Spain is undergoing a severe economic downturn and recession perhaps more acute than that of other European countries of the so-called periphery. Contrary to other past recessions Spain has been unable to depreciate its former Peseta in order to become more competitive, boost exports and reduce unit labor costs. Here is the dilemma. In the absence of monetary policy in what regards currency depreciation and the fixation of interest rates, what can Spanish policy-makers do to revitalize the national economy? The answer is related to complementary currencies and the emergence of a civic card that rewards good civic behavior.
Welfare states and in particular nations of Western Europe are increasingly facing difficulties to continue to maintain social benefits in the areas of health care, education and pensions, that Europeans have unfortunately become too used to. We are a society that leans too much towards the perceived deserved rights, yet unable to follow up with the obligations in a fierce environment of competition with emerging nations where abundant and inexpensive labor costs reign. The backslash is harming the social fabric of our once upon a time dynamic societies. The mandatory way forward involves cutting back on social benefits, increasing the cost of accessing a good education, putting limits to the over use and abuse of accessing health care, and freezing pensions.
In the absence of the possibility of currency depreciation, nation states of Western Europe could consider the widespread use of complementary currencies with which citizens could buy in the welfare supermarket. The welfare-related complementary currency takes the name of Iberio in Spain.
What is the Iberio and how can it be used? The Iberio is a complementary currency. As such it can be used simultaneously with the Euro. Both currencies can be traded against each other, so the Iberio's exchange rate is floating. As a result the Iberio can depreciate and appreciate against the Euro. Every Spaniard would have a civic card with a preset number of Iberios. The number of Iberios would go up or down based on a citizen's civic behavior. Good civic behavior would be rewarded with an increase in the outstanding number of Iberios. Bad civic behavior would be penalized with a subtraction in the outstanding number of Iberios.
The Iberios could then be used to co-finance the welfare state. A number of Iberios would have to be paid to attend the general practitioner's or the emergency room or to buy drugs at the Pharmacist's. An extra University fee premium in Iberios should be paid by incoming students and future college graduates. The list of possibilities goes on.
How can good and bad civic behavior be determined? A variety of chores that would increase society's common good would be rewarded, including cleaning highways, planting trees, volunteering with an NGO or joining the Army of Africa, a volunteer corps, for a semester or a one-year shift. When the Iberios run out because of bad civic behavior or over use or abuse of the welfare system, a Spaniard would always be entitled to increasing the number of Iberios by either self enforcing good civic behavior or accomplishing volunteer work of the nature granting a payment in Iberios.
The Iberio represents a complementary currency as designed and proposed by one of the World's leading currency experts Bernard Lietaer. The payment of Iberios into a Spaniard's civic card represents a basic income of the nature proposed by Oxford Economist Paul Segal and Spain's Basic Income Network President Daniel Raventos.
Banks cannot deposit or lend in Iberios. The aggregate outstanding number of Iberios is only a function of how much volunteer work is performed. As a result the Iberio is grounded on a kind of gold standard. At any time the number of outstanding Iberios is backed-up by an already performed number of hours of volunteer work. There is no leverage. Traders and speculators are to stay away from the new complementary currency, whose trading is limited by the impact of a sort of Tobin tax. The Iberio is introduced in detail in Reypública.
REYPÚBLICA is Jaime Pozuelo-Monfort's Second Book
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