Complexity or resilience?

In the Times, Ed Conway (right), economics editor of Sky News, describes problems arising from the complexity of ‘the hallmark of 21st-century life’ and the International Alliance for Localization records examples of new modes of development and progress.

Conway writes about the vast supply chains, financial instruments and legal structures ‘sitting beneath every industry’:

  • Where once a company made its products in one country, these days most sophisticated goods are the product of many hundreds of contractors from around the world, eventually assembled into one unit and quickly shipped to your door.
  • Where once a bank manager would know to whom he lent money, these days debts can be packaged and repackaged so many times that the link between borrower and lender is effectively lost.
  • Financial globalisation — the ability to move money seamlessly from country to country leaves countries even more vulnerable to banking crises.
  • And in much the same way as companies outsource non-core production and services, the public sector delegates responsibilities to private operators.
  • By replacing tightly knit relationships with impersonal complex structures we lost something — consider the 2008 financial crisis,

The complexity of the regulatory system played a part in the Grenfell Tower disaster tragedy. Not only were regulations extensive yet oddly vague — allowing builders to use various loopholes — they were not even checked by government officials. These days contractors in England can instead hire “approved inspectors”, private outfits which provide a bit of advice and tick the appropriate boxes.

Globalisation, once a means of boosting everyone’s income, has instead evolved into an excellent vehicle to help the rich get richer.

The International Alliance for Localization sees that the building of more resilient economies will require a rethinking of the financial system, and its Planet Local series has been turning the spotlight on some inspiring examples of ethical banking:

* In Maine, USA, a local resident with money to invest  is providing nearby small farmers with loans whose interest is paid exclusively in the form of farm products.

* Brazil’s Banco Palmas, governed and managed by residents of the impoverished Palmeiras neighborhood in the city of Fortaleza, has issued a local currency, dramatically shifted spending patterns to keep money circulating locally, and extended basic financial services to people shut out of the mainstream banking system.

* In Croatia, the democratically-owned Ebanka functions as a non-profit bank, in stark contrast to most financial institutions worldwide. Their loans are given without interest, and every member has an equal voice when it comes to voting on big decisions, regardless of the value of their deposit.?

Visit IAL’s growing library of localization initiatives

 

LWM is a member of IAL, a cross-cultural network of thinkers, activists and NGOs from 58 different countries.

 

 

 

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International Alliance for Localization: Local Futures

In the Times, Ed Conway, economics editor of Sky News, describes problems arising from the complexity of globalisation, ‘the hallmark of 21st-century life’ and the International Alliance for Localization records examples of new modes of development and progress. He concludes: “Globalisation, once a means of boosting everyone’s income, has instead evolved into an excellent vehicle to help the rich get richer”.

The International Alliance for Localization sees that the building of more resilient economies will require a rethinking of the financial system, and its Planet Local series has been turning the spotlight on some inspiring examples of ethical banking:

* In Maine, USA, a local resident with money to invest  is providing nearby small farmers with loans whose interest is paid exclusively in the form of farm products.

* Brazil’s Banco Palmas, governed and managed by residents of the impoverished Palmeiras neighborhood in the city of Fortaleza, has issued a local currency, dramatically shifted spending patterns to keep money circulating locally, and extended basic financial services to people shut out of the mainstream banking system.

* In Croatia, the democratically-owned Ebanka functions as a non-profit bank, in stark contrast to most financial institutions worldwide. Their loans are given without interest, and every member has an equal voice when it comes to voting on big decisions, regardless of the value of their deposit.?

Visit IAL’s growing library of localization initiatives

 LWM is a member of IAL, a cross-cultural network of thinkers, activists and NGOs from 58 different countries.

 

 

 

 

Economic Prospects for 2017: Andrew Simms – New Economics Foundation

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As John Nightingale who sent the link says, this ‘reads well’: 

Each year the Financial Times conducts a survey of leading economists on the UK’s upcoming prospects. The New Weather Institute is part of that survey and predicts a bumpy ride. A lot of the FT material sits behind a paywall, so for interest here are the answers we gave to their questions (which are themselves interesting in terms of locating mainstream concerns) on issues ranging from economic growth, to Brexit, monetary and fiscal policy, inflation, immigration and, unavoidably, Donald Trump.

Highlights (full text on WM New Economics Group website):

It is time to stop measuring the health of the economy using orthodox economic growth measured by fluctuations in GDP as the primary indicator. By mistaking quantity for quality of economic activity, worse than telling us nothing it can be actively misleading. It tells us nothing about the quality of employment, the intelligence of infrastructure, the economy’s resilience, the environment’s health, or the life satisfaction of the population. As the United Nations Development Programme pointed out (as far back as 1996), you may have growth, but it might be variously jobless, voiceless (denying rights), ruthless (associated with high inequality), rootless (culturally dislocating in the way that fed Brexit, for example) or futureless (as now, based on unsustainable resource use) . . .

. . . tax breaks, subsidies and the way investment portfolios get managed means that money flows cheaply in fossil fuel infrastructure and operations. At the same time, necessary and successful emergent sectors like solar and other renewables can still struggle for affordable, patient capital. The privatisation and weakening of the mission of the Green Investment Bank is deeply concerning in this regard . . . prevalent economic uncertainties seem to be having the effect of putting everyone, the MPC included, on ‘watch’, and unlikely to do anything radically different in the ‘phony war’ period of approaching Brexit negotiations . . .

If anything, far from being downgraded by the Brexit debate, the economic importance of immigration to key UK sectors has been made more acutely obvious, ranging from higher education, to food, retail and a range of other service industries. Importantly, many of the drivers of population movement from inequality to conflict and environmental degradation show no sign of lessening and, if anything, growing worse.  The tone and promise of government policy seems mostly to affect the degree of xenophobia experienced by immigrants rather than significantly changing their numbers. With all these things in mind, I doubt trends in immigration will change much in 2017 and that this will buoy-up a UK economy facing a wide range of threats . . .

There is no reason in principle why QE cannot be used in a more intelligent and focused way. The UK is weighed-down with an aging, creaking, high-carbon infrastructure. The case for public investment as necessary to rebuild the foundations for a modern, clean and efficient economy to underpin our quality of life is overwhelming. The cost of money for conventional borrowing is cheap. And the decision by the Bank of England to expand its quantitative easing (QE) programme from £375 billion to £445 billion in the wake of Brexit, demonstrates that public money creation is also possible when the situation demands it. Up to date, QE has benefited the banks, and the holders of certain assets, with broader economic benefits being questionable. But, as Mark Carney has previously indicated, there is no reason in principle why it cannot be used in a more intelligent and focused way to aid the productive, low carbon economy. I and others have consistently argued that far more good could be done if the same basic mechanism was used, for example, to capitalise a much larger and more ambitious green investment bank via bond purchases. The work subsequently undertaken such as large scale energy efficiency retrofitting of the UK housing stock and the roll out of renewable energy would generate good quality local employment and better prepare Britain for the future. There is no sign yet that the government intend to seize this opportunity and rather too many signs that any borrowing that is undertaken will not be put to as good use . . .

Combined with the sentiments unleashed by Brexit, and the UK government’s active new embrace of industrial strategy, it is possible that the economic pendulum may swing back some degrees from globalisation toward localisation. Done in a purely autarchic way this might be negative. Done with respect to international cooperation and obligations, and to help build a more environmentally sustainable economy, it could snatch success from the jaws of chaotic self-destruction.

http://network.neweconomyorganisers.org/conversations/11898 Did you know… Adding your events to the NEON calendar will automatically promote them to our 1414 membersadd your events here.

 

 

 

Time Banks summary

Assembled because of the 15th October, Public Timebanking event in Birmingham

The world’s first time bank is said to have been established in 1973 by a Japanese woman. The benefits that older time bank members derived included formation of new friendship networks to replace those lost by retirement and the chance to use old skills and learn new ones. Time banks can generate a new form of social capital that fosters traditional Japanese reciprocity and has ikigai or ‘sense of meaning in life’ as one of its main pillars. See Elizabeth Miller’s thesis, submitted for the degree of Doctor of Philosophy of the Australian National University June 2008.

time banks boyle coverDavid Boyle, who helped to found the London Time Bank, wrote a 2001 briefing, published on the New Economics Foundation blog, setting out a practical prescription for community time banks, that can release human resources to tackle deep-rooted social problems and also provide practical and effective solutions for a range of public policy problems. Download here.

The time bank idea was further developed at the London School of Economics by Washington law professor Edgar Cahn in 1986, who describes the idea as working like a blood bank or babysitting club: “Help a neighbour and then, when you need it, a neighbour – most likely a different one – will help you. The system is based on equality: one hour of help means one time dollar, whether the task is grocery shopping or making out a tax return… Credits are kept in individual accounts in a ‘bank’ on a personal computer. Credits and debits are tallied regularly. Some banks provide monthly balance statements, recording the flow of good deeds.”

time-bank graphic

Our database first records a reference to a 2001 letter to Ed Mayo, then director of the New Economics Foundation, enclosing a donation for the Time Bank work with a local reference:

“I rather like our South Birmingham LETS social fund, which enables elderly and/or frail people who are not LETS members to use the appropriate services – shopping, sitting, gardening etc. It costs nothing except members’ donations of Hearts to the fund. Where Time Banks will perhaps work better is in becoming better known – forming linkages with Health Centres and other organisations – because the gripe here is that the fund is not used enough”.

The Farmers Guardian (26.10.01) recorded that the Cumbria Rural Women’s Network was helping women to train or retrain, set up or expand their businesses. The network catered for 16-year-olds upwards with some 15 local networks bringing women together on a geographic or common interest such as a wool group. Voluntary co-ordinators and mentors – successful business women or rural women with professional training – advised and supported budding entrepreneurs. The commitment was repaid by the time bank – this means that their time is repaid by an equivalent amount of someone else’s work or training time.

In its 2002 Social Enterprise Strategy (now archived) the Department of Trade and Industry highlighted the remarkable upsurge in competitive social enterprises – credit unions, social firms, housing co-operatives, fair-trade and ecological enterprises, managed workspaces, farmers’ markets, recycling initiatives, employment services, community shops, arts ventures, social care co-operatives and time banks.

James Robertson’s Newsletter No. 8 – December 2005, brought news of a Municipal Time Bank: ”The Overstrand Municipality in Hermanus is running this project in partnership with SANE and the Embassy of Finland. It enables poor people in the municipality to reduce their debts or pay for services, and the municipality gains the value of the work they do. The benefits of this Community Exchange System (CES) are that people work for each other and their communities. This encourages people to identify and use their skills to meet local needs, builds the local economy and community, and compensates for cashlessness.

2015

time banking logo

http://timebank.org.uk/

Could Brummie bonds fund house building?

john clancyCity councillor John Clancy, who once worked in the venture capital market, explains in a Chamberlain Files article,  [accessed via the Brummie], that  ‘Brummie bonds’ can provide much needed investment and kick-start building by local councils and housing associations across Birmingham.

Some readers will remember that the Brummie Bonds concept was incorporated in the 2003 People’s Pensions Proposal, informally presented to MPs, an MEP and NGOs by a London colleague Colin Hines (co-founder of Localise West Midlands) with co-authors, accountant Richard Murphy (now of Tax Justice fame) and MP Alan Simpson. Read on here.

In October 2004, David Bell’s article on the subject in the Post: Buy a share in Brum pointed out that bond issues are used to raise finance by federal states in Germany and many other local authorities around the world, but although English councils have powers to issue bonds none are believed to have used them.

John Clancy’s vision is of a 40-ward investment strategy. An access-all-areas Brummie Bond investment issue is needed and he records that the Labour Party’s policy announcement last weekend on the Future Homes Fund is effectively the revival of the concept of housing bonds itself:

  • Anyone saving for a house deposit can put it in an ISA to which the Government would contribute 20%. The Labour Party is proposing that those funds would be earmarked for new house building. The banks would be directed to invest these assets into housing bonds.
  • Local councils and housing associations would issue bonds into which the UK’s banks would be required to invest. This would keep investment by UK citizens in the UK and, effectively, into local and regional investment.
  • If local developers are sitting on a land bank where planning permission for housing is already given, then the “use it or lose it” principle would have to apply. If there is capital ready and willing to buy and build from housing bonds, then so be it. Positive, active creative capital will need to push out dormant, destructive, delayed capital.

There is now a growing consensus that investing in UK housing is the best investment strategy for the health and wealth of the funds. They provide healthy returns on a risk adjusted basis to the pension funds.

A recent analysis by TradeRisks.com recommends hard-nosed investors (especially pension funds) to go into social housing bonds rather than corporate bonds, and that now is the best time to do so. Sixteen of the biggest 60 Housing Associations have now issued own-name public housing bonds. It’s time for local councils to do the same.

Government has relaxed the rules on investment and recognised the key part that local government pension schemes have to play in regeneration, infrastructure and ‘green’ investments. Cllr Clancy says that if any local government pension fund has not laid out its 30% housing and infrastructure asset investment strategy, we should ask why it has not done so. He ends:

It’s time for Bonds: Brummie Bonds.

Let’s build.

Syriza MPs help to promote the social economy by donating 10-20% of their wage

anca voinea co-opIn a Co-operative News article, Anca Voinea notes that  Syriza has highlighted the importance of reviving the co-op movement, seeing it as a distinct economic model that would be part of their movement for a broader social and solidarity economy.

Syriza had shown interest in the movement over the last two years and is preparing for new legislation to support co-operative principles, promote co-operative education, transfer of companies to the workers and establish co-operatives of similar standards to those in Latin America and France.

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When incoming prime minister Alexis Tsipras (above) presented his agenda to parliament, he made a commitment to growing the social economy, including co-ops. Syriza has now launched a public consultation to gather opinions about the promotion of the social economy.

VioMe in Thessaloniki went bankrupt and the workers, who had not been paid for over a year, occupied the building to prevent the owner from taking away the machinery and products in stock. The factory is now in public administration and the workers are fighting a legal battle for ownership of the enterprise. They are also calling for a change in the legal framework to allow workers to take over enterprises. Mr Tsipras promised to support this effort with legal reforms. He has also spoken about the importance of co-operative banks as a vehicle for development.

Reading about this venture reminded the writer about an Argentinian workers’ initiative recorded here.

greek solidarity header

An online platform, Solidarity4all, first mooted by the late Tony Benn, showcases different examples of informal co-operation, from social pharmacies to grocery stores or free lessons, including newly formed co-ops. Syriza has helped the Solidarity4All initiative, with each MP donating 10-20% of their wage to promote the social economy. People have taken matters into their own hands through grassroots activism and local collective action. The many and varied social solidarity initiatives include social pharmacies, social medical clinics, social kitchens, social groceries, Okmarkets without middlemen, a social collective of mental health professionals, social solidarity drop in centres, time banks (sharing skills and time), olive oil producers sharing olive oil, the ‘potato movement’ where farmers trade direct with consumers cutting out the supermarkets. Read more about Solidarity4All here.

Interest rates in the UK. Heading up

Mainstream economic commentators are currently anticipating an upward movement in interest rates in the UK. Many even anticipating it to occur in the immediate run up to the General Election.

However, rates paid by borrowers in the UK are already some of the highest in Europe.  And the lending rates are until very recently clearly lower. Here is my latest comparion of some key average interest rates across some of the most relevant countries in Europe.

Interest_April_14

 

 

 

 

There are links to the source data in the earlier comparisons – see below. And one can see that across Europe in these years borrowing rates have been lower in the countries compared here. And have even been falling more in the other countries since 2012.

 

 

 

This is the latest in a series of such comparisons

that we have done – begining in December 2011 when we used the comparison to call for the way in which the Bank of England set interest rates to be changed

We also did a comparison in late 2012 when we brought these issues to the attention of the Parliamentary investigation into the rigging of interest rates.

This has all been part of a stream of work concerned with challenging the power of the Bank of England, whose role in our recent UK history goes far beyond the setting of interest rates.

Award for LWM co-founder of the Aston Reinvestment Trust

pat conaty community finance award

The Citi Foundation and Community Development Finance Association awards recently recognised several organisations finding innovative ways to finance the communities that need it most.

Pat Conaty received an individual award for working to improve access to finance and support the community development finance sector. On the right is Shamima Begum, the other individual award winner.

Pat first brought the CDFI concept to the UK from his native United States. He set up several CDFIs, such as the Aston Reinvestment Trust in Birmingham, and innovated the products, forms and funding that CDFIs use. ART’s loan support  has now created or safeguarded 5000 jobs and over 650 loans have been delivered since 1997.

Hundreds of thousands of people have been enabled to access fair and affordable finance in the UK through CDFIs, which also helped to create over 8,000 businesses in 2013 and almost 12,000 new jobs, delivering Start Up Loans, New Enterprise Allowance and Regional Growth Fund programmes.

To read more about the work of CDFA and the awards go to http://www.cdfa.org.uk/2013/10/09/time-to-celebrate-finance-heroes-in-the-uk/

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Regional government in the Midlands – a historical precedent

Fleetwood’s Ken Palmerton (co-founder of the Institute for Rational Economics) responds to the last post: “Why not the Midlands indeed! Mercia, under Earl Leofric and his tax cutting wife Godiva, was a viable entity, why not now?”

mercia mapA search revealed that the Midlands of England, Mercia, included much of south Derbyshire, Leicestershire, Nottinghamshire, Staffordshire and northern Warwickshire and Tamworth was the capital of Mercia.

The Electoral Commission could only dream of such a level of engagement

BBC political correspondent Justin Parkinson earlier wrote that this period is sometimes credited with a level of engagement in local politics that the Electoral Commission could only dream of; government originated in “moots” or meetings, where small communities thrashed out their differences. If this was not conclusive, disputes moved up to the shire court and, eventually, came up for discussion at “witans”, great councils involving the great and good, including the king.

 Coins and notes

mercian coinOffa was the king of prosperous Mercia from 757; coins bore his name and the name of the moneyer from whose mint the coins came. Some coins, issued under the authority of the Church, bore the names of the archbishop of Canterbury, Jaenberht, but after a dispute, Offa gave the coining rights to Eadberht, bishop of London.

jersey note2Ken remembers causing ‘a bit of a riot’ when he told people at a Green Party meeting in Plymouth that he was a Jerseyman and nonplussed at all their fuss. The island he hailed from had ALWAYS claimed its independence and the basis of that independence was their insistence upon creating and circulating their own currency – and, later, notes. What makes the islands different is that the States, the island’s Parliament, does not borrow, or rather has not done so historically – he adds that because the pressure the Islands have been under to “conform” to international practices has been intense.

Ken – and also Ben Dyson of Positive Money points out that, nowadays, the creation and circulation of currency is ‘small change’; Ben adds that the governing entity should also issue electronic money and spend that directly into the economy.

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Reviving a genuinely local entrepreneurial culture

david boyle2Innovative thinkers often have to wait ten to twenty years before their concepts become mainstream. Two years ago David Boyle (New Economics Foundation) listed ten linked propositions, many borrowed from the most successful cities in Europe and North and South America, which could effectively allow cities to take back control of their economic destiny.

Agreeing with the City Growth Commission that a new economic agenda is emerging in these successful cities (and setting aside the issue of the desirability of growth) these propositions offer a more interesting and convincing contribution to the Core Cities debate, than Jim O’Neill’s four points:

Boyle’s ten linked propositions offer an outline agenda – a composite drawn from these urban centres:

  1. Rebuild local economies by plugging the leaks that are draining local money away. How money circulates in an area is just as important as the amount of money flowing into it. Traditional economics suggests that cities must specialise. That may be true for the largest businesses, but it is irrelevant for local business. For them, the best way forward is not just by specialising, but also by building diversity and looking for ways of replacing imports.
  1. Develop local diversity and distinctiveness. Too many of our cities have devoted their imagination and resources to making themselves look the same as each other. But because economic diversity keeps money circulating locally, it is critical that any new developments design well-being, distinctiveness and sustainability indicators into Master Planning processes and that any new retail effort must make high streets more, not less, diverse.
  1. Bust local monopolies to let enterprise flourish. One major reason why so many of our local economies have been hollowed out is that so many cities have been using net wealth destroyers as anchor stores.
  1. Organise enterprise coaching, support and advice in every neighbourhood. Coaches, backed up by a panel of local business people, bank managers and other local volunteers, can help to break down the barriers preventing enterprise from starting, replicating the kind of social networks that successful places have.
  1. Use local resources to build an effective new local lending infrastructure. Our businesses are now in a far weaker position than American or German competitors, and potential competitors, because we have no equivalent lending infrastructure. The real problem is not lack of capital to lend, it’s a serious lack of institutions capable of lending it.
  1. Invest in local energy. At present only 0.01 per cent of electricity in England is generated by local authority-owned renewables, despite the scope that exists to install projects on their land and buildings. In Germany the equivalent figure is 100 times higher.
  1. Use waste products as raw material for new enterprises. Traditional economics confines its interest to the point where money becomes involved and to the point when a product is thrown away. Cities are often blind to the potential value of what is wasted and thrown away – because all these have potential for enterprise.
  1. Use public sector spending to maximise local money flows. Making sure that public sector contracts build the local economy, and provide permanent economic assets for depressed areas.
  1. Launch a range of new kinds of money. Successful models are now running all over the world, keeping local resources circulating locally and providing independence for impoverished communities. They can provide low-cost or free credit, and – in some countries – they underpin whole sectors of the economy.
  1. Experimenting with new kinds of credit creation for local public benefit. There will be occasions when regional economies require the creation of new public money, free of interest, where necessary to cope with unprecedented financial emergencies, and as the basis for loans to rebuild the infrastructure of productive local economies.

Boyle notes that not all of these ideas could be organised without central government support, but that the rest could be done by imaginative and forward-looking city leaders, grasping the new powers of general competence made available in the Localism Bill.

 

Read the full article here.

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