Disclaimer: I favor a society in which no one has to "earn" the basic life needs. However, this is a proposal of what can be implemented in the world as it exists today, while we help move towards the one we want.
This name is probably suggestive enough that you instantly have at least a general idea of the proposal.
It would indirectly tie in to WISE; directly tie into Ithaca Hours; and could be a first phase, partial implementation of the ideas in my "Workable Transition to Democratic Retirement Systems"
Here is an outline:
I give you, say, $1,000 today. In return, I get some guarantee of an "income" in the future.
** The "income" -- This income need not be in dollars. It can be in Ithaca Hours; it could also be in part or in whole simply in credits, such as: two free meals per week; such and such portion of a Community Supporter Agriculture (CSA) share; a fraction of housing, etc. [Though I do not presently see any obstacle to having it be paid out 100% in Ithaca Hours insofar as needs met in the Ithaca region] Or it could be "paid" as a mix of these three in some combination.
** As an annuity -- in principle it could be either "forever" or under other terms, but I think we agree that a "Fixed number of years" is contrary to our value system; we don't want to tell an 81 year old, "sorry, you had bought a fixed number of years, so your meals are cut off now.." So let's assume it's a "forever" type income that is guaranteed.
** Planning for retirement -- Each contribution one makes to this "community annuity" would guarantee something (e.g. on meal per week) or a level of payment. Once the total (in dollar-equivalent or in needs of food+housing+etc), when possibly combined with a traditional annuity and/or IRA and/or Social Security, etc, equals your total needs-upon-retirement, your needs are met. Each retiree can plan a combination that works for them.
The "subversive beauty" here is that it allow us to *transition* gradually towards a system that is 100% community-based, democratic (non-corporate) retirement systems. Without a graduate-transition, far fewer will make the leap. With a whole spectrum of in-between shades of gray, many more will be ready to start the transition (maybe as little as 5% or 10% in the community annuity) and over time, to increase it
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The preceding is from the retiree's point of view. As for what to do with the money, your WISE idea obviously gives an already detailed roadmap (and which can refined as needed).
I think this outlines the basic idea well enough; surely a lot of careful thought would need to be put into the details of what would "buy" (guarantee) what, but I think this portion of the proposal does not need any more details at this stage; it's not up to me as one person to decide; democratic processes should decide on the structure. You personally have not only considerable knowledge and experience, but also contacts and organizations with who it could be fleshed out.
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However -- the second portion is worth a bit more analysis at this early stage. This portion concerns answering the question: "in what ways would my Ithaca Hours Annuity" be, in fact, 'guaranteed'?"
In the case of Social Security the "guarantee" people rely on (regardless of how wise you or I think it) ultimately is the government. Likewise governmental bonds. For corporate bonds, the "guarantee" comes from ... etc.
What would make "Ithaca Hours Annuities" (IHA) guaranteed in the sense of being very reliable, very secure, very safe? This is a critical question.
I wanted to ask this question very seriously and I approached it this way: "What would I need to feel secure enough to put what for me is a 'significant' amount of money, into this?" Not as a donation to support these projects but as a serious supplement to my retirement some day.
Temporary, working assumption: Let's assume for the time being that I will retire in the Ithaca region. (There certainly are problems related to geography; I strongly feel that once we overcome the other, considerable challenges, and actually have one viable, working community-annuity in place, even if "only for folks who retire in our region" then that would be a huge triumph and with a very do-able amount of extra work, the geography problem could be solved. I imagine a network of regional such community-annuities would develop across the country and some kind of cross-acceptance mechanisms built up. In any case once we have the rest figured out and in place and working at least locally, I am confident that the geography challenges can be, one step at a time, gradually overcome as well).
Here is my list of things which would collectively bring me very close to, or very possibly all the way to, my my being comfortable, and I believe, others being comfortable too, in writing a check for what they consider a "significant" amount (certainly $1,000 or more in my case, I can tell you), payable to IHA.
For people in general, certainly this could be 1% to 10% or more or one's savings ; and people have savings from $1,000 to $100,000 to much more...
Note: I'm very impressed with your experience with Ithaca Hours and Ithaca Health Fund so I'm confident you could create a robust "part 2" yourself -- I am doing this to get such a list started, a first draft if you will. But if you agree with the principles of Part 1 above (I hope "money talks" and getting some serious investment this way is attractive to you -- it could certainly be "seed" money for your WISE idea..) -- then please get in touch with me and let's discuss it..
*1* We Need To Be Secure That IHA Will Still Be Around When People Retire.
IHA (Ithaca Health Annuity organization, yet to be formally given a catchier name) could be a subset of Ithaca Hours, or an independent non-profit corporation, or similar legal entity -- what measures will it take to help make its annuities secure?
a. One safeguard might be a legal guarantee to refund 100% of funds, plus inflation adjustments, to the original contributors in the event (which we need to make extremely unlikely) that IHA ends up being dissolved. This one's obvious I suppose, but worth stating.
b. Another safeguard would be a stable Board that can function after/without your (Paul Glover's) considerable talents and involvement -- or those of any single individual who might leave the Ithaca area.. We're thinking (very) Long Term, after all.
*2* A second level of protection would be against IHA ever having to dissolve. This could be an essay in and of itself, but essentially would be based on my (or any other potential IHA investor/owner/participant/member's) confidence in sound economics [choose any of the above, or some combo like POMI or PIMO etc for Participant/Investor/Member/Owner..] In any event, your WISE project, suitably implemented, among other projects, would, I believe, inspire enough confidence on this level. Additionally, outside economics/investment advisors could be brought in to advise, certify certain standards are met, etc.
Definition: "Delivering Institution" If IHA pays out to retirees in U.S. dollars then any institution at which these retirees spend their dollars, is a delivering institution (DI). However if retirees are paid in Hours (or other instrument), then a DI is an institution which accepts these Hours (or other instrument e.g. nation-wide exchanged hours). For example if retirees are paid in hours, and a retiree wishes to buy food with these hours at GreenStar, then GreenStar would be a Delivering Institution (DI).
*3* We Need To Have Security Against Violation Of Promise By Delivering Institutions
Another level of protection is needed. Supposing we are confidence that IHA will not dissolve. Supposing we are confident that it will invest the money it receives, wisely. We are confident IHA will be around in 10, 20, 30, or more years when "we" (the IHA member in question).
But how do we know any DIs will exist to accept Ithaca Hours? Or, how to we know "enough" such DIs will exist, in such numbers and variety, to assure that the Hours retirees receive will suffice (or when combined** with US Dollar retirement instruments will suffice) for one's economic needs upon retirement?
As a longtime believer in (and user of) Hours since the 90s I strongly support the system and have a high level of confidence in Ithaca Hours. But when we are talking about tens of thousands, hundreds of thousands or more dollars...when we are talking about many years and indeed decades from now...when we are talking about virtually life-and-death and "make or break" nature of either having or not having enough to live on at retirement, it is clear that a very high level of assurance and safeguards is needed
(** IHA might have a magic number, a percent like 40% Hours say, which it asserts is safe; i.e. that 60% U.S. dollars and 40% Hours would be "safe" in that a sufficient number and variety of DIs exist so 40% of one's needs could be so met. Every few years, this number could be increased if the facts on the ground merit such an increase. The eventual goal would be 100%).
Are there ways to achieve a fairly high level of confidence that enough DIs will exist in 10, 20, 30 or more years? Some initial thoughts:
*a* Legal contracts between (e.g.) GreenStar and IHA, that it will always accept Hours. (possibly it will make this promise in return for actions or promises on the part of IHA).
What else might further add to the robustness and safety of Ithaca Hour Annuities (IHAs) as a safe retirement instrument?
*b* Secondly, we need to have security against bankruptcy/dissolution of DIs.
How would IHA prepare for the possibility of GreenStar or other DIs possibly no longer being there when the person with the IHA retires? Some possibilities:
*i* First a not-very-cheerful suggestion: Consulting carefully with lawyers, so IHA is near the front of the line for collection, in case (e.g.) GreenStar goes into bankruptcy -- in other words, so some huge bank doesn't collect 100% of the remaining assets before IHA gets anything. But we'd make sure this kind of event is very unlikely anyway:
*ii* A less depressing suggestion: Be very choosy about who IHA partners with, make sure they are robust and review, every few years, (and guarantee to pre-retirees who are part of the IHA that this review be done), the financial viability of each participating DI institution" [Importantly, in case IHA losses faith in such an institution, we need to have the legal and practical mechanisms to make a 'transfer/transition', and one which is not too costly or time consuming]
*iii* A more cheerful suggestion: Work with the delivering institutions in co-operative ways such that you support one another, and make it far less likely for any delivering institution to face that danger. Over the years the IHA will help make GreenStar stronger, GreenStar will help make IHA stronger. IHA will help make Alternatives Federal Credit stronger, and AFCU will help make IHA stronger, etc.
*c* IHA can buy insurance to cover possible losses in case a partner ("delivering institution") is dissolved or goes into bankruptcy.
*d* Avoid insurance in the corporate sphere by, instead, having 5 or 10 or more institutions (GreenStar, IHF, IHA, etc) co-insure one another, so in a crisis, the one can be saved by the many.
Those are some of the main "dangers to safeguard against" and several proposed, possible paths towards creating -- as I believe we could -- a truly safe Ithaca Hour Annuity instrument.
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P.S.: How much money would need to be deposited, in total (or today) for a member to receive, upon retirement, benefits from IHF equivalent to "annual memberships, Forever"? Could this number be calculated?
P.P.S. A final thought: We might want to limit or even make illegal the transfer of funds to corporations from IHA investments. That is if Jane Smith puts in $100 and that $100 is used by IHA to give some money now to GreenStar, some of that $100 to a local merchant, etc, we might not want all of that $100 ending up in some corporate annuity because,
a) otherwise why bother, why not have Jane put her $100 into a corporate annuity? and
b) as a value, we want to i) give less support to the corporate world, partly to reduce and work towards eliminating corporate power, but also to ii) create more protections for people that protect them from reliance upon the Corporate Sphere, so being independent of that sphere is desirable.
In other words, if money from annuities purchased from IHA is then invested by IHA into say GreenStar, do we want to allow GreenStar to just take that money and invest (100% of it? some of it? none of it?) in the stock market, or to buy its own annuity [from a corporate source]? I imagine we would want to either forbid or strongly limit that.