Local Currency for Washtenaw County?
At the October 2009 meeting of the Ann Arbor Downtown Development Authority board, Sandi Smith reported out from the partnerships committee that a $6,000 grant had been awarded to Think Local First. The grant was awarded in regular U.S. dollars. But it’s a local currency that those federal dollars are helping to explore – by paying for a study to see if a local currency is feasible in Washtenaw County.
Backround trio from left to right: Kathy Ciesinski with Think Local First; Andrew Cluley, who was covering the event for WEMU radio; and Bob Van Bemmelen, proponent of the Unity model. Foreground trio: Ingrid Ault, executive director of Think Local First; Samantha Nielsen Misiak and Krissa Rumsey, both facilitators for TLF. (Photos by the writer.)
On Tuesday evening at the downtown Ann Arbor District Library’s lower level multipurpose room, Think Local First held the first of three meetings designed to gauge interest and support for the idea of a local currency. Ingrid Ault, Think Local First’s executive director, said she was hoping that more than the 10 people who dropped by would attend.
But there’ll be two additional meetings with the same content, both from 6-8 p.m.: Thurs., Feb. 25 at the Ypsilanti Senior Center; and Wed., March 3 at Vitosha Guest Haus Inn.
One couple, Larry An and Eileen Ho, dropped by the Tuesday event, even though that wasn’t the reason they were visiting the library. They’d come with their fourth- and six-grade kids, who were looking for their artwork – the lower level of the library is regularly updated with exhibits of art created by students in Ann Arbor’s local schools.
What piqued An and Ho’s curiosity was the idea of adding a local currency as a tool in their cohousing development – Sunward Cohousing – to aid the distribution of the work. Currently, members of the development are supposed to work four hours a month on tasks that are determined by the development’s work committee. For example, An said he’d put in some time shoveling snow in the wake of the storm that hit Ann Arbor earlier in the week.
Larry An, who dropped by the Think Local First event on Tuesday, is pointed in the right direction by Kathy Ciesinski, who was volunteering for the nonprofit.
An’s effort at snow shoveling didn’t match another resident’s, he said, who spent the entire day shoveling – that exceeded the four-hour monthly requirement in short order. But there’s no way to store that extra labor. And as the residents of the development get older, An said, people might not be able to contribute to the kind of work they did when they were younger.
The idea of using a currency primarily as a way of banking time was one of four basic approaches to local currency presented on poster printouts at different “stations” in the multipurpose room on Tuesday night. A parade example of such an approach receiving national attention is Ithaca Hours.
Closer to home, a time-centered approach to local currency has been implemented by the Dexter Miller Community Co-op, a neighborhood cooperative on the city’s west side. [Chronicle coverage: "Another Day, Another Dex-Mil"] On payment of the membership fee and dues for the Dexter Miller community, members are issued 16 DexMills – each note is worth 15 minutes, for a total of four hours.
How you get your hands on the “money” is one way to distinguish among various approaches to local currency. A second main approach presented at Tuesday’s meeting was basically to conceive of a local currency as an alternative to ordinary U.S. federal currency. The local currency can be purchased with those federal dollars at some agreed rate of exchange. In Traverse City, Mich., Bay Bucks are an example of that approach.
Also visiting the Think Local First event on Tuesday was Stephen Ranzini, president of University Bank, who had spoken to the DDA at their October 2009 meeting about his experience with the paper currency model of local currency. From The Chronicle’s report of that meeting:
DDA board members were alerted to some existing experience with local currencies in the Ann Arbor banking community, when Stephen Ranzini addressed them during public commentary at the conclusion of the meeting. Ranzini is president of University Bank. He described how he’d begun his banking career in Newberry, Mich., near Sault Ste. Marie, and how he’d developed a local currency there. In the first year, they’d circulated around $0.5 million of local scrip, and found that it had increased local shopping. So it was an idea he thought was worth looking at.
The Traverse Area Community Currency Corporation, which issues Bay Bucks, describes on its website how most businesses that accept Bay Bucks don’t accept them for 100% of payment. The idea is to keep the Bucks in circulation and circulating – to achieve that goal, businesses can’t accept more Bucks in payment than they can reasonably expect to spend themselves.
The idea of using local currency for only partial payment for goods and services is key to the coupon model, which was the third main approach presented at the Think Local First event. At the meeting was a proponent of the coupon, or Unity model, Bob Van Bemmelen.
Samantha Nielsen Misiak talks with Bob Van Bemmelen about the coupon model of local currency.
Van Bemmelen is a pharmacist, and he appealed to a medical model to explain part of his enthusiasm for this approach. Money is like blood, essential for getting goods and services (nutrients and oxygen) to the people who need them (cells of the body). While a newborn baby might have a few ounces of blood, he said, as the baby grows, it generates a sufficient amount of blood to deliver nourishment to the rest of the body.
One advantage of the coupon model, Van Bemmelen said, is that you can easily inject money into the system – you simply give it to people.
The fourth and final approach to local currency presented on posters was a barter system with “trade dollars” used as an accounting tool. An example of such a system is the Michigan Barter Marketplace.
Participants in the event Tuesday evening were asked to visit each station where the different currency models were explained on posters, and then fill out a sheet indicating their level of support for each approach.
The next two meetings will have the same format: Thurs., Feb. 25 at the Ypsilanti Senior Center; and Wed., March 3 at Vitosha Guest Haus Inn. More input will be eventually be solicited through an online survey, said Ault.
This is one of the dumbest ideas to surface in some time and I can’t believe that intelligent people are wasting their time on this.
Local dollars will have negligible impact on local purchases as anyone who is determined to buy locally (which I support 100%) will do so voluntarily regardless of the unit of currency and anyone who doesn’t give two hoots about buying locally will refuse to accept the Ann Arbor dollars (or pesos, drachmas, or whatever.)
Further, if anyone actually followed one of the approaches mentioned by a proponent by “injecting Ann Arbor dollars” into the system by simply giving them away, the credibility of the entire system would go kaput. If that was allowed to occur, Ann Arbor dollars would become as valuable as the Venezuelan Bolivar.
People will buy locally either due to availability, convenience, quality, or geographic loyalty. We’d be best served by focusing on those attributes rather than trying to re invent the wheel (or the US $.)
I am sorry to say this, but this is just silly. These people should spend their energies on more constructive projects. The idea of having to carry around local currency in addition to my cc (which my wife and I essentially use to pay for everything) and the little cash I carry is not at all appealing. Surely local business can find ways to increase business through other means such as good service, accessibility, reduced prices and having products customers want to purchase. This is just a gimmick that has no intrinsic value. If local businesses give preferred prices to those that use the currency, I will surely go elsewhere to do my shopping rather then deal with the inconvenience of a local currency.
Maybe a better idea would be to get Bank of Ann Arbor or the UofM Credit Union to issue credit cards that could earn “Local Rewards” points that could be redeemed at Washtenaw county small businesses.
A new currency makes doing business more complicated, and provides no incentive to users unless the local businesses stopped accepting real money, which they have no incentive to do, since it would just make them harder to do business with.
Clearly one necessity would be to educate potential users of the local currency system to the fact that it wouldn’t be mandatory or otherwise replace US currency or credit cards.
Bob, do you have some insight into how the BerkShares program, for example, has continued or into the longevity of the Ithaca Hours program, contrary to your claims of such systems having no value?
David, do you know how much the business owners you purchase from pay to an out-of-state company for each of your credit card transactions?
I don’t have a strong opinion either way as to the value of a local currency, but I would like to state that during these difficult economic times I’ve stopped using my credit cards and my debit card almost entirely. The reason for making such a change is pretty simple; think local first.
As Steve Bean points out when you use a credit card a significant portion of your payment is sent out of state to the credit card companies, taking money out of our local economy and giving it to the companies responsible, at last partially responsible, for the economic disaster we are currently experiencing. Letting local merchants keep the amount that would have been paid in fees is good for our community.
At first I thought it would be a hassle to pay for everything (well almost everything) in cash, but as it turns out it has made life much simpler. Our credit card and bank statements (my wife is also working on a cash basis) are only a few lines long, so monthly reviews of our accounts take minutes instead of hours. We don’t over spend or go unknowingly over our limit, so no fees and no interest, and to top it all off the chance of identity theft is now negligible.
If a local currency will encourage individuals to stop using credit cards I say do it. Logistically, it might be difficult to implement such a system, especially in the days of ATM’s, which is how I get my cash but since I use a local bank (Bank of Ann Arbor – Thanks Tim & Hans for all your support of local charities) I’m still not paying a fee.
If we can get by the logistics perhaps there is even a bigger benefits to the community. For example, perhaps there could be “charity dollars” that individuals could give to panhandlers instead of cash. These dollars could be restricted in use so people don’t feel like they are supporting a drug or alcohol addiction, but are still able help our neighbors in need. Also, a local currency could replace the failed “Gold” gift certificate program. Who knows what else we could incorporate into a well thought out program, but we will never know until we explore the possibilities.
Steve said: “David, do you know how much the business owners you purchase from pay to an out-of-state company for each of your credit card transactions?”
Yes, I am aware of the fees they pay. Paying those fees is part of doing business in the modern world (for both the seller and buyer) and I am sure they account for this when they set prices. I am also sure the financial institution(s) that print and manage the local currency will also be taking a cut. Design and printing local currency notes and setting up the system will not be trivial as steps will have be taken to prevent fraud and counterfiting. Therefore, they will not be fee free. What guarantee is there the merchants can find a local source for these activities and to setup/administer this system. Recall they went out of state for the Gold system.
A few comments on our experience with the DEXMILs in the Dexter-Miller Community may be helpful. As mentioned, members received 16 DM upon enrolling. Thereafter, the only way to get more is by doing something for another member. The result is an incentive to help out other neighbors in order to have more DM to pay for assistance received from some other neighbor. In theory this is just a simple time banking system without centralized accounting of time spent.
In practice having DEXMILS makes it easier to ask for help from others. But many do not bother to actually ask for or pay DM when providing or receiving a service. Exchanges are occurring much more frequently among our members but it appears that few DM are actually being used.
So our local currency system has helped to accomplish its goal of increasing neighborly exchanges even even while it is frequently not actually employed.
Jct: In 1999, I paid for 39/40 nights in Europe with an IOU for a night back in Canada worth 5 Hours. If you link your local currency to the Time Standard of Money, so can you. I’ll take yours if you’ll take mine.
I’m more concerned about the 6K grant. That money came from somewhere and I would hope none of it was tax money. We can’t afford this garbage anymore.
I can’t believe that we really need to set up an entire Ann Arbor currency system just to be neighborly? That should be a given.
Martel is confusing two issues. The local currency program is apparently intended to increase economic activity for local merchants throughout the county. DEXMILs are over two years old and are only used by about 50 households in one Ann Arbor neighborhood. Its purpose is basically to increase neighbors helping neighbors and it has done just that.
I’ll go, and I’ll listen. I can’t believe there is a grant to study this – more silly waste. Is this a shovel ready project that creates jobs? Seems the only job created here will be the unbelievable administrative task of tracking these “bucks” I can envision all kinds of problems: disagreement of the value of X# of hours of my service vs yours; my “bucks” went through the wash or the dog ate them; I’m old and I don’t have the capability to do tasks; the product or service I want isn’t available in the program; the product or service has been overvalued; and on and on. Let’s Get Real here – this will be so labor intensive that the value of the buck will be reduced by the cost of administration.
Hi Al Feldt, Yes, I agree that I appear to have confused the purpose of the DEXMIL initiative with the intentions of the Ann Arbor currency initiative. Blame my confusion on the context of the article. In any event, I doubt the usefulness of the Ann Arbor Currency project and still find it amazing that so much time and energy appears to be spent on this. I am glad, however, that your neighbors in Dexter find the DEXMIL project useful in promoting neighborliness.
I agree that this seems to be a waste of money, and just creates additional overhead of tracking and managing this local currency. I have no problem supporting local businesses today with cash or credit cards. There are many better uses for $6000 that this study!
The “People’s Republic of Washtenaw” to issue its own currency? How about “Moscow on the Huron” as the capital?
Let’s put a portrait of that great statesman Leigh Greden on the “currency”.
What about enforcing counterfeiting violations?
20/20 or some other investigative news show a number of years back showed the disaster that occurred when pepole joined “bartering clubs” and lost their homes in exchange for some worthless coupons that no one wanted to accept as value.
The tragic part is that somebody’s money was squandered on this jokeof a study.
Ah, the old “People’s Republic of” gag. It just never gets old, does it?
I am surprised at the negativity towards local currency on this forum! Perhaps people do not know who it benefits themselves and the community?
Thomas Greco’s Money: Understanding and Creating Alternatives to Legal Tender, is a great resource. I will quote him here:
The purpose is
“1. reduce reliance on conventional money and markets, and/or 2. bring money and markets under local, democratic control” (p. 48).
I suggest that we should not assume the U.S. greenback is a reliable currency. Over $12 trillion was just printed in the past year’s bank bailouts!
“Within our local economies there is plenty of demand for goods and services that remains unfulfilled, and there are plenty of skills and talents which go unused. Why can’t the unused resources be employed to fill the unment needs? Mainly, it is because there is a general lack of money circulating within the local economy, and what money there is does not reach those who are most in need. Official money does not remain in circulation for very long within the local economy.” (p. 14)
Best of luck with localization!
Or perhaps people understand but just disagree about its feasibility?
Sorry, I had to leave and failed to finish the thought. The thing that strikes me about that is the idea of democratic control. What do either of those things mean when applied to money?
So the $6,000 came from AADA? for shame.
Adding a note for the archives from a reader who just recently found this article: “… there has been a county wide local currency in place amongst disabled people in the community since 2004. It’s called the Washtenaw Talent Exchange Network, and is administrated by Americorps and the Ann Arbor Center for Independent Living.” [link]