Rory Sutherland

The Wiki Man | 13 March 2010

A fortnightly column on technology and the web

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If you have used Oxford railway station recently, you may have noticed a strange electronic sign on the up platform displaying a ‘parking code’, a seemingly random three-digit number. I wondered about this and asked around.

It seems that, when parking next to the station, you can either ‘pay and display’, in which case you pay a kind of rip-off-the-clueless-tourists hourly rate, or else you can pay by mobile phone. By including the ‘parking code’ when you call (it can only be seen from the platform, and hence is known only to those with train tickets) you pay much less. It’s a system of discrimination where there’s one price for rail travellers and another for everyone else — you could call it aparkheid.

This is just one case of technology challenging our assumptions about pricing. Another is the Oyster Card, which now intelligently refunds you once you have spent more on journeys in a day than the cost of an equivalent travelcard. Or, for that matter, airline rewards currencies, which are distinct from money in being non-transferable. Such points schemes may seem a minor example, but they are far from trivial to airlines — to many they are the third most accepted currency after dollars and euros.

Which forces me to ask the question, why stop here? In the coming ‘post-bureaucratic age’, why can’t governments use smart technologies to create entirely new currencies in parallel to conventional money?

Let’s say you award everyone in London 300 transport units every year. If you want an on-street parking permit, this might cost you all 300 units (in addition to any annual fee). On the other hand, if you choose not to have a car at all, you would have 300 units to spend on joining a car club or using public transport. A system like this could maintain a degree of egalitarianism (everyone starts from the same base) while preserving much of the information-value and breadth of choice found in free markets. Essentially you are creating a currency which answers to the purchaser’s desire for something, rather than his ability to pay.

Another possibility, which Ross Harvey brilliantly proposed in a recent email to me, is to create a smart currency for buying government services where each pricing unit is 0.01 per cent of household income. Need a GP’s visit? That’ll cost you ten units. In other words you replace the idea of ‘free at the point of delivery’ to ‘proportionate payment at the point of delivery’. The Finns already practise this income-related approach to traffic fines (with no cap, leading to the rather bizarre result that Nokia’s Anssi Vanjoki once picked up a E116,000 fine for a minor speeding offence). Mad? But then how reasonable is it to charge someone earning £15,000 a year a declamping fee of £150, as must happen in London every day?

Some sort of redistributive currency of this kind (you might call it ‘the mite’, since Jesus made a very similar point to mine a few thousand years ago) would be an interesting way to reduce taxes and introduce market mechanisms into the public sector without challenging the basic ideas of ‘fairness’ which people expect from public services. Technologically it has only been possible in the last few decades. It is at least worth a small trial in the next one.

Written byRory Sutherland

Rory Sutherland is vice-chairman of Ogilvy Group UK. He writes The Spectator's Wiki Man column.

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