You are not poor when you have no money, you are poor when you have nothing to offer
April 12, 2012 4:49 AM   Subscribe

"They're quite joyous occasions," she said. "It's very liberating, not using money." / "I felt liberated, I felt free for the first time. I instinctively reached into my pocket, but there was no need to."

As a reaction to the economic crisis, the Greek port of Volos are using an alternative local unit, the TEM (link in greek), as an alternative to money.

"...the network would have grown even faster than it has if people were not so "frozen, in a state of fear. It's like they've been hit over the head with a brick; they're dizzy. And they're cautious; they're still thinking: 'I need euros, how am I going to pay my bills?' But as soon as people see how much they can do without money, they're convinced."

BBC article
posted by rubyrudy (73 comments total) 14 users marked this as a favorite
 
the Greek port of Volos are using an alternative local unit, the TEM (link in greek), as an alternative to money.

It is an alternative currency, not an alternative to money.

In fact, I rather believe it is a scheme to avoid taxes, and in particular Greece's 23% Value Added Tax, at a time when the cash-strapped Greek government is cracking down on VAT fraud and requesting bills for every transaction.
posted by Skeptic at 5:01 AM on April 12, 2012 [9 favorites]


LETS, Alternative Currencies (wiki links)
posted by Leon at 5:10 AM on April 12, 2012 [1 favorite]


In fact, I rather believe it is a scheme to avoid taxes, and in particular Greece's 23% Value Added Tax
You can't pay taxes if you don't have any money.

People may simply not want to pay the taxes, but the whole problem is that even if people could make an economically beneficial transaction they can't because they simply don't have any unit of exchange.

So,I might have the skills to fix Jean's car, and Jean might have a camera that Stu might buy that might cover the cost. Stu might have some spare time to come and paint my house.

If people have money, Stu can paint my house, and buy the Camera, and Jean can use the money to pay me to fix her car.

But if no one in that chain has money, nothing happens. So, a barter network allows the transaction to take place in the absence of cash.

And, of course, you get around the VAT. But how can you demand people pay a VAT if no cash has changed hands? Demanding payment in Euros for work you do for someone else, even if the person has no euros to pay, does not seem very fair.
posted by delmoi at 5:12 AM on April 12, 2012 [8 favorites]


One problem with the TEM is that it's linked to the Euro. Right now, people probably don't want to hold on to them, for fear that the market might go under. Over the long run, if it proves stable, it could end up with the same problem, as people hoard them as much as euros.

If I were in charge I would have a fixed rate of decline, so that a TEM worth €1 would be worth €0.9 in a year, etc.
posted by delmoi at 5:16 AM on April 12, 2012 [1 favorite]


You can't pay taxes if you don't have any money.

mon·ey [muhn-ee] noun, plural mon·eys, mon·ies, adjective
noun
1. any circulating medium of exchange, including coins, paper money, and demand deposits.
2. paper money.
3. gold, silver, or other metal in pieces of convenient form stamped by public authority and issued as a medium of exchange and measure of value.
4. any article or substance used as a medium of exchange, measure of wealth, or means of payment, as checks on demand deposit or cowrie.
5. a particular form or denomination of currency.

TEMs are money, and I'm very much afraid that Greece's tax authorities are sooner or later going to agree with me.
posted by Skeptic at 5:25 AM on April 12, 2012 [1 favorite]


You can't pay taxes if you don't have any money.

While it might in some sense be true that you can't pay the taxes, it's not true that you don't have to, at least in the United States. Even if this weren't actually money, we tax bartering "income" where no money changes hands and I would expect that plenty of other countries do too.
posted by Bulgaroktonos at 5:27 AM on April 12, 2012 [6 favorites]


Last I checked, merchants using alternative currencies in the US still pay all the relevant taxes, in dollars.

An 8% tax on a Berkshares transaction is simply 0.08 Berkshares per berkshare.
posted by ocschwar at 5:30 AM on April 12, 2012


These alternative to state-backed money are often called 'hours,' the wiki on 'local currency is pretty interesting.
posted by the man of twists and turns at 5:32 AM on April 12, 2012 [3 favorites]


You can't pay taxes if you don't have any money.

By the same token, you can't buy stuff if you don't have any money either.

But hey! These people have found a way to buy stuff without using the official government currency. Stands to reason they should be able to find a way to pay taxes too.
posted by valkyryn at 5:43 AM on April 12, 2012 [3 favorites]


The monopoly on money is jealously guarded by central banks and centralized governments. The "right" for any one entity to have a monopoly on money is one of the great unquestioned premises that affects everyone daily.
posted by spacewaitress at 5:48 AM on April 12, 2012 [3 favorites]


TEMs are money, and I'm very much afraid that Greece's tax authorities are sooner or later going to agree with me.

Actually, that doesn't seem to be the issue. The Greek Parliament has actually encouraged this kind of thing. It's the Germans and the rest of the Eurozone that are going to get pissed.
posted by valkyryn at 5:48 AM on April 12, 2012 [3 favorites]


From The Man of Twists and Turn's link:
[Wörgl, Austria] used the scrip to carry out 100,000 AS in public works projects involving construction and repair of roads, bridges, tanks, drainage systems, factories, and buildings. The scrip was also accepted as legal tender for payment of local taxes. In the one year the currency was in circulation, it circulated 13 times faster than the official shilling[citation needed] and served as a catalyst to the local economy. The heavy arrears in local tax collection declined dramatically. Local government revenue rose from 2,400 AS in 1931 to 20,400 in 1932. Unemployment was eliminated, while it remained very high throughout the rest of the country. No increase in prices was observed. Based on the dramatic success of the Wörgl experiment, several other communities introduced similar scrips.

In spite of the tangible benefits of the program, it met with stiff opposition from the regional socialist party and from the Austrian central bank, which opposed the local currency as an infringement on its powers over the currency. As a result, the program was suspended, unemployment rose, and the local economy soon degenerated to the level of other communities in the country.
posted by spacewaitress at 5:52 AM on April 12, 2012


...they should be able to find a way to pay taxes too.
The problem is that they will have to pay their taxes in Euros, or face disruptive penalties like confiscation or imprisonment.
posted by Coventry at 5:52 AM on April 12, 2012 [1 favorite]


The monopoly on money is jealously guarded by central banks and centralized governments. The "right" for any one entity to have a monopoly on money is one of the great unquestioned premises that affects everyone daily.

Uhmm, no. You can trade in and with a great many other currencies other than the legal tender of the country in which you happen to be trading. You can trade in and with alternative currencies, foreign currencies, metals, frozen orange juice, you name it. There isn't a "monopoly" and it certainly isn't "jealously guarded". What governments do jealously guard, for very good reasons, is being able to tax transactions in any currency or form whatsoever.
posted by Skeptic at 5:54 AM on April 12, 2012 [5 favorites]


The problem is that they will have to pay their taxes in Euros, or face disruptive penalties like confiscation or imprisonment.

They could bring back the corvée, and tax payments in kind. Of course, those were fundamentally unjust, and most societies have fought very hard to get rid of them, but, I suppose, if a descent into feudalism is unavoidable, we might as well get on with it....

My fears of a return to the 19th C may have been a tad optimistic.
posted by GenjiandProust at 5:57 AM on April 12, 2012 [2 favorites]


The Greek government is a corrupt and miserable failure, if I were living there I'd do everything in my power to avoid their extortion.

What's needed is something more informal and harder for the authorities to crack. Maybe large scale family / commune affiliations, in which no money changes hands and only the loosest accounting takes place to avoid later government intrusion. How many would be needed? A farmer, a butcher, a couple builders, an electrician, a teacher...
posted by Meatbomb at 5:58 AM on April 12, 2012 [3 favorites]


The Greek Parliament has actually encouraged this kind of thing.

I don't think it has quite done that. According to the second-linked article:

"Last week, Parliament passed a law sponsored by the Labor Ministry to encourage the creation of “alternative forms of entrepreneurship and local development,” including networks based on an exchange of goods and services. The law for the first time fills in a regulatory gray area, giving such groups nonprofit status. "

So, it has encouraged “alternative forms of entrepreneurship and local development”, including barter networks. If this grows into a shadow economy with an alternative currency eating into their tax base, I'm pretty much sure it's going to crack down on it, and not just because their lenders won't like it.
posted by Skeptic at 6:05 AM on April 12, 2012 [1 favorite]


I suppose a reputation economy would be difficult to tax. Everyone has a How Awesome I Am number, maintained by some vaguely central Awesomeness Analyst, and when you do work, you submit an invoice to that guy, who goes to the person you did it for and checks out the receipt, and then your score rises. Awesomer people contribute more awesomeness per transaction.

This does of course run into all the same problems as Reddit upvotes, but hey, it is quite difficult to tax.
posted by LogicalDash at 6:05 AM on April 12, 2012 [1 favorite]


If the government, on a random (truly) day during each 14 day period, took 1% of the balance in a person's virtual "currency" account as tax, that would be a 29.5% annual rate of taxation. It would encourage circulation because whoever's got the most money in an account is going to pay the most in taxes.

Adjust frequency and percentage accordingly.
posted by seanmpuckett at 6:15 AM on April 12, 2012 [3 favorites]


seanmpuckett: what would happen on day 13 if tax hadn't been collected yet?
posted by Leon at 6:27 AM on April 12, 2012 [1 favorite]


vaguely central Awesomeness Analyst

I nominate Zappa's Central Scrutinizer
posted by chavenet at 6:31 AM on April 12, 2012 [1 favorite]


It seems to me that a problem with this kind of system is that it only works at small, local scales. As you get larger and more geographically spread out, the chance of scamming and various chicanery increases.
posted by GenjiandProust at 6:32 AM on April 12, 2012 [2 favorites]


The Greek government is a corrupt and miserable failure, if I were living there I'd do everything in my power to avoid their extortion.


Uhm a huge part of the corruption and a large reason why they've failed is because of absurd and rampant tax evasion and fraud. What's the factoid that was thrown around - more Porsche SUV's registered in Greece than people who filed tax returns reporting income over 50k EUR?

It seems to me that a problem with this kind of system is that it only works at small, local scales. As you get larger and more geographically spread out, the chance of scamming and various chicanery increases.

Yes if only there were a way to get around this...
posted by JPD at 6:33 AM on April 12, 2012


Barter transactions are subject to tax just like anything else. They are *harder* to tax, which is of course the point here.

Tax dodging was one of the things that got Greece into this mess in the first place. Plus ça change.

The defining feature of an official currency is that the government pays its bills with it and you pay your taxes in it.
posted by unSane at 6:36 AM on April 12, 2012 [2 favorites]


monopoly on money is jealously guarded by central banks and centralized governments. The "right" for any one entity to have a monopoly on money is one of the great unquestioned premises that affects everyone daily.

You can pay in any currency you want. Banks used to have their own currency.
posted by Ironmouth at 6:50 AM on April 12, 2012


TEMs are money, and I'm very much afraid that Greece's tax authorities are sooner or later going to agree with me.
So are they going to accept TEMs as payment for taxes? Or are they going to start demanding that greeks no longer do favors for eachother, without paying off the German government.

The question is, how do you value the TEM for tax purposes? If it's worth N euros, then you should be able to buy 0.23*N euros with 0.23*N TEMs. If you can't, they're not. Chances are, no one is going to want to trade Euros for face value TEMs anyway.

These things are legislatively sanctioned, presumably the addressed the tax issue in the law that authorized them.
Tax dodging was one of the things that got Greece into this mess in the first place. Plus ça change.
What got them into the mess was joining the Euro in the first place. Had they had their own currency like the Small countries with their own currencies were able to devalue in order to boost exports. Iceland is a good example of that, their economy recovered much more quickly then, for example, Ireland, despite having a much greater actual loss.

The reason they were able to borrow so much was due to a "stamp of approval" and the assumption that Eurozone countries would all bail each-other out in an emergency.

The attitude of "HOW DARE THESE GREEKS PROVIDE VALUE TO EACH-OTHER WITHOUT GIVING GERMAN BANKERS A CUT!!!" is just fucking crazy. No wonder they want to drop the Euro.
posted by delmoi at 6:59 AM on April 12, 2012 [3 favorites]


No wonder they want to drop the Euro.

Except that they don't.

Most Germans would like them to, though.
posted by Skeptic at 7:06 AM on April 12, 2012 [1 favorite]


The attitude of "HOW DARE THESE GREEKS PROVIDE VALUE TO EACH-OTHER WITHOUT GIVING GERMAN BANKERS A CUT!!!" is just fucking crazy. No wonder they want to drop the Euro.

So you'd be cool with me evading my US taxes?

They aren't evading taxes imposed by German bankers, they are evading VAT legally imposed by the state, a tax collected by nearly every developed country in the world. Part of the reason why the Germans have rolled their metaphorical Panzers into Athens is because the Greeks did such a poor job of tax collection
posted by JPD at 7:08 AM on April 12, 2012 [1 favorite]


You can't pay taxes if you don't have any money

People down the centuries have tried that argument without the slightest success. It hasn't even raised a sarcastic laugh since the Sherrif of Nottingham popped his clogs.

In particular, you cannot escape VAT by resorting to barter. If you supply services or goods and receive other goods or services in payment, there are two separate supplies:

* the supply from you to your customer
* the supply from your customer to you

You must account for VAT, and so must your customer if they're VAT-registered. You both account for VAT on the amounts you would each have paid for the goods or services if there had been no barter and they had been paid for with money.

Demanding payment in Euros for work you do for someone else, even if the person has no euros to pay, does not seem very fair.

We could argue the ethics, and we could argue the gaping chasm that would be left in the system if barter were outside the scope, but I feel the key point here is: do you think the tax authorities give a shit?
posted by Segundus at 7:10 AM on April 12, 2012 [1 favorite]


What got them into the mess was joining the Euro in the first place.

Wrong. Tax compliance in Greece was virtually non-existent before the Euro. What happened was the Greek government at the time lied through its teeth about the state of Greek finances, defrauding their way into Euro membership. The former prime minister basically came to office saying "Look, all those figures we've been reporting to you for the last decade or so? Yeah, we basically made those up." The Euro certainly made things worse by letting this state of affairs continue, but the problem was already there.
posted by valkyryn at 7:21 AM on April 12, 2012 [5 favorites]


People may simply not want to pay the taxes


Which is actually quite understandable. While some politicians, entrepreneurs (governmental subsidies) and public "servants" stuff their pockets with taxpayers money, these people have to make ends meet. So, not really surprising.

"We don't pay taxes. Only the little people pay taxes," billionaire hotelier Leona Helmsley

By the way, total bankrupt Greece is a huge buyer of German military equipment and has a very high military spending per head. I am sure some people make a killing there. No pun intended.
posted by yoyo_nyc at 7:26 AM on April 12, 2012


the Greek government at the time lied through its teeth about the state of Greek finances, defrauding their way into Euro membership.

to be completely fair everyone knew they were lying. Is it still fraud if you know in advance you are being lied to?
posted by JPD at 7:33 AM on April 12, 2012 [2 favorites]


If I were in charge I would have a fixed rate of decline, so that a TEM worth €1 would be worth €0.9 in a year, etc.

Ah, rather like our current federal reserve.
posted by IndigoJones at 7:33 AM on April 12, 2012 [1 favorite]


to be completely fair everyone knew they were lying.

Only kinda, or at least that's the impression I've gotten. I think it's true that everyone knew the Greeks were overstating their position somewhat, but I don't think anyone knew just how badly. I don't think even the Greeks knew, because they'd stopped collecting real numbers years before.

Is it still fraud if you know in advance you are being lied to?

Depends. In law "fraud" as such generally involves reasonable reliance on a material misrepresentation. Europe did know Greece was lying about something, but unless they knew both exactly what they were lying about and what the real answer was, there's a good argument to be made that this isn't enough to avoid a charge of fraud.* The argument would be something "I knew they were lying about this, but didn't know they were lying about that" There's also a question as to whether, given the nature of the lie, it would have been reasonable to believe that the truth was where Europe believed it was rather than where it actually seems to have been.

Again, the situation with Greece does not seem to be anyone saying "See, we told you it was this bad!" but more a "Geez, that's even worse than we thought."

That being said, Greece could also make the argument that Europe had to be completely and totally stoopid to believe a word of it. This isn't the most flattering defense to take, but one has to admit it has a certain cogency.

So yes, letting Greece into the Euro was never a good idea to begin with. But the fact is that Greece would still be experiencing similar problems either way. The solution might be a bit easier--default, devaluation, and inflation would be possible--but they'd still have crashed just as hard.

*Or it wouldn't be if we were talking about individuals or corporations. Applying legal doctrines to sovereign states is always dicey.
posted by valkyryn at 7:54 AM on April 12, 2012 [2 favorites]


JPD: "What's the factoid that was thrown around - more Porsche SUV's registered in Greece than people who filed tax returns reporting income over 50k EUR?"

Debunked (8:30)
posted by dickasso at 7:54 AM on April 12, 2012 [1 favorite]


That being said, Greece could also make the argument that Europe had to be completely and totally stoopid to believe a word of it. This isn't the most flattering defense to take, but one has to admit it has a certain cogency.

More to the point, it isn't appropriate to speak of "Europe" here as a single entity. The German government and the Bundesbank, for instance, were dead against letting Greece (or Italy, for that matter) into the euro at first. But the French government didn't want to enter a currency union with just Germany and a few Northern countries, so it sought a "Southern balance" and lobbied to let more Mediterranean countries in. Meanwhile, the UK government, while asking for their own opt-out, also vetoed in the name of national sovereignity any arrangement which would let the European Commission have a closer look at member states' accounts.

Nobody was a dupe, but everybody was to busy pursuing their own short-term advantage to notice what they were all cooking together.
posted by Skeptic at 8:03 AM on April 12, 2012 [3 favorites]


Not as cool as these when it comes to legal tender.
posted by ericbop at 8:04 AM on April 12, 2012


Well hey I said it was a factoid. Too good to be true.

The point remains tax collection is a huge issue. 304k people reporting over 50k EUR still speaks to a lot of evasion. Less than half the tax take as a % of GDP compared to the UK before you take the much larger Greek informal economy.

to be completely fair everyone knew they were lying.

Only kinda, or at least that's the impression I've gotten. I think it's true that everyone knew the Greeks were overstating their position somewhat, but I don't think anyone knew just how badly. I don't think even the Greeks knew, because they'd stopped collecting real numbers years before.


Nah - Everyone knew they were lying. Everyone who should have known knew that Greece and Italy were entering into these long-term derivative arrangements and rearranging deck chairs to make their headline numbers hit the Maastricht Criteria. if you go back to 98-99 you can even find a few finance ministers being pretty open about it. It was just decided that the EMU as a political success was more important than fixing the financial side of things at that moment. I think it was always intended that the Greeks et al would fix things, but again politics got in the way.
posted by JPD at 8:07 AM on April 12, 2012 [2 favorites]


Which is actually quite understandable. While some politicians, entrepreneurs (governmental subsidies) and public "servants" stuff their pockets with taxpayers money, these people have to make ends meet. So, not really surprising.

Well, sure. There is plenty of corruption to go around, but it seems depressing common that people want the fruits of collective purchasing by the government (eg schools, roads, police and fire services) but way too many people resent paying for them. They often point toward "corruption" or "tax and spend" politicians as their rationale, but that is, in most cases, a thin veneer over the starker truth of "I don't want to pay" (leaving aside whether the people doing the complaining freely voted for the government they are complaining about -- obviously, in some places "freely" and "voted" may mean different things).

Obviously, I am mostly familiar with the US rhetoric on this topic, but every time tax evasion comes up, no matter what country, I see the same forces at work.
posted by GenjiandProust at 8:44 AM on April 12, 2012



It seems to me that a problem with this kind of system is that it only works at small, local scales. As you get larger and more geographically spread out, the chance of scamming and various chicanery increases.



Exactly! The problem with our current system is that it only works at small local scales! So maybe we should be doing more currency at the scale which seems to work best: the small, local scale.
posted by aniola at 9:11 AM on April 12, 2012 [1 favorite]


delmoi: "One problem with the TEM is that it's linked to the Euro. Right now, people probably don't want to hold on to them, for fear that the market might go under. Over the long run, if it proves stable, it could end up with the same problem, as people hoard them as much as euros.

If I were in charge I would have a fixed rate of decline, so that a TEM worth €1 would be worth €0.9 in a year, etc.
"

So, kind of like Worgl Script?
posted by symbioid at 9:15 AM on April 12, 2012


Exactly! The problem with our current system is that it only works at small local scales! So maybe we should be doing more currency at the scale which seems to work best: the small, local scale.

Well, except most small, local economies are supplied by a complex web of services and goods from quite far away. I am not sure if a formalize barter system would do a good job of supplying, say, city markets with vegetables (which, even with local produce, needs to be trucked a distance) much less farms with trucks.
posted by GenjiandProust at 9:26 AM on April 12, 2012 [1 favorite]




Done before, doesn't work either.
posted by Skeptic at 9:28 AM on April 12, 2012 [1 favorite]


I meant my last comment in response to aniola's
posted by Skeptic at 9:29 AM on April 12, 2012


They aren't evading taxes imposed by German bankers, they are evading VAT legally imposed by the state, a tax collected by nearly every developed country in the world
Imposed by "the state" under duress from foreign governments. The Greeks had no real democratic control over the situation, thus the problem. There is no one they could have voted for who opposed the loan conditions.
posted by delmoi at 10:08 AM on April 12, 2012 [1 favorite]


Imposed by "the state" under duress from foreign governments.

no. Greece had a VAT years before this current crisis.
posted by JPD at 10:19 AM on April 12, 2012


Currency these days happens on such a large scale that I can't fully understand how it works. There's scamming, various chicanery, and strange beasts like Wall Street.

Here in the city that brought the US the bizarre idea of a bike lane, Davis Dollars are rapidly taking hold. I chose to say "more currency" rather than "all currency" because I do acknowledge our current infrastructure. Local currency can encourage local community - I've seen it first-hand.
posted by aniola at 10:23 AM on April 12, 2012 [1 favorite]


Imposed by "the state" under duress from foreign governments.

Those taxes existed well before the current situation. They just weren't collected very well.

There is no one they could have voted for who opposed the loan conditions.

Wrong. Again. There are upcoming elections in Greece, and there are more than enough candidates promising to renege on the loan conditions. Of course, if they do so, the lenders will stop their payments and the Greek government will quite simply run out of money to pay its civil servants, including teachers, doctors, etc. It can then choose your apparently preferred solution and start printing its own "funny money", but who in Greece is going to trust money issued by a manifestly bankrupt state that will rather finance itself through the printing presses than thorugh a half-competent tax collection?

Greece's need to bring its fiscal house in order isn't imposed by "foreign governments" (which would hardly be serving their own citizens by throwing good money after bad at a bankrupt country which didn't intend to pay back). It's imposed by reality and the hard fact that you can print more money, but not more wealth.
posted by Skeptic at 10:24 AM on April 12, 2012


I mention the bike lane because bikes as transportation is another crazy idea that supposedly can't happen alongside our current infrastructure. They also work only on a small scale.
posted by aniola at 10:25 AM on April 12, 2012




Not as cool as these when it comes to legal tender.

The Open Currency people have Coin of the Realm for your LARP/Ren Fair needs.

(along with other products you might not find as interesting)
posted by rough ashlar at 10:34 AM on April 12, 2012 [1 favorite]


If Greece "Didn't want to pay off German Banks" they could have, you know, just owned up to the fact that they don't have sufficient fiscal discipline to participate in a monetary federation and left the Euro.
posted by chimaera at 10:46 AM on April 12, 2012


I see your coin of the realm and raise you Nova Roma Coins

Having alternative currency or methods of exchange is nice enough, but at some point you need to pay the light bill.
posted by dethb0y at 11:32 AM on April 12, 2012




I mention the bike lane because bikes as transportation is another crazy idea that supposedly can't happen alongside our current infrastructure. They also work only on a small scale.

You've never been to Holland, I presume?
posted by Skeptic at 11:46 AM on April 12, 2012


Regarding the discussion up thread on tax collection, perhaps they could take a lesson from China? How China crowd sources it's tax collection.
posted by pwnguin at 11:48 AM on April 12, 2012


If Greece "Didn't want to pay off German Banks" they could have, you know, just owned up to the fact that they don't have sufficient fiscal discipline to participate in a monetary federation and left the Euro.
posted by chimaera at 10:46 AM on April 12 [+] [!]


Speaking of which, I see that you live in California...
posted by Skeptic at 12:09 PM on April 12, 2012


I mention the bike lane because bikes as transportation is another crazy idea that supposedly can't happen alongside our current infrastructure. They also work only on a small scale.
---
You've never been to Holland, I presume?


Here's what I mean by scale: If I as a bicyclist commute two hours to work, I might go twenty miles. If I as a car-driver commute two hours to work, I might go a hundred miles. Likewise, a local currency won't travel as far as an international currency. As you've pointed out, this doesn't mean it can't work splendidly.
posted by aniola at 12:17 PM on April 12, 2012


Davis Dollars are freely convertible into US Dollars at 1:1. So how is this an alternative currency again?

Its not a crazy idea - its just pointless. Alternative currencies make sense when there is high or hyper inflation - and the alt currency has a fixed mechanism for money supply creation and floats freely. An alternative currency that converts at a fixed rate to the prevailing local currency is a marketing scheme at best, an effort to evade sales taxes at worst.
posted by JPD at 12:23 PM on April 12, 2012


From the last link: "Exchange them for U.S. Dollars at the rate of $0.95 USD per 1 DD. (You can get $0.97 per DD if you exchange 250 DDs or more, or $1.00 per DD if you exchange 500 DDs or more.)" I believe it may work differently for non-profits. They've tweaked the rules a bit recently since I last paid attention.

Also from the last link: "It doesn’t change how you pay taxes – you must pay taxes on Davis Dollars income the same way you pay taxes on other income."
posted by aniola at 12:28 PM on April 12, 2012


Something that converts to $1 at a $500 threshold functionally converts at $1.

Also from the last link: "It doesn’t change how you pay taxes – you must pay taxes on Davis Dollars income the same way you pay taxes on other income."

And I'm sure, sure, the backers are providing transaction data to the state.
posted by JPD at 12:33 PM on April 12, 2012


Sorry, I don't quite understand your last comment.

Would the useful response be to point out that there's incentive to use davis dollars because you can get them for slightly less than a dollar, but you spend them as a dollar? so it's sort of a built-in discount. I don't know what "the backers are providing transaction data to the state" means, but I know that davis dollars is doing things legally.

And then there's the incentive to spend those davis dollars at local businesses. Again, the main reason I brought davis dollars up is because I have seen it - as a local currency - encourage connections within our community.


Here's another simple analogy. Large monocrops seem to be awesome! They feed lots of people and whatnot. But then they turn out to have some problems, and small, diverse crops are awesome!
posted by aniola at 12:53 PM on April 12, 2012


But its still a monocrop because it has a fixed conversion rate into dollars. That's the point. And its not even like a heritage dent field corn vs roundup ready corn - its roundup ready vs glyphosate safe
posted by JPD at 12:57 PM on April 12, 2012


That's a good point. It does serve to keep money in the community, though. Sort of like how the bike lane maybe isn't the best way to do things, but working within the realm of what people are willing to accept.
posted by aniola at 1:08 PM on April 12, 2012


Speaking of which, I see that you live in California...

... and?
posted by chimaera at 1:23 PM on April 12, 2012


And nobody is suggesting that California abandons the US dollar, despite not being a glowing example of fiscal discipline...
posted by Skeptic at 2:25 PM on April 12, 2012


And nobody is suggesting that California abandons the US dollar, despite not being a glowing example of fiscal discipline...

California is not a glowing example of fiscal discipline, but I find it strange that you figured an ad-hominem based on information you found on my profile was a good way to respond to my assertion that Greece could leave the Euro, as though I were claiming (somehow) that "California has its shit together, why not Greece?"

But if I need to elucidate some of the many reasons that your comment was ridiculous, perhaps I should outline just a few ways that California and Greece are different.

1) California has been part of both economic and political federation with the US for 150 years.
2) California is not only in monetary federation, but political federation, and is subject to federal laws regarding state finances.
3) California hasn't entered into the dollar by arguably fraudulent (or at least staggeringly, ridiculously, apallingly optimistic) means.
4) California pays more in Federal taxes than it receives in Federal funds. Most recent years, had it received parity of its tax submissions, that parity would have funded surpluses in Sacramento.
5) California cannot repudiate its debt.
6) California cannot depart the dollar (and US political federation) unilaterally.
7. California is unable to extend its debt arbitrarily -- it is constrained by its own state constitution and by Federal law that it cannot simply undertake deficit spending, and manage its debt by the issuance of more currency or by raising or lowering interest rates. (Greece cannot do that as part of the Euro, but it could if it went back to the Drachma).
8) An independent California would both have less debt as a percentage of its GDP but a GDP roughly 6 times that of Greece.
9) California actually has high levels of tax compliance. Greece's levels of tax compliance are abysmal.

I stopped at 9, but I'm sure I could come up with a few more.
posted by chimaera at 2:50 PM on April 12, 2012 [3 favorites]


The thing about many local currencies that is different that, say, dollars, is that dollars are a scarce currency: the total supply is restricted, and when there are significant distortions in the distribution (i.e., huge wealth disparity between rich and poor), it doesn't work so well as a medium of everyday economic exchange for (in the US, increasingly large) portions of the population. As someone said upthread: if you are using scarce dollars as your exchange medium, but no one has dollars, then maybe Joe can do some work for Bob and Bob can do some work for Alice, and Alice can do some work for Cynthia, etc., but none of the work gets done because no one has any dollars to pay each other with.

On the other hand, many local currencies operate on a plentiful supply basis. Time banks, for example. It's kind of an antidote to or hedge against the sort of wealth disparity that breaks a scarce money system. But you all should really read up on local currencies, such as the links at the top of the thread that some other folks posted, if you're interested in how all this works (since I've now about reached the limits of my knowledge of the topic).
posted by eviemath at 3:54 PM on April 12, 2012


On the cautionary side, I know that one of the reasons there are laws restricting or highly regulating the use of alternative currencies in the US was the history of abuse of company scrip in paying, eg., mine workers who lived in company towns, where they paid rent to the mine company in company scrip, bought all their food and supplies at the company store in company scrip, and gosh, for some reason they could never manage to save up and come out ahead, but were always falling further and further behind and more in debt to the company store and such.

Sadly, youtube doesn't seem to have the Leadbelly version:(
posted by eviemath at 4:05 PM on April 12, 2012 [1 favorite]


(Well, as a second-best option, here's The Weavers' version.)
posted by eviemath at 4:25 PM on April 12, 2012


Bartercard is one of the longest-running systems. It's quite popular but has some serious problems. In Australia, the Tax Office rule that 10% GST is payable on all trade-dollar transactions in cash. But that in itself doesn't kill it.

For every $1,100 I sell on trade, I owe $100 to the ATO for GST, and I owe $110 to Bartercard in fees. My material costs would be approximately $220, again in cash to the supplier, and other costs such as employee time, shop rent and electricity, etc probably add up to $100 or so, so it has cost me $530 in real money to make that $1,100 in trade dollars.

(This is why, as a general policy, I ask customers to pay some proportion--usually half--in real money and some in trade dollars. It stops me going backwards. I'm happy to take my profit in trade dollars, and if that were a universal practice I believe it would stimulate the barter economy greatly.)

Even if I was providing a service with near-zero material costs, I'd still be trading at $310 real money to $1,100 trade dollars. If I had a low-margin product, such as computers where it isn't unusual to pay $900 to a supplier for a product you would sell at $1,100, I'd actually be spending $1,210 in real money to make $1,100 trade dollars.

GST alone doesn't kill it. Trade agency fees don't kill it. (Both together deal it some serious wounds, unless you are a service business.) Low margins kill it worse than either.
posted by aeschenkarnos at 8:29 PM on April 12, 2012


"The attitude of "HOW DARE THESE GREEKS PROVIDE VALUE TO EACH-OTHER WITHOUT GIVING GERMAN BANKERS A CUT!!!" is just fucking crazy."

If you mean those German bankers who are currently paying the bills those Greek market goers are running up, you might just call me crazy.
posted by Blasdelb at 9:59 PM on April 12, 2012


Chimaera, maybe your moral indignation about my purported ad hom would be a bit tempered if you put yourself for a moment in the boots of a Greek person reading your own comments.
Much of the public discourse about the debt crisis has been tainted by a frankly unhelpful and rather unpleasant sense of moral superiority. The citizens of the countries hit by the crisis are portrayed to a man as an entitled bunch of dishonest, lazy buggers, congenitally unable to pay their taxes and thus deservingly being thrown out of the euro paradise by the Angel of Fiscal Wrath. Even some sympathetic commenters, like Krugman, appear to believe that those countries can only improve their competitiveness by repeated devaluations, and not like Germany...or California, by increasing productivity. It's all rather condescending, and even the old chestnut of the "Protestant work ethic" has been trotted out once again (and never mind that nowadays Germany's richer regions are the overwhelmingly Catholic like Bavaria). I hoped that, as a Californian, you might understand that a fiscal crisis is a little more complicated than that.
Coming now to your points: Firstly, Greece is also in a political federation, although admittedly a looser one than the US. I shall rather not delve into the details of how California came into the US, although our Mexican friends may have a word or two to say on the subject. It was indeed a long time ago.
More to the point, Greece is just as legally committed to the euro as California is to the dollar. There is no euro exit mechanism in the EU treaties. Besides the legal obstacles, there would also be huge practical ones: how would you stop the unavoidable capital flight once Greece's exit was decided?
In the EU treaties, there are also debt limits for eurozone countries, they just have been blatantly disregarded since...er... Germany blew them.
Finally, if lax tax compliance was the sole root of Greece's fiscal problems, they would be easier, not harder, to fix than California's, since it would be just a matter of enforcing Greek law. Even the most crooked person pays his taxes if the taxman has real teeth. By contrast, California's fiscal problems seem more firmly rooted in its state constitution and lop-sided direct democracy, and changing laws, never mind a constitution, can be a whole lot more difficult than enforcing them...
posted by Skeptic at 12:52 AM on April 13, 2012


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