The Capitol Hill Babysitting Cooperative (CHBC) is a cooperative located in Washington D.C., which aims to fairly distribute the responsibilities of parenting among its members. Co-op is often used as an allegory for demand-oriented economic models. Alegory illustrates several economic concepts, including the austerity paradox and the importance of money supply for economic well-being. The allegory has received sustained attention, especially in the wake of the recession of the late 2000s.
Former members Joan Sweeney and Richard James Sweeney first presented the co-op as an allegory for economics in a 1977 article, but little is known until popularized by Paul Krugman in his book Peddling Prosperity and subsequent writings.. Krugman describes allegory as "favorite parable" and "life changing".
Video Capitol Hill Babysitting Co-op
Histori
Co-op was established in the late 1950s, and in 2010 continued to operate. In 2010, there were twenty families in the co-op (down from the success of 250 families). Some of them are members of the second generation co-op. It is open to new members.
Members naturally leave the co-op as their children grow up, but many continue to work together in various organizations. In 2007 a number of former elderly co-op members from the 1960s and 1970s were involved in the founding of Capitol Hill Village, an organization dedicated to helping elderly people continue to live at home by providing a support community. The organization is modeled after Beacon Hill Village in Beacon Hill, Boston, and while it involves elements of mutualism, it is the payment of contributions and involving external parties.
Some additional details:
- Co-op grew from 20 families in the early 1960s to over 200 in the early 1970s.
- In the early 1970s the co-op split geographically into two - north/south or east/west.
- In the 1960s the position of the secretary was rotated every month. This is seen as an aggravating task, which causes it to rotate, and requires parenting requests, matching caregivers with requests (so always called), and balancing books.
- Double time is paid after midnight and between 17:00 and 19:00 (at dinner).
- The time and half are paid for hours later. The currency issued by the co-op, called the scrip, has a very high demand, at least at some point, with the former member being quoted as saying "Oh god, you will kill for scrip... you will sell the child your child for scrip. "
Maps Capitol Hill Babysitting Co-op
System and history of cooperatives
The Co-op gives each new member twenty hours worth of "scrip," and requires them to return the same amount when they leave the co-op. Co-op members use scrip to pay for parenting. Each scripting piece is contractually considered to pay half an hour of parenting. To generate more scrip, couples take care of other members' children. The co-op administrator is responsible for various tasks, such as matching couples requiring nannies with couples who want to raise children. To "pay" for system administration fees, each member has an obligation to contribute fourteen scrip scripts a year (ie 28 scrip). Some administrative scripts are given to administrators to spend and some are saved.
At first, the new co-op members felt, on average, that they had to save more scrip before they started shopping. So they nurture whenever there is a chance, but do not spend the scrip they get. Since care opportunities only show up when other couples want to go out, there is a lack of demand for babysitting. As a result, the co-op falls into "recession". It describes a phenomenon known as the austerity paradox.
The government's initial reaction to the co-op recession added to the new rules. But these steps do not solve the inadequate demand for babysitting. Finally, the co-op can alleviate the problem by giving the new members a thirty-hour scrip, but just ask them to return twenty when they leave the co-op.
Within a few years, new problems arose. Too much scrip and lack of parenting. When new members join, more scrip is added to the system until the couple is already too many, but new members can not spend it because no one else wants to nurture. In general, cooperatives have a common problem because the administration takes more than is spent, and sometimes the system adds too much scrip into the system through the amount issued to new members.
Hypothetical resolution
The co-op issue occurs because of two issues: the scrip value has been fixed, and the scrip ratio for the pair is unstable. The cooperative can create a scrip ratio for a fixed pair, by adjusting the number of scrips that enter the system through new members and leaving the system through a partner who chooses to leave the co-op. In addition, it can let the scrip value adjust so that couples get paid more scrip for parenting when the babysitters supply is small, and less when supplies are large.
Mitchell criticized the suggestion that price flexibility alone would solve the demand problem. He noted that the fall in prices will lower the price of baby care. This, of course, also means that the number of scrips received for child care will also be reduced. So, because parents make less money, even when baby-sitter supply decreases, because less incentive to raise children, nannies will not get richer.
The traditional neo-classical response to this critique, given by Pigou, is that the effects of cheaper baby-sitter prices are more of a redistribution of wealth than couples with a bit of scrip to more people, which will encourage those who have been saved in the future then to spend more.
Mitchell criticized this because, he asserted, the fall of babysitter salaries solved the problem only if it reduces the desire of the couple to save, which is not supported by any research. The only effect of falling wages is to increase the real value of the nominal contract. In other words, couples should spend more time on parenting before they get the amount needed to leave the cooperative. Mitchell concludes that the problem is a greater aggregate desire to save than can be financed by existing administrative debt, and that the solution is thus either to reduce (desire for) savings or, more likely to increase spending by simply issuing more scrip.
Alegory for liquidity traps
Co-op alliance modifications create a situation that resembles a liquidity trap. Suppose the co-op develops a system in which parents can borrow scripts from the administration in an emergency and pay them back with interest later.
This lending program will benefit both the administration and the parents. This gives the administration more tools to control the demand for babysitting. If the administration observes that the demand for parenting is over, it can increase the fees members must pay when they borrow scrip, which is likely to result in fewer member loans. Thus the demand for child care will be reduced. Similarly, administration can reduce the amount of interest paid when the demand for child care is low. And the system will help parents, because they no longer need to keep scrip as much as possible because they can borrow more in emergency cases.
This hypothetical modification to the Capitol Hill Babysitting Co-op makes administration analogous to the central bank. Depending on the economic conditions, the effectiveness of the general system (ie co-op) depends in part on the interest rate. When the time is good, it is best to have a relatively high interest rate, and when the time is bad, the rate should be lower.
Imagine that during the winter the couple does not want to get out, but want to get more scrip for the summer. To compensate, the administration may lower the number of additional scrips returned when parents want to borrow in the winter, and raise rates in the summer. Depending on the seasonal strength of a baby sitter, this might work. But suppose the seasons are so strong that no one wants to go out in the winter even when the government sets the interest rate to zero. That is, suppose no parent wants to leave even when they can borrow money for free. In this hypothetical situation, the co-op has fallen into the trap of liquidity.
Hypothetical resolution
According to Krugman, the main problem is that the scrip value is fixed. Couples know that every scrip they save in winter can be exchanged for the same amount of time in summer, giving them an incentive to save because, psychologically, every scrip value is more valuable to them in the summer than in winter. Conversely, if the co-op modifies the system so scrip can be redeemed for less time next summer than in winter, there will be less incentive to save because members will get less "bang for their buck" if they choose a scrip holder until summer. In other words, Krugman suggested that the co-op should have inflationary monetary policy.
The most common criticism of Krugman's interpretation, given by the Austrian economy (see Austrian critics) is that the problem is the fixed price of wages, not from scrip (money), alleges that the solution is couples decide how much they pay to keep their own child; when there is a high demand or low supply of babysitters, couples will be more willing to nurture if they are given more scrip for their services.
Or, the Neo-Chartalist view asserts that the administration of the cooperative must solve co-op problems through a "fiscal" policy. That is, the scrip system is fiat money, which can be created or destroyed instantaneously by "spend" or "taxation", and administration should simply inject more scrip into the system when demand is low, and reduce the number of scrips when demand is high by increasing the cost of scrip or levy fees ("tax"). Co-op board deficit expenditures (eg thirty expenditures, twenty taxes) are called fiscal policies, and should not be confused with monetary policy, which refers to central bank lending.
The emphasis on a co-op member's clean scrip, which is equal to the amount injected into the cooperative by the administration, is a feature that distinguishes Chartalist views. From this perspective, the function of introducing loans, as Krugman puts it, is that the interest on these loans creates or destroys the savings of clean members. For example, if the administration borrows a ten-hour scrip with 10% interest for a year (thereby collecting eleven scrip hours in a year), it has created a ten-hour scrip but will draw eleven hours in the future, thereby reducing private sector assets clean with an hour.
As a consequence of this discrepancy, while Krugman suggests using monetary policy to manage the economy, and completing the liquidity trap by creating inflationary expectations to make savings less desirable, Miller suggests using fiscal policy to manage the economy (matching the administrative debt to the desired personal savings) and complete the liquidity trap by publishing more scrips, thereby increasing administrative debt, to fund this desired savings.
Another proposed solution is to set the due date on the scrip, so it should be spent, and one can borrow scrip through the "bond" scrip.
Note
References
External links
- Official Site
- Citizendium: Recession (economy) & gt; Tutorial: Baby-sitting crisis - analogy
Source of the article : Wikipedia
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