What's Great About a Market Economy

It can respond to desires like this one:

Susan Witt is an unassuming middle-aged woman who drives a Volvo around her quaint Rockwell-esque town and has somehow managed to foment a small revolution.

After years of planning, Witt started printing her own money and spending it around town.

She is not a counterfeiter. She is the founder of Berkshares, a local currency that was introduced last fall in Southern Berkshire, Mass. (where Normal Rockwell lived out his later years).

"The Berkshares are pretty simple to operate," she said. "You walk into a local bank, put down $90 federal and get 100 Berkshares, and then those Berkshares are spent at full value at regional stores."

$835,000-worth of notes were printed on fine-grain paper and distributed to banks that agreed to participate. The notes are now accepted at 225 businesses in the area, and the program continues to grow.

Berkshares were created to stimulate the local economy by giving people incentive to shop in their own neighborhood, rather than drive the distance to large chain stores.

"We want to encourage everybody to do their business locally rather than going to a mall or shopping online," said Sharon Palma, executive director of the Southern Berkshire Chamber of Commerce. "Using Berkshares, you have to do business locally, and the other really nice piece of that is it's face-to-face business."

Several communities across the U.S., Canada and Europe have developed similar programs, but only Berkshares are fully-backed by the U.S. dollar. Several banks in Southern Berkshire have agreed to exchange Berkshares for dollars.

This sounds silly to me of course. The purchasers of 'Berkshares' are almost certainly limited to those most likely to purchase products at these stores anyway. The increased business for participating firms is likely rather small. And the system operates more or less like a 'frequent-shopper' club, in that you receive a discount of 10 percent on purchases as a reward for using Berkshares.

Do the stores actually make a greater profit by increasing business marginally and giving a 10 percent discout? I'd be curious to know. Further, when WalMart or some other national chain starts to grant a 10 percent - or 25 percent - discount for the use of Berkshares, the game is up.

But in the meantime, isn't it neat that the free market can respond to every wing-nut idea?