What the Berkshires Learned by Launching its Own Currency

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:15)

And I'm Tracy Alloway.

Joe Weisenthal (0:17)

So Tracy, one of the big themes in economics this year has been this idea of sort of, you know, you see it at the national level, sort of local reliance.

The president talks about buying American and how that's a value. But it's kind of interesting because this idea of like buying local or buying American, it's an idea that sort of transcends traditional sort of a political viewpoint.

Tracy Alloway (0:45)

Yeah, that's right. So everyone wants, well, it feels like everyone kind of wants to look inward right now, at least economically. And when we think about that, I guess on a global basis, a lot of people tend to get outraged, you know, the end of globalization, less free trade.

But it's funny because when you look at it on a smaller basis, the idea of buy local is kind of a cuddly concept, right?

Joe Weisenthal (1:11)

Yeah, it seems like buying local is one of those things that economists who teach or academic economists say, oh, it's a bad idea and free trade is what's most wealth maximizing, and it really shouldn't matter where you get it from as long as it's the cheapest and best quality.

But it feels like people always have this sort of intuition about it and some level of another, whether it's sort of more protectionist, more right wing, whether it's more left wing, sort of buy from the local farmer. There's a lot of people seem to have some sort of moral intuition relating to buying local that sort of conflicts a little bit with what the proper economics literature would say.

Tracy Alloway (1:50)

Yeah, it's a really funny tension in economics, isn't it? Why are we talking about this?

Joe Weisenthal (1:56)

I'm glad you asked, because today we're going to combine this topic of sort of buying local with another favorite topic of the Odd Lots podcast, which is sort of alternative currencies and the nature of money and stuff like that.

Because we're going to be talking about something called Berkshares. Berkshares. Berkshares.

Tracy Alloway (2:20)

Like Berkshire?

Joe Weisenthal (2:22)

Exactly right. It's a local currency that was launched in the Berkshares, which is a sort of well-known region in Western Massachusetts.

Tracy Alloway (2:34)

And it's a local currency for a specific region in a specific state. It's super local.

Joe Weisenthal (2:41)

Exactly right. A hyper local currency. It's been around a little over 10 years, I think.

And today on the show, we have Alice Maggio. I'm just going to call her, she's sort of like the Federal Reserve Chair, the Janet Yellen of Berkshares. So there's this currency, Berkshares, she's the Executive Director of it. She's also at the Center for New Economics, and she's going to join us, and we're going to talk about what she and others have learned in launching the sort of how it works, this own regional currency.

Tracy Alloway (3:13)

All right, I guess we'll have to ask her about the elusive wage growth in the Berkshares as well.

Joe Weisenthal (3:19)

Let's get right to it. Ellis, thank you very much for joining us.

Alice Maggio (3:32)

Thanks for having me.

Joe Weisenthal (3:33)

So let's just answer the first obvious question for people. What are Berkshares?

Alice Maggio (3:39)

Well, you described it pretty well. Berkshares are a local currency that are only used in the Berkshire region of Massachusetts.

And they're paper currency. They have really beautiful design by John Isaacs that features local heroes on the front and local artwork on the back. So we celebrate people who are associated with the Berkshares in some way, who have done important things, including Norman Rockwell and Herman Melville and W. E. Du Bois, but also Stockbridge Mohican and Robin Van End, who started the first CSA in the country.

Joe Weisenthal (4:18)

Now, I want to talk about the economics and all that and the monetary policy of Berkshares.

But before I do, I don't want to forget another question, because it's something we overlook a lot. It's interesting that you immediately talked about the designs on the money, because when people talk about money from a sort of economic or monetary policy standpoint, but no one really ever talks about the designs on money. But it's always there. Every country has always put a lot of pride into honoring people on their money. Money in no country has ever just had like a sort of blank token that doesn't represent anything. Part of what makes a currency work is sort of this sort of mythical way we imprint on it important symbols.