There is no obligation to personally perform any of the tasks rewarded in civics. To begin, families with children, infirm, or individuals with special needs would be exempt. There would be two other ways of opting out of participation. The first could be by paying an extra amount in dollars as part of one’s annual taxes (e.g., $1,000 for the example above). The second option for people not interested or without the time to personally perform any of the tasks would be to purchase civics via an online market, openly and transparently. People who earned more civics than they needed for their annual contribution could sell them in that market. The buyer of the civics could make the purchase in conventional money or as an exchange for any good or service acceptable to both parties.
The government’s role should be to ensure that fake civics are not in circulation and that exchanges are transparent and fair. The government should not tie the value of the civic to the national currency. If the government wants the value of civics to rise relative to the national currency, the most effective way would be to require a bigger contribution payable only in civics and, accordingly, if it wanted the value to drop, it could require a smaller contribution to be paid in civics.
Furthermore, the process can be targeted to specific population segments and should be countercyclically tuned to local conditions. For instance, specific programs that pay in civics could be implemented for young people when their unemployment level is abnormally high, as is the case now in parts of Michigan and California, for example, or in Portugal, Ireland, Greece, and Spain in Europe.
The legitimacy of the civic completely depends on the legitimacy of the process by which the choices are made on the activities that can be awarded civics. Bottom-up democratic processes are critical to the genuine success of what is proposed here. This leads to the critical question of appropriate governance for such systems, as will be shown in Chapter 11.
NATIONAL CURRENCY CRISIS SOLUTION?
At the core of our current financial predicament is the issue that the banks aren’t lending, and it’s not because businesses in general aren’t viable. Cooperative currencies, however, can remedy this cash crunch. In terms of a national crisis, a C3 currency, as explored in Chapter 7, could be used to take care of some of the commercial business currently conducted in national currencies. In a case for the eurozone, for example, countries like Spain, Portugal, Greece, or whichever is in trouble could continue using the euro currency for everything having to do with international activities: tourism, shipping, importing, and exporting. Their respective governments could, in addition, create a new version of the peseta, escudo, or drachma to be used for internal social and environmental businesses. This neonational currency essentially could be spent into existence by the government itself, for specific purposes, without incurring debt in the financial system.
Thomas Mayer, former chief economist for Deutsche Bank, made in July 2012 a proposal for Greece that is surprisingly radical for his background. It acknowledges that the great majority of Greeks don’t want to leave the euro and that they don’t agree with the extreme austerity program imposed in Greece.
Mayer’s solution is called the geuro, a second currency that would circulate in Greece in parallel with the euro and, Mayer says, “solve all of Greece’s problems.” For the first time, a mainstream economist, working for a major bank, is endorsing the idea of a complementary currency!
The geuro would be used immediately in most domestic transactions. For the purchase of essential imports, geuros would have to be exchanged for euros, “most likely at a hefty discount of 50 percent or more. Since an increasing number of domestic goods, services, and wages would be paid in devalued geuros, the export sector could reduce its prices in euros and regain competitiveness against foreign suppliers.” 6 The main difference between the geuro and the civic is that the geuro would be issued as a central government IOU and the civic would be issued by cities or regions without generating additional debt. But the civic would otherwise provide a mechanism to provide the same benefits as the geuro in terms of gradually rebuilding the competitiveness of Greek labor.
Edgar Kampers, director of the Dutch Qoin, has been working in the domains of sustainable economic development and cooperative community currencies since 1998. He remarks, “Current legal tender currency systems are very strong in developing high profits and building a globalized society. They have proved less effective, however, in supporting regional economic development, stimulating ecological policy goals and behaviors, and encouraging an active civil society. The current economic and financial crisis faced by many regions in Europe calls for new arrangements for communities to remain or become resilient.”7
In the province of Limburg in Belgium, for example, there was a waste cooperative between all the municipalities in the province, and this organization calculated the difference in price between new kinds of campaigns. “What they found was if they do a traditional awareness campaign, then they have a response of less than 2 percent. If they do the same thing with the same costs per person in that municipality, and they use a cooperative currency system, then they have a response of almost 40 percent. That’s 20 times better! It’s the only successful way of changing the behavior of the people on a limited municipal budget. And coupled with the information society, which makes computing, smart phones, tablets, and this type of technology so cheap and easy, it is now available everywhere,” Kampers added.
Lisa Conlan, CEO of TimeBanking USA, notes, “Given the current credit crunch that states and municipalities are experiencing, there is no reason why a wide variety of services could not be paid for in a local currency, such as time dollars. There’s snow removal, garbage collection, even community gardening.”8
A rich tapestry of initiatives comes to light with the understanding that unused resources can be linked with a whole host of unmet needs. Such exchanges provide solutions for cash-strapped charities and government bodies at different social levels, resulting in huge economic and social benefits.
TOREKES
Rabot is an immigrant district in Ghent, the fourth-largest city in Belgium. Rabot is the poorest community in the entire region. Most of the population lives in low-income apartment buildings in one of the most densely populated localities in Europe. Well over 20 languages are spoken, with Turkish the most prominent. Rabot suffers from high unemployment and the usual symptoms of urban decay, which have profound effects, both physical and metaphysical.
In 2009, one of the authors was asked what could be done to improve the area. The starting point was a survey to find out what residents wanted for themselves. Many, particularly those living in high-rise apartment buildings, wanted to have access to a few square yards of land for gardening, growing vegetables, and flowers.
Ghent, Belgium. Residents pay for their plots of land exclusively in the town’s local currency—torekes. Photo credit: Stefanie Overbeck.
The city owned land in the neighborhood, including a site where an old factory had been demolished and the land was left abandoned. Rather than leaving it derelict, the land was divided into plots measuring four square meters each, and these plots became available to rent on an annual basis, at the cost of 150 torekes, a newly introduced local cooperative currency. Torekes are available only in paper form for this pilot project, on the request of the participants themselves. One of the reasons is simplicity.
To earn torekes (Flemish for “little towers,” emblematic of the neighborhood), a long list of urban agricultural improvements and beautification activities could be done. Participants were rewarded for activities such as putting flower boxes on the windowsills facing the street, planting and maintaining sidewalk flower containers, placing “no advertising” labels on mailboxes to reduce junk mail, or helping to clean up a neighborhood sports field after a game. In all, 526 different activities were performed.
Wouter Van Thillo, who has been managing the project since 2011, describes the series of events that ensued: “In addition to paying for the rent of the neigh
borhood gardens, arrangements were also made with the local shops to accept torekes for specific goods that the city wants to encourage, such as low-energy lamps and other green products, or fresh seasonal vegetables. Participating shops can either use the torekes for their own participation in local activities or simply get them reimbursed for euros at the city office. Torekes can also be exchanged for public transport tickets and seats for cultural events or movies. All activities with very low marginal costs for additional participation, such as buses and cinema, are ideal for this scheme.
“We’ve also found, as this program has gained traction, that well-to-do residents from other parts of Ghent are now participating because it’s fun.”
This simple paper currency with no demurrage is considered to be a major success. Not a week goes by without visitors from other towns and cities across Europe stopping by to learn from this example. What this experiment has proven is that it produces a much broader social impact with the same euro budget, providing effective leverage in using conventional currency. Specifically, even at this very early pilot scale, conservatively three times more activities have been produced with the same amount of euros. If the implementation was fully scaled up, it has been estimated that this multiplier could potentially rise to a factor of 20.
These two colorful models of municipal and state governments finding inventive ways to resolve issues in their respective communities stimulate questions on how these methods can be expanded and improved. For the foreseeable future, government at all levels will continue to grapple with serious budget shortfalls, thus obliging cuts not only in discretionary programs but also to critical services and benefits. A city-issued currency such as torekes makes it possible to multiply the results achieved with a given budget in conventional money.
EDUCATION
The cost of education is a burden usually carried at the federal level of government. The seed of a provocative response to budget concerns was planted over a decade ago in Brazil, when the education fund had grown to more than $1 billion. Conventional solutions—such as the very successful GI Bill approach of the United States that funded education for veterans after World War II—would provide student loans directly to individuals for their own education. Another idea was crafted by one of the authors in cooperation with Gilson Schwartz, an economics professor at the University of São Paolo, Brazil.
The framework of what has since matured into the Creative Currencies Project was to leverage educational funding by using a multiplier that would allow many more students to benefit from the same amount of money with some surprising results.
The first model was the saber (meaning “to know” in Spanish and Portuguese), a specialized education paper currency allocated to primary and secondary schools, particularly in economically depressed areas. This currency is first given to the youngest students (7-year-olds), who transfer it to older students (for instance, 10-year-olds) in return for tutoring help with their schoolwork. The 10-year-olds can then do the same thing with 12-year-olds in compensation for the hours spent mentoring, and the latter with 15-year-olds and so on. At the end of this learning chain, the sabers would go to 17-year-olds, who could use them to pay for part or all of their university tuition.
The saber offers a number of advantages. It circulates among students at different grade levels, the last of whom go to college; it promotes better education through learning by teaching; it offers a better chance for students to go to a university; and it allows educational funds to be used for many more students than if they were used for just one scholarship, thereby creating a learning multiplier. For instance, the university would be able to exchange sabers for conventional money through the education fund but at a discount of, say, 50 percent. This makes sense because most of the costs at a university are fixed and, similar to empty seats on an airplane, the marginal expense of an additional student has little impact on those costs.
The total learning multiplier per dollar for the education budget allocated to this project would, therefore, be a factor of 10 (five times for the exchanges among students of different ages, multiplied by two for the arrangement between the education fund and the university, which discounts the saber by 50 percent). This 10-fold learning multiplier was calculated in terms of the financial effect of $1 billion spent through the saber system, delivering a total of $10 billion worth of education.
Another factor, learning retention rates, further increases this figure. Several decades of research have shown that learning retention depends less on the person or the topics involved than on the delivery system. What is striking is that our traditional educational system commonly uses the two least effective methods available: lecturing and reading, through which, respectively, only 5 and 10 percent of what is taught is retained. At the other end of the spectrum, an impressive 90 percent retention rate applies to whatever one teaches others!
So when the learning retention rates increase from 5 to 10 percent (normal educational methods) to 90 percent (teaching others) is factored in, another 10-fold multiplier effect develops. In other words, spending $1 billion through the saber system could roughly be estimated to generate as much as $100 billion worth of retained learning, in comparison to the conventional scholarship grants approach.
The saber program could also be expanded beyond the conventional classroom: eight-year-olds could teach their newly learned reading and writing skills to grandparents who are illiterate; students could help the elderly or handicapped by reading to them or recording their oral histories. These programs would encourage intergenerational relationships and further learning, not to mention creating extra assistance for the elderly without burdening governmental budgets.
Demurrage can be used to control the balance each year between the number of students wanting university seats and the availability of seats. A demurrage fee would be applied to encourage students to use sabers for the year that is printed on the saber itself, for example, 2014. If the sabers were not used to pay for tuition before or during that year, they could be exchanged for sabers of the following year—the year 2015—but with a 25 percent penalty. This creates a strong incentive to use sabers on or before their deadline.
“While the project hasn’t been adopted on a federal level in Brazil due to the vicissitudes of Brazilian politics, we have created instead two other currencies, talents for those involved in the practical application of knowledge, and alegres for activities that bring joy or make the world a more beautiful place,” adds Schwartz. Both use the same principles as the saber, in which young people teach other young pupils.
He continues, “We are now working with the Department of Finance and the police. Goods that have been seized because of unpaid taxes or contraband will be available for purchase by our students using any of the three creative currencies.”
WISPOS
Back again in the city of Ghent, Belgium, the local educational authority has been challenged by a variety of issues associated with the education of a large immigrant population, many of whom are illegal. Teachers report students having serious deficits in the rudiments of several subjects, the worst being French and mathematics. Falling behind academically undoubtedly contributes to being further marginalized in the future. Something creative to break the cycle had to be found.
Jeffrey Freed, author of Right-Brained Children in a Left-Brained World, a best seller and a classic in the field of education, has identified the general learning styles of the Millennials, children born since the turn of this century. “These kids have grown up in a world very different than previous generations. Just think about the impact of technology alone. Many tend to be more right-brained dominant in that they think in pictures. They process information in a nonlinear way. So in doing a math problem, for instance, they can get the right answer, but they can’t retrace their steps. They get bored and lethargic easily. The drill and kill method of teaching just won’t work. What succeeds is if they are taught in short time spurts. They need to understand the context of
what is being taught, so learning in field trips and through other rich experiences is the way to go.” 9
With this insight, one of the authors and Igor Byttebier, a resident of Ghent and a consultant to the innovative program, worked with the teachers of the Wispelberg School, one of Ghent’s high schools, to design an hour-long program with a class of 12-year-olds that takes place every two weeks. Kids from the senior class participate, too, by assisting the teachers. They designed games around learning so it would be fun and provide novelty. To make it even more interesting, they divided the class into teams that would compete against each other for the entire academic year. Wispos, a token currency, was awarded for correct answers and debited for incorrect ones.
Igor Byttebier explains, “French is a difficult language as the pronunciation is so subtle to the ear. So we devised a game called twister. There’s a large checkerboard on the floor in bright colors, five squares by five squares, 25 squares in all. The differently conjugated verb endings are placed in different squares. The teacher shouts out a phrase, and the team rep has to jump onto the right square. If correct, two wispos are given; if wrong, one is forfeited.”10
On average, between 6 and 22 wispo tokens were won by each of the students, who could then purchase fruit and other healthy food items from the school store.
The project has been running for two years now, and, given its success, a second high school, KTA, has adopted the program. “When tested, the students scored 20 percent better than before as a result of the games, and in mathematics, the improvement in test scores was, on average, 10 percent.11 Just as important is the interaction between students of first and last years, combined with physical and intellectual activity. This is an enormous help to their social integration and self-esteem,” adds Byttebier.
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