has made the Belo Horizonte digital PB an internationally
recognised good practice (Peixoto, 2008).

Posted by Dandarius on February 5, 2011
On Transition California

To clearly understand the power of self-reliant economics as an investment model, let us follow the adventures of two dollars as they go out to seek their fortune and make their mark in the world.

Dollar #1 ended up in a civil engineering construction company. The company did relatively well. They won a contract with the IMF to build an oil pipeline in South America. The cost of the pipeline ultimately was the responsibility of the local government, which would end up paying for the interest on the loan to build the pipeline for many years. This road made it possible to transport oil from drilling operations in a remote section of the country. The profits from the drilling were supposed to help pay for economic development projects to benefit the local people. Unfortunately, they ended up being used to pay for the interest for the loan to build the pipeline but this did not affect the profitability of the construction company, which was paid for by the IMF who loaned the money to build the road. And so after ten years, the $1 investment was worth $3.84

There was unfortunately a minus side – environmentally, socially and economically. The pipeline had serious leaks and caused an incredible amount of pollution. The areas for miles around the drilling sites were blighted. The communities protested, but they were not shareholders, and the construction company felt itself answerable first and foremost to the shareholders. The construction company did provide a large number of jobs while the pipeline was being built, but these were generally low paying subsistence level jobs. In any case, workers generally spent all their income in stores which stocked items imported from other places. For this reason, there was no economic development in the area other than the drilling itself. 100% of the profits of the drilling operation thus left the country. The local area, being impoverished, experienced massive social unrest and unemployment. There is no way to put a price tag on these costs.

Dollar #2 went to Working Villages. It was used in the set-up and operation of grain mills. At an initial start up cost of $133,000 and a yearly operating cost of $30,000, the mills had expenses of $433,000 over a ten year period and income of $2.4 million. Net income was almost $2 million on an initial investment of under $200,000. So Dollar #2 had grown to $10 in the 10 year period.
But the story of Dollar #2 had just begun. The $10 was reinvested in development of a chain of cooperative stores, which stocked food, clothing and manufactured items produced locally at prices below the cost of imported items.. All the money earned by the local farmers during the 10 years – about $10 million was used to buy products in the stores. The stores sold items at a 25% net margin, and so produced a net profit of $2.5 million from total gross sales of $10 million over the period, from a startup capital of $100,000. The $7.5 million in gross sales that were paid out to local producers and manufacturers were all recycled through the local economy multiple times. The dressmakers who sold their dresses bought food from local farmers, who in turn bought locally made agricultural implements. The $10 thus grew to $250.

The story of Dollar #2 is starting to get interesting! Income from the milling and the stores was re-invested in building local industries, including clothing, construction materials, furniture, agricultural tools, large fruit orchards, and a large dairy. Oxen were trained to plow and transport goods, enhancing worker productivity. One farmer with a trained ox team can plow at least 10 times more land than a farmer plowing by hand. Agricultural output thus soared.
Because the economy was self-reliant, every transaction within the village economy was recycled back into the local economy. It thus became increasingly difficult to judge profitability exactly, but we conservatively estimate that the original investment produced wealth in excess of $100 million in 10 years in this one village alone. Within 10 years, we expect to have replicated the self-reliant community in hundreds of locations in the region.
The ROI for Dollar #2 was $3.86 while at the same time, by building the local economy, the opportunity for future investment increased exponentially. A local economy that at the outset could properly utilize an investment of at most $200,000 had been transformed into an economy that could effectively utilize tens of billions of dollars – all of this with zero pollution or environmental degradation and total community support.

Which dollar followed an intelligent investment course? If we consider this from the standpoint of investment security, Dollar #1 was better, because the construction company had a proven track record, and was well capitalized. If we look simply at return on investment, both courses appear almost equivalent. But if we look at the long term picture, Dollar #1 created environmental and economic chaos, while Dollar #2 was instrumental in the economic growth of the community, without any pollution or social upheaval creating prosperity across the board.

Editor’s Note: This protest speaks to the need for relocalization in conjunction with economic democracy, as well as a scaling down of the materialistic lifestyle encouraged by Western culture. I knew years ago that Mondragon was creating high tech exports to partially support their cooperative project (many people wondered how did they do it and why haven’t we been able to?). This raised a red flag as most high tech is environmentally unsustainable, as is the environmental burden of transporting exports and related packaging. Most high tech goods are produced in sweatshops to be competitive on the global market. Sometimes despite good intentions, the distancing of the supply chain leads easily to environmental, economic, and social abuses. It become much easier to both hide these practices and to emotionally and socially distance one’s self from the effects. Hence all the problems with tracking sweatshop and green goods. A truly sustainable economy would be focused on local/regional productions, with minimal production of necessary specialized goods by the global fair trade market. In the meantime, these workers need fair wages. In the long term, they should be building their own regionally produced, democratically controlled, sustainable, cooperative economy. Nothing else will substitute.

FagorMastercook Protest
ZSP Admin, pon., 07/21/2008 – 20:10
Fagor’s not a Workplace but a Workcamp: Mondragon Capitalists F#$% Workers in Poland. Strike is Imminent

Fagor is a large appliance manufacturer owned by the Mondragon “Cooperative” capitalist enterprise. In Poland it cooperatives FagorMastercook in Wroclaw. Currently there are serious labour problems in FagorMastercook. Members of the Wrocław group of Union of Syndicalists (ZSP) went Friday to a protest in front of the factory.

The place has become quite militarized. On Friday the firm had over 200 armed security guards from the notorious firm Impel there to protect the factory. The place was surrounded by metal barricades and each worker going in was throughly searched. Some employees say that there is often heavy security and searches.

Despite the heavy security, or perhaps because of it, about hundreds of workers joined in the demonstration on Friday. About 300 people, workers and supporters, were there after the morning shift, and about 200 before the afternoon shift began. The demo was organized by the August 80 union which has been negotiating with the firm for many months to get people a pay raise.

The workers in FagorMastercook have noted many instances of people being fired for belonging to unions or even just agreeing with their postulates. At least 20 members of August 80 were fired.

In FagorMastercook there are a few unions: Solidarity, August 80 and OPZZ Metalworkers. Solidarity and August 80 are calling for pay raises. In June a warning strike took place. Over 90 percent of the workers went on strike. Then a wave of repressions started. Besides firing some unionists and others who supported them, they started to pick out people, have supervisors stand behind them on the line watching their every move, threatening to fire them if they got even a second behind production. This sort of intimidation was probably used to show people that if they tried to organize themselves, the company would find any small pretext to fire them.

On July 9, two members of August 80 were fired for “leaving their workstations”. They had been collecting votes on a strike referendum.

Members of ZSP at the demonstration were told that people were threatened with dismissal for demanding pay raises. They also heard that the workers will probably vote to go on strike.

Production workers at FagorMastercook make around 1200 zloties (400 euros) a month. Minimum wage in Poland is currently 1126 zloties a month but this will be raised to 1276 next year. So workers at this highly profitable factory are making almost nothing. That’s why one of the slogans of the workers is FagorMastercook: A Workcamp, not a Workplace.

At the end of 2006, the EBRD decided to give 17.5 million euro to FagorMastercook. This money was given as part of a restructuring project. FagorMastercook wants to increase production in Poland and achieve economies of scale while making Poland its production hub for Central Europe. The company moved production from Spain when it started new production of gas stoves in Poland about 5 years ago. The production of refrigerators also got moved to Poland. Over 80 percent of the production is meant for export. They increased turnover by about 29% last year.

FagorMastercook works in a Special Economic Zone and received subsidies from the Polish state; it received a direct subsidy of 3.5 million zloties for creating jobs, plus a CIT and corporate real estate tax exemption. So in addition to money from the EBRD, FagorMastercook got help from the Polish state of about 52 million zloties. That’s equal to the EBRD’s 17.5 million euros at the current exchange rate. This means that the EBRD and Polish state invested more in the FagorMastercook facilites in Wroclaw than Fagor.

Although Mondragon still pushes its “cooperative” worker-friendly image, publishing bullshit reports on how it is concerned about the effects on globalization on the local workforce, for example in Spain, Mondragón Cooperative Corporation (MCC) is a typical capitalist employer operating plants in low-wage countries like Poland, Egypt, Morocco, Mexico, Thailand and China. Employees in these countries are not co-op members. (Some employees in other countries, even in Spain are also non-members; as many as 1/3 of Mondragon workers are not cooperative members. Any cooperative can also apply to MCC to employ up to 40% non-cooperative workers.)

It pretends to be “one of the world’s top 10 best employers” and pays completely shit wages here in Poland and is actively repressing unionists. This is even worse than having typical capitalism disguised as a cooperative; it’s just typical exploitation of people from poorer countries by those in the richer ones.

ZSP is calling on people to send letters to Mondragon and to Fagor expressing their disgust with the appallingly low wages in Poland and with the recent incidents of repression and intimidation against protestors. We also ask people, if they meet anybody spreading naive reports about Mondragon, to point out what’s going on.

Sample protest letter (please write your own version):

To:

José María Aldecoa
Mondragon Corporation Cooperative
Pº Jose Maria Arizmendiarrieta
Nº 5 20500 Mondragon
Guipuzcoa, Espana
Fax: +34 943- 796 632
Fax: 34 943-779-300

Fagor Electrodomésticos
Fax: 943 79 68 81

Fagor Mastercook
Fax: 48 22 639-8985

We are writing to support the demands of the workers at Fagor Mastercook in Wroclaw and to demand an immediate end to its repression of unionists.

Workers at Fagor Mastercook are demanding an pay raise of 1000 zloties since salaries there are barely above minimum wage and are well below the national average. Over 90% of the workforce participated in a warning strike in June. Afterwards, many union members and leaders were fired. Workers have complained that they have been harrassed and intimidated. Peaceful demonstrators were met by 200 armed security guards.

This type of exploitation is a disgrace. Enough of your hypocrisy !

We are looking forward to the workers’ imminent strike and ultimate victory.

Signed
….

If you sent a protest, let us know. If you sent a different text, send copies to: info@zsp.net.pl

I attended tonight a panel on the interchange rules that will be proposed by the Fed by April 2011 and enforced by July 2011. The panel was composed of representatives from issuers (Bank of the West) acquirers (WestAmericaBank), Prepaid (Mastercard, Plastyc), Alternative Payments (Bling Nation).

There were many disagreements on what the impact will be on the many entities composing the complex card payment ecosystem. If there was one agreement it is that this regulation will have unintended consequences and possibly backfire on the government’s good intentions. But the positive outcome is that it may act as a trigger to force participants to innovate above what may quickly become a commodity: moving money.

Examples of unintended consequences:

• Free checking is likely to disappear. This may increase the population of banking dropouts: “formerlybanked”.
• Savings may not be transferred to consumers.
• Merchants might start to discriminate between cards issued by issuers who are exempt from the Durbin amendment (FIs with assets of $10B or less). “Citi or BofA cards only please” “You came from Redwood Credit Union? we can’t accept that card”. Note that while some Visa rules in theory prevent this, some participants in the audience have argued that these rules don’t have much court value.
• Banks moving to unregulated a.k.a. (yet) unregulated payment networks to drive revenue. “We are interested in you because you are not regulated”.
• Banks will likely move increasingly in the prepaid area, pushing high debit customers into new products like segmented spend, allowance cards. With the right prepaid product, banked employees might switch to prepaid.
• Banks may consider charging for ACH.
• The Fed may end up having to regulate many more players such as Google/PayPal, which may unfairly benefit from such rules.

On the innovation side, Bling Nation’s Wences Casares compared the current payment ecosystem to the telco ecosystem in the late 80s. Everyone back then was focused on voice. Then suddenly voice become a commodity and everyone had to come up with new products. He believes that payment business is in a similar situation of becoming a commodity very quickly as a result of such regulation, which may trigger a wave of innovation on top of the payment layer that can drive revenue.

Patrice Peyret of Plastyc was quick to remind that this analogy breaks down when you look at the current protocols, which are simply flawed at heart. New protocols, designed with security and real-time are likely to be required for innovation to be unleashed.

Towards the end, Wences reminded the audience that contactless has little benefit for the merchant or the customer, that the true revolution in mobile payment is in the new things that can be built on top, starting with but not limited to: Loyalty, rewards, deals, social, etc. I completely agree with this.

Grace Hill is comprised of sister agencies, Grace Hill Neighborhood Health Centers, Inc. (GHNHC) and Grace Hill Settlement House (GHSH). Each is controlled by a separate governing body. Grace Hill Settlement House was founded in 1903 by the Episcopal Diocese to help immigrant families “settle into their new neighborhood” on the near north side of St. Louis. Now it serves neighborhoods throughout the City of St. Louis and St. Charles County with its MORE system.
The Grace Hill Settlement in St Louis is one of the pioneers of Co-Production using Time Dollars. Their Member-Organized Resource Exchange (MORE) now underpins community involvement in 11 neighborhood centers and four health centers. Their involvement in the Head Start program dates back to 2001 when they won the contract to deliver the program to half the city of St Louis, mainly because of their proven ability to involve hard-to-reach groups through MORE.

Since MORE was fully computerized in 1991, service activity by residents has generated over 670,000 Time Dollars which, calculated at minimum wage, would have an equivalent monetary value of $3.5 million.

MORE for all
The Member Organized Resource Exchange (MORE), a hallmark Grace Hill program, has become the organization’s most vital way of engaging neighbors in helping neighbors.
Shaped by community members who build their leadership skills on one of seven MORE Boards, the program can involve everyone – children and parents, youth and seniors. In MORE’s inventive “time dollar” system of barter-exchange, community members of any age can offer a service – whether babysitting or house painting – within their skill set. Hours of service not only help their neighbors, but translate into “dollars.” They can then use “time dollars” to exchange services with neighbors, purchase services at Grace Hill Neighborhood Health Centers, or buy everyday household items and larger purchases, such as major appliances and furniture, at MORE stores. The exchange builds self-confidence as community members see the value of their work converted into tangible assets.
MORE also operates the Neighborhood College, where community members can strengthen their skills in 40-hour certificate courses on subjects such as parenting education and financial literacy. Like everything about MORE, the curriculum changes when neighbors see a new need arise.

From Shareable.net
by Mira Luna
1/20/2011

For the holidays, I flew to Lawrence, Kan. and St. Louis, Mo. to meet my partner’s friends and family. I was also being introduced to the area to get a feel for whether or not we might want to move there in a few years to build a community around a number activist projects like a timebank, a shared community space, and a bike kitchen.

It is often assumed that the west and east coasts are the geographic centers of cutting-edge social change and the Midwest lags far behind in consciousness, so my expectations were pretty low. But I left with hopeful utopian dreams. My experience there taught me not only that the consciousness is ripe in pockets of the Midwest, but also that the terrain may provide even more fertile ground for radical change.

In Lawrence, a couple of working class activists bought a commercial/residential building across the street from a large cohousing complex. The building will be green retrofitted into a community-run space called the Cosmic Beauty School, including healing services, sharing libraries, community events, sustainability classes, co-working spaces, and an alternative exchange system similar to the Share Exchange space in Santa Rosa, Calif. The Cosmic Beauty School hopes to provide a much-needed hub, gathering point, and resource center to catalyze other important social change projects that might otherwise have trouble getting off the ground.

While living in the nascent School for a few days, we learned about efficient fire wood stoves and the challenges of winter urban farming in a cold climate, as well as how to scavenge and chop firewood (an amazing art form with all the different kinds of wood), how to reuse water through a grey water system.

Next we visited St. Louis. Economically devastated and crime ridden, it seems particularly ripe for change. A neighborhood center in a low-income, African-American community has one of the best timebanks in the country called MORE (Member Organized Resource Exchange), with time dollar stores providing peer-to-peer mutual aid and self-help among the poor.

Nearby, a nonreligious group that calls itself Catholic Worker (after Dorothy Day’s work to address social and economic justice) has bought up nearly a whole block to provide free housing for low-income folks, with an adjacent urban farm, aquaponic system, and chicken coop. Many other buildings nearby are successfully squatted long-term by activists and low-income folks keeping the neighborhood safer. The Catholic Worker also bought a huge abandoned church for just $1.

BWorks, an umbrella organization in St. Louis, offers participatory (l)earn-a-bike, (l)earn-a-computer, and create-a-book literacy programs to low-income youth and is expanding to a larger location this coming year along with a community center called CAMP that incubates all kinds of activist projects and community services. On our way there, we stopped by the Black Bear, an anarchist café and community space.

St. Louis reminded me a lot of Detroit (another destitute Midwestern city), which I visited at last year’s U.S. Social Form. There, activists have been gaining access to large tracts of land for urban organic farming to feed the poor and revitalize the economy with healthful employment. Similarly, in Cleveland, sustainability-oriented worker cooperative development organizations are getting significant support for addressing high unemployment with more empowering green jobs.

Disillusioned by the economic downturn, the mainstream economy is being questioned by those hardest hit. The empty urban centers of St. Louis and Detroit create both physical and mental openings for opportunity. People are exploring new, local, sustainable livelihoods like urban farming, free collective housing, and worker cooperatives. The empty buildings and rock-bottom real estate prices allow radical projects that would normally struggle for extensive capital funding from outside sources like foundations to easily thrive on grassroots community volunteering and donations.

I have utopian dreams of making more projects like these happen in the San Francisco Bay Area, but there are significant roadblocks due the cost of implementation here. Buying a building is pretty much out of the question in San Francisco, which means my friends and I must continually put lots of effort into fundraising or working primary, full-time jobs just to pay for rent rather than focusing on the work of change itself. My energy gets siphoned off into the mainstream economic system or trying to find funding in a haystack of other nonprofits.

Another challenge is that, unlike many urban areas in the Midwest, San Francisco has yet to see the ubiquitous face of desperation that often catalyzes consciousness for real, deep change, while the saturation of the nonprofit industrial complex reinforces the status quo by putting band aids on the situation.

Activists in Lawrence noted Midwest brain drain — many comrades leave there to find the holy grail of social change in the West. Maybe it’s time to switch directions and start cultivating the fecund fields of the Midwest. Breaking free of our economic chains is a great first step down the path to utopia.

Real wealth or phantom assets? David Korten explores the difference between the kind of wealth that makes life better and the phantom wealth created by financial speculation.
by David Korten
Yes! Magazine
posted Jan 18, 2011
This is the third of a series of blogs based on excerpts adapted from the 2nd edition of Agenda for a New Economy: From Phantom Wealth to Real Wealth. I wrote Agenda to spur a national conversation on economic policy issues and options that are otherwise largely ignored. This blog series is intended to contribute to that conversation. —DK

People often fail to recognize the difference between phantom financial assets and real, living wealth.

In business school, we were taught to assess investment options to maximize financial return. I don’t recall that the professor ever mentioned that this meant maximizing returns to people who have money—to make rich people richer. Or that money is a system of power and that the more our lives depend on money, the greater our subservience to those who control the creation and allocation of money.

Nor do I recall asking my professors, “What is money?” “Why do we assume that maximizing financial return maximizes the creation of real value?” “How does the conversion of natural living wealth to financial wealth create real value?” “What about the many fortunes built through financial speculation, fraud, government subsidies, the sale of harmful products, and the abuse of monopoly power?” I may have had some doubts, but kept them to myself for fear of being dismissed as hopelessly stupid.

The market makes no distinction between the dollars acquired through means that enrich society, those created by means that impoverish society, and those simply created out of thin air.
Perhaps those who taught us economics, finance, and accounting did not themselves recognize the difference between real living wealth and phantom financial wealth.

Real wealth has intrinsic value. Examples include fertile land, healthful food, knowledge, productive labor, pure water and clean air, labor, and physical infrastructure. The most important forms of real wealth are beyond price and are unavailable for market purchase. These include healthy, happy children, loving families, caring communities, a beautiful, healthy, natural environment.

Real wealth also includes all the many things of intrinsic artistic, spiritual, or utilitarian value essential to maintaining the various forms of living wealth. These may or may not have a market price. They include healthful food, fertile land, pure water, clean air, caring relationships and loving parents, education, health care, fulfilling opportunities for service, and time for meditation and spiritual reflection.

Money, a number on a piece of paper or created with an accounting enter, has no intrinsic value. Wall Street generates it in astonishing quantities through accounting tricks, financial bubbles, and debt pyramids. It appears from nowhere and can disappear in an instant, as a phantom in the night.

Those engaged in creating phantom wealth collect handsome “performance” fees for their services and walk away with their gains. When the bubble bursts, borrowers default on debts they cannot pay and the bubbles and debt pyramid collapse in a cascade of bankruptcies.

What is Real Wealth?
John Robbins: We’ve been measuring happiness in all the wrong ways. How can we find true quality of life?
It is easy to confuse phantom financial assets with the real wealth for which they can be exchanged. Indeed, the illusions of phantom wealth are so convincing that most Wall Street players believe they are creating real wealth.

The market, of course, makes no distinction between the dollars acquired through means that enrich society, those created by means that impoverish society, and those simply created out of thin air. Money is money, and the more you have, the more the market eagerly responds to your every whim. It is still only a number with no existence outside the human mind.

It is easy to confuse phantom financial assets with the real wealth for which they can be exchanged.
Those who benefit from the creation of phantom wealth may never realize that their gain is unfairly diluting everyone else’s claim to the available stock of real wealth. They may also fail to realize that Wall Street and its international counterparts have generated total phantom-wealth claims far in excess of the value of all the world’s real wealth, thus creating expectations of future security and comforts that can never be fulfilled.

The deceptions are built right into our language. We refer to speculation as “investment” and to phantom financial wealth as “capital.” Indeed, when we hear the terms wealth, capital, assets, or resources we have no way to know whether the reference is to a real asset or only to a phantom financial asset. Our language gives us no way to make this essential distinction. It is no wonder we get confused and fail to recognize that Wall Street produces nothing of real value.

David Korten (livingeconomiesforum.org) is the author of Agenda for a New Economy, The Great Turning: From Empire to Earth Community, and the international best seller When Corporations Rule the World. He is board chair of YES! Magazine and co-chair of the New Economy Working Group. This Agenda for a New Economy blog series is co-sponsored by CSRwire.com and YesMagazine.org based on excerpts from Agenda for a New Economy, 2nd edition.

From Business Alliance for Local Living Economies

• Connect local businesses with local lenders, investors and donors.
• Earn a “living rate of return” while supporting the local economy.
• Create jobs by strengthening family farms, local manufacturing,
and independent business.

Monthly Webinars: Every first Tuesday, launching Feb 1, 10:00am PST/1:00pm EST

Full-day Intensive: June 14, Bellingham, Washington (opening day of the BALLE Business Conference)

First webinar on February 1st free!

Webinar Topic: Introduction to Community Capital Strategies and Solutions with Michael Shuman, BALLE Research & Economic Development Director and Don Shaffer, President & CEO of RSF Social Finance.

Following webinars will be free to BALLE network leaders, and at a discounted rate for BALLE network business members, RSF and Investors Circle investors, and members of either Slow Money or AEO.

Series Overview: As investors worldwide assess the damage from the most recent financial meltdown, a growing number are considering—for the first time ever—local options. With a new generation of local investment institutions and supportive public policies, literally trillions of dollars could move from Wall Street to Main Street and create millions of new jobs. What are the most promising new innovations to connect your local businesses with local lenders, investors, and donors? How can you earn “a living rate of return” while supporting your favorite businesses support local food, renewable energy, and independent retailers? What are the potential benefits for investing in your home, your own energy efficiency, and your family? This webinar series, which will run all year and include an all-day workshop before the BALLE Annual Business Conference in June, will review pioneering efforts around the country with respect to local banking, credit unions, slow-money investing, cooperatives, self-directed IRAs, local investing clubs, and local stock exchanges. It will explore how communities can better tap capital through New Markets Tax Credits, CDFIs, and various tax incentives. This series is aimed at community investors, instigators, organizers, foundations, innovative bankers, businesses looking for capital, and anyone else committed to unleashing local money to build local living economies.

A new era of security and opportunity through the democratization of money

Perhaps you’ve noticed that the national economic picture is a bit grim these days: layoffs, long
term unemployment, foreclosures, bankruptcies, oil spills, public bailouts of private industries,
lack of access to healthcare and education. Out here in California, the crime beleaguered city of
Oakland recently laid off 80 police officers. San Jose is currently debating which fire stations to
close. Schools are cutting classes and laying off teachers. Economic insecurity for average
citizens seems to grow by the day.

How does it come to this?

With present day level of resources, knowledge, and technology, with our breadth of moral and
philosophical perspective, with millennia’s-worth of historical lessons, why can we not run our
nation and its economy in a way that offers greater stability, comfort, and security for all citizens?
Shouldn’t progress have created a heaven on earth by now? Could we not just as well create
socioeconomic conditions in which each citizen can greet the new day with hope and enthusiasm,
secure in the knowledge that he or she has the resources available not only to care for
themselves, but also to engage in meaningful activity that contributes to the betterment of self,
community, and society as a whole? What stands in the way of this?

————–

Regarding the problems listed above, the traditional solutions – “growth”, “stimulus”, more
regulation, more taxes, less regulation, fewer taxes – are starting to ring a little hollow. Perhaps it
is time to step back and question more fundamental assumptions. Perhaps larger issues are at
stake.

Currently, many people are in need of work to do and there is much work that needs doing, yet
the above problems persist. Where is the bottleneck? In any of these scenarios, the likely initial
explanation is “lack of money”. Yet the irony is that this comes at a time when there is
theoretically more money in the system than at any point in history.

I propose that our current plight comes from an incongruity between the goals and methods of our
political system versus our economic system. Politically, we are a democracy, whereas
economically, we still function largely as a feudal system. Corporate entities are typically run
through a relatively autocratic top-down structure – it is merely that kings and high priests have
been replaced by CEOs and bankers, nobles are now middle managers and, well, the peasantry
is still pretty much the peasantry. Standing in for the king’s army, enforcement now comes
through public officials who are increasingly dependent on private money for their continued
political survival.

Then as now, the lynchpin around which this all turns is the creation, management, and control of
a nation’s wealth.

What would a more “democratic” economic system look like? What follows is a thought
experiment proposing a system based on some fundamentally different premises: public and
private institutions in service of the citizenry rather than the reverse, motivation by more “carrots”
and fewer “sticks”, a starting premise of abundance rather than scarcity – ultimately conditions
under which society could be relieved of the many costs of dealing with the social ills that spring
from desperation. While a shift so fundamental may seem tantamount to altering the planet’s
orbit, a relatively discrete change in one sector of the economy (monetary policy) could largely
produce this effect.
Political Democracy, Economic Feudalism Bill Miller

– Page 2 —
Money

Despite its ubiquity, most people don’t realize how money actually comes into the system. Only a
tiny fraction (about three percent) exists as actual coins and bills. The rest is created by a process
so bizarre that most can’t believe it upon first hearing. The bulk of money is actually created when
banks make loans – and goes away when the loans are repaid. (That’s why a “credit crunch” as in
the Fall of 2008 is such a threat to the economy.) We tend to think of high levels of national debt
as a horror, yet in a debt-based currency system such as ours, debt is basically an indicator of
economic activity. Clearly, there’s a lot of it going on. If the average citizen or community is not
benefiting from it, it is simply because it’s not flowing properly. That happens when the roles of
debtor and creditor are not properly assigned.

I suggest this situation arises because money enters the economy through the wrong gate – large,
private (i.e. “undemocratic”) financial institutions funding large-scale projects. As financial
institutions get larger, they are increasingly disinclined to fund smaller ventures – “Main Street”
rather than “Wall Street”. The biggest returns come from large, capital intensive projects – office
buildings, industrial parks, and the like. In the textbook theory, the money so invested is
supposed to “trickle down” to feed smaller supporting businesses, workers, and eventually the
average citizen. Yet recent decades seem to reveal a number of stoppages in the pipe. Money
apparently doesn’t trickle down; rather, it needs to “well up”.

Many would doubt that the current financial system could undergo a major reinvention. Money so
pervades our lives that we tend to think of it as an immutable law of nature, something simply to
be contended with or endured. We tend to forget that it is an entirely human-created institution –
an idea that we’ve all agreed to. And the nice thing about ideas is that they can be changed when
they cease to serve.

Toward a Democratic Monetary System

What makes for a more democratic financial system? Clearly, it lies in putting control and benefit
more directly in the hands of the people it is intended to serve. In a truly democratic system, that
would be the citizenry – you and me. If money fails to trickle down to the average citizen, how else
might it enter and flow? The remainder of this article outlines an alternative system based on
several fundamentally different premises: financial empowerment of the citizenry first before
abstract institutions, a starting point of abundance rather that scarcity, and money as primarily a
medium of exchange, not a store of value.

Caveat: In considering anything new, there is an overwhelming tendency to evaluate it by
comparison with what currently exists. Please bear in mind that what follows is a fundamentally
different system. Accordingly, concepts such as loan, interest, debt, payment, exchange, savings,
investment, and the like will not have the same meaning, nor will they always translate from one
system to the other. (If they could, it wouldn’t really be a new system.)

Our current economic model is based on a premise of scarcity – things take on value by being in
short supply. People are induced to participate substantially through fear of lack. In contrast, the
model below starts with a premise of abundance – all the resources, knowledge and technology
presently exist to enable all persons to create lives of comfort, meaning, and security – were they
made properly available.

Secondly, the existing model grants the power to initiate creation of monetary wealth to abstract
institutions like banks, investment houses, and corporate entities. The actual citizenry is then
subordinated to these institutions in order to obtain the resources needed for living. In contrast,
the following model makes each individual citizen the originating source of wealth. (This isn’t so
radical when considering that even now, the taxpayer is ultimately the source for corporate
Political Democracy, Economic Feudalism Bill Miller

– Page 3 —
“bailouts” and the guarantor of the “full faith and credit of the United States”. At the moment, we
are simply not receiving the benefit and acknowledgement for it.)

Further, since the current system is based on scarcity, participants must compete, and cannot
fully trust or rely upon each other for collective survival. Because of this, economic security
comes primarily through storing up a hoard of material and monetary wealth that ideally will see
one through a lifetime. However, inherent factors prevent this strategy from working for all, so
competition must become ever more fierce. This dynamic is largely removed in the model
described below, enabling citizens and workers to operate more effectively as collaborators and
teammates rather than opponents.

The Essentials of the Model:

The proposed system – “Citizen Dollars” – centers around two novel features (the numbers quoted
are merely for illustration. The national economy is complex, and the actual figures will depend on
a variety of factors):

1) Federal government removes money creation powers (i.e. fiat currency created through the
principle of fractional reserve) from the private central banking system. Instead, each individual
adult citizen is granted the right to create (spend into existence) a fixed amount of new money –
“Citizen Dollars” (say $10,000 per year) that is allotted in monthly increments.1 (Note that this is a
grant, not a loan.) The goal is to put sufficient money in circulation to fund needed economic
activity, but not so much as to cause inflation. The banking system then takes on a more limited
role as the logger and manager of transactions.

2) Money so created is subject to a demurrage charge2 of one percent per month, causing held
money to slightly lose value month by month. (On this schedule, money issued on a particular
date becomes valueless in about nine years.)

An knee-jerk reaction to #1 will of course be that this is some sort of massive new welfare or
“government giveaway” program. Not so! No benefit is given away here that is not already being
granted to the central banking system. We are simply transferring the right to create fiat currency
from private institutions directly to the citizenry – cutting out the potential waste, inefficiency, and
corruption of a long string of middlemen. Again, this isn’t such a big step when one considers that
the taxpayer is the ultimate backer of the current system.

This now enables money to be allocated where needed by millions of citizen venture capitalists
who are directly in contact with the pulse of the economy, not an elite corps who may be out of
touch – or even at odds with – the needs of the country.

Why the demurrage charge? For two reasons: If money is the “life blood” of the economy, it must
flow in order for the system to remain healthy. Circulating money funds business activity and pays
workers. Conversely, hoarded money starves the economy. Accordingly, money that is worth
more today than next month is likely to be put to work now rather than later.

Secondly, money that is held does no work – and will lead to inflation if supplemented with more
money. Therefore, money needs to have a lifecycle. Currently, money is ultimately removed from
circulation by taxation, loan repayment, and inflation – all rather objectionable methods, judging
from popular sentiments about each. In contrast, demurrage gives a precise schedule for the
lifecycle of each dollar, and puts the end user in charge of the amount of value he or she controls.

1
Note: in keeping with the times, this system is all handled electronically by debit card, and by
computer or smartphone for those who are more technically savvy. This saves the cost and risks
of printing and managing a vast amount coins, bills, checks, renewal stamps and the like.
2
“Demurrage” is a fee imposed for holding an asset longer than is intended – for example, the
storage charges for parking a vehicle for an extended period.
Political Democracy, Economic Feudalism Bill Miller

– Page 4 —
If you’re worried about the effect of demurrage on saving for the future, remember, next year (and
every year), you’ll have at least another $10,000 to work with.

For rough illustration then, with a population of 300 million adults, three trillion in new money
would be pumped into the economy each year. The demurrage charge renders each issuance
valueless in about 9 years, so by these numbers, the economy would eventually stabilize with
about 13.5 trillion dollars in circulation. If this proves to be recessionary or inflationary, the annual
allotment would be adjusted accordingly.

Further Aspects and Implications:

Beyond the above, the day to day economy world work largely as it does today – workers still
work for pay, products and services are still bought and sold. There would however be several
major differences – some that even a “Tea Bagger” would love: No taxes (at least federal income
tax), no need for welfare, retirement, or other entitlement programs, vastly diminished “financial
services” activity (stocks, loans, third-party ownership), fewer large-scale (national, global)
publicly traded ventures and more small and employee-owned businesses (fewer General Motors
and more Teslas), price stability due to little or no inflation, and more robust local economies.

Employment: Because individual citizens are now the originators of monetary wealth, they are no
longer mortally dependent on having a “steady job”. This changes the nature of the employer/
employee relationship, making possible a more egalitarian contractor/ contractee relationship
where workers are engaged for specific tasks and are compensated for their particular talents.
This offers efficiencies for the employer, and relieves workers of the low morale which results
from feeling chained to a job. Further, the employee benefits that formerly were used as
inducements to stay chained, are now more readily obtainable independently, for reasons
indicated below.

Public Infrastructure: Large infrastructure projects – roads, bridges, airports – would be done by
public agency. However, financing these with tax money would not make sense under these
circumstances, being literally a case of giving with the right hand and taking back with the left.
Rather, public projects would be financed by allowing workers to create an amount of money
additional to the annual base. As in the previous paragraph, such workers would be engaged on
a delimited basis, as contractors, for defined tasks – no need for governmental agencies to carry
large payrolls of workers, who may not always be effectively utilized.

Private Ventures: Large-scale private projects would be more difficult to finance by conventional
means, since loaned money loses value through the demurrage mechanism. (Egregious rates of
return would need to be charged.) This encourages businesses to be smaller and more tied to the
local community and economy. That said however, money that would otherwise be held in a
depreciating savings account can be invested in a productive business as a hedge against
demurrage – provided that the venture is successful. This enables larger projects, but primarily
those where the principal investors have a direct involvement in a business that is carefully
chosen to create real value.

Local Economies: As indicated above, the proposed system favors smaller, locally owned,
employee owned and operated businesses. Such businesses can be more responsive to
community needs, and they empower workers who now have a personal stake in their success.
Again, empowerment of the many (Main Street) rather than control by a few (Wall Street) is the
essence of a truly democratic system

Worker Incentive: Although some might be content to live minimally on the annual grant, most will
want a higher standard of living, and further, will want creative, productive, meaningful outlets for
their energies. (One can only stomach so much daytime television.) Yet even in the former case,
people aren’t necessarily slacking – their “job” is to creatively invest $10K in support of the
Political Democracy, Economic Feudalism Bill Miller

– Page 5 —
economy. For the rest, with the newly supportive climate for small business, workers will be better
able to realize personal vision and ambitions as opposed to feeling like a cog-in-the-machine or a
rat-in-the-race.

Pricing and Price Stability: In the current economy, prices have been wildly skewed by decades of
inflation, marketing, competition, fads, corporate wheeling and dealing, real and engineered
shortages, debt and interest fluctuation, and other manipulations. (Remember how much your
parent’s first house or automobile cost versus the same today?) Because the new system
provides basic economic security now and in the future, and discourages the long term storing of
wealth, prices can become more reflective of reality and be stable in the long term.

Loans, Interest, and Inflation: Presently, it is the interest charge on debt that primarily leads to
inflation and price instability. In a debt-based system, the money to pay interest on debt is not
created, and so must be appropriated from elsewhere. This eventually requires either that
someone go bankrupt or that the economy be expanded, through more debt, in order to cover the
interest cost. This steady debt increase, plus the relentless need to appropriate the money to pay
interest, drives up prices and further erodes the value of each dollar – the result being inflation.

Loans will play a much smaller role in the proposed system for several reasons: it is based on
credit rather than debt, economic activity is intended to occur on a smaller local scale, prices are
expected to moderate and stabilize as described above, and the long term holding of cash is
discouraged through the demurrage mechanism.

Economic Growth: Despite the current political fractiousness and polarization, everyone seems to
speak with one voice when affirming the desirability of economic growth. “Growth” is a benign-
sounding term – flowers grow, children grow. We hope that knowledge, understanding, and
opportunity will grow. Yet unqualified growth is not always good. Children who reach maturity but
continue to grow become medical anomalies. Bodily cells that grow continuously, while pursuing
“self-interest”, are better known as “cancer”. In any finite system, a population that continues to
grow will eventually exceed the limits of sustainability.

In the current context, “growth” is a euphemism for “debt expansion” (a term that sounds a little
less benign). For the reasons indicated in the previous section, our present monetary system
demands constant growth in order to pay mounting interest charges, and to avoid bankruptcy on
a massive scale. In contrast, the new model has minimal need for interest, so can allow ventures
to stabilize at a steady state upon maturity. The “growth” energy can then be redirected toward
goals like “refinement”.

Foreign Trade: Greater localization of economic activity, coupled with a reduced incentive to
continually amass wealth, will reduce the pressure for businesses to relentlessly seek the most
dollars at the least cost through means like off-shoring and globalizing. At the same time, we do
live in an increasingly interconnected, interdependent world, and there will always be need for
foreign trade. Initially, this might seem a problem for an economy in which currency is designed to
lose value. However, the same dynamic that boosts economic activity locally also holds
internationally – dollars that are subject to demurrage, received in payment, are more likely to be
re-spent quickly, and in the issuing country. This boosts the economy, whereas debt-and-interest
bearing dollars are a drain upon it.

Environmental Sustainability: Once again, the diminished pressure to increase the corporate
bottom line as much as possible and by whatever means necessary, can allow for business
practices that manage resources responsibly for the long term, and increase public safety.

Political Democracy, Economic Feudalism Bill Miller

– Page 6 —
One Major Rethink

One major philosophical reframing that might take some getting used to is that the proposed
system calls into question two values currently promoted as sacrosanct: personal savings and
the profit motive.

Savings: Americans are regularly chastised these days for being financially imprudent – spending
too much and not saving enough. Part of this may be a greed problem. Another part is a debt
problem. We live in a debt-based economy in which average people are having trouble servicing
personal debt, due to real income that has been flat or declining for several decades – while the
cost of living continues to rise.

From a systemic view, the current financial system needs savings as reserves against which to
issue more debt. And personally, people need savings to see them through times of need –
because we live in competitive, individualistic communities that are not designed to offer sufficient
support in such instances. We must rely on money rather than people.

The intent of our proposed new system is to have money actively working in the community, not
stored or narrowly focused on investments designed primarily to generate interest payments. The
financial system’s need for reserves largely goes away in the new system, since it is based on
credit, not debt – and there is an effective penalty for holding cash reserves for an extended
period. For the individual, the need for cash reserves is vastly diminished by the annual allotment
and by stabilized pricing.

Profit: If something is worth doing, I’ve often wondered why people need additionally to be bribed
to do it. That seems like a bad system design. Profit is essentially the extraction of more value
than one puts in to an endeavor or trade – an inequity that is designed in from the start. It is the
only (legal) way however, to accommodate the need for the savings and interest payments as
described above.

Sometimes profit comes by legitimately expanding the economy with new value. All too often
however, the relentless need to show profitability is met by externalizing costs – which eventually
come back to bite us as oil spills or acid rain or layoffs or too expensive health insurance or
bankruptcy or … well, the list goes on.

In contrast, in a system where one’s needs are met, where there is economic stability and
security for the future, the need to constantly acquire, accumulate, and hoard is vastly diminished.
“I’ll be happy when…” can turn into “I’m happy now.”

Long Term Outcome

Apart from immediate economic comfort and security for the general citizenry, an abundance-
based monetary model has a range of secondary benefits. Presently, the chronic threat of
scarcity, deprivation, and impoverishment, the chronic conditions of insecurity, stress, and fear,
the ongoing pressure to compete with and mistrust others results in a long list of social and
psychological ills – and the economic costs of avoiding or dealing with the same.

While some people can adapt, function, and even flourish under such conditions, others cannot
and become disempowered, hopeless, ashamed, desperate, cynical, or angry. They may strike
back at the system out of pure malice. Those who fall out of the system may end up homeless,
destitute, and desperate – a prime motivator for criminal activity. In addition to harmful effects on
health, chronic stress often leads to maladaptive coping mechanisms like addictive behavior.
Powerlessness, shame, bitterness, jealousy, and anger can result in domestic abuse and other
violence. All of these factors impose psychological, medical, legal, and financial costs to society.

Political Democracy, Economic Feudalism Bill Miller

– Page 7 —
On the other hand, when people feel secure, now and for the future, the energy formerly
expended on dealing with basic survival can now be directed toward productive activity –
discovery and creation that adds value to their personal lives and to society at large. No one has
to fall below the line. Accordingly, fewer resources will need to be spent on fixing social problems
and defending against threats.

Some will maintain that competition is essential for progress. While it is true that competition can
drive innovation, collaboration offers the benefits of far more collective knowledge, perspective,
and energy toward the same end.

A More Diverse, Vibrant Culture and Economy

As noted above, most money presently enters the economy through large, capital-intensive
ventures that are designed and funded by entities with narrow, specific interests. Because of this,
people, products, services, and other activities that do not directly serve these interests tend to be
devalued monetarily and therefore ultimately neglected. Yet many of these are vital to the health
of society – fulltime parents, teachers, libraries, after school programs, various forms of public
maintenance and civil service, a healthy environment. Others professions such as writers,
musicians, actors, and philosophers add richness to the culture and further human development.
Yet we’ve all heard stories of single parents who must work two jobs to make ends meet. And the
“starving artist” is a cliché that virtually everyone understands.

Currently, workers in such professions have to put their main focus on finding some “job” outside
their calling in order to survive. This diminishes or thwarts the unique contribution they might
otherwise make. In an abundance economy, basic survival is not an issue, therefore people are
freed to develop and offer their unique talents, to their own benefit and to the enrichment of
society as a whole.

Getting There From Here

Although the money system pervades nearly all aspects of modern life, it is not set in stone. As it
works less and less well for more and more people, the pressure for alternatives will increase. A
number of alternative or “complementary” currency systems already exist and have functioned for
years alongside the mainstream economy – LETS (local exchange trading system), Time Dollars,
Ithaca Hours – even coupons and frequent flyer miles are considered such. These generally do
not attempt to replace a national currency but rather supplement it by focusing on limited contexts
like elder care, farmer’s markets, travelers, or local business communities.

It is far easier to introduce something new if it can be implemented gradually, building acceptance
as it functions alongside the existing system. That approach may be difficult in this case because
the existing system and the one here described work on several opposing principles – “top down”
(bankers) versus “bottom up” (citizens), scarcity versus abundance, currency units with perpetual
value versus expiring value. Accordingly, a change-over might have to happen relatively abruptly.

In such a transition, several looming issues would have to be confronted – primarily what to do
with existing debt and existing wealth. A detailed analysis of these is beyond the scope of this
article, but in general, we may simply have to revisit the ancient Hebraic tradition of jubilee and
forgive most debts. This of course would initially leave great inequities, but if that cost enables a
more functional society for all members, perhaps the majority would decide it is worth it. As to
existing wealth, if the current Federal Reserve dollars were put on a depreciation schedule along
with the new currency units, perhaps this transition could happen more gently. Ultimately, the
demurrage principle and the more egalitarian nature of the new system would tend to even things
out over time.

———
Political Democracy, Economic Feudalism Bill Miller

– Page 8 —
However, even if such a new economy were to benefit the vast majority, there are powerful
entrenched interests who benefit by the current system, and their efforts to resist any change to
the status quo probably cannot be overestimated. Further, they seem to have increasing control
over our major institutions. The contention and paralysis we’ve already seen over seemingly clear
public issues like healthcare, unemployment, and financial reform suggest that a much more
fundamental restructuring might lead to all-out political nuclear war.

Yet in the realm of governance, there was a time when kings with vast armies ruled over a
populace with far fewer resources than we have today. In the realm spirit, there was a time when
high priests and popes controlled access to the divine, and enforced their decrees with
sometimes shocking brutality. Somehow, democracy still managed to struggle and prevail in
these domains. People can now vote, run for office, and pursue whatever religious beliefs make
sense of their lives.

In the economic realm, there too may come a tipping-point, when a critical mass of people turn
away from the glitter and distraction of “American Idol” long enough to realize that the kings and
high priests of finance are driving the economy toward failure for the masses – and it doesn’t have
to be this way. Perhaps we will then insist upon growing from our status as mere consumers of
value, using dollars begged and borrowed from the temple priests, toward becoming direct
participants in the creation of an economy that works for all citizens.

Some religious traditions teach that humans were created in the image of God. Perhaps this
refers to our ability to shape the world in which we live. To date, by design or default, we’ve
created conditions where life for vast numbers of people is, as Hobbes noted, “nasty, brutish, and
short”. We can now do better. Given our present level of knowledge and resources, we could just
as well create conditions of comfort, security, and opportunity for ourselves and for future
generations.

In the final analysis, it comes down to a simple question: In view of all that has happened to date,
in whom would you place greater trust to do what is best for the country, a cabal of Washington
and Wall Street elites, or millions of American citizens?

For a truly bright future for all, let democracy prevail!

——————–
Bill Miller
September 2010
Half Moon Bay, CA

In this video, Charles breaks down the false dichotomy of gifts versus money. Timebanks look more like traditional gift economies where reciprocal relationships and recognition were encouraged not shunned as part of a healthy, ecologically sound, gift culture…something I’ve been trying to explain for a long time.

http://vimeo.com/18513825

Here are some print ads for loan businesses I found in a 1938 San Francisco phone directory, while looking up some artifacts found in my house.

It’s fascinating to me that 70 years later, a lot of these messages are essentially the same, except they are transported via SMS, Web and email. I note also that banks and stock/bond brokers do not advertise.

From Collaborative Consumption
How can the trust we form face-to-face be replicated in our online systems?
By Rachel Botsman on November 29, 2010

The success of many organizations in the Collaborative Consumption space relies on the strength of the peer-to-peer network they build for their community. The key ingredient in these online networks is their ability to replicate the trust we are able to build in our real-world exchanges in the online environment. Here are 10 key factors that help build an effective peer-to-peer reputation system.

1. Unforgivable behaviour: Identify the single most important good behaviour that the reputation mechanisms need to encourage. This will simultaneously act as a strong disincentive for bad behaviour.

2. Decipher: There is a gap between what people actually care about and what they think they care about. Test your system to clarify the difference.

3. Competition: We are innately wired to love being top of the table. Present your user rankings to create healthy competition among peers.

Leaderboard.jpg

4. Quality: Celebrate and reward users who take the time to contribute quality feedback; they should become the benchmark for others.

5. Signal: People need to be crystal clear on what they are rating. Identify the main behaviour signal you want users to be able to share, eg like/dislike; satisfied/dissatisfied; trust/distrust; reliable/unreliable, etc.

6. Sticky ratings: Pick a primary scoring system (stars, ticks, tiers, thumbs, badges, numerical ratings) and give the ratings sticky names, such as “Power Seller”.

ebay.jpg

7. Trust dimensions: People build trust in different ways. Scoring systems are great but they are often binary. Build in qualitative feedback systems based on open-ended questions that anyone can answer and that will prompt people to share something revealing and meaningful about themselves.

8. People like me: We like to know, and tend to value, what our friends and people like us think of other people. Integrate “inner-circle” vouching mechanisms (for example, went to the same school, work in the same office) into your reputation system.

9. Peer police: An open reputation system must be peer-policed but if things do go wrong, your organisation needs to be on hand quickly to offer support, resolve disputes and weed out the vandals and abusers.

10. Mirror reality: The ultimate goal of your system is to virtually replicate the trust we form face to face. Mirror the questions and dynamics we use in physical reality.

“10 things” are from Rachel’s “The Reputation Economy” article that appeared in AFR BOSS Magazine. Read the full article here.

Construction Traffic on I-376

Originally uploaded by daveynin

Whenever I drive I realize how much people behave differently when driving their little mobile avatars than when walking or bicycling. I’m for instance amazed to see people trying to get ahead of a single car in a 5mph traffic. I think there is a lot to learn from these behaviors.

Driving a car on a highway is quite efficient from the perspective of going from point A to point B, at least when and where efficient public transportation options are not available. In addition, driving a car has the advantage of anonymity: other drivers don’t know your who you are, only the car you drive and how you drive it. This implies that any legal but aggressive behavior, or illegal but uncaught by the police, has little consequence unless you get into an accident. Knowing that your name won’t be publicly tainted by your bad behavior is an incentive to behave aggressively.

When you walk or bicycle, it’s harder to get away anonymously. People can easily catch up with you and ask you about your behavior. This I think leads to more courteous behaviors.

To me this is similar to a market. In a market that’s completely anonymous and driven only by numbers and mediated by computers, aggressiveness can be expected to be high. In comparison markets that assume conversations between buyer and seller, haggling, behavior is likely to be more subtle. The main reason is that information about a dishonest participant will circulate very quickly in a human-driven market where anonymity is difficult than in a computer and broker-mediated market.

One option of course is to increase the regulation of the markets, which in highway terms is to have more police cars around: drivers stay anonymous to each other but completed naked to a few policemen. This implies that the monopoly of moral superiority is given to one small group, something I think is prone to corruption.

Another option is to limit anonymity and to facilitate sharing information on market participants. On the highway, this would mean dash applications that gives the ability to rate other drivers, directly from your steering wheel, but also that display right away warnings when a badly rated driver is approaching.

Limiting anonymity is much harder in financial markets, since it is easy to conceal a trade behind a chain of intermediaries. In a way, it’s the intermediaries job to help participants conceal their real intentions, especially those participants with the biggest impact on markets. Our financial markets are like high-speed highways with little police and very fast cars remotely driven by participants, in which many small investors drive their little car.

How can “social” improve the morality of markets, without succumbing to either a monopoly of moral superiority or a wild jungle with no morality?

Published on Commondreams.org
Wednesday, December 22, 2010
by TomDispatch.com
by Rebecca Solnit

After the Macondo well exploded in the Gulf of Mexico, it was easy enough (on your choice of screen) to see a flaming oil platform, the very sea itself set afire with huge plumes of black smoke rising, and the dark smear of what would become five million barrels of oil beginning to soak birds and beaches. Infinitely harder to see and less dramatic was the vast counterforce soon at work: the mobilizing of tens of thousands of volunteers, including passionate locals from fishermen in the Louisiana Oystermen’s Association to an outraged tattoo-artist-turned-organizer, from visiting scientists, activist groups, and Catholic Charities reaching out to Vietnamese fishing families to the journalist and oil-policy expert Antonia Juhasz, and Rosina Philippe of the Atakapa-Ishak tribe in Grand Bayou. And don’t forget the ceaseless toil of the Sierra Club’s local environmental justice organizer, the Gulf Coast Restoration Network, the New Orleans-born poet-turned-investigator Abe Louise Young, and so many more than I can list here.

I think of one ornithologist I met in Grand Bayou who had been dispatched to the Gulf by an organization, but had decided to stay on even if his funding ran out. This mild-mannered man with a giant pair of binoculars seemed to have some form of pneumonia, possibly induced by oil-fume inhalation, but that didn’t stop him. He was among the thousands whose purpose in the Gulf had nothing to do with profit, unless you’re talking about profiting the planet.

The force he represented mattered there, as it does everywhere — a force that has become ever more visible to me as I live and journey among those who dedicate themselves to their ideals and act on their solidarities. Only now, though, am I really beginning to understand the full scope of its power.
Long ago, Adam Smith wrote about the “invisible hand” of the free market, a phrase which always brings to my mind horror movies and Gothic novels in which detached and phantasmagorical limbs go about their work crawling and clawing away. The idea was that the economy would somehow self-regulate and so didn’t need to be interfered with further — or so still go the justifications for capitalism, even though it took an enormous armature of government interventions to create the current mix of wealth and poverty in our world. Your tax dollars pay for wars that make the world safe for giant oil corporations, and those corporations hand over huge sums of money to their favorite politicians (and they have so many favorites!) to regulate the political system to continue to protect, reward, and enrich themselves. But you know that story well.

As 2010 ends, what really interests me aren’t the corrosions and failures of this system, but the way another system, another invisible hand, is always at work in what you could think of as the great, ongoing, Manichean arm-wrestling match that keeps our planet spinning. The invisible claw of the market may fail to comprehend how powerful the other hand — the one that gives rather than takes — is, but neither does that open hand know itself or its own power. It should. We all should.

The Iceberg Economy

Who wouldn’t agree that our society is capitalistic, based on competition and selfishness? As it happens, however, huge areas of our lives are also based on gift economies, barter, mutual aid, and giving without hope of return (principles that have little or nothing to do with competition, selfishness, or scarcity economics). Think of the relations between friends, between family members, the activities of volunteers or those who have chosen their vocation on principle rather than for profit.

Think of the acts of those — from daycare worker to nursing home aide or the editor of TomDispatch.com — who do more, and do it more passionately, than they are paid to do; think of the armies of the unpaid who are at “work” counterbalancing and cleaning up after the invisible hand and making every effort to loosen its grip on our collective throat. Such acts represent the relations of the great majority of us some of the time and a minority of us all the time. They are, as the two feminist economists who published together as J. K. Gibson-Graham noted, the nine-tenths of the economic iceberg that is below the waterline.

Capitalism is only kept going by this army of anti-capitalists, who constantly exert their powers to clean up after it, and at least partially compensate for its destructiveness. Behind the system we all know, in other words, is a shadow system of kindness, the other invisible hand. Much of its work now lies in simply undoing the depredations of the official system. Its achievements are often hard to see or grasp. How can you add up the foreclosures and evictions that don’t happen, the forests that aren’t leveled, the species that don’t go extinct, the discriminations that don’t occur?

The official economic arrangements and the laws that enforce them ensure that hungry and homeless people will be plentiful amid plenty. The shadow system provides soup kitchens, food pantries, and giveaways, takes in the unemployed, evicted, and foreclosed upon, defends the indigent, tutors the poorly schooled, comforts the neglected, provides loans, gifts, donations, and a thousand other forms of practical solidarity, as well as emotional support. In the meantime, others seek to reform or transform the system from the inside and out, and in this way, inch by inch, inroads have been made on many fronts over the past half century.

The terrible things done, often in our name and thanks in part to the complicity of our silence or ignorance, matter. They are what wells up daily in the news and attracts our attention. In estimating the true make-up of the world, however, gauging the depth and breadth of this other force is no less important. What actually sustains life is far closer to home and more essential, even if deeper in the shadows, than market forces and much more interesting than selfishness.

Most of the real work on this planet is not done for profit: it’s done at home, for each other, for affection, out of idealism, and it starts with the heroic effort to sustain each helpless human being for all those years before fending for yourself becomes feasible. Years ago, when my friends started having babies I finally began to grasp just what kind of labor goes into sustaining one baby from birth just to toddlerhood.

If you do the math, with nearly seven billion of us on Earth right now, that means seven billion years of near-constant tending only to get children upright and walking, a labor of love that adds up to more than the age of this planet. That’s not a small force, even if it is only a force of maintenance. Still, the same fierce affection and determination pushes back everywhere at the forces of destruction.

Though I’m not sure I could bring myself to watch yet again that Christmas (and banking) classic It’s a Wonderful Life, its premise — that the effects of what we do might best be gauged by considering what the world would be like without us — is still useful. For the American environment, this last year was, at best, a mixed one. Nonetheless, polar bears got some protection and the building of at least one nuclear power plant was prevented; the work of groups like the Sierra Club continued to keep new coal-fired power plants at bay; and Californians defeated a sinister oil-company-sponsored initiative, to name just a few of the more positive developments. Erase all the groups at work on the environment, hardly noticed by the rest of us, and it would have been a massacre.

The Alternatives to “There Is No Alternative”

We not only have a largely capitalist economy but an ideological system that justifies this as inevitable. “There is no alternative,” as former British Prime Minister Margaret Thatcher used to like to say. Many still argue that this is simply the best human nature, nasty to the core, can possibly hope to manage.

Fortunately, it’s not true. Not only is there an alternative, but it’s here and always has been. Recently, I had dinner with Renato Redentor Constantino, a climate and social justice activist from the Philippines, and he mentioned that he never cared for the slogan, “Another world is possible.” That other world is not just possible, he pointed out, it’s always been here.

We tend to think revolution has to mean a big in-the-streets, winner-take-all battle that culminates with regime change, but in the past half century it has far more often involved a trillion tiny acts of resistance that sometimes cumulatively change a society so much that the laws have no choice but to follow after. Certainly, American society has changed profoundly over the past half century for those among us who are not male, or straight, or white, or Christian, becoming far less discriminatory and exclusionary.

Radicals often speak as though we live in a bleak landscape in which the good has yet to be born, the revolution yet to begin. As Constantino points out, both of them are here, right now, and they always have been. They are represented in countless acts of solidarity and resistance, and sometimes they even triumph. When they don’t — and that’s often enough — they still do a great deal to counterbalance the official organization of our country and economy. That organization ensures oil spills, while the revolutionaries, if you want to call them that, head for the birds and the beaches, and maybe, while they’re at it, change the official order a little, too.

Of course, nothing’s quite as simple as that. After all, there are saints in government and monsters in the progressive movement; there’s petroleum in my gas tank and money in my name in banks. To suggest that the world is so easily divided into one hand and the other, selfish and altruistic, is impossibly reductive, but talking in binaries has an advantage: it lets you focus on what is seldom acknowledged.

To say there is no alternative dismisses both the desire for and the possibility of alternative arrangements of power. For example, how do you square a Republican Party hell-bent on preserving tax cuts for the wealthiest 2% of Americans with a new poll by two university economists suggesting that nearly all of us want something quite different? The pollsters showed a cross-section of Americans pie charts depicting three degrees of wealth distribution in three societies, and asked them what their ideal distribution of wealth might be. The unidentified charts ranged from our colossal disparity to absolute equality, with Swedish moderation in-between.

Most chose Sweden as the closest to their ideal. According to the pollsters, the choice suggested that “Americans prefer some inequality to perfect equality, but not to the degree currently present in the United States.”

It might help to remember how close we had come to Sweden by the late 1970s, when income disparity was at its low ebb and the Reagan revolution was yet to launch. Of course, these days we in the U.S. aren’t offered Swedish wealth distribution, since the system set up to represent us actually spends much of its time representing self-interest and moneyed interests instead. The Republicans are now being offered even larger bribes than the Democrats to vote in the interests of the ultra-affluent, whether corporate or individual. Both parties, however, helped produce the Supreme Court that, in January, gave corporations and the wealthy unprecedented power in our political system, power that it will take all our energy to counteract and maybe, someday, force into retreat.

By the way, in searching for that Thatcher no-alternative quote, I found myself on a page at Wikipedia that included the following fundraising plea from a Russian woman scientist: “Almost every day I come home from work and spend several hours improving Wikipedia! Why would I donate so much of my free time? Because I believe that by giving my time and effort — along with thousands of other people of different nationalities, religion, ages — we will one day have shared and free knowledge for all people.”

Imperfect as it may be, ad-free, nonprofit Wikipedia’s sheer scope — 3.5 million entries in English alone, to say nothing of smaller Norwegian, Vietnamese, Persian, and Waray-Waray versions with more than 100,000 articles each — is an astonishing testimony to a human urge to work without recompense when the cause matters.

Butterfly Spotting

The novelist and avid lepidopterist Vladimir Nabokov once asked someone coming down a trail in the Rockies whether he’d seen any butterflies. The answer was negative; there were no butterflies. Nabokov, of course, went up that same trail and saw butterflies galore.

You see what you’re looking for. Most of us are constantly urged to see the world as, at best, a competitive place and, at worst, a constant war of each against each, and you can see just that without even bothering to look too hard. But that’s not all you can see.

Writing my recent book about disasters, A Paradise Built in Hell, led me to look at the extraordinary way people behave when faced with catastrophes and crises. From news coverage to Hollywood movies, the media suggest that, in these moments of turbulence when institutions often cease to function, we revert to our original nature in a Hobbesian wilderness where people fend for themselves.

Here’s the surprise though: in such situations, most of us fend for each other most of the time — and beautifully at that. Perhaps this, rather than (human) nature red in tooth and claw, is our original nature. At least, the evidence is clear that people not only behave well, but take deep pleasure in doing so, a pleasure so intense it suggests that an unspoken, unmet appetite for meaningful work and vibrant solidarities lives powerfully within us. Those appetites can be found reflected almost nowhere in the mainstream media, and we are normally told that the world in which such appetites might be satisfied is “utopian,” impossible to reach because of our savage competitiveness, and so should be left to the most hopeless of dreamers.

Even reports meant to be sympathetic to the possibility that another better world could exist in us right now accept our Social-Darwinian essence as a given. Consider a November New York Times piece on empathy and bullying in which David Bornstein wrote,

“We know that humans are hardwired to be aggressive and selfish. But a growing body of research is demonstrating that there is also a biological basis for human compassion. Brain scans reveal that when we contemplate violence done to others we activate the same regions in our brains that fire up when mothers gaze at their children, suggesting that caring for strangers may be instinctual. When we help others, areas of the brain associated with pleasure also light up. Research by Felix Warneken and Michael Tomasello indicates that toddlers as young as 18 months behave altruistically.”

Are we really hardwired to be aggressive and selfish, as Bornstein says at the outset? Are you? No evidence for such a statement need be given, even in an essay that provides plenty of evidence to the contrary, as it’s supposed to be a fact universally acknowledged, rather than an opinion.

The Compassion Boom

If I were to use the normal language of the marketplace right now, I’d say that compassion and altruism are hot. It might, however, be more useful to say that the question of the nature of human nature is being reconsidered at the moment by scientists, economists, and social theorists in all sorts of curious combinations and coalitions. Take, for example, the University of California’s Greater Good Science Center, which describes itself as studying “the psychology, sociology, and neuroscience of well-being, and teaches skills that foster a thriving, resilient, and compassionate society.” Founding director Dacher Keltner writes, “Recent studies of compassion argue persuasively for a different take on human nature, one that rejects the preeminence of self-interest.”

A few dozen miles away is Stanford’s Center for Compassion and Altruism Research and Education, which likewise draws on researchers in disciplines ranging from neuroscience to Buddhist ethics. Bornstein’s essay mentions another organization, Roots of Empathy in Toronto, that reduces violence and increases empathy among children. Experiments, programs, and activities like this proliferate.

Independent scholars and writers are looking at the same underlying question, and stories in the news this year — such as those on school bullying — address questions of how our society gets organized, and for whose benefit. The suicides of several queer young people generated a groundswell of anti-bullying organizing and soul-searching, notably the largely online “It Gets Better” attempt to reach out to queer youth.

In a very different arena, neoliberalism — the economic system that lets the invisible hand throttle what it might — has finally come into question in the mainstream (whereas if you questioned it in 1999, you were a troglodyte and a flat-Earther). Hillary Clinton lied her way through the 2008 primary, claiming she never supported NAFTA, and her husband, who brought it to us, publicly apologized for the way his policies eliminated Haiti’s rice tariffs. “It was a mistake,” Bill Clinton told the Senate Foreign Relations Committee on March 10th. “I had to live everyday with the consequences of the loss of capacity to produce a rice crop in Haiti to feed those people because of what I did.”

Think of those doing the research on altruism and compassion as a radical scholarly movement, one that could undermine the philosophical and political assumptions behind our current economic system, which is also our political system. These individuals and organizations are putting together the proof that not only is another world possible, but it’s been here all along, as visible, should we care to look, as Nabokov’s butterflies.

Do not underestimate the power of this force. The world could be much better if more of us were more active on behalf of what we believe in and love; it would be much worse if countless activists weren’t already at work from Aung San Suu Kyi in Burma and the climate activists in Tuvalu to the homeless activists around the corner from me. When I studied disasters past, what amazed me was not just that people behaved so beautifully, but that, in doing so, they found such joy. It seems that something in their natures, starved in ordinary times, was fed by the opportunity, under the worst of conditions, to be generous, brave, idealistic, and connected; and when this appetite was fulfilled, the joy shone out, even amid the ruins.

Don’t think of this as simply a description of my hopes for 2011, but of what was going on right under our noses in 2010; it’s a force we would do well to name, recognize, celebrate, and enlarge upon now. It is who we are, if only we knew it.

Rebecca Solnit hangs out with climate-change activists, homeless advocates, booksellers, civil libertarians, anti-war veterans, moms, urbanists, Zen monks, and investigative journalists and she sure didn’t write this piece for the money. She is the author of 13 books, including last year’s A Paradise Built in Hell: The Extraordinary Communities that Arise in Disaster, and this year’s Infinite City: A San Francisco Atlas.

We need your help in collecting information that can inform our collective efforts to improve the accessibility of timebanking to all who can benefit from it. As you know from earlier correspondence, we (Marc Brakken, UW; Preston Austin, Dane Co. TimeBank; and Stephanie Rearick, DCTB and TimeBanks USA) have been accepted to present a paper at an upcoming conference in Lyon, France. The topic is “30 years of Complementary Currencies: What next?” and our paper is titled “Deploying Timebanking for Human-Scaled Economic Development“

As part of our research for the paper and, more importantly, for future development of cooperative and collaborative tools and infrastructure for this movement, we need to learn what’s already happening and what’s in the works at a movement level around the world.

Could you please take a few minutes in the next week to reply to the following questions? We appreciate your help and plan to use the information we gather to work with timebanking organizations and individual movement-level thinkers to help all of us be better equipped for success.

The form is online here: https://spreadsheets.google.com/viewform?formkey=dHJfdWhzUFY5SDNPSXNiNDZXSlhqc1E6MQ

If you have other questions you think we’ve missed please let us know! There is a separate set of questions we intend to ask (or work with others doing similar research) of individual timebanks. The list above is geared toward developing a better understanding of the state of the movement.

For questions/comments on the survey, please contact Stephanie Rearick at steph (at) uvulittle.com