Boosting the local economy through a Nova Scotia dollar

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So let's start the new year with adventures in economic development. The Ivany commission on the new economy is due to report in a few weeks, and in case they missed it, here's one last idea for their consideration: the Nova Scotia dollar.

Yes, yes, I know. Me, too. When I first heard it, I thought: another one for the nutty ideas bin. But you never know, so I gave the guy who raised it a hearing -- a fellow named Ty Savoy, who says he's trying to get his one-man upholstery cleaning business in the Halifax area going, but who also dabbles in ideas.

One thing led to another, and when I punched in "local currencies," voilà! Mother Google coughed up a ton. There are some 4,000 such local currencies in the world with the number growing like topsy. Economic uncertainty has boosted their creation. Their aim: to stimulate local business, especially in tough times, and in a wider sense to act as a hedge against an increasingly uncertain world financial system.

In Ty's account, government employees (and employees of other institutions) could be paid partly in Nova Scotia dollars (if they so chose), which would be spent on Nova Scotia goods and services at businesses that choose to honour the N.S. buck and would use it to offer discounts.

A report by the Worldwatch Institute just this week confirms that this is, with local variations, the way it works, adding that as well as encouraging local purchases, the broader aim is to reduce unnecessary imports, help reduce local unemployment, and to counteract online shopping.

The gold standard in North America is in the Berkshire area of Massachusetts called "Berkshares," linked to the E.F. Schumacher Institute -- Schumacher being the British economist who wrote the classic Small is Beautiful: a Study of Economics As If People Mattered.

There are a dozen or so of these local or "alternative" currencies in Canada, including a "Toronto dollar" and a "Calgary dollar." In the U.S., they run into the hundreds, including an "Arizona dollar," and they're in Europe and Latin America in the thousands. So much so that last week, Britain's The Guardian, pointing out that in Bristol you can pay your taxes with the Bristol pound and that the mayor takes his entire salary in them, asked: "Can local currencies help advance global sustainability?"

Sometimes they're currency, sometimes they're more like coupons (the Canadian Tire dollar), and sometimes they're like credits to underpin barter. Something of that nature called the Local Exchange Trading System (LETS), now gone international, was pioneered in B.C.'s Comox Valley in 1983. The United Nations is into it, conferences have been held in Europe on associated issues (how they relate to national money, how the taxation works, and so on).

Of course, sometimes they work and sometimes they fizzle. It's not so much about money in the end as an expression of how cohesive is the local spirit among businesses and public. The fact that it seems to be working in many places, however, says something.

And, as such, it need not be a Nova Scotia dollar. It could be a Cape Breton dollar, a Digby dollar, a Lunenburg dollar -- on the understanding that the holder can also cash them in on demand for national money with whatever institution is putting them out. (In the Berkshires, five local banks are doing it).

There's a bigger issue here, too. How a society cycles its money is intimately linked to its economic development. There's plenty of surplus money in Nova Scotia, for example, but most of it is locked up in pension funds, mutual funds and other investments and would be at work stimulating business elsewhere.

Local investment in local business is a premium form of economic stimulation. The incentive to succeed is greater if you're working with local money (and, by definition, local support) than with a government grant, or a loan from a bank, which (except for the credit unions -- and unlike in the U.S. which have local banks) are branches of huge money machines centred elsewhere.

So when the Ivany commission asked (they asked any suspect who might have ideas), I suggested a Nova Scotia bank along the lines of North Dakota's, which has its own public bank and is among the few states in the U.S. not in hock to its eyeballs since it borrows from itself for public spending, plus uses bank funds for economic development.

So there you have it, Ivany commission, two birds with one stone: a Nova Scotia bank backing up a Nova Scotia dollar.

As for Ty, he's just hoping the Nova Buck comes along because he figures it will help him compete with the big boys.

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Ralph Surette is a freelance journalist in Yarmouth County. This article was first published in the Chronicle Herald.

Photo: woody1778a/flickr

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