Local Currency, Local Comfort
In the current economy, our communities may be the best investment.
Instead of worrying about how the economic downturn is affecting our property values, Westchesterites would do better to consider how the collapse of many of the bigger corporations serving our area actually presents a unique opportunity to reinvest our time and energy on our communities.
Indeed, for every national chain store that vacates a mall, there is a local business in one of our village downtowns ready to pick up the slack. For every stockbroker whose reduced annual bonus will cost his kids a private school education, there’s a public school district ready to accept his help in the classroom or beyond. For every supermarket that closes because of its inability to meet cash-flow demands, there’s a Community Supported Agriculture (CSA) farmer waiting to accept a new subscriber for her organic produce.
We all have gotten used to treating Westchester the way an urban dweller treats his city: as the receiving dock for a bevy of goods and services provided from afar. Now that we’re becoming less able to afford all this product—and now that the conglomerates keeping all this production and consumption in motion are crumbling under their own weight—we’re finally in a position to respond as only people living in real towns can: by learning to work with one another.
I had just finished my new book on our highly dysfunctional economy, Life Inc: How the World Became a Corporation and How to Take It Back (Random House), when I noticed a perfect example of the kinds of measures I’ve been arguing for. The chef/owner of an organic restaurant in my town was soliciting local investment for his stalled expansion project. Comfort, the beloved Hastings-on-Hudson eatery, is more than just a restaurant to us. It’s an outpost of civility, community, and—quite literally—comfort in an otherwise rather downtrodden town center. It’s the kind of place at which you find students on a budget eating, as well as a long line of dads buying Asian chicken and sesame-sautéed greens for the family’s dinner. We depend on Comfort as much as its owner, John Halko, depends on us.
We were all delighted to learn that Halko was planning a second venue across the street, but growing impatient as the seasons passed without the boards coming off the windows. The problem was that while Halko was able to borrow the initial funds he needed from the bank, the credit crunch hit just when he was going back to borrow the last bit he needed to finish the electrical work and finally open. The bank refused him.
So Halko got a brilliant idea: why not get the money from the community itself? He began selling VIP Cards. Customers could buy a card for $500, and receive credit for $600 at either restaurant. That’s a 20 percent return on the investment for the consumer, as well as a discount on what the equivalent sum would cost Halko if he borrowed it from the bank. Plus, Halko can pay back the premium in food and labor, which he gets at a discount, rather than in cash—which costs him the same as anybody else.
While the initial response was slow, that had more to do with people not knowing about the offer than their willingness to pitch in. A few of us with media ties wrote about Halko’s plan in online forums—I dubbed the cards “Comfort Dollars”—and for TV news shows, and then the investors began pouring in. Within a few weeks, Halko had the tens of thousands he needed, and he was able to complete Comfort Lounge.
Instead of outsourcing his borrowing and our investing needs to a Wall Street bank, we brought it back home. And, unlike the investments in our 401k plans (which rarely produce 20-percent returns anymore, anyway), we have a direct connection—a personal stake—in what happens to Comfort. We want more good food in our town, more places to congregate, and a more thriving local economy. And now that we also have a financial interest in keeping Comfort in business—how else to spend a thousand bucks of credit?—we will be recommending the place to our friends. This is good for everybody, and represents a very different style of commerce than most of us are used to in our otherwise highly disconnected strip-mall reality.
The entire scheme harkens back to an era long before centralized, bank-issued currency dominated economics. Back in the late Middle Ages, most towns had their own currencies that functioned right alongside centrally issued “coin of the realm.” Instead of being lent into existence by a bank, local currencies were earned into existence through agriculture. A farmer brought his crop to the grain store, and received a receipt for the amount he deposited. This receipt could be broken up and used as money.
The interesting thing about these local currencies is that they lost value over time. The grain store needed to be paid, and a certain amount of barley or wheat was lost to spoilage. So each year, the grain store reissued the currency—at a slightly lower value. This meant that instead of storing money, people spent it as fast as possible. It was constantly circulated, since holding onto it meant losing value. People invested in preventive maintenance on their equipment and higher wages. Workers ate and lived well; women were actually taller in late Middle Ages England than at any time since.
Those who needed it still used centralized currency for long-distance transactions, but the vast majority of people did just fine transacting with locals. In fact, there was so much money available to these small communities that they began investing in projects that would take generations to complete. The great cathedrals of Europe were not funded by any central bank or the Vatican, but by small communities looking to invest their profits in their own futures. The cathedrals they built drew pilgrims from around the world, and bequeathed prosperity to their grandchildren.
Of course, once monarchs got wind of how much extra money was floating around, they outlawed local currencies and forced their citizens to borrow the money they needed from central banks. As a result, local commerce and reinvestment was overrun by long-distance trade, powerfully chartered corporations, and larger, non-local players with better access to the king’s treasury.
It may have taken a few centuries, but the banking system created to extract the value from local communities has finally revealed its weakness in permitting human-scaled, local commerce from taking place. Instead of focusing on how to save the biggest players, we might take a lesson from our European ancestors and look at the many ways we can provide for one another what we have for so long relied on distant corporations to do for us. And Westchester, with its vast pools of talent, access to resources, scenic beauty, already strong education, and highly varied terrain, is uniquely poised to reinvent itself for a more sustainable commercial and cultural future.
New York may be the best in the world at a whole lot of things—from literature and arts to fashion and finance—and we are the best of New York. There’s no good reason we can’t begin doing for Westchester what we’ve been doing for pretty much everyone else. While the Comfort Lounge may not stand up in scale or importance to Chartres, the underlying ethos that has brought it to life is the same: local people investing their time and energy locally.
It’s more efficient, more immediate, and a whole lot more fun.
Douglas Rushkoff is the author, most recently, of Life Inc: How the World Became a Corporation and How To Take It Back.