Feeding America accepts food donations and distributes them to food banks. They had what economists call the “local knowledge problem”, that central office doesn’t know what the local banks need. What they have too much of, what they want more. A bank in Alaska wasn’t getting fresh produce because the distributor didn’t think their distribution network would get it there in good state, unaware that the bank had set up their own distribution logistics for that purpose.
At some point a new CEO of Feeding America comes in and is like “wtf guys, this sucks”. Gets a bunch of economists and food bank people together to hash out a solution. What they come up with is a market using fake money. They give a certain amount daily to each bank, more to the ones they decide are needier. Then banks get to bid on the food they want. They can use their whole allowance every day, or save up to bid high amounts on popular items. They can also bid negative amounts on things that no one really wants, to make up for the hassle of logistics.
One bank person was like “nuts to this, I’m a socialist and I don’t want anything to do with markets”. He ended up liking it a lot, and him liking it helped convince others.
They also have a way for food banks to sell to each other. But that’s not used very much. The bank people talk among each other a lot, they’re friends, they share tips about dealing with food bank problems, they’d rather earn social points by giving food away than fake money by selling it to each other.
I’m pretty sure I intended to reference this last bit in my review of Order Without Law (relevant because the bank people seem like a close-knit group) but forgot.
Planet Money: The Free Food Market
Originally ran in 2015, reran some other time.
Feeding America accepts food donations and distributes them to food banks. They had what economists call the “local knowledge problem”, that central office doesn’t know what the local banks need. What they have too much of, what they want more. A bank in Alaska wasn’t getting fresh produce because the distributor didn’t think their distribution network would get it there in good state, unaware that the bank had set up their own distribution logistics for that purpose.
At some point a new CEO of Feeding America comes in and is like “wtf guys, this sucks”. Gets a bunch of economists and food bank people together to hash out a solution. What they come up with is a market using fake money. They give a certain amount daily to each bank, more to the ones they decide are needier. Then banks get to bid on the food they want. They can use their whole allowance every day, or save up to bid high amounts on popular items. They can also bid negative amounts on things that no one really wants, to make up for the hassle of logistics.
One bank person was like “nuts to this, I’m a socialist and I don’t want anything to do with markets”. He ended up liking it a lot, and him liking it helped convince others.
They also have a way for food banks to sell to each other. But that’s not used very much. The bank people talk among each other a lot, they’re friends, they share tips about dealing with food bank problems, they’d rather earn social points by giving food away than fake money by selling it to each other.
I’m pretty sure I intended to reference this last bit in my review of Order Without Law (relevant because the bank people seem like a close-knit group) but forgot.