So why are we in Transition Stroud looking at a currency for Stroud? Well this blog entry is a bit of a ramble as I've been interupted several times and never quite seem to finish it...but hey ho see what you think...
Well a 1.5% plummet in economic growth in the last three months of 2008 compounds the previous quarter’s 0.6% drop to make the UK recession official. The percentages may seem small but the continuing economic shrinkage will cause acute problems for some specific sectors - such as in retail where the damage is over 4% - taking proportionately much larger hits than others. The media suggest this recession will be wider and deeper than we endured in the early 1990s - and for many young adults it will be their first taste of austerity and social insecurity.
As noted before many Greens have called for an end to GDP as the accepted way of measuring economic health and instead “value what matters” for a more ecologically sustainable economy - infact a carbon lite life can be a happier life - see here. Certainly I would have hoped that a Green Government would have tried to engineer 0% growth carefully, deliberately and as painlessly as possible rather than through the calamitous events that have brought about the current situation.
Indeed we need to start thinking differently. George Monbiot last year quoted research that a 3% increase in economic growth (the aim of most countries) practically means a doubling of economic activity every 23 years. A doubling of growth between now and 2040 means humankind will consume more natural materials from the Earth than were used in the entire period from when we first stood on two legs up to present day. Indeed, continuation of 3% growth would mean consumption of mineral and other resources would further double between 2040 and 2063. That just isn't possible????
So let us hope the current crisis will mean a move to a more sustainable and responsible economy. What opportunities are there?
Dr Molly Scott Cato, economics spokesperson, Green Party of England & Wales - who lives in Stroud - writes: "These are interesting times for green economists. For 30 years we have been calling for a steady-state economy rather than economic growth. Two signs that we are in a steady state would be the absence of economic growth and zero interest rates. Since we have both of those now, can we take heart that the steady state may be approaching? Of course life is never so simple, and in reality what we are seeing at present is a chaotic struggle for the remaining credit by ‘businesses’ many of which do not produce anything. Without political management of the economy the descent from peak money - like the descent from peak oil that will shortly follow - gives no guarantee that the useful businesses and productive jobs will survive. In a recession the public sector increases in size relative to the private sector. Governments invest in the economy when private-sector ompanies cannot afford to. Sadly, at present they are investing in bankrupt banks rather than the transition to a low-carbon economy that the Green New Deal would ensure."
Interestingly I read that Casey Research, of Vermont, has analyzed the costs of the US government bailouts of the housing crisis, the credit crisis and others and has concluded that the total is $8.5 trillion, which is more than the cost of all US wars, the Louisiana Purchase, the New Deal, the Marshall Plan and the NASA Space Program combined. According to CRS, the Congressional Research Service, all major US wars (including such events as the American Revolution, the War of 1812, the Civil War, the Spanish American War, World War I, World War II, Korea, Vietnam, Iraq and Afghanistan, the invasion of Panama, the Kosovo War and numerous other small conflicts), cost a total of $7.5 trillion in inflation-adjusted 2008 dollars.
The $700 billion spent bailing out banks in the US is enough to fund complete medical care for every man, woman and child currently alive in the US for 11 years!! And how far would $50 billion used to bail out the auto industry???
I was recently sent around one of those 'amusing' emails about trying to help us understand how much a billion really is....a billion seconds ago it was 1959, a billion minutes ago Jesus was alive, a billion hours ago our ancestors were living in the Stone Age and a billion days ago no-one walked on the earth on two feet. Yet a billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it....
In the UK too the Government is set, in effect, to own great swathes of our financial system - Northern Rock, RBS, Lloyds TSB, HBOS. Is this really the best use of money?? What opportunities are there?
See Monbiot article here about how we could solve the credit crunch without giving anything to the banks. He writes in support of local currencies - like the possible Stroud Pound - he notes the mayor of Curitiba in Brazil, kick-starting the economy of the city in 1971 by issuing currency in the form of bus tokens. People earned them by picking and sorting litter: thus cleaning the streets and acquiring the means to commute to work. Schemes like this helped Curitiba become one of the most prosperous cities in Brazil. But the projects which have proved even more effective were those inspired by the German economist Silvio Gesell. He proposed that communities seeking to rescue themselves from economic collapse should issue their own currency. To discourage people from hoarding it, they should impose a fee (called demurrage), which had the same effect as negative interest.
Monbiot writes: "No one is suggesting that we replace official currencies with local scrip: this is a complementary system, not an alternative. Nor does Lietaer propose this as a solution to all economic ills. But even before you consider how it could be improved through modern information technology, several features of Gesell’s system grab your attention. We need not wait for the government or the central bank to save us: we can set this system up ourselves. It costs taxpayers nothing. It bypasses the greedy banks. It recharges local economies and gives local businesses an advantage over multinationals. It can be tailored to the needs of the community. It does not require - as Eddie George, the former Governor of the Bank of England, insisted - that one part of the country be squeezed so that another can prosper.
"Perhaps most importantly, a demurrage system reverses the ecological problem of discount rates. If you have to pay to keep your money, the later you receive your income, the more valuable it will be. So it makes economic sense, under this system, to invest long-term. As resources in the ground are a better store of value than money in the bank, the system encourages their conservation."
The possibility of a Stroud Pound is exciting. The Mayor of Stroud has already pledged support and in this country there are other examples where it is starting to work - in Totnes they launched a currency in March 2007 - see good article in The Independent here. Lewes have also launched a local currency - see here.
In the US "BerkShares" were launched in the Southern Berkshire region of Massachusetts in 2006. They have been a huge success – some 1.43 million "BerkShares" worth $1.29m (£650,000) were issued in the scheme's first 17 months and there are now more than 300 businesses accepting them. BerkShares' organisers say: "The purpose of a local currency is to function on a local scale the same way that national currencies have functioned on a national scale – building the local economy by maximising circulation of trade within a defined region.
The currency distinguishes the local businesses that accept the currency from those that do not, building stronger relationships and a greater affinity between the business community and the locals. The people who choose to use the currency make a conscious commitment to buy local first. They are taking personal responsibility for the health and well-being of their community by laying the foundation of a thriving local economy."
The Stroud Pound is a similar idea ie to keep money in the area, thereby retaining wealth within the community. If you look at the places with economic problems it is because the wealth is leaking out of the neighbourhood.
The think-tank nef (the new economics foundation) in the 2003 book, the Real World Economic Outlook first predicted the scale, and consequences of the global credit bubble. Now that the bubble has burst, the think-tank has launched a set of proposals intended to both immediately stabilise the economy and lay the foundations for a phoenix-like new economy.
And, nef says this doesn’t mean starting from scratch: "Just beneath the economy’s surface is the sleeping architecture of a new, diverse and resilient local financial system. The same is true of Britain’s neglected and undermined network of small shops and local enterprises that contribute disproportionately to job creation and help create the social glue that holds communities together during hard times."
You can download their report here. It includes calls:
- to demerge banks that are ‘too big to fail’ - the discredited financial institutions that have needed so much public money to prop them up should be reduced to a size where their failure would not jeopardise the system itself.
- to introduce a moratorium on crash-related home evictions. The banks, which are at fault, have been bailed out to a previously unimaginable degree by the tax payer, yet thousands of hard-working home owners face the daily insecurity of potential eviction. Evictions could be stopped replaced by long-term plans for restructuring householders’ mortgage debts.
- to create a secure, accessible local banking system for people by growing the role of post offices and more.
- to use the Government’s new role in the banks to set new directions for investment to tackle the other great challenges we face: climate change and oil depletion.
- to launch a Green New Deal as mentioned before: with a windfall tax on the oil companies to invest in a massive environmental transformation programme that could insulate the economy from recession, create countless new jobs and allow
Our financial system has long since failed to do the basic job required of it – to underpin the productive economy and the fundamental operating systems of family, community and the environment upon which we all depend. Now that the state owns a large slice of the financial system, these are things we can do now.
As nef write about 2008: "This year has been finance-led capitalism’s 1989. It is now as broken as the old Soviet Union. It didn’t work for the real economy. It put people in rich and poor countries alike into debt for short-term profit. It was uncontrolled and grew in power until the tail was wagging the dog. Now there is a huge opportunity to develop a new model for a real economy that does work for people and the planet."
A Stroud Pound would be a small part of the fight to reclaim our local economy.