Printing Money

Photo: Katie Moorman

You may have spotted a paragraph in a recent Viva webmag noting that the Lewes Pound Group is on the march again. Clearly attempts to make the punters notice the existence of “Toms” (why is there still no nickname?) via canvas bags and stalls at the Farmers Market haven’t had the desired effect. It seems a more radical procedure is required to animate the Pound’s decaying corpse. Now they are giving (yes, giving) free Lewes Pounds if you spend a few quid in certain shops. A good marketing wheeze, no? Get the notes circulating by putting a few free tasters out there. I mean it worked for Ben and Jerry’s.

It might be helpful at this point to remind ourselves what money means. For a long time (since King Croesus in the 6th century BC, more or less), cash meant coins made of a metal agreed to be precious. Coins were a useful technology and worked fine until an unnamed, but inspired, Chinese bureaucrat in the 8th century AD came up with a brilliant idea. “Why lug that heavy gold around with you? In fact why not put it over here in this official-looking government strong-box and we’ll give you a note to say we’ll pay you back on request.” And so paper money was born. For Marco Polo such a mechanism was the greatest wonder of Kublai Khan’s empire. It was also its weak spot. Wanting to finance war (as the Mongols often did), the Mighty Khan listened to yet another clever official who proposed that, as these notes were so handy, people would rarely want to get their hands on the actual gold. Why not then simply print more paper? To be fair to the Khan this is a temptation many later rulers (including our current Government) have been equally unable to resist. 

This is not to say that the Lewes Pound group are ‘doing a Kubla’ and simply printing more dosh (though it must be tempting). Like the ancient Chinese Jiaozi, The Lewes Pound is backed by a promise to redeem it for something ‘real’, in this case Sterling. What Sterling is backed by is another story. The problem is that money is simply a way of keeping accounts between us. We have plenty of convenient ways to do this. As has been pointed out in these pages before, new ways to pay (especially if they are less convenient) may simply end up rather de trop.

Will the current campaign change things? Possibly, but I wouldn't bet a 21 pound note on it. Despite sucking up around 15 grand to run last year and goodness knows how much time, even some Transition Townies can’t seem to be bothered to defend the economic and environmental claims made for the Pound any more. Some clearly still have hope. It does slightly remind me of an unpopular boy at my school who would give people sweets with invitations to his birthday. Whether it was a visionary marketing strategy or a desperate gesture is still not clear to me even thirty years later. I suppose it depends on whether his parents followed it up with something decent (like even more sweets). Or maybe he was great when you got to know him. Ben and Jerry’s may be rewarding on closer acquaintance and thus giving freebies makes sense. Will the Lewes Pound be so tasty?

Solar Power

Solar power is flavour of the month around town. With the proposed community owned power station and the Rooks thinking about getting panels, it sounds as if Lewes is leading the way into a low emissions future. In the face of environmental catastrophe, free energy from the sky certainly sounds like a tempting option. Lately I’ve been wondering though if the optimism around solar power is justified. What, one is tempted to ask, could be the trouble with energy from the sun?

Looking more closely at solar, the primary trouble is something familiar to Brits: the weather. Blighty is not a sunny climate and we use the brunt of our electricity in winter when the supply of sunshine is at its least abundant. There is also cost of installing panels. Photovoltaic panels (that’s the kind which generate electricity) for a typical house are likely be somewhere between 7 and 15 grand.  When you stick these factors together the figures don’t look encouraging, either from an individual point of view or from the wider social angle.

For individuals even the most promising scenarios suggest that if you install such panels, you might get electricity worth about 25% of the installation costs over the life of your system. While money isn’t everything, this picture would leave solar unlikely to catch on except among people who have spare cash and enjoy the warmth generated by their own piety rather than the small amount of energy they’ll get in the British winter. The last government recognised this and set up an incentive called the feed-in-tariff to encourage take-up. This involves buying any unused electricity householders generate from solar panels they’ve hooked into the National Grid (presumably mostly in the summer). The rates of payment for spare lecky are generous to put it mildly: often several times the cost of electricity generated by other sources. The question is open as to how many people this will encourage but it’s undoubtedly a nice investment opportunity for those who can afford it. The social perspective comes in when you realise that the people paying this enormous subsidy are the rest of us. Clearly this isn’t sustainable and a rather hot debate among environmental commentators right now is about whether this money would be better spent on the development of other alternatives to fossil fuels. The feed-in-tariff represents a big bet (with our money) that the price of the technology will ultimately come down and that of other energy sources will rise, to the point where solar is cost-effective.

Solar isn’t a significant energy source at the moment and there are plenty (including many earlier advocates) who doubt it ever will be, for the UK at least. You might want to consider this if you were thinking of taking a shareholding in the local power station. Is it a good bet? Or is it as big a leap of faith over sense as the Lewes Pound? For now it is worth remembering that, for something free, solar sure is expensive.

Pound for Pound

From http://www.vivalewes.com/ Nov 2008

The launch of the Lewes Pound has been the biggest thing to hit town since the boycott of the Lewes Arms all those months ago. The Pound's website promotes it as way to keep money in the local economy, cut carbon emissions and strengthen relationships with local traders. Though coverage has been everywhere (local and national) there has so far been very little discussion of what the Pound can realistically achieve. Lately I've been wondering: when all the razzmatazz, and eBay auctions are over what's the Pound really worth?

The argument that the Pound keeps money local goes something like this. Did you realise that the Lewes economy is like a bucket full of holes? Money that comes into Lewes is leaking into the globalised world beyond. The Lewes Pound will address this by ensuring that a portion of the money in circulation can only be spent in local businesses. This should maintain (and perhaps increase) spending in local shops. Just how many Pounds circulate in the local economy depends on how many people pick them up in the first place and on how many of those keep using them after the initial buzz. The arrangement is envisaged as permanent though of course it’s possible that, after dealing with two kinds of money for a while, a portion of people may find this a hassle and revert to regular cash. Though the plan is optimistic, the evidence for such complementary currencies may be less encouraging. It suggests that they have their best chance of catching on when physical money is scarce and large numbers of people really need a substitute. They literally stop money going out of town. In a country with plenty of coins, notes and plastic there just isn't the same necessity for an alternative, and complementary currency is far more likely to remain a novelty. After all people already have a way of supporting local business.

This support is given via regular money but an aim for the Pound (assuming enough people use it) is to increase the amount spent. However, here it runs into another problem. What about all those times when buying from the shop down the road is undermined by price, product range and all sorts of other factors which influence us weak-willed consumers. If you don't have a lot of money to throw around, the hole in the bucket that leads to Asda might look quite attractive. Sadly, in Lewes many small traders selling core commodities, like food and electrical goods, haven’t been able to compete in recent years. Against such forces what chance for the Lewes Pound? The example of the Totnes Pound (on which the Lewes Pound is based) is instructive. It maintains a steady circulation which implies that it at least has a number of committed advocates who keep putting it out there. However, is far from clear that it has increased spending in the local economy. In fact its circulation might just as easily mean that the market for local goods and services is fairly stable and unlikely to be dramatically altered by these kinds of initiatives.

Of all the possible benefits of the Lewes Pound, cutting carbon emissions has been put front and centre. The assumption is that keeping trade local will help the environment. Much as I love the High Street, this is not always a straightforward case to make. Sure, people walk to local shops but they also drive to them. Supermarkets often (though not always) mean you have to drive, but then larger loads can mean fewer trips. Relative to the volume of stuff they sell, large stores may have fewer deliveries than small ones as their products can often be delivered in larger amounts. Also there is no obligation on local traders to stock local goods and the products people demand mean even corner shops have a global inventory. Strange though it may sound, even if shops do have more local goods, there is no guarantee that commodities from nearby have a lower carbon footprint than stuff flown in from abroad. Local vegetables may come from heated polytunnels or British apples could have been refrigerated for months. Anyway, if we're really serious about cutting emissions internet shopping can be a more efficient way, as many deliveries can be made on one journey. It’s often complicated to calculate the carbon cost of various shopping options and proposing a vague notion of “localness” as the solution to emissions is seriously oversimplifying the issue.

All of which seems to leave us making friends with local traders. Despite some instances of traders being hassled to accept Lewes Pounds by some customers, this may be one area where the people behind the Pound are onto something. Community development is something complementary currencies can at least potentially achieve if they get beyond being simply a curiosity for the middle-class. If nothing else Lewes Pounds will give us all something to talk about now the parking has been done to death. Actually, and maybe this is the real point of the exercise, they do more than that and have been a publicity coup worthy of a town that's been grabbing headlines since Simon de Montfort. Local trading is well worth shouting about and can be wonderful in myriad ways: not least convenience, services the big boys can't match, and gluing the whole community together.

The other side of the Lewes Pound, though, is a danger that complex problems are being addressed with a romantic fantasy of self-sufficiency rather than appropriate solutions. The survival of local business in the face of globalised competition is an issue that requires action well beyond temporary hype. We need to consider many solutions from high quality start-up advice for businesses to supportive local authorities. Transition Town deserve credit for having raised a flag: it’s down to all of us to work out how to keep it flying.

Pretend Money

I paid for something with Lewes Pounds the other day. Not particularly noteworthy you’d think but actually it was the first time in the two years of its existence that I’d ever been asked for, or offered, the local lucre. To be honest I’d begun to wonder if it was still on the go (though now I come to think of it there is  still a rather forlorn looking stall at the Farmer’s market). However, Comedy at the Con (I highly recommend it) were offering 3 quid off the headline price so it seemed worth a trip to the Town Hall to buy some... Well is there a slang for Lewes Pounds? Given the absence of even a nickname as a marker of public consciousness I can’t help but wonder: what is the trouble with pretend money?

The arguments for the Pound are economic and environmental. The economic argument is that the money can only be spent locally thereby supporting local businesses who participate in the scheme. There are all sorts of questions posed by this and the evidence for such complementary currencies is not encouraging. It suggests that they have their best chance of catching on when physical money is scarce and large numbers of people really need a substitute. The Con Club, and anyone who offers a similar promotion, clearly can’t go on taking a hit forever so at some point meaningful use of local money comes down to a matter of whether enough people can be arsed with the extra hassle or not. The continuing novelty status of the LP suggests that most people can’t.  Local traders are really up against it when competing with big boys as the costs of core commodities costs can be kept lower due to economies of scale. There isn’t really any evidence that local currencies can do anything to challenge this trend.

It’s on the environmental arguments though that local currencies really become confused. The assumption is that keeping trade local will help the environment through reduced carbon emissions.  Alas this is not a straightforward case to make.  Sure, people walk to local shops but they also drive to them. Supermarkets often mean you have to drive, but then larger loads can mean fewer trips.  And since when do local traders have to stock local goods? Even corner shops have a global inventory.

It’s also worth considering if “locavorism” is quite as virtuous as all that. As well as being increasingly ripe for parody, a closer look suggests it offers no guarantees of reduced carbon footprints.  A vague notion of “localness” as a tool to combat environmental difficulties seems simplistic at best.

Clearly modern environmental problems are enormous and most of us may struggle to come up with a meaningful response. Initiatives like  the Lewes Pound  may have more piety value than practical effect. Of course, for as long as there are people willing put it out there the LP might possibly serve as another reminder of the crisis we’re in. Perhaps the trouble is though that it doesn’t do anything else.

John McGowan, 3rd Feb, 2011