Creating currency to care for the elderly

By Maggie Mahar

A frequent contributor to THCB, Maggie Mahar's work has appeared in the New York Times, Barron's and Institutional Investor. A fellow at the Century Foundation, Maggie is also the author the increasingly influential HealthBeat blog, one of our favorite health care reads, where this piece first appeared.

Did you know that Japan has found an ingenious way to “create” money that can be used to care for the elderly? 

Bernard Lietaer, author of Access to Human Wealth: Money beyond Greed and Scarcity (Access Books, 2003) describes the system in this interview with Ravi Dykema, publisher and editor of Nexus, a leading Holistic journal.

Lietaer begins with the basics, by explaining what money is: “I define money, or currency, as an agreement within a community to use something as a medium of exchange. It's therefore not a thing, it's only an agreement – like a marriage, like a business deal...And most of the time, it's done unconsciously. Nobody's polled about whether you want to use dollars. We're living in this money world like fish in water, taking it completely for granted.”

Lietaer, who co-designed and implemented the convergence mechanism to the single European currency system (the Euro), and served as president of the Electronic Payment System in his native Belgium, doesn’t take currencies for granted. He knows that a dollar is simply a piece of paper (which is no longer backed by gold). It has value because we have agreed that it has value.

But today, he points out, new currencies are being created: “There are many new agreements being made within communities as to the kind of medium of exchange they are willing to accept.” For example, “In Britain, you can use frequent flier miles as currency. It's not a universal currency, it's not legal tender, but you can go to the supermarket and buy stuff. And in the United States, it's just a question of time before privately issued currencies will be used to make purchases. Even Alan Greenspan, the [former] governor of the Federal Reserve and the official guardian of the conventional money system, says, ‘We will see a return of private currencies in the 21st century.’”

Frequently, Lietaer notes, countries design a new currency with a social purpose in mind. This brings us to Japan: “there are about 300 or 400 private currency systems in Japan to pay for any care for the elderly that isn't covered by the national health insurance,” he explains. “They are called ‘fureai kippu’ (caring relationship tickets).

“Here's how they work: let's say that on my street lives an elderly gentleman who is handicapped and cannot go shopping for himself. I do the shopping for him. I help him with food preparation. I help him with the ritual bath, which is very important in Japan.

“For this help, I get credits. I put those credits in a savings account, and when I'm sick, I can have other people provide such services for me. Or I can electronically send my credits to my mother, who lives on the other side of the country, and somebody takes care of her.”

No matter what service is provided, one hour of service equals one credit.

This system “makes it possible for hundreds of thousands of [elderly] people to stay in their homes much longer than they otherwise could,” Lietaer observes. “Otherwise, you'd have to put most of these people into a home for seniors, which costs an arm and a leg to society, and they're unhappy there. So nobody's winning. In contrast, Japan has created a currency for elderly care.

“In the United States, Florida is the only state that has the same density of elderly people as Japan does—18 percent of the population is more than 65 years old. But Florida is a model for our collective future. Colorado will be there in 2020. Germany will be there in 2006, France in 2008, Britain in 2012…If you put all of these elderly in homes for seniors, you'd go bankrupt. Japan has been looking for another way, and has found it by introducing a monetary innovation.”

In the U.S., currencies based on hours of service are called “time dollars.” As this Time Banking website explains, a record of accumulated “Time Dollars” is kept in a computerized “Time Bank,” and Time Banking is now well established in the US. “Programs range widely, from the MORE programs in East St Louis which focuses on health and training and has 12,000 members who exchange 100,000 hours a year, to small street projects involving a dozen residents.

“In New York, Mashi Blech has been running the Member to Member Time Dollar Program for sixteen years. This is funded by an HMO and offers older residents a catalogue of health related products and activities in exchange for time credits.”

The website goes on to lay out the rules of accumulating and using time dollars:

1.    Participants list the services they can offer and those that they need
2.    All agree to both give and receive services
3.    Everyone is interviewed and provides references
4.    Every hour giving help earns the giver one credit called a time credit
5.    Participants ‘buy’ the services and support they need with their time credits:             every hour received is one time credit
6.    The time broker co-ordinator matches up the giver and receiver
7.    Every transaction is recorded on a computer using a software package called             Timekeeper
8.    Participants receive a regular time bank statement
9.    One hour is one credit regardless of the skills one offers
10.   Participants can donate credits to other participants or the ‘time bank pool’
11.   Everyone is seen as special with a contribution to make

What is almost magical about the concept is that, as Lietaer points out, “For those people who are willing to give some of their time, the money manifests automatically.” In that sense, the system creates money.

“It doesn't quite work that way with dollars, does it?” he asks.  “One of the two of us has to get dollars by competing for them somewhere outside of our community.”

“Time dollars” by contrast “are helping in a lot of communities where conventional money is scarce: in ghettos, retirement communities, high unemployment zones, student communities.” These are places where people are likely to have more time than money. Rather than competing in a competitive market where dollars are exchanged, they share services in a co-operative market where they help each other.

“There are 31 states in America that are paying employees to start such time dollar systems, because it solves social problems, says Lietaer. “There are some operating in Chicago, fairly big ones in Florida. For example, in Chicago, there are entire neighborhoods that used time dollar systems to create a neighborhood watch system that got rid of drugs and gangs. It's working, it doesn't cost anything to the taxpayer, it doesn't create a huge bureaucracy, and it encourages the solution of the local problems by and with the very people who know most about them.”

Lietaer explains that the time dollar system was invented by Edgar Cahn, the author of No More Throw-Away People(Essential Works Ltd, 2000). Cahn claims that “if you can't compete in the dollar economy, you're thrown away.” He shows how a time dollars system provides a solution to this process, because it operates in parallel with the conventional competitive economy, and it creates an environment where everybody can contribute.”

Time dollars can help to solve social problems without taxation or large governmental bureaucracies. All you need is a community. Japan’s model is certainly worth keeping in mind as we devise ways to provide the home health care services that the elderly need.