Perhaps society needs both me-money and we-money

17.56, Monday 26 Oct 2020

Let me point to the problem, and then I’ll say why I think we need me-money and we-money.

The country needs medical professionals like nurses and doctors. Medical professionals need to live near hospitals, their place of work. They use their wages to rent or pay a mortgage on houses. This amount is dependant on property prices.

But the property price is dependent on people with surplus cash, anywhere in the world, using property as an investment. Property yields returns in the form of rent and an appreciating price. This investment drives up property prices.

This seems absurd.

The money that is used to pay health professionals in a shared (socialised) health system that they use to pay for a place to live SHOULD NOT BE the same money as the money used by property investors. The two types of money shouldn’t interact. They should be decoupled.

I get that there are probably good reasons for it, and money probably only works when it’s universal. I don’t know what the theorists would say, but let’s focus on the phenomenon here: ultimately this feels like a bug in the system.

So what’s the answer?

Here is my science fiction:

Could we imagine two separate moneys, individualist money and socialist money. Call them me-money and we-money.

Me-money is the money we have now. It works in the exact same way as it does now. You spend it, you save it, you borrow it, you invest it.

We-money is a second type of money, exchangeable for me-money in limited ways, and with certain special properties. It’s both more powerful and more constrained.

We-money is used for socialised health, to tackle climate change, and to build railways - anything where the main good is felt by society as a whole.

The division works roughly like this:

There are certain things that we want, as a society, that are unlikely to come about when individuals are left to act in rational self-interest. For example, corporations will tend to pollute left to their own devices; a corporation which makes the effort not to pollute will be out-competed by those that don’t incur that cost. So, as a society, we have regulations which cause the corporations to act collectively. Often the corporations like regulation like this, because they then are able to take a desired course of action (not polluting) which was essentially prohibited by the system when unregulated.

Ditto, we - as a society - want doctors and nurses to be able to afford houses near hospitals in big cities. But individually, no-one will rationally give up their place on the housing ladder.

Likewise building railways and other national infrastructure. No private sector enterprise will rationally take this on (not without being paid a disproportionate amount to take on the risk), but we all benefit when said infrastructure is there.

So what I’m proposing is that in systems like paying NHS workers, or investing in railways, or the government selling carbon credits to polluters, all of that is done is in a separate currency, we-money, that is insulated from whims of the main free market economy.

How would it work?

  • Key workers would be paid in we-money, or some mix of both. The exact proportion is subject to negotiation and politics.
  • Taxes are paid exclusively in we-money.
  • The exchange between the two types of money is regulated. In one direction (from we- to me-money) it’s free. In the other direction, it’s heavily taxed. That means that, yes, if you operate only in the traditional, me-money economy, taxes will cost you more. But if you operate in the socialised, we-money economy, it’s cheaper.

Then we-money has some restrictions:

  • We-money can’t have credit. It can be circulated, but it can’t be lent or borrowed. No we-overdrafts, no we-mortgages. So basically there’s a government monopoly on creating we-money (credit is a way that money is created, and banks are prohibited from offering it).
  • We-money is subject to a heavy wealth tax to prevent hoarding. If you want to keep it, convert it to me-money.

Supply and demand for we-money will have to be carefully balanced: public sector workers are paid in we-money, which injects it into the economy, but it is also the denomination of taxes, and that takes it out.

By insisting that all government taxes and duties, such as carbon credits, are in we-money, corporations and even individuals will choose to offer discounts to key workers to get hold of their we-money (and therefore avoid the exchange tax) or change their ways.

And therefore, medical professions, being paid in we-money, will get a discount on buying houses.

Two further thoughts:

  1. In a way, this mechanism resembles local currencies, or loyalty card points, or even (god forbid) company scrip. Those schemes have their pros and cons, but I mention them simply to show that the idea of having demarcated yet interacting economies is not novel.
  2. If two types of money, why not three, or four, or one for every domain? The answer is that money appears to have worked for a long time, and a key attribute of money is universality. The universality is a protection against ideas like company scrip, where workers are paid in company money that can be spent only in the company shop, and this is an ugly system of control. So if we’re to break that rule of universality, let’s do so in the minimum way possible, and stick to only two moneys. Besides, being able to mix the two types gives a good range. It would be like an old-fashioned graphic equaliser on the economy.

I can see topics such as

  • the we-/me-money ratio paid to teachers
  • the exact percentage of the me- to we- exchange tax
  • the anti-hoarding wealth tax bands

being subject to debate and politics just as much as the level of the personal tax allowance, or sales tax/VAT, or the minimum wage. And these are conversations worth having! They allow us to discuss the relative values of individual and collectivist needs, and I don’t believe we’re able to adequately pick these apart right now.

Big question: would this work, against the original absurdity I pointed out?

I don’t know. But I decompose the challenge like this:

  • Is there a problem with money to begin with, yes or no? If yes, then whether or not you agree with my we-/me-money division, let’s discuss possible mechanisms.
  • For any given mechanism, how do we evaluate it, and what tools and simulations do we need to evaluate it; how do we test it and how do we introduce it?

If you’re an economist, how would you turn the above into an actual paper?

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