Dr Edgar Cahn, President and Founder of the Time
The Committee wished to meet Dr Cahn because of his
work on the digital divide. In fact Dr Cahn has developed an alternative
theory of social economics and his projects are attempts to put
this into practice. Dr Cahn outlined the thinking behind his Time
There are two economies.
- A market and money economy based on specialisation.
- A family, neighbourhood and community economy.
Society is slowly becoming aware of the externalities
that money and the market economy imposes on the non-market economy.
Money gives importance to mobility and price; it gives a high
value to scarcity and devalues common values; the money market
has been subsidised by the labour of women and minorities. It
was therefore necessary to create an alternative currency.
This started with a number of questions. For example,
why are programmes for social relief, operating on the principles
of the market economy, usually ineffectual? Is there not another
way that does not rely exclusively on specialised labour? A family,
for example, runs on the basis of self-sufficiency and co-operation,
not on the pricing system, which obtains in the money market.
Dr Cahn developed a "currency" that strengthens the
community economy and supports the mechanism of peer groups and
extended families. There are a number of projects, most in the
US but some in the UK and Japan, which offer systemic support
for the family co-operative system.
This currency is "timedollars". In a project,
participants earn timedollars for a range of community activities,
which go well beyond usual definitions of work, for example taking
a wheelchair-bound person shopping or looking after children.
The timedollars earned can then be spent on similar services.
There are also opportunities to purchase second hand computers.
Dr Cahn referred to the work of Youth Courts in which young people
become involved in judging others and for which they earn timedollars.
There are now 10 such juries in the US, and a Grand Jury has been
set up to oversee the system.
There is a timedollar computer base, which provides
security for what is, in effect, a form of non-monetary exchange
of labour and goods. Trust is a consequence of memory and Dr Cahn
drew an analogy with DNA. Human cells changed within a fairly
short period, but the DNA structure, memory, held the framework
Dr Cahn believes that e-commerce offers potential
for good but should only be approached from an unfamiliar viewpoint.
The digital divide is merely another way of posing the question
"how do we draw people into the e-economy that are not there
already?". This is the thought process of the money market
where most interactions are between strangers. All that e-commerce
does is to increase the speed of these interactions. This does
not build sane societies.
It is essential that socially valued activity be
considered the equal of work. The way to empower the powerless,
and the poor, is to lend them the means to improve themselves
and to insist that they repay in community service. This is where
the money market and the community market interact. The big question
is how to make e-commerce a catalyst to bring about social change.
A major consideration is access to governmental aid systems.
The Time Dollar system appears to be spreading faster
in the UK than in the US, perhaps because the UK has a cultural
tradition which recognises certain social goods. This does not
operate in the same way in the US: "We worship money".
Dr Cahn's presentation prompted a number of questions,
which we were not able to pursue. Is the timedollars system essentially
different from the tokens in a baby-sitting circle? How does the
system interact with the market economy? It was clear that the
results of the projects are mixed. To see the latest situation
consult the Time Dollars website: email@example.com
11 April 2000
Andy Pincus, General Counsel, and Elliot Maxwell,
Secretary's Special Adviser on E-Commerce, Department of Commerce
There is nothing unusual in recent events: the Internet
stimulates competition and competition means losers. For example,
MicroStrategies lost two thirds of its value in a single day.
The administration established an e-commerce Working
Group, which meets every two weeks to co-ordinate policy. It has
forty members (it had been bigger). This may be an unwieldy number
but there seems to be no other solution. As an example of the
lack of co-ordination Mr Pincus mentioned the issue of drugs by
Internet: an announcement had been made which was not consistent
with general policy. Informal and formal consultation is important
when policy is being formulated, including with NGOs and consumer
groups which are less well organised.
Issues of e-commerce trade policy had led to a formal
structure for liaison but "Joined-up government" did
not have much appeal in the US. Outside big companies little thought
is given to the impact of technology; NGOs tend to be fearful
of it and react defensively.
LEGISLATION AND THE ROLE OF GOVERNMENT
- The main policy thrust is that there should be
no legislative discrimination between online and offline commerce.
- The US has problems with the EC Data Privacy
Directive but the current discussions on "safe harbours"
appear to be heading towards a compromise. The issue is not that
there are different systems but that both should be interoperable.
In the US the private sector has taken the lead because this is
the source of innovation. In the EU it appears that governmental
regulation is the order of the day. The objective of both groups
should be co-operation and legal compatibility.
- Business wants the rule of origin approach whereas
the NGOs wants destinations to be.
- There are concerns about the speed of deployment
of broad band, particularly in inner city and rural sites. Government
programmes are trying to remedy the imbalances, and the government
is also encouraging the private sector to do likewise.
- Prosecution. There are problems over privacy
implications. For example law enforcement agencies have proposed
that ISPs retain "click data" for set periods of time
to enable them to track back "up the pipe". However,
there is a strong feeling that law enforcement agencies should
not be given more authority.
- Self-regulation is essential: it makes industry
pro-active. The private sector has already established a number
of 'seal' programs to bring about trust. The task of government
is to empower consumers.
- The question of domain names is important and
the government has to think of the international implications
when dealing with domestic policy. The ICANN group is a good example
of how to deal with such issues.
- Denial of service attacks have brought about
new ideas on security but industry will deal with it. It is an
international issue, which was why there might be a governmental
role. As for prevention, it does not really matter whether it
is private sector, or government and private sector. What matters
is that best practice is followed. The US has set up a private
sector group to deal.
- There is concern over the 'smart card'. The US
argues that it should not be used to restrict access by non-Europeans.
- The EU domain name (.eu) is not a country code
and the US is anxious not to see the codes opened up to other
non-territorial organisations interested in acquiring their own
domain names. The thrust for this seems to have come from the
EC not Member States.
- Digital signatures. It is not feasible to say
that a particular technology is legal and another is not. The
US urges the EC to consider two things:
- Let the market pick technologies. (The Directive
didn't quite cover this, but it was essential that there should
be no barriers about redress).
- Closed systems. If a community of companies regard
e-contracts between themselves as legally viable then other countries
should recognise them too. Reference was made to automobile industry
- There are clear problems with digital signatures.
For example, many jurisdictions require certain notices or disclosures
and these have to be given in writing. The NGOs doubt that consumers
would see e-mail documentation as having the same force of law
as the written document. The President has directed the Federal
Government to look into these issues.
The Federal government does not have a forum in which
to discuss issues with states and there is no analogy with the
EC/EU system. The National Conference of Commissioners on Inter-State
laws has tried to develop a minimum set of laws for e-commerce
but commerce is traditionally a matter of State law and the States
are beginning to break ranks. Maryland has been the first to produce
a suite of regulation for e-commerce. When California sought to
introduce laws on ecommerce it removed a number of the elements
recommended by the NCCIS, dealing particularly with trust issues.
The e-commerce industry sought redress in Congress, arguing that
uniformity was necessary if the market was not to be choked off.
With respect to financial services, some States had
"gold plated" the basic minimum legislation. This had
led also to a call among other States and industry for a stronger
Federal lead ie more than a minimum set. There was a competition
among the States as to who could be the friendliest to e-commerce.
It was now fashionable for each State to head towards the status
of "e-government". Maryland had set itself up as a place
for settling cyber-disputes; Delaware had attracted corporate
registration; Virginia claimed to be the first to create an e-commerce
Countries had sought to sign bilateral agreements
with the US because they needed the investment. It was an attractive
inducement to require these countries to accept the same system
as obtained in the US (and by extension, Western Europe). "China
will be a hard sell because self-regulation is not a big thing
there." The Japanese were more willing than the Chinese to
try self-regulation. It was a question of "did they want
to be part of the system or not?"
It is important to separate the sales tax issue from
the others. There are thousands of different tax jurisdictions
in the US. Sales tax is based on the location of bricks and mortar
facilities: the law argues that sellers do not have an obligation
to collect tax unless there is a physical connection with a particular
State. It was still too early to tell how the States would deal
with the impact of e-commerce on sales taxes. The system is complex
and the States do not have the political will to change or to
simplify the taxation system. In the future they will probably
try to create a simplified template, though this could be difficult
Mail order sales are virtually exempt from tax. This
is tolerated because it has a limited effect but this might not
be the case with e-commerce when sales tax constitutes on average
40 per cent of States' revenue.
The EU has taken a strong position on the question
of digital goods but it was difficult to see that it would be
enforceable unless ISPs acted as government agents. And there
was a question of equity. If downloadable goods were tax free,
what about similar physical goods? For example, digitised software
vs. software in a box. And if the US States were to introduce
a simplified tax system, what would happen when goods were supplied
from Canada and Mexico (NAFTA)?
The issue of international taxation is becoming increasingly
important. In practice there is less controversy about income
and corporation taxes and the OECD appears to be coming up with
an acceptable solution.
e-Commerce holds great promise for SMEs and the Small
Business Agency (SBA) is trying to manufacture extension partnerships
to help them.
On the issue of relocation to avoid tax, States have
different environments and, outside the issues of e-commerce,
States compete to attract business. In the field of e-commerce,
probably most inducements took the form of tax breaks for "server
farms". Numbers of States have tried to improve the flow
of skilled workers through special education schemes in the hope
of attracting IT companies.
Consumer protection and international co-operation
on the prevention of crime (currently the subject of G8 discussion)
will soon come to the fore.
Mr Pincus will probably leave the Department of Commerce
before the new Administration comes in. Asked if there was any
unfinished business, Mr Pincus said that his wish would be to
persuade companies to take the self-regulation challenge more
seriously. Business had always been defensive towards government,
and it was difficult to get them to be proactive in a policy issue
such as regulation. It is the more established companies that
take the leadthey have the resources to do so.