The Libra Association and Facebook took a lashing during their first day of congressional hearings on Tuesday. Wednesday wasn’t much better.
Rep. Alexandria Ocasio-Cortez (D-NY) focused on a comment David Marcus, CEO of Calibra, made yesterday when he said he would trust all of his assets in Libra.
“You said yesterday you would be comfortable taking 100 percent of your pay in Libra. In the history of this country, there is a term for being paid in a corporate-controlled currency,” she said. “Do you know what that term is?”
Marcus said he did not. Ocasio-Cortez continued,
“It’s called ‘scrip.’ Do you think there’s a risk in taking your pay this way?”
Marcus did not answer the question as Ocasio-Cortez ran out of time.
Scrip is a substitute for the government-issued legal tender that some companies use to pay their employees. Employees can only use scrip at company stores, where the companies can engage in price-gouging. Remote logging and mining camps that were cash poor have used the tactic in the past.
More recently, Amazon has been accused of scrip-tactics. The company rewards efficient employees with “Swag Bucks.” Employees can then use these Swag Bucks to purchase Amazon-themed merchandise.
The liberal U.S. Senator criticized this technique in June, tweeting “it’s a tactic powerful organizations use to take over towns and control local workers.”
Ocasio-Cortez also expressed doubt on a aspect that Facebook and Libra have touted as a strength. The Libra Association is comprised of 28 founding members which include Visa, Mastercard, Spotify, PayPal, Uber, and eBay. Libra has claimed that the diversity of members points to some form of democratized decision-making.
Ocasio-Cortez honed in the lack of democracy in their process. When she asked if the founding members were democratically elected, Marcus responded with a “no,” then fumbled over buzzwords like “proper oversight” and “regulatory” before the senator cut him off.
“So we are discussing a currency controlled by an undemocratically selected coalition of largely massive corporations.”
Marcus responded to the senator’s various attacks by saying that he will work with regulators and does not intend to challenge sovereign currencies.
The senator went on to say,
“Between scrip and the issues with how Facebook handled the elections, we’re seeing a destabilizing in our public good.”
Facebook and the Libra Association have taken a beating for the second day in a row. On Tuesday, Ohio Senator Sherrod Brown said Facebook’s Libra project was like a “toddler who has gotten his hands on a book of matches.”
New Jersey Senator Bob Menendez said, “trust is something you earn and Facebook has not earned it.” The sentiment seems to be global, as many countries have already come out to say they do not trust Facebook’s new currency.