[Futurework] RE: LETS are failures (was: Local living economies)

[Karen Watters Cole]

Keith, Bill: Good morning. Thanks for some good commentary on local economies.   I don’t have the impression that the BALLE people are promoting LETS schemes as part of their fundamental mission.  Neither are they anti global or anti multinational corporations as much as they are pro local businesses becoming more connected to each other, learning best business practices from each other and supporting each other’s businesses.  One of the best features, in my review of their literature and program, is promoting building blocks to train and sustain newer entrepreneurs, much as apprenticeships and trade unions used to function in earlier economies.  They are also working on a national marketplace database.    Some of the best stories I can share involve single item producers who team up with others to package the end product creatively, using raw materials available locally, each group remaining a stand alone business, not incorporated.  For example, a local town became nearly extinct when it’s two sources of jobs and revenue were closed down. Consultants were brought in, thanks to the initiative taken by a local “spark plug”,  just to help them coordinate the natal ideas they had themselves for surviving that then became thriving.  The trawlers supplied the previously tourist season only salmon smoker with a year round supply, an old cannery was reopened, wood that was previously exported became available for a local craftsman who made wood tops for the tins, artisans carved native designs into the wood tops and they are sold at gourmet prices in the nearby big city airport and elsewhere.  The offal from the smoke house and wood chips are trucked upstream to refurbish the watershed stripped by years of logging.  They had the talent and means but just didn’t know what each other had to work together. Each had a piece of the puzzle that became a whole picture.    Individual members may of course be more anti Big Box, and this is certainly a current of electricity that charges many people not just local businesses trying to compete.    But this isn’t just about competition and the marketplace.  It is also about entrepreneurs who still want to do and produce for themselves in their local communities. They will always be there, we can only hope, and if your energy projections are correct, we will care very much about them in the future.  I have seen a few things about the cost of transporting all this global food and what it is doing to roads, not just energy needs and ozone layers.  No one is yet seriously advocating bringing food to market by horse and buggy again, but buying local first makes a lot of sense to many people, regardless of Wal-Mart, OPEC or collapse of the world economy.   I am interested in sustainability over several core concepts, not just local economies.  Since I am not a business person myself, I am interested in the human spirit and entrepreneurial success equations.  My philosophy is to recognize, accept and seek a better balance of yin and yang in my life and the world around me. I try to promote a moderate perspective and moderation reaction.  Some of my best friends are multinationalist corporate wheeler dealers.    I did hear about a few cities/towns where LETS were managing to survive, although I do not know much more than that, the paper ones actually doing better than others. Again, I am not trying to sell BALLE itself on FW, (there are at least five other groups I can provide urls to regarding local living economies) besides the selection of websites I provided in the original LLE post. If anyone is interested in other websites or references, please contact me offline.  - KWC   Bill and Karen, At 13:10 07/06/2003 -0400, you wrote: Harry, What is your feeling about the efficacy of LETS as a balance to the Walmarts of the world?        http://www.gmlets.u-net.com/  Bill Over here, 100% of LETS (and similar) schemes fail within 18 months. They are constantly springing up and constantly dying. The reason why -- beyond an initial flush of enthusiasm --  local currencies are not in any way credible is because you can't do normal currency-things with them. In practice, what happens is that most of those who join LETS schemes offer unimportant or crazy services like weeding the garden, reflexology, reading Tarot cards, aromatherapy and such like, so that you have very little to spend your credits on. (And you can't save them because no-one wants to borrow them, never mind pay you interest.) People with useful skills like plumbers, electricians, carpenters avoid LETS schemes like the plague because they can't use the currency - certainly not in the five or so LETS schemes I've seen come and go in Bath. There's none at the moment, but there'll be another soon, I expect. And this will fail once again.) What will be a real boon to local economies will be smartcards. Yes, even Walmart smartcards! If Walmart were to start their own smartcard scheme (which they are seriously studying, so I understand, stimulated by Ebay's current experiment), then that would be a real currency because it would be redeemable at any time against a wide variety of goods of value. In fact, Walter Wriston, who probably understands money as few others do in modern times, having been chairman and CEO of Citicorp/Citibank for 17 years, thinks that privately issued smartcards will be inevitable and, because they will be backed-up by real value, have a very good chance of overtaking national currencies in due course. Another supporter who writes on the subject of alternative smartcard- and electronic-type currencies is Jon Matonis, ex-Foreign Exchange Manager for Deak International's World Bank office and Director of Futures Trading for Sumitomo Bank Ltd. And then, right now, Barclays Bank over here are issuing a fully protected credit card -- a sort of halfway-house to a smartcard -- and if the initial trial is successful it is inevitable that this will gradually become a fully-fledged new currency in due course.(You can be certain that many other banks and businesses with large cashflows are looking carefully at the Barclays trial.) Despite the fact that smartcards are likely to be instituted by major transnational corporations, they will be a major boon to local economies because they will allow, even encourage, a great deal of new transactions and work outside the official economy because individuals will be able to transfer money between themselves without anybody else (particularly the government) being any the wiser. At present LETS schemes typically involve unemployed people on welfare and middle-class drop-outs. Once such individuals -- presently attracted to LETS schemes -- have possession of smartcards then they will be able to interact with relevant skills in the real world and not the trivial services that are the only ones presently on offer in LETS schemes. It's to be remembered, too, that all developed countries have considerable 'grey' or underground economies, which (though, by their nature, are not directly measurable) are officially estimated to amount to about 10-15% of GDP of some economies (UK and US) and up to 40 or even 60% in others (Italy and Russia respectively). When these grey economies start using smartcards then they will expand steadily from then onwards as a proportion of the taxable economy. I am having the roof of my office replaced shortly and have had four estimates from builders. One of them has offered to reduce his quote considerably if I pay in cash because he can evade tax. In the future, when smartcards are available and fully keyed into a fully encrypted database which will keep an individual's money and transactions away from government eyes, then this type of tax evasion will not only increase but gradually become the norm for large parts of the economy, whatever governments may try to do. I am afraid that nothing much can be done for local economies at present until (a) freight transport and personal commuting become a great deal more expensive, and (b) we have at least one, and hopefully, several fully functioning smartcard schemes -- followed up in due course, one hopes, with local solar-powered production systems and electrification. The last is several decades away but the first two are probably fairly imminent, so I wouldn't be too pessimistic -- so long as you don't exhaust yourself with trying to run a LETS scheme! (Much, much better, local businesses should start a local credit bank of their own like using real money like the Grameen bank.) Small businesses should not be anti-global or against the large transnational corporation. The latter are mainly a product of absurdly cheap energy -- which won't last for more than a decade or two longer. As energy becomes more expensive, then the advantages of local economies will gradually reassert themselves. I had a long argument with the founder of LETS schemes (whose name I've forgotten) on his website several years ago. I don't know what's happened to him but I doubt very much that he's still starting schemes himself. Keith Hudson   On Sat, 7 Jun 2003 08:29:05 -0700 "Karen Watters Cole" <[EMAIL PROTECTED]> writes: Last weekend I attended the first national gathering of a group formed to promote local living economies, partly as a personal growth exercise and for writing research.  The groups name, BALLE, stands for Business Alliances for Local Living Economies (http://www.ballenetwork.org/BALLE/) and includes mostly small local entrepreneurs trying to remain vital in their communities, centered around sustainability themes and a strong desire to promote local business first.  Some of these good people are unabashedly anti-global, anti-multinationals but most of them simply want to succeed in the places where they live, raise their children and pay their taxes.  These are not provincial people insisting everyone be of the same color, creed or cloth, otherwise I would not be interested in what they are trying to promote.  Keith Hudson, 6 Upper Camden Place, Bath, England