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The Glastieven Model is a micronational economic strategy that aims at creating a functioning market economy in a micronation, developed by Sax Blackwood between April 2017 and November 2020. The name references Glastieve, their micronation, where the strategy was successful. The Glastieven Model uses the valuelessness of the micronation's currency in the local macronation to artificially stimulate demand for goods and services produced in the micronation; it also includes establishing a monetarist debt certificate currency based on reciprocity, and the micronational government raising funds in the currency of the local macronation.
The functioning economy
The Glastieven Model holds that a "functioning economy" only obtains when there is both a supply of goods or services produced within the micronation, and citizens use this supply of micronational goods and services to meet some of their own economic demands. This is distinguished from a "simulated economy", where participation is an affectation or game on the part of the participants and the micronation's economy does not supply its citizens with anything useful, which is predicted to be unstable, and unable to support the existence of the kind of financial institutions that micronationalists often like to try to establish—e.g. stock exchanges. It is also distinguished from simply selling products to non-citizens in macronational currency, which is not considered to be an economy within the micronation.
The model proposes two techniques to tempt citizens to supply and use micronational goods and services. The first technique takes advantage of the initial worthlessness of the micronation's currency to make micronational goods and services more desirable than direct macronational equivalents. The government pays the first vendors in macronational currency to provide useful goods and services and sell them in macronational currency. This provides potential customers with a strong incentive to purchase these goods, as while the currency remains worthless, they are essentially being given away for free—but businesses are not asked to produce anything for free.
As exchanges continue, the currency will begin to acquire value as a medium of exchange, and a meaningful incentive emerges to provide supply that actually meets demand, creating the basis for a functioning equality. Micronational supply need not be of the same quality as its macronational competitors due to the strength of the "free stuff" incentive, so even nations without the capacity for extensive manufacturing can experiment with this technique.
The second technique is to use the micronational currency in a light-hearted way as a unit of account for favors and other small-scale transactions that come with a loose expectation of reciprocity. Here, the micronational currency is being used as a tool to move existing reciprocal transactions into the sphere of the micronation's economy. Blackwood describes this secondary technique as the economic analogue of New Secessionism.
There is a risk when introducing a micronational currency that a de facto fixed exchange rate will emerge as citizens mentally simplify prices in the micronation by imagining them in terms of the more familiar equivalent. However, a functioning economy requires that the relative prices of different goods and services may differ from their relative prices in the local macronation, meaning that the micronational currency must be able to evade such a de facto fixed exchange rate: prices in the micronational currency must be determined by market forces from within the micronation.
Separately, hyperinflation is a concern when creating a micronational currency. If money is constantly created through (say) government salaries, it may lead to unspent money piling up in citizens' bank accounts. To prevent this, a currency that insists on strict reciprocity is necessary. This means that all exchange is reciprocal, and it prevents particular individuals from hoarding money and not spending it. It also requires that the micronational government cover the costs of any salaries by levying taxes rather than printing more money, unless there are problems with liquidity, keeping the amount of currency in the small-scale system under careful control.
In the Glastieven Model, the banknotes and coins of the micronational currency are debt certificates, representing a transferable debt to the value of the number printed on the banknote, owed to the first person to spend it into circulation, the "issuer." Subsequent holders of each note owe a debt to that note's original issuer. This ensures that all exchange is reciprocal, prevents particular individuals from hoarding money, and removes the risk of hyperinflation resulting from inactivity.
At the launch of the economy, a limited number of banknotes should be given to the government and each citizen. When the government or citizens spend these banknotes, they become their issuers. The government is also stuck sharing this same limited supply of banknotes, and if it wishes to raise money, it must do so through taxation. Confiscated banknotes must be returned to their original issuers, not to the government. Printing additional money should only be done if the economy is thriving, and only for the sake of liquidity.
Within Glastieve itself, a caveat was imposed upon the vanilla Glastieven Model by Blackwood's successor as finance minister, Glastieven R. Glastieven R believed that it was unfair to prevent citizens from saving up money to purchase expensive items, so he introduced "TESAs" (Tax-Exempt Savings Accounts) with a maximum value pegged to the price of a specific desired item. Moreover, the citizen had to "remain active" in the economy, or their TESA would be closed and the money inside confiscated.
Raising macronational funds
For a micronation to implement the Glastieven Model, it must have a strategy for raising macronational funds to secure its own economy and extend its manufacturing capacities (by being able to offer more generous bribes to its own citizens to produce goods and services for each other).
Blackwood originally proposed that the micronation itself—or at least its government—should operate within the local macronation as a permanent for-profit entity, suggesting charity-style fundraisers, a novelty souvenir shop, or investing in the stock market with shares owned in the name of the citizens collectively. Glastieve did make a small profit on an Afternoon Tea charity-style fundraiser on the basis of this recommendation. However, by 2020, they instead argued that micronations should emulate Adam I's strategy in the Empire of Adammia of encouraging businesses based in micronation to sell commodities made in the micronation to customers in the local macronation and then charging tax on these ventures.