In the early 2010s I participated in a time bank, run along similar lines: http://timetradecircle.org/ (Cambridge MA)
It didn't work very well. People with valuable skills were generally not willing to offer them, and instead people would offer to do only fun things. So you would see lots of unmatched requests for things that required specific skills (legal, taxes, plumbing, computers) or difficult work (carrying heavy things, babysitting), and lots of offers for amateur interior decorating advice etc.
Additionally, everyone who signed up started with 10 hours in the bank, effectively printing money, which made it even more unbalanced.
Marx did not account for exactly the sort of behavior as described. The jackboot enters to enforce equality in that system very quickly because people will abuse it. I have seen people fight each other over mcdonands toys. Greed/Sloth knows no bounds, your particular monetary systems has to account for that. Most dont.
The article refutes the headline — nothing New about this except the ledger? When I was very young my parents joined a New Parents group. Members traded favors (“can you watch my kid for a few hours”) for little pieces of paper denominated in half hours. The shopping neighborhood nearby had “NeighborhoodDollars” that you could buy at a discount to face value and use at any of the shops. Local currencies are great and help bring people together, I highly recommend talking to people who live near you!
This is pretty cool. It reminds me a little of a concept I have been working on which is part currency and part UBI experiment. (shameless plug) It is called The Good Loop (thegoodloop.org). It works by Charities creating tasks that reward some number of credits. Volunteers perform the tasks and earn credits. Merchants accept credits for goods and services. Merchants then donate the credits to the Charity of their choice. It is a closed looped system to encourage and reward volunteerism.
Can the merchants claim it as a donation on their taxes?
At least in Germany, you can't "pre-donate", i.e. work to a charity and claim it as a donation. You'll have to agree on a price and the charity has to be able to compensate you and after everything is done, you can choose to not take their money. I'm not sure whether the third party in the transaction changes anything.
We had a baby-sitting-club kind of thing with its own currency, nice middle/upper-middle-class neighborhood, and some people just couldn't seem to get around to 'earning' credits by babysitting other people's kids...
So there was forgery.
Of course, in such a small community, it was immediately obvious who had done it, so people stopped being available to babysit their kids.
Paul Krugman has written on them long ago. I think there were things like runs on the bank and people hoarding babysitter hours, stalling out the system, and all kinds of emergent problems.
There’s a local currency in use here in my city [0] and it seems to have a lot more support than the approx. 10 local businesses accepting the Time Credits mentioned in the article. I see the stickers in the windows of shops that accept the local currency (it’s pegged 1:1 to the euro) but I’ve never actually bought any myself. Seems to have a following if the list of stores accepting it is anything to go by [1]
How is VAT paid? The government is clearly not accepting the local currency.
So VAT must be paid in euro for purchases in the local currency? I am wondering how this eventually works out, especially the day when selling your local currency into euros is not anymore possible or pegged 1:1, while VAT must still be paid in euro.
I'm not familiar with this, but according to his links it seems there's a fixed exchange rate of 1 € = 1 G. I think it's not exactly a "different currency" it's more like chips in a casino.
I didn’t know - and I hadn’t considered it, to be honest - but a dig on the website suggests that the government treats it as something akin to bartering or donation of services. As a result, it is exempt from VAT (TVA in French).
"Les échanges de services non-monétaires, promus par les réseaux de monnaies complémentaires (banque de temps, réseau d’échanges réciproques de savoirs, SEL – Système d’échanges Locaux, etc.) relèvent d’une activité ponctuelle, d’un coup de main. Ils n’entrent pas dans le cadre d’une profession et sont exonérées de TVA et d’impôts.
Thanks. So I go for a haircut, if I pay in EUR the hairdresser forwards the VAT to the government. If I pay in the local currency for the same haircut, the hairdresser keeps the VAT. Same if I buy fruits from a local producer (how is that "coup de main"!?)
This very much looks like VAT or other tax evasion scheme. Maybe users of the currency should realize the associated risks.
If the government shuts it down for fraud, it will be difficult to convert the local currency back to euros and the claim that is pegged 1:1 to the Euro might be be correct after all.
As I understand from their site, while you can trade euros for the local currency at a rate of 1:1, you cannot trade your local currency for euros.
They have a FAQ [0] (in French, sorry) that states that the national financial autorities do not allow for you to exchange your local currency for euros. What’s more, if you pay for something in the local currency you cannot receive change in euros - the vendor needs to give you change in the local currency, too.
It sort of seems like once you ‘buy’ your local currency, you can spend it but you can never trade it for euros again. The peg of the currency to the euro 1:1 seems to be convenient more than a tax dodge, but I have never used it personally.
Of course time is money, the benefit for some people though is that their time is then credited at a fairer rate of exchange than the normal employment way of crediting time, at the same time that it allows them to monetize things that would otherwise be difficult to monetize.
However for someone like me whose time is credited more than most by the employment system it seems like it would be a losing proposition to do things for time credits instead of money.
Yes, but that whole system is essentially built on the trust that everyone gets their fair share for giving time. Saying "for someone like me" runs completely counter to their ideas. Personally, it wouldn't be beneficial to me either but the catch is that this system essentially dictates you just have to give up some benefit to you in order to gain a benefit for the community.
However, I really don't know how viable this scheme would be on a bigger level. Eventually, this hopeful and admirable attempt faces the problems outlined in the article: landlords don't want time credits, banks don't want them, the government doesn't want them. So it's a risk of giving up your privilege of earning well that might leave you with nothing eventually.
I don't think it has to be viable on a bigger level. If all the system does is keep productive, engaged community members a reason to stick in the town due to the currency they've built up, I see that as a win for the currency.
Startup idea: a messenger that allows small communities to create their own currencies and provides a way to convert between them. Basically Internet, but for money.
...It'll turn into an even bigger scam than cryptocurrencies, but the idea seems interesting...
The point is to incentivize local spending, not just spending on local goods. Money that circulates within a community stimulates more local activity. Local producers are more likely to undercharge for the value of their goods and services for the sake of community vitality than large, remote businesses that want to squeeze every bit of value out of a transaction.
It's essentially a way to get more work done. It doesn't work if the network is so large that people lose that incentive.
That limitation is supposed to be an asset, it seems. No, you can't use the currency outside the local network. That incentivizes you to use your dollars only for things outside the network, and to go inside the network whenever possible (to make the best use of your overall holdings). You might give up convenience (by going to a local store to by produce rather than ordering from Amazon or a national chain), but then you see the benefits in community vitality.
In the end, this only works if you accept that investing in your local community is more important than saving a few minutes or dollars sending your work-hours-in-the-form-of-dollars to some far-flung exec's pocket. Some people are so well remunerated by the traditional system that I suppose they don't really have to care about all that.
I didn't see any examples of how people can get anything in return for sharing their time. Unless you can convert your time credits for unpleasant work you don't want to do, it is just a gold star for charity work, and I'm not sure that quantifying and gamifying charity is a productive change.
I think the best way to think about this is to consider time credits a supplemental currency that incentivizes actions that benefit the community. Yes, your time could be worth more when working with traditional currency, but by that logic why would anybody volunteer?
Finding a way to benefit volunteers and people that are involved in the community, while also supporting local businesses, seems like a great way to keep money moving without relying on large businesses to generate income.
> Yes, your time could be worth more when working with traditional currency, but by that logic why would anybody volunteer?
Yeah but lots of people's times are theoretically worth more with this than with traditional currency was what I was getting at - anybody whose job is undervalued by companies but who can turn their skills to the benefit of others can earn more valuable time credits than they could earn money.
For example a janitor might have the handyman skills to build some IKEA furniture for you and earn more in the way of time credits than they would in money from their normal employment, without having to go through all the work they would have to become a handyman as a job or small business.
When it comes to volunteer work, you actually don't want to offer cash rewards because it decreases the motivation of people to volunteer - and yes, I realize what I just said sounds exactly backwards from what we'd assume the case to be.
When you start offering a reward, the human brain starts playing a comparative game. Instead of "I'm helping someone because I think it's the right thing to do" your brain starts doing the "I'm helping someone because I want a $25 gift card" etc. Wikipedia lists this as the Overjustificatioon effect[^1]
To be fair to the original article, I think the intent wasn't to reward volunteers but to instead create a local closed market that might help an economically depressed area.
In a functional time credit system, you should be able to play a critical role -- you should be able to consume products & services in the system in exchange for dollars in order to be allow those in the system to pay for essentials that they cannot buy with time credits.
Your hourly billable rate is irrelevant here because these community tokens aren't trying to compete with your salary. They're pricing something else, something orthogonal to your professional compensation.
The idea is roughly lets use the language and methodology of "capital" to look at all the non-"net-worth"-ey things that makes us human.
So your "net worth" is the sum of your 1) Financial Capital (bank account) and 2) Material Capital (house and "stuff").
But that's only 2/8. When you hear about people who live in luxury highrises and work 12 hours a day at McKinsBcgBain but are too drained when they come home to do anything other than order takeout and pass out watching netflix only to pop a xanax and do it all again the next morning, that's being wealthy in Financial and Material Capital but poor in everything else.
The idea of these community tokens isn't to price your time as Financial capital, but rather price it into something like 3) Social Capital (the relationships you have with others) or, maybe, 4) Cultural Capital (all the ideas and bonds that constitute a community identity). Do others interact with you purely transactionally, or do they rely on you as you rely on them? Do you feel like you're part of a neighborhood, or just renting space one 12-month lease at a time?
So basically, your time can be priced in salary-dollars or it can be priced in community-bonds. Your time may command a high salary-dollar price, but what kind of social- and community-dollar price do you command?
Time credits are not a new form of currency, they were used extensively in early co-operative communities such a the one started by Robert Owen in the 1820s. Sorry to cite a book, but this has some details:
There are lots of examples of co-operatives that use a currency of their own, the more idealistic ones did time based currencies because it was a proxy for equal pay for equal work. Communities tended to adopt their own to keep money circulating locally.
It's not a new idea [0], but I admit that I was excited about this referring to digital communities. Nonetheless, it's a cool way of separating one's self from the Government monopoly on money.
To the comments saying "this is not new", the article uses the sense of the word not as "not existing before" but as "already existing but seen, experienced, or acquired recently or now for the first time" e.g., "her new bike".
Ya I was thinking that too. We've been watching The Last Kingdom and Vikings (set around 800 AD), and the main thing that's changed today vs then is that they had little mechanization or automation, so everything was made by hand. A suit of armor required so much time to make that it took a lifetime to acquire one.
Contrast that with today, where we can buy computers for $1000 that took millions of worker-hours to design and build. So in away, our $15 is worth something like $15,000 to them. Or more precisely, their day's work on the farm would produce 1/1000 of today's wages, maybe 30 cents or something comparable. Enough to buy some eggs or beer if they were lucky.
What gets me though is that most of us have a quality of life higher than royalty enjoyed then. Yet most of us spend our entire lives underemployed, doing work of little importance, still making someone else rich. The sacrifice of our daily life should cost us 1/1000 what it did then, but it still costs us the same. What good is more buying power if you hate your job, today is the worst day of your life, and tomorrow will be even worse? But hey, at least you have a flat screen.
I think that's why the concept of barter can feel attractive, because if everyone has a relatively comparable work output, then an hour spent doing something we enjoy (say baking or whatnot) can be exchanged for something we might find miserable but someone else might enjoy (like giving a massage). Whereas with cash, an hour baking might be worth $7, but an hour massage is worth $60.
The divergence between the free market value of something, and its toll in human suffering, is the primary cause of most conflict in the world today IMHO. That gap is why some of us are punished so much more for the work we do, and why so many of us don't get to do the work we'd like to do. We all just run the rat race and compete with the joneses until we're put out to pasture. I've found no solution to this yet in my own life, so I'm curious to hear others' experiences.
Check out https://www.mrmoneymustache.com/ for one possible alternative that is working for a lot of people that live in the US. The FIRE movement is about working for a short amount of time and living frugally but well for the whole of your life. You have to give up keeping up with the Joneses and most people will think you are a bit weird, but many people feel that is a great trade.
Bah, humbug. Time credit system? The currency is only related to time (time someone puts into doing something the community values, that is). My new "actual" time credit currency goes all the way and pegs itself totally 1:1 to time. Sadly, it turns out the inflation is horrible. Mother nature clearly hasn't studied economics the way she keeps creating new seconds all the time.
I've always found this concept interesting, and more generally the idea of community-based currencies. Time-based currency has a history [1] of attempted implementations, many of which don't leverage the community aspect here.
A large part of why I find these ideas interesting is related to the legal system used by the Romani [2],where failure to comply with the rules set forward results in exile. Because of their reliance on community, members are incentivized to follow the rules because exile would be incredibly detrimental to an individual's livelihood. I feel as though time credits work on a similar principle: that your efforts will be recognized in your community, but a lack of good faith will result in those time credits being worthless.
As always with these kinds of ideas, it can never work, in this case due to Gresham's law: bad money drives out good. No prostitutes or manual laborers (good money) are going to trade their time. Only aspiring actors, amateur artists, and etc (bad money) will be willing to participate in the market.
You can't get around money, at least not as a large scale economic system.
Reminds me of Berkshares, a local currency that launched in western Massachusetts while I still lived there. It's not a great idea since people have no real incentive to participate, but it's always interesting to see something like this play out.
There's a difference between re-defining one's local monetary system to use 'chunks of time' instead of money, and variably pricing select goods and services in terms of 'how much money you make in an hour.'
The former scheme is hard because time, as the Ithaca HOURS currency experiment shows, isn't exactly fungible in the same way that money is. Being able to redeem 'an hour' assumes that all people can do the same level of work at all tasks.
The latter, however, requires a different way of thinking about pricing.
For instance, service providers might set their rates as multiples of one's hourly wage: a tennis teacher might charge 1x, a pro-tennis teacher might charge 3x, and a low-income psychotherapist might charge .85x... Such a scheme could work with a sufficient number of clients -- essentially one is sampling from the income distribution -- but the system is more equitable to income differences.
From this point, one can think of more complex schemes, like a non-linear mapping function that can prevent high-income individuals for paying drastically more than others.
Yes, one big issue is one of trust and verification of income... but if it were a culturally accepted practice, it could work. The other issue is the incentive to only target high-income people. Perhaps there could be a set of tax breaks for those whose distribution of client's incomes met some basic requirements.
I got here a touch late, but this seems inspired by or at least a descendant of the Cincinatti Time Store[0], which at the time (1827) was the most popular mercantile endeavor in Cincinatti.
This is an old hat. Have a look at eg http://www.tauschkreise.at/?page_id=46 for some activities in the German speaking parts of the world. (Use Google Translate as needed.0
Calling this a currency is generous... it’s more of a token that externalizes the normally intrinsic reward for acting charitably. It’s like the stickers that I give my 6 year-old son for doing his chores.
Money you can pay taxes with is the specialised kind of money: “state money”.
You limit yourself in some ways if you consider state money to be the only money. It ties you to your state: which is OK when you agree with your state, but sucks when you don’t. It ties you to the state’s economy (the problem these novel/local currencies attempt to solve). It ties you into statecraft, international relations, and the horror show that is global currency exchange. It invites the state into every transaction you make. It invokes your state’s monopoly on violence, with every transaction you make.
All these have their uses, but they are also a burden sometimes.
But it's also a store value when you can spend those credits a local businesses. If your kid could turn in his stickers for toys or pizza then it would be an apt comparison.
I really like this idea of businesses accepting different types of currencies to encourage specific types of work like charity, volunteering, good grades for kids.
That’s the point; I don’t give dollar bills because that is money. It’s not like you couldn’t pay these people in dollars instead of “time credits”. Why use time credits? Because they aren’t really money and may or may not be worth anything at the end of the day. Show me a community where someone can meet their day-to-day needs exclusively with “time credits” and I’ll concede that it is money.
I see this and bitcoin as attempts at Balkanization, due to the failures of US conservative & neo-liberal economic policy since the early 70's onward. I see bitcoin as a Chinese state scam, a structured, self-funding via hardware manufacturing, attack on NATO policy that outgrew its britches and now serves as a global-warming-causing lunar-magic-gold reserve. Since there aren't any cheap new frontiers, you see things like "Time Credits." This means that undeserved communities are inventing their own tribal states because the larger state isn't meeting their needs. These generally aren't good things because more cohesive societies tend to exist longer.
Whilst I cannot debate the merits, I like the idea of a currency that helps reduce the amount of hoarding, since the whole point of currency is to be exchanged and keep an economy working.
Introductory economics usually frames the purpose of money as being threefold:
1. Medium of exchange; this is what you're referring to as "the whole point of currency". But don't forget about:
2. Unit of account; Something that allows you to compare "apples to oranges" so to speak, a common denominator.
3. Store of value; Some people choose to consume what's due to them up front, others choose to "hoard" for later (nothing wrong with that, IMO), most spread their consumption evenly over their life more or less. If we were all trading chicken eggs and babysitting hours amongst ourselves this would be a lot harder.
The world as a whole (except maybe like Japan) doesn't seem to have the problem of hoarding money. Low and negative interest rates have forced everyone to deploy capital and maintain comparatively little in risk free short-term sovereign notes.
It's apparent that maybe we should have hoarded a little bit, as individuals and institutions everywhere are reeling from the damage covid has wrought on the world economy.
It doesn't have to be a new concept to be necessary. Why do people on hacker news constantly have to miss the point? Most ideas are revised versions of things that have been done for centuries. The cult of "new" is ridiculous.
Exactly, you cant even read past the title to pull out the most important part (hint: the definition of the word "new" isnt the most critical thing to talk about)
Basically it would give the city more power relative to the state and federal government.
Basically I think this would be the best way to turn back the changes best described in the book "Fear City: New York's Fiscal Crisis and the Rise of Austerity Politics".
Economic reason:
Some of cost disease of social services like the ones that were cut relates to the subsidizing of suburban America, and I think local currency with reduced purchasing power in the suburbs would help avoid that.
Political reason:
The structure of American governance gives non-urban areas disproportionate power, due to a variety of mechanisms. Yet cities are more inherently more productive and the engine of the economy. Granting a major city the power of semi-autonomous monetary and fiscal policy will give it more power to counter balance this.
For similar reasons I think EU should go back to local currencies, but rather than getting rid of the euro could have both.
It didn't work very well. People with valuable skills were generally not willing to offer them, and instead people would offer to do only fun things. So you would see lots of unmatched requests for things that required specific skills (legal, taxes, plumbing, computers) or difficult work (carrying heavy things, babysitting), and lots of offers for amateur interior decorating advice etc.
Additionally, everyone who signed up started with 10 hours in the bank, effectively printing money, which made it even more unbalanced.