One thing I just realised about the UNITS OF TRUST scheme that I have been promoting, and am working on here in Sweden, is that is promotes the idea of slow money.
One way of thinking about resilience in the local economy is to consider the Permaculture approach where the idea is to slow down the flow of energy and nutrients through the system you are managing. A resilient local economy is one that slows down the flow of money away from the area – to keep it in circulation as long as possible.
One aim of a UOT scheme is to support the development of a local economy resilient, among other things, to hikes in energy costs. To understand how UOT schemes could do this, it helps to have an overview of household expenditure. As shown in the graph below (from UK national Statistics online, data for 2008) household economies are perilously dependent on fossil fuels. For non-tax expenditure, 42% is on transport, housing, fuel and power and food. All three are highly energy intensive. If the price of energy goes up, so will the proportion of the household budget taken by these essentials. Less money will be available for other purchases sending the overall consumer economy down.
The localised economy (stimulated by local investment in essentials) will be more resilient in this case. Firstly, because less transport is involved, and secondly because there are more organizations providing these essential services. To take a negative example; if local firms are focused on manufacturing consumer goods, and food is being brought into the area, any downturn in consumer spending from increased fuel costs will put these jobs at risk and raise food prices.
As fuel costs rise, so does the amount of money “leaking” out of the local economy into the fuel supply chains. This leakage may even mean that bank loans are hard to get and moving house will be more difficult. It makes sense to improve the house you have, retrofit it with renewable technology and insulation as well as shorten local supply chains. This work creates business for local entrepreneurs. So again, by stimulating the development of these local enterprises the local economy becomes more resilient.
Units of trust are created at the end of the supply chain, that is to say consumers invest in the organization providing them with their basics. This does not mean that money will be unavailable further up the chain. The companies that supply these essentials, like food provision and housing in turn will themselves need to invest. For example, an organic farmer may want to invest in wind power to serve increases in customers. In this case, the farmer can use some of the investment from her own UOT offering to invest in wind power. The wind power entrepreneur can offer investments to local farmers who want to use renewables. In this way, investment is stimulated all around the local community.
More reading: See the updated white paper on Units of Trust
See the video about SLOW MONEY