The MarketTown is a national solution, not a pecuniary interest development. It is a free market approach to growth without congestion. .
The project budget is likely to be in the $2 to 3 billion range. It will build 4,000 residential attached buildings, plus a town centre with larger 4-story office and apartment buildings, as well as public facilities, industrial park and a complete infrastructure.
Eliminate the Middle Man: Ultimately, each MarketTown is funded by the buyers. Nothing new in this; all private-sector projects are ultimately paid for by the end buyers. However, in a MarketTown the middleman is eliminated. Instead a small seed fund for the first project is required, but after that each MarketTown takes a portion of its profits and starts multiple next-generation projects, paying back the 1st MarketTown when the 2nd-gen projects go live.
Cost Plus Premium: In lieu of taking developer profits, (there is no developer) the MarketTown adds a Cost Plus Premium of about 20% to the actual cost of acquisition and construction. However, it passes on the efficiencies of scale savings that probably would exceed the 20% charged. This premium is intended to provide for the common wealth of the MarketTown, based on free market principles.
Legacy Fund: Half of this money is placed into a Legacy Fund that is the functional equivalent of net profits, although it is hoped this will be viewed by the IRD as a capital investment in the MarketTown rather than taxable income. This money is used to level the playing field for the SME businesses that move into the MarketTown. Funds are provided as financing or venture capital, along with top talent in professions the typical SME business could not afford. This is done to increase overall private wealth within the community. Keep in mind that this is private enterprise in the sense that the MarketTown is a private, tax-paying corporation whose stockholders are the MarketTown citizens.
The Bank: With wholesale mortgage-backed securities in the $2 billion range, $200 million in cash, as well as many SME businesses and 8,000 adults wishing to deposit savings and use credit, the need for banking services is significant. Why send those profits overseas? The term bank has both a common meaning (financial intermediary that creates credit by lending money to a borrower) and a legal meaning that may mean a different term for the actual financial institution is ultimately used. However, for now, we use the term bank in its common meaning. The MarketTown will need a bank:
- To process construction/mortgage applications and package them into securitised bonds (estimated at $2 - 3 billion)
- To sell those bonds on the wholesale market, most likely to insurance, pension and sovereign funds
- To manage the retail end of mortgage payments, backed by the Legacy Fund
- To manage the 10% Legacy Fund Premium (estimated at $100 to 300 million)
- To receive deposits from MarketTown citizens and businesses and provide retail financial services
- To manage the Instant Mutual Fund System (EIMFS) for citizens and businesses
Reinvestment Premium: In biology organisms replicate and over time, communities of interest form. In MarketTowns, half of the Construction Premium is provided to the MarketTown Stewards and Company to fund second generation MarketTown projects. It is estimated that each one will require seed capital of about $5 million, meaning a first generation MarketTown could fund as many as forty second-generation projects. When those 2nd-gen projects pay their Reinvestment Premium, the parent project gets its capital repaid with a return on investment as well, or it can opt to use that stake to start more projects world-wide. Part of the benefit of this is to establish a global network of MarketTowns with trade agreements and visitor privileges, so that citizens of one MarketTown may have dozens or even hundreds of world-wide MarketTowns where they are welcome. Another part of this system is to offer a realistic model backed by start-up funding that can enable the world's poor to rise out of poverty without buying into the current middle-class model that is devouring the Earth's resources at an unsustainable rate.
IMFS (Instant Mutual Fund System): Investing in mutual funds is a way to protect capital from inflation by investing in a wide range of assets that rise in value as inflation erodes the purchasing power of money. New technologies change a key function of this, in tying together the lowly EFTPOS card with the mutual fund. The bank operates the mutual fund. Citizens may opt to have cash they earn deposited as cash, or they may buy fractional portions of the mutual fund at its market rate at the instant of the transaction. When they buy something from a MarketTown establishment, they can pay with that EFTPOS card that instantly sells to the bank the fractional amount required for the purchase... say $30 for a meal. The bank's computer gives them cash that instantly pays the vendor in cash, creating a taxable event that keeps the IRD happy. Then, the vendor, who has also instructed the bank to convert cash to the fund, has that electronic cash converted into their fractional ownership in the fund.
If this sounds confusing, think of it like this. Let's say the fund only invested in a precious metal that had a relatively stable value of $0.10 per token. Unlike ten cent coins that have no metallic value, the tokens would be made of a metal that has true melt value of ten cents; a melt value that remains stable as purchasing power of currency declines (i.e. is inflation immune). Having enjoyed their meal, the diner would swipe their card to pay. Behind the scene, instantly in the bank's computer:
- the bank would purchase 300 tokens in their vault from the diner
- give the diner $30 in cash
- the bank would then transfer that $30 cash to the restaurant and record the taxable transaction, thus paying for the meal
- the bank would then sell 300 tokens to the restaurant.
The tokens would never have moved, all was electronic and instant, yet the holding of cash would have been for the nano-second required to keep the IRD happy. Rather than pay a 2-3% transaction charge as is done if it was a credit card, the electronic transaction would be free... part of the overhead of the citizen-owned bank that makes its profits on loans and investments. Over time, the value of that metal would increase, which really means the purchasing power of dollars is decreasing. While this is not significant for the average person who generally has a relatively low cash balance (money comes in from pay, out for expenses), when that is multiplied by the 8,000 adults, it becomes a significant eroder of common wealth.
Anti-wealth-leakage Policy: Wealth leakage are all those ways that individuals and communities find their purchasing power (and ultimately their common wealth) diminishes because the practice of ticket clipping has become the norm. The symptoms are clear as the place begins to look tired and worn. Building maintenance is differed or neglected. Trash and graffiti become more evident, especially as the local government cuts back on services. The more ambitious leave, especially the young, depriving the community of leadership. Crime becomes more prevalent, both because people lack legitimate opportunity, and because of cutbacks in law enforcement budgets. The most notorious leakage businesses are franchises, chains and big-box stores selling goods that drive out local businesses. Initially, such leakage businesses undercut the local business, but once competition is driven out, prices rise to what the market will bear. Typically, the businesses open up outside of the downtown, near the motorway or on cheap farmland. It is well known that the almost instant effect is to gut the downtown as buyers abandon the long-standing stores for the cheaper prices in the newcomers.
The answer to this is to stay out of that paradigm completely. Design a whole new way of setting out businesses so that the profits stay local, but the prices (including the externalised costs) are lower. Keep the money turning locally. This is difficult to do under municipal law, especially as the big corporations get the right to sue municipalities for loss of profits, but it is much easier to do on private property under corporate law.