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Building a more resilient economy with Bay Bucks
Sergio Lub is walking me through the stockroom of his jewelry company’s headquarters in Martinez. All around the room, precious metal bracelets and rings nestle in cardboard boxes with labels like “Mardi Gras” and “Sage Bundle.”
Lub’s been making and designing jewelry for over 30 years, but I’m not here to talk with him about that. I’m here to learn about something else he’s been experimenting with for just as long – alternative economies, or as he puts it: “trying to find different forms of this human invention we call money.”
Lub has tried all kinds of complementary and alternative currencies through the years. He’s an old hand at bartering – he once traded jewelry for an entire house. If you order from Lub’s website, there’s an option at checkout for wholesale, retail, or barter exchange.
With that kind of history, it makes sense that Lub is one of the early adopters of a new business-to-business exchange system called Bay Bucks. It’s kind of like bartering, but more complex: the value you get for your goods or services can be applied to an entire marketplace as credit. You can also think of it like a bank for goods or services, which can be drawn from or deposited into by any member.
Member businesses range from jewelers, like Lub, to gluten-free bread bakers. There’s even a medical doctor. The marketplace uses its own internal currency, Bay Bucks. It all takes place through the Bay Bucks website, where members have been vetted before joining.
Let’s look at an example:
Maybe a local restaurant has a lot of empty tables at lunch. Across town there is a law firm that wants to host a company luncheon to give out some awards.
The law firm and the restaurant each set a value for their services, with the amount based on the U.S, dollar price. If a lunch at the restaurant normally costs $20 per table, they can offer it on the exchange for 20 Bay Bucks. If the firm is offering legal counsel at $100 an hour, that’s 100 Bay Bucks an hour.
So the law firm can fill up those empty tables and take their whole company to lunch without using cash, by paying in Bay Bucks. Maybe the luncheon cost 200 Bay Bucks. The law firm now owes 200 Bay Bucks’ worth of legal services to any other business on the network, not necessarily to the restaurant.
Renée Davidson, a PR consultant and Bay Bucks member, says she likes not having to trade directly with someone else.
“Having a larger group of people to be able to trade with means that they can get my services and then I can use those trade bucks to purchase other services that I need, and it just expands the economy that way,” she says.
Bay Bucks co-founder Kendra Shanley says part of the point of Bay Bucks is to keep the local economy strong by getting more people to actually spend locally.
“When you think about a dollar being spent at a Target or Walmart in the Bay Area,” she says, “the majority of it goes out to a remote headquarters in other areas.”
In contrast, Bay Bucks can only be spent within the nine counties of the Bay Area, so that wealth can never reach the hands of a Target or Walmart headquarters.
“When 100 percent of your economic wealth is re-circulated in the community, the multiplied effect of it is so much bigger than when you use cash,” says Chong Kee Tan, the other co-founder of Bay Bucks.
These two may talk like economists, but they are not schooled in the trade. Tan has a PhD in Chinese Literature and Shanley is a scientist who has worked on HIV prevention. Regardless, the pair is part of a growing global movement that is looking at economics in a new way.
Last year, for example, the mayor of cash-strapped Bristol in the U.K. accepted his entire salary in a local currency, the Bristol pound. The Japanese government created a system where people earn time-credits for caring for their elderly neighbors, and then can turn around and use those credits for themselves or family members. Closer to home, the Bay Area Community Exchange Time Bank helps individuals exchange services using hours instead of dollars.
What these projects and Bay Bucks all have in common is they’re using commerce in an unexpected way: to create a network of real connection between people.
Bay Bucks co-founder Chong Kee Tan says that the conventional economy is ultimately isolating.
“Why are we suffering alone? Why are we struggling by ourselves?” he asks. “Let's get together and let's help each other, and create an economy based on abundance, [rather] than scarcity or fear.”
The growth of a more cooperative kind of economy is already happening: just look at the rise of AirBnb or the proliferation of car sharing networks. Still, this is a pretty small subset of the American economy as a whole.
Forbes magazine estimates that more than $3.5 billion will move through the “sharing economy” this year, but that’s practically pennies compared with the U.S. gross domestic product (around $15 trillion annually). The founders of Bay Bucks say they aren’t trying to replace the U.S. dollar. They just want us all to have a few more options.