katie doyle's thoughts and wishes

letterstomycountry:

jakke:

In recent weeks, Theodoros Mavridis has bought fresh eggs, tsipourou (the local brandy: beware), fruit, olives, olive oil, jam, and soap. He has also had some legal advice, and enjoyed the services of an accountant to help fill in his tax return.

None of it has cost him a euro, because he had previously done a spot of electrical work – repairing a TV, sorting out a dodgy light – for some of the 800-odd members of a fast-growing exchange network in the port town of Volos, midway between Athens and Thessaloniki.

In return for his expert labour, Mavridis received a number of Local Alternative Units (known as tems in Greek) in his online network account. In return for the eggs, olive oil, tax advice and the rest, he transferred tems into other people’s accounts.

[…]

Tems has been up and running for barely 18 months, said Maria Choupis, one of its founder members. Prompted by ever more swingeing salary cuts and tax increases, she reckons there are now around 15 such networks active around Greece, and more planned. “They are as much social structures as economic ones,” she said. “They foster intimacy and mutual support.”

The network is currently busy transforming a disused building owned by Volos university into a permanent exchange and barter space. It will host a daily market from next month at which members can meet and exchange without using cash. Several highly successful open-air markets were held throughout last summer, Choupis said, until the weather got too cold.

So this is actually a really cool idea.

Greece basically needs a much cheaper currency that’s basically useless for imports to help its economy recover. In a regular situation, this would happen through a steep decline in the price of the drachma. This can’t happen for Greece, because it’s such a small part of the overall eurozone - so the government is using all kinds of drastic policies like wage cuts to get the same effects. But that’s not sufficient; tems has all kinds of advantages:

• Consumption needs. This is the most basic upside: if you’re a producer using the euro, then you want to do business with foreigners as much as possible, because they tend to be reliably richer. If you’re using tems, then you basically have to trade within Greece. So this makes more goods and services available within Greece.
• Social capital. This system is really heavily based on the notion that trading should be a social process. Using a currency unit with very limited legitimacy like this means that you really have to trust people to accept it, so meeting people who are also using tems and interacting with them builds interpersonal trust. The organizers have also promoted this by organizing the open barter events. Networking and trust are really helpful for economic growth, especially in a society like Greece where basic support and infrastructure have been hugely disrupted by the harsh government austerity measures in the last few years.
• No seigniorage. Because the tems system is set up and managed by a nonprofit organization, there is no temptation for the government to increase its own revenue or stimulate the economy by printing more units - because the people behind the currency don’t actually benefit from such issuance.

You can read more about the nonprofit behind tems here. (It’s in Greek, but Google Translate can help you out.) They seem to be fully aware of all the upsides and going but this in a positive proactive manner. 

However, tems isn’t really a panacea for Greece. It can’t be a full substitute for a devalued currency in the domestic economy. Here are some of the more significant downsides:

• Limited scale. For whatever wonderful characteristics tems have, adoption has been pretty slow - Volos has around 800 participants out of a population of almost 150,000. This is definitely enough people to run a barter network, and it takes time for such a new system to expand. However, if only well-connected Internet-using people are adopting tems, the benefits might be pretty limited.
• Motives of operators. From what I can tell, so far the people behind tems have nothing but positive intentions. However, if at some point in the future they become corrupt and start trying to get seigniorage revenue out of tems - from issuance, preferred exchange rates, or however else - then this will effectively make the currency way more difficult and costly to use as an alternative to the euro.
• Tax collection. The government doesn’t see tax revenue from these alternate-currency transactions. This is great for citizens, because sales tax is a punishingly high 23% - but the government is largely in this position because it’s so strapped for cash. Alternate currencies make the problem even worse.

So yeah. Greek citizens are going rough a really tough time, and it’s reassuring to see people finding ways to get by. But it’s not entirely clear to what extent systems like tems can solve their problem.

LTMC: Jakke’s hard-hitting commentary on-point, as always.