Fureai Kippu
This is a Japanese concept that’s a bit like the LETS trading system that began in Australia. It operates alongside the standard currency, complementing it. And in Japan it is more than just a concept, it actually provides for social services while encouraging community involvement.
Fureai kippu (in Japanese ふれあい切符 :Caring Relationship Tickets) is a Japanese sectoral currency created in 1995 by the Sawayaka Welfare Foundation so that people could earn credits helping seniors in their community.
The basic unit of account is an hour of service to an elderly person. Sometimes seniors help each other and earn the credits, other times family members in other communities earn credits and transfer them to their parents who live elsewhere. For example, an elderly woman who no longer has a driver’s license; if you shop for her, you get credit for that, based on the kind of service and the number of hours. These credits accumulate- users may keep them for when they become sick or elderly themselves, then use the credits in exchange for services. Alternatively, the users may transfer credits to someone else.
A surprising part of the project has been that the elderly tend to prefer the services provided by people paid in Fureai Kippu over those paid in yen. This may be due to the personal connection. When they surveyed the elderly, it was clear they preferred the people who worked for Fureai kippu over the people who worked for yen because of the nature of the relationship. To convert this community service to yen would seem to dilute the community ethic. [Wikipedia]
Surely it could be taken further? Perhaps a welfare organization could become involved with LETS to create a twin currency system, where regular LETS dollars work the same as now but SOCIAL LETS dollars can be earned by anyone but only ultimately cashed in for social services.
A variation exists in Brazil called Saber. Young children receive currency which can only be spent on receiving tuition from older students. The currency works its way up until adult students earn it from tutoring high school pupils, and spend it on tertiary education from the government.
To (eventually) replace national currencies with a more relevant system, the starting point must be something that everyone has access to achieve. The problem with Bitcoin and similar systems is that just by being enrolled you automatically receive currency. This is a good way of kickstarting the system, but ultimately assigns little true value to the currency.
Key Criteria for a Perfect System
Anyone Can Earn. Pretty much the only thing everybody has access to is the utilization of their own body. Those who are under-employed have greater capacity to start earning. Those who are fully employed already have some type of income. See Time Banking at Wikipedia.
Examples of how to earn “time hours” include:
- Child care
- Legal assistance
- Language lessons
- Livestock production
- Home maintenance
- Vermin / weed removal
- Odd jobs
- Office or secretarial work
- Tutoring
- Hairdressing
- Driving instruction
- Delivery of goods
- Shoe Shining!
- Respite care / helping the elderly
- Accounting and bookkeeping
- Writing
No Lending. Jesus was against lending, and it could be argued that the invention of lending led to much of the inequality in the world. Arguably people who receive only what they have earned are happier and more satisfied than those who trade in future promises. Without lending, bankruptcy becomes impossible. Growth becomes more realistic, and less critical. Consequently, the central “bank” would not pay any interest.
No Fees. It would be backward to only use paper notes and coins. It would also be alien for such a freeing concept that only a central power kept track of your worth. Ideally there would be a central “bank”, a personal card/phone app, a copy on your home server, and paper printouts/receipts at transaction points and at your home – if you choose. That way if suddenly the “bank” said all your money had disappeared, you’d have a way of fixing things. The government would supply the “bank” system free of charge, paid by taxes.
No transactional taxes. Governments would need to find their taxes elsewhere.
Investment encouraged. It would be illegal to loan your currency, but investment in businesses and projects should be encouraged. Money sitting in the bank is idle. Any investment is rewarded via a government dividend, continually adjusted to relate to the ratio of money in the bank to money invested. If few people are investing, dividends go up. If everyone is investing, dividends are zero. Direct return on your investment from the business or project would be limited to something like KickStarter.com, where you receive goods and services for your patronage. Shares cannot be traded. The only way out would be if the business dissolves and everybody gets a return – perhaps only as much as the initial investment and the currency issuer gets the rest. Or you can cash out via receiving goods and services.
All property should be leased. Ideally your society should own all resources – land, water, infrastructure, minerals, forests etc. To get this happening initially, existing owners could be paid with long leases and perhaps money as well. Market forces determine prices, with a discount available to existing lessees, so that they can maintain continuity. Leasing works well for the domain name system.
Taxes should be harm based. Currently people get taxed on achievement. Taxes should be penalties, like taxing cigarettes, taxing pollution, taxing hoarded cash (subject to limits and ratios to income) – see demurrage. That wouldn’t be enough, so tax luxury cars, private education, unproductive land, and jobs that don’t grow society (like accountants and lawyers). Imagine if the armed forces were sponsored by people who consume sugar drinks… Clean living (healthy) people who lead productive lives could proudly claim to pay no taxes. Chain smoking talk radio hosts would suffer big time.
Chains. Fureai Kippu and Sabre are examples of closed loop systems. Ideally every aspect of governmental social spending has a closed, transactional loop. Or a “chain”. For example, every resident is given trash currency relative to (say) their age. Residences give their trash currency to the garbage trucks, enabling a set amount of trash to be taken from their home (they get rewarded for not using all of their credits). The garbage trucks then exchange the trash currency for real currency at the rubbish tip. Their payment is relative to how much tip space they take up. The government is at the start and end of the chain, and each link has incentives to do better.
Problems
In the system described above, inflation would be very low, but circulating currency would keep expanding as people provided more labor. Consequently the value of currency units could continually drop. If the decline was slow, it wouldn’t really matter – just like knowing a horse cost $75 two hundred years ago doesn’t bother me today. If the decline was fast enough to affect things, then a means of returning the currency to the issuer would need to be found. Keep in mind that a decreasing value would encourage use and discourage saving…
The less-privileged in modern society tend to resent those who have inherited fortunes. Many countries therefore have “death duty”. Dissolution of invested businesses could return some currency to the issuer. Perhaps some investments could have short-term goals, where getting your money back plus the pleasure of success is sufficient reward. See kiva.org.
Instead of death duty, perhaps investments all become government owned upon death, and the inheritors are rewarded somehow for the deceased’s wise investments. Cash is inherited free of tax, but hoarded cash attracts tax continually.
A future society could have a large number of people reverting to “old ways” and not interested in an electronic monetary system. A physical system needs to be available. It would need to be cheap to produce, and not easy for the general public to duplicate. For example, perhaps coins made from carbon nano-tubes could be produced for next to nothing. And off-grid folk could pay a minor fee for their freedom, say 5% of the currency value to pay for the physical costs.
Unemployment. There might be a problem with too many people wanting to earn currency with their body/hours relative to jobs. One solution is government industries – necessarily monopolies – where there is always enough work available at minimum wage levels. Factories would be a good example although hopefully in the future humans won’t be doing such work. This also helps with refugee immigration – newcomers could be welcome to arrive if they are willing to work for basic pay.
Preventing theft. Using modern technology, units of currency could carry transactional trails. If someone is paid in physical currency, it could have their name imprinted on it. If your name is not on the currency, it decreases in value by a certain percent. The greater the amount, the greater the reduction. So a million units are only worth 10,000 if they are not yours – but 10 units are worth 9.9.
Bureaucracy. The origin of currency is the issuer, and the distribution is via government agencies in return for services or time rendered. Corruption could be attractive, so tight checks and balances are required. This is inefficient. Transactions should require endorsements from more people as the value rises. The people endorsing the transaction should have no relationship other than the ability to verify the transaction. The level of bureaucracy should be related to the odds of fraud in that field and the transactional value. If for example strawberry farm wages are shown to have a strong change of fraud, then the cost of increased oversight will reduce the value of business being done. People will be incentivised to be honest.
Artists. Artists could receive a “living wage” from the government, and profit from selling their art. The big problem is determining what is genuine art. Once again a sliding scale could be the answer. All artists must make their art available for purchase via a public bidding system. Those whose revenue is below a cut-off point (say the top 95%) lose their living wage for a year or more. The cut-off point and period of wage loss could be continually adjusted to create the best return for the government and the strongest disincentive for bludgers.
Sliding Scale
It has become apparent as I wrote the above that sliding scales are a critical aspect of the system. Penalties, taxes, minimum wages and so on should be continually adjusted to find the perfect balance between what the government and individuals earn. This already happens – when a government has a budget surplus they tend to reduce taxes. To stimulate an economy, interest rates tend to be lowered.