Monetary Theory and the Great Capitol Hill Baby Sitting Co-op Crisis

from Journal of Money, Credit, and Banking February, 1977, as rescued from the Internet Archive.
There is a JSTOR version of this with good formatting, and at least one other copy in the wild.
Thanks to John Hritz for the pointer.

Apologies for the � marks which are a sign of uncertain provenance. In deference to copyright I have included only the first section of the article.

Monetary Theory and the Great Capitol Hill Baby Sitting Co-op Crisis

By Joan Sweeney and Richard James Sweeney

Sole responsibility for the views expressed here is the author�s. In particular, this does not represent a statement of Treasury views. The authors wish to thank Sevn W. Arndt, David Klock, Dennis E. Logue, Eric Olsen, Jean Willett, and Thomas D. Willett for helpful comments.

Joan Sweeney is Mrs. Richard James Sweeney. Richard James Sweeney is deputy director, Office of International Monetary Research, United States Treasury.

Two of Washington D.C.�s most splendid institutions�the Board of Governors of the Federal Reserve System and the Capitol Hill Baby Sitting Co-operative�are currently fighting their own separate battles against the scourge of inflation. Neither seems to be winning.

Whatever the lessons of the board�s experience, the lessons from the co-op�s are clear. (1) The co-op has been increasing its money supply ("scrip") per capita, by running budget deficits, and this has generated inflationary forces. (2) However, the main "commodity" this scrip money buys is baby-sitting time, and the price of baby sitting is constitutionally pegged at one unit of scrip for every one-half hour of baby sitting. Hence, this system of price controls means the inflationary pressure does not drive up the scrip-price of baby sitting, inflation is suppressed, and shortages are found. (3) The political process of rectifying the situation holds little hope. Few members see the problem as fundamentally monetary, but instead believe others are not doing their part in removing the shortages.

For the uninitiated, it may help to know that there are several forms of baby-sitting co-ops. One popular form is the bookkeeping system. In the most rudimentary version, members earn one credit for each hour of sitting, and lose one credit for every hour someone tolerates their kids. A co-op at this stage develops rules�for fairness, usefulness, for expediency�and to make the thing go at all. For example, people want to go out on Friday and Saturday more than on other days. Either there are rules�"If you go out on weekends, you must sit on weekends"�or there are rewards�"Time-and-a-half on weekends." And, of course, there must be rules to keep people from moving away when they�re "down" on hours.

The major alternative to the bookkeeping system, if there are many people involved, is a "scrip" system�the scrip is pieces of heavy paper. In the Capitol Hill Baby Sitting Co-op, a splendid organization to which we belonged for two years, a unit of scrip "pays" for one-half hour of sitting time. There are good reasons for preferring scrip to bookkeeping. An arithmetic bookkeeping mistake will show members as a whole "ahead" or "down" in hours, and the problem can be hard to resolve. With scrip, the hours earned automatically cancel against the hours spent when the sitter is "paid."

The co-op has enjoyed vicissitudes that make Nixonomics look good by contrast. A few years ago the co-op had a recession. Few people felt they could go out but many wanted to babysit. Now there is great difficulty rounding up sitters for all those who want to go out. This is a classic sort of inflationary pressure�too much money (scrip) chasing too few goods (sitters).

Technorati Tags: kids, via:jhritz, economics, money

Comments

[Edward Vielmetti]

There's a good clean copy here:

http://faculty.wcas.northwestern.edu/~mwitte/B01/handouts/sweeneys.html

"The co-op has enjoyed vicissitudes that make Nixonomics look good by contrast. A few years ago the co-op had a recession. Few people felt they could go out but many wanted to babysit. Now there is great difficulty rounding up sitters for all those who want to go out. This is a classic sort of inflationary pressure—too much money (scrip) chasing too few goods (sitters)."