On Kindness and Fureai Kippu

Joerg has sent me an extract of an interview with 'alternative money' guru Bernard Lietaer about Fureai Kippu. Fureai Kippu, as Joerg notes, is Japanese, and seems to mean 'caring relationship tickets'. The essential idea is that you give your care services now in return for pay-back services, either in another time or in another place.

"For example, there are about 300 or 400 private currency systems in Japan to pay for any care for the elderly that isn't covered by the national health insurance. They are called "fureai kippu" (caring relationship tickets). Here's how they work: let's say that on my street lives an elderly gentleman who is handicapped and cannot go shopping for himself. I do the shopping for him. I help him with food preparation. I help him with the ritual bath, which is very important in Japan. For this help, I get credits. I put those credits in a savings account, and when I'm sick, I can have other people provide such services for me. Or I can electronically send my credits to my mother, who lives on the other side of the country, and somebody takes care of her. Here is an agreement within a community to use as medium of payment something other than national currencies, to solve a social problem. And it makes it possible for hundreds of thousands of people to stay in their homes much longer than they otherwise could. Otherwise, you'd have to put most of these people into a home for seniors, which costs an arm and a leg to society, and they're unhappy there. So nobody's winning. In contrast, Japan has created a currency for elderly care. In the United States, Florida is the only state that has the same density of elderly people as Japan does -- 18 percent of the population is more than 65 years old. But Florida is a model for our collective future. Colorado will be there in 2020. Germany will be there in 2006, France in 2008, Britain in 2012. Partly because of the baby boom generation, and partly because of the fact that health care has improved and people live longer. If you put all of these elderly in homes for seniors, you'd go bankrupt. Japan has been looking for another way, and has found it by introducing a monetary innovation."

This is a beautiful argument, beautiful that is except for the fact that it's flawed in just the same way our PAYGO pension system is flawed. It's a pyramid and the pyramid has inverted, so what we pay now collectively, we won't get back as individuals later. In each generation there will be less who are able to give in relation to those, from the previous generation, who are waiting to receive. Toshiharu Kato , the originator of one widely used eco-money sytem in Japan, was quoted by Japan Today as saying he:

is confident that there are plenty of people willing to create such communities, especially among businesspeople in their 50s and 60s who have retired or been laid off due to corporate restructuring. "I'm counting on the thousands of men who have another 30 years or so to live and who could contribute so much to improving their neighborhood," he said. "I may be a dreamer, but I'm hoping that ecomoney communities will flourish all over Japan and serve as an ideal model for other fast-aging countries."
Source: Japan Today

Now I think it's important to say that I have no objection whatsoever to this kind of scheme, nor indeed to the whole idea of voluntary activity. I love the idea of the 'gift economy', and just in case you hadn't noticed we bloggers may be among the most active participants.

What I can't buy, however, is the idea that these schemes will help overcome the deflationary problems associated with ageing societies. Again it could be noted, I am not averse to the idea that our societies are too 'hooked on growth', and that this addiction may have exacerbated the pyramid-type problems we are now about to have. But when you're hooked, you can't just come off like that. You need some methodone-type substitute to help. The idea that we can simply throw our recent growth history to the winds seems to me to be an extremely dangerous one.

So where does growth come from? Well, in one sense there is no great mystery. A large part of modern economic growth has come from the systematic introduction of a larger and larger population into the money economy, and the transferring of this population from lower value activities like agriculture, to higher value ones like industry, to then higher value ones like ICT based services. (Of course, capital is involved, but capital comes from saving, and with more people working, more people are earning and saving, so, of course, the growth of available capital is tied in some indirect fashion to the growth of the labour force). In another sense there is a mystery, the mystery of productivity and what is known as TFP, but let's leave this one for another day.

Now the problem with the eco-money schemes, is that they take people out of the normal open economic system, and send them back into a relatively-closed non-monetary one. This may be great for their feeling of worth as human beings, but it is definitely negative for growth. So instead of getting all those positive feedback effects we had on the way up as more and more people enter the economy (eg women in the second half of the 20th century) we may now get negative feedback as people leave on the ride down. Note that those Kato has in mind are businesspeople in their 50s and 60s, the very people most governments hope to win back into the money economy in order to pay the pensions. This is very different from Irving Fisher's proposal for stamp scrip money in the context of the 1930's deflation. Fisher's problem was a liquidity drought. Japan is swimming in liquidity, the problem is to get people to use it and spend!