Cash and freedom

by Chris Bertram on February 16, 2016

Paul Mason has an article today about the impending end of cash. The subtitle asks “But what would a cashless society mean for freedom?” but sadly the article itself has little to say on the subject. It isn’t hard to see, though, that the end of cash would give governments almost unlimited power to deny resources to those they consider undesirable. We’ve already seen this with the way that the Obama administration successfully pressured the major credit card companies to block donations to WikiLeaks. And it is a key component of the UK’s rather horrible Immigration Bill 2015 which has as a central purpose to create a “hostile environment” for people who lack authorization to be on the territory of the state by, inter alia, “working with banks and building societies to restrict their access to bank accounts”. In practice this means that people whose right to remain is cancelled could almost immediately lose access to the resources they need to fight the administrative decision against them. History shows that technologies that are first piloted against one group of people can be extended to others. We face a future where people deemed by the executive to be problematic in some way could lose access to all means of payment. At least with cash you can subsist on the margins of society; without it, government control is potentially total. Perhaps this is coming sooner than we think?

{ 93 comments }

1

jake the antisoshul soshulist 02.16.16 at 2:23 pm

How would bitcoin fit into this. Not that I am a fan of it. But it seems to me it would have the same issues. The state could make access difficult, if not impossible.
They certainly could crack down on the greymarket.

2

ZM 02.16.16 at 2:37 pm

I think you are failing to see the positives Chris Bertram, a cashless society would encourage responsible consumption, and would provide accountability, and could also help with logistics and less waste if the cashless system was integrated more into ordering products and so on. It would be different from what we have now, but that is no reason to just see negatives about possible total government control.

3

William C Roberts 02.16.16 at 2:54 pm

Accountability for whom, ZM? And to whom? I think you’re making Bertram’s point for him!

4

Watson Ladd 02.16.16 at 3:08 pm

Already here if you are a pornographer. The US government exerted pressure on banks to cancel bank accounts of people involved with the smut industry in Operation Choke Point. There weren’t any hearings, no need for pesky judges, and the banks rolled over because they open only by the whim of regulators. Thankfully Congress intervened.

5

walden 02.16.16 at 3:09 pm

I use cash a lot. Don’t think that corporations should be able to track me and my buying habits and practices.
And when I give money to folks on the street I’m certainly not going to give them a credit card or transfer…they need cash and should be able to use it as they see fit.
Cashless society looks like a nightmare to me.

6

Donald Johnson 02.16.16 at 3:18 pm

” It would be different from what we have now, but that is no reason to just see negatives about possible total government control.”

The sarcasm here just writes itself.

7

engels 02.16.16 at 3:25 pm

“The state could make access difficult, if not impossible”

How?

8

Steve Williams 02.16.16 at 3:26 pm

ZM@2

‘I think you are failing to see the positives Chris Bertram, a cashless society would encourage responsible consumption, and would provide accountability, and could also help with logistics and less waste if the cashless system was integrated more into ordering products and so on. It would be different from what we have now, but that is no reason to just see negatives about possible total government control.’

I think it’s worth focusing on Chris’s negatives rather than your positives, since the negatives he’s identified are both plausible and results of this one policy, whereas the positives you’ve identified are less salient and could in any case be brought about by other policies.

9

Ze K 02.16.16 at 3:28 pm

Well, they already have a CCTV camera on every corner, so what’s the big deal. This is Airstrip One, after all.

10

William Timberman 02.16.16 at 3:29 pm

Does this mean that every homeless person, busker, etc. will be required to have bank accounts and Square card readers for their iPhones? And will we send out the Soylent Green skiploaders to scoop up the ones who don’t?

11

Yet another Pete 02.16.16 at 3:34 pm

JTAS @1: Can you explain that for me. Surely if governments could block bitcoin they’d be doing it already. My feeling is that elimination of cash would make crypto-currency enthusiasts’ claims about how they were fighting for freedom against the tyranny of government look a lot less ludicrous.

Other random thoughts:

1) The UK hasn’t shown much inclination to get serious about money-laundering so far. How much does this sort of control depend on it’s doing so? Seems to me that if you don’t get serious about that, all you’re doing is massively expanding the illicit economy, and granting serious power to whoever can move money between the two spheres.

2) Is the real story here going to be about social control by private individuals? If access to the legal economy depends on someone conducting a check of your papers, that someone has an awful lot of discretion over whether and how to make your life difficult.

12

MPAVictoria 02.16.16 at 3:34 pm

I use cash all the time. I find it makes it easier to track how much I am spending.

/Sorry no deep thoughts today.

13

engels 02.16.16 at 3:34 pm

Have there been any studies of the effect of cashless payments on beggars so far? I’m sure I give them money less than I used to because I’m often without cash

14

Snarki, child of Loki 02.16.16 at 3:59 pm

engels:
for beggars, I’ve heard the suggestion to hand them prepaid 7/11 cards: anonymous, good for basics, hard to use for drugs or booze. The “open 24/7” feature helps too.

15

Sam Dodsworth 02.16.16 at 4:21 pm

good for basics, hard to use for drugs or booze

A cashless society “encouraging responsible consumption”, then.

16

Lynne 02.16.16 at 4:26 pm

Chris, those are real dangers, which I hadn’t thought of. I oppose this idea because of the violation of privacy it entails, just as I oppose the increasing number of “smart” features in cars, which will, we are told, enable us to get lower insurance rates by showing the insurance company what good drivers we are. People have a right not to be monitored.

17

Rich Puchalsky 02.16.16 at 4:36 pm

I personally hope that any beggar who I hand money to is going to use it on drugs or booze. I can’t very well hand over the actual articles though.

The whole topic of cashlessness has been widely addressed (although not necessarily well addressed) in science fiction. For example, Zelazny had a series of short stories about a computer programmer who helped to set up the worldwide money-tracking system, saw the dangers of it, and (in characteristic Zelazny style) instead of warning anyone or taking any political action used his access to set up a backdoor so he personally couldn’t be tracked and could become a super-private-detective.

Ian Banks wrote a good deal about a society without money, which is a completely different proposition.

18

Maanen 02.16.16 at 4:44 pm

@Watson_Ladd
Operation Choke Point was aimed at categories of businesses that the DOJ and FDIC thought were prone to money laundering and fraud. Pornography was among those categories. Not sure why, perhaps because a lot of online pornography thrives on copyright violations, or maybe just the sleazy reputation of the business in general. Whatever the case it was certainly overreach to treat all businesses in a category as run by dishonest crooks. In a cashless society it would certainly end all legitimate trade in those categories. or at least drive the honest abroad.

19

chris y 02.16.16 at 4:51 pm

Walden: And when I give money to folks on the street I’m certainly not going to give them a credit card or transfer

They don’t want you to do that, you know.

20

Neville Morley 02.16.16 at 5:13 pm

I’m amazed that ZM doesn’t have anything to say about the crime-fighting possibilities, or the way this could promote public health initiatives. I Know What You Bought Last Wednesday.

21

oldster 02.16.16 at 5:26 pm

“In practice this means that people whose right to remain is cancelled could almost immediately lose access to the resources they need to fight the administrative decision against them.”

That’s worrisome, alright. I couldn’t hire lawyers, for instance.

Now suppose I have some cash. How exactly does that help me?

Do I have a big stack of 500-euro notes, so that I can give one to my lawyers every time an hour passes? Do I walk around with the 10,000-100,000 euros it will take me to hire representation? And do I want to deal with the lawyers who regularly get paid in stacks of cash? Do I want to deal with lawyers who do not have sharp questions about how I brought more than US$10,000 with me into the country to begin with?

Maybe I keep it in a bank. Govts are good at seizing assets, esp. ones that look questionable. Banks are required to keep close tabs on deposits and withdrawals.

And why would my paying them in cash persuade the govt to let me take advantage of their representation? If the govt wants to dissuade lawyers from representing me, it will find ways to do it–especially if I am doling out wads of cash every time that we meet. A few well-placed enquiries from Inland Revenue will make those solicitors pull in their horns very fast indeed.

I don’t disagree with your concerns, Chris, I just think that cash per se is a side issue. The real issue is about a seamless web of govt control of banks and law-firms and cash transfers and so on. I don’t think letting me keep a few quid of colored paper in my pockets is going to make any difference to the big picture here.

22

Matt 02.16.16 at 5:38 pm

Oldster said, Do I have a big stack of 500-euro notes, so that I can give one to my lawyers every time an hour passes? Do I walk around with the 10,000-100,000 euros it will take me to hire representation? And do I want to deal with the lawyers who regularly get paid in stacks of cash?

I am not sure how such things work in the UK, but when I worked for a public interest organization that mostly provided legal services for poor immigrants in the US, we regularly took cash from our clients for the very modest fees we charged. The fees were much less than what a “commercial” lawyer would charge, but not nothing, either. (In some cases, the fees were waived, but if people could pay the fairly small fees, they were asked to do so, so that we could help provide more services to others, too.) Certainly the sort of scenario that Oldster suggests didn’t happen. (We didn’t do hourly billing, for example.) But, we did regularly take cash payments from people (many of whom didn’t have access to bank accounts) and it was not a significant problem.

23

oldster 02.16.16 at 5:52 pm

Thanks, Matt. That’s information I did not have.

So do you think your work in representing poor immigrants was made *easier* by their having access to cash? Would anything have been different if they had only had e.g. debit cards?

Put differently: is there a scenario in which the INS goes after their debit cards, in which the INS would *not* equally go after their cash-on-hand?

24

Brett 02.16.16 at 5:55 pm

The problem for Bitcoin is that in a cashless society, it would be even more difficult to convert it into a usable other currency than it is now. Right now, the government can crack down on Bitcoin currency exchanges, but you could still see (and have) illicit cash-for-Bitcoin dealers who can cycle money in and out of it.

But with no cash, you’d have to get someone to take your bitcoins for their commodities/gift cards/etc, and then trade those in for cash. Each step would require taking a discount on your original amount of Bitcoins, until you’re probably in the same boat as drug gangs trying to launder drug money (and getting only 20-30 cents on the dollar in the process).

25

Brett 02.16.16 at 5:56 pm

EDIT: Sorry, not “trade those in for cash”. It should be “trade those in for usable digital currency”.

26

Brett 02.16.16 at 6:01 pm

@Maanen

Not sure why, perhaps because a lot of online pornography thrives on copyright violations, or maybe just the sleazy reputation of the business in general.

Very high credit card chargeback rates, plus the possibility that illegal revenue might be involved. I read an interesting book from a guy who was heavily involved in the “Girls Gone Wild” franchise in the 2000s, and they’d do the whole “hook people with free plus shipping DVDs, then auto-charge their cards full price for the next ones” to sell them. Eventually the number of charge-backs would get so high that the payment processor/bank would dump them, and they’d have to switch to another one – it was basically a game of whack-a-mole.

27

Chris Bertram 02.16.16 at 6:05 pm

@oldster yes, it was intended as an example of the way control of banking already served as an exclusionary and controlling technology in one area, immigration. It would then be a trivial matter to extend it to other areas. That already covers most of us. Ending the option of using cash just closes the space in which a few marginal people subsist and makes everyone legible to the state across the full range of their behaviour.

28

Matt 02.16.16 at 6:15 pm

The next time the Cypriots’ (or other deadbeats’) banks seize 40% of the money in accounts, you don’t want to let those forewarned escape punishment with cash withdrawals. Negative interest rates will be more stimulative when There is No Alternative. And think of all the extra economic activity generated when big banks make a little money off of every shopping trip and not just those of poor people.

EDIT: before I commented I figured I really should read the article. It turns out that my second jokey observation is the real motivation. They really do want to make everyone “invest” or lose their money via negative interest rates, and cash is the last big barrier against forcing everyone into the casino. Holy shit.

29

Matt 02.16.16 at 6:22 pm

Oldster – my pleasure. I worked at this place long enough ago that taking payment via a pre-paid debit card would have been a bit unusual (in 2004, if I’m remembering correctly) though it’s possible that they are now taken. I’m pretty sure we didn’t take them at the time. I suppose that, if people were paid with prepaid debit cards somehow, or got a hold of them, they could be used. (There are, of course, other reasons to not like those ideas – the fees really add up for poor people.) But, cash people have on them can’t be made difficult to use in the same way that, say, a bank account could, and paying people in cash is easy if they are working in the grey market, so that made it attractive and easy for many of our clients.

30

Map Maker 02.16.16 at 6:22 pm

Interesting how the view of this changes depending on which side of the atlantic you sit. In Euro land, the existence of 500 Euro notes, and tax havens within the borders pretty much cements the link between cash and tax evasion.

In the US, $20 is the largest common bill, harder to hide large sums of money in $20s vs. 500 Euro notes. While the US cash economy covers a lot of undocumented workers who are evading taxes, it is small potatoes compared to Europeans hiding assets from taxes in swiss safe deposit boxes…

31

William Berry 02.16.16 at 7:07 pm

“In the US, $20 is the largest common bill . . .”

Really. Why you dissin’ our old friend, Benjamin Franklin? He does get around, you know.

32

Chris Bertram 02.16.16 at 7:13 pm

Hmm, I think there’s a passage in one of the Jack Reacher novels, where there’s extensive discussion of the utility of the US dollar for money laundering etc because the notes always stick around, whereas European notes typically change in design every few years.

33

Doug Bamford 02.16.16 at 7:25 pm

I am very interested in taxation and technology, and blog about it when I get the chance.

I think Chris is absolutely right to point out that it makes it more difficult to live ‘outside the system.’ In some ways that is good – making life harder for criminal gangs, tax evaders, etc. etc. but we might worry that it would impact on vulnerable people who are on the edge of society.

My take is that technology is coming anyway and we have to try to make the most of it and make sure it works for the less well off and not just those at the top. I think for example we can have a much more progressive tax system, for example.

And those on the edge of the system could try to get by without cash – gifts in kind etc. It might be harder but it would be possible.

Another thought is that the end of cash might lead to a lot of liberalisation/legalisation – prostitution, soft drugs etc.

34

Chris W 02.16.16 at 7:59 pm

London buses no longer accept cash payment. Travel card top-up machines are mostly card-only, with the odd cash machine. If you don’t have a payment card or a travel card (both of which require registered addresses) it can be very hard to get around.

English social care is moving towards “direct payments”: money given to people’s bank accounts, for them to spend in line with their care plans. The local authority monitors their spending, usually with strict criteria; they disallow cash withdrawal; and oblige users to post account statements every 6 – 12 months.

35

engels 02.16.16 at 8:07 pm

They don’t want you to do that, you know.

They criminalised
not buying things for moral reasons
– giving your money to people who need it will probably be next

36

Guy Harris 02.16.16 at 8:19 pm

Engels@33: The link in your post was broken, here’s the link you want.

37

The Raven 02.16.16 at 8:21 pm

Alternative currencies will emerge; this is an old, old story.

Bitcoin is looking better and better.

38

Guy Harris 02.16.16 at 8:27 pm

(BTW, pro tip: if you refer to a particular post, link to it, don’t just say “so-and-so@666” – post numbers change; the Engels post to which I replied was numbered 33 when I started constructing the reply to it, but somehow became post number 35 when I submitted my reply.)

39

Matt 02.16.16 at 10:05 pm

In the US, $20 is the largest common bill, harder to hide large sums of money in $20s vs. 500 Euro notes. While the US cash economy covers a lot of undocumented workers who are evading taxes, it is small potatoes compared to Europeans hiding assets from taxes in swiss safe deposit boxes…

According to today’s Financial Times, there is a serious move to eliminate the 500 Euro note, on the grounds that it’s mostly used for tax evasion and to finance terrorism (and for Germans to buy expensive things, it seems.) It doesn’t seem certain yet, but apparently the talks are serious.

40

H Horan 02.16.16 at 10:19 pm

Currencies are a public utility, available on a free and equal basis to everyone. The primary motivation behind the “cashless society will be so much more efficient” claims is the desire to privatize this utility, so that its private owners can capture artificial rents (i.e. charging X% everytime you use the virtual currency, just as the credit card companies do now).
The “total loss of privacy” motivation that’s already been discussed is secondary. Banks are already required to report any large cash withdrawls/deposits to the authorities, and as noted, banks will readily give up credit card transaction data without a search warrant. There is undoubtedly some marginal social value in making money laundering more difficult. But if you think it is problematic that Google can track everything you ever do on the web, and sell that data to anyone, wait until there are databases of every financial transaction you ever make.

41

Gerald 02.16.16 at 10:37 pm

That is a horrible idea …. what is this rush to Big Brother all about??
Privacy and freedom go hand in hand.

42

pnee 02.16.16 at 10:38 pm

There’s a tangle of confusion here, I think. I don’t see any move by “central banks” to eliminate cash as printed money.

The author says this,

Why would a central bank want to eliminate cash? For the same reason as you want to flatten interest rates to zero: to force people to spend or invest their money in the risky activities that revive growth, rather than hoarding it in the safest place.

Lowering interest rates is primarily about influencing the amount of money in bank accounts, not the cash stuffed in people’s mattresses. The amount of paper currency in circulation is basically irrelevant to central bank policy (in jargon terms, M1 is much smaller than M2). But the author happily conflates money in bank acounts with currency. Then points to private banks that eliminated or discouraged cash services (most probably because it’s a pain in the ass to work with, not as part of some grand conspiracy.) Trust me, those banks are still happy to set up an account for you to put lots of money into.

To the extent that cash is going away, it’s because consumers and merchants don’t like it compared to the alternatives. (The risk of loss/theft, the need to make change, the need to find an ATM at inconvenient times, etc.) Businesses that want to track their customers’ purchases are likely to have affinity programs anyway, they don’t need cash elimination for that. They don’t need to have perfect data, or have it for absolutely everyone, to get a lot out of it. They may not like cash, but they don’t need to destroy it to track us pretty well already.

There are regulations to track large cash transfers. The affect on the average person of these regulations is a rare bit of paperwork or nothing at all.

43

David B 02.16.16 at 10:41 pm

Not true, the majority (I think) of Oyster cards are not registered, and you can also use unregistered bank cards. In both cases Transport for London have no idea who you are.

Cash Oyster topups are still big and you can do them at lots of small shops “Oyster Ticket Stops”

44

engels 02.16.16 at 10:56 pm

Guy@38, thanks for the advice.

45

Guy Harris 02.17.16 at 12:32 am

<a href="http://crookedtimber.org/2016/02/16/cash-and-freedom/#comment-659098"@Engels, you’re welcome – it wasn’t directed at you, it’s directed at everybody. When reading CT, I’ve often found it a bit of work to figure out to what comment people were replying, as the comment number was correct when they typed the reply but became incorrect later. “The comment numbers don’t change” is the obvious assumption, but, alas, it’s an incorrect one.

46

Guy Harris 02.17.16 at 12:33 am

And here, in the midst of giving pro tips, I screw up a link to a comment. Here’s the Engels comment to which I was referring.

47

Cranky Observer 02.17.16 at 12:42 am

Guy Harris @ 12:32 AM: that’s why I quote the time (and in a long thread the date) rather than the post number, which as you note can change if there are posts in moderation or one gets deleted for terminal obnoxiousness.

48

Bill Murray 02.17.16 at 3:03 am

The risk of loss/theft of cash is much lower than loss/theft using credit cards/online systems. So is the money for terrorism. When cash comes out looking bad it usually comes down to the study adding huge amounts of cost for traveling to the ATM to get cash.

49

maidhc 02.17.16 at 5:33 am

Keeping your money in cash is the only way to have control of your money. As soon as you put it in the bank, it can be taken away from you because you owe somebody for car payments, student loans or whatever. If your intention was to pay your rent and buy some food for your children as your top priorities, you’d better keep your money in cash.

The most-needed reform is to limit the fees charged by check-cashing companies, because they really gouge people who can’t afford to use banks. Unfortunately they have a very powerful lobby.

It’s been suggested that bringing back postal banking might help this problem. Possibly it would for some subset of people who are too poor to have bank accounts.

50

oldster 02.17.16 at 6:03 am

I don’t know about all this. Larry Summer just wrote an op-ed calling for the elimination of high-denomination bills like the US$100 and 500-Euro note.

If Larry Summers says it’s a good idea, it must be so.

51

engels 02.17.16 at 9:28 am

45, 47 good point

52

Chris Bertram 02.17.16 at 10:00 am

The renumbering thing is because some comments go to moderation and are then stuck there until we release them, whereupon the numbers change. I usually reply to a particularly comment by prefacing it with @engels or whatever, at least where that’s relatively unambiguous.

53

greg 02.17.16 at 10:42 am

It is just another method for the powerful to more efficiently plunder the rest of the system. Since this also involves the slow destruction of the productive economy, prepare.

54

Maria 02.17.16 at 11:42 am

Good questions, Chris. Funny, as I’ve been developing some ideas on just this topic.

@engels at 7 asks how government can make it difficult to use cash. Quite easily, if informally. Just last week I mentioned to a bank employee the various public signals coming from parts of the UK government about the end of cash. He said the banks have gotten the message very clearly and a project to, for example, make it possible for people to withdraw 20 quid from a bank machine just using their debit cards to touch it were put aside. Not to make it harder to rob someone’s card and do crime, but to avoid encouraging greater use of cash with smartcards.

55

Maria 02.17.16 at 11:52 am

On my hobby horse now, but just last night I was giving out about a world (in the UK anyway) where the salaried tax-payers are not just caught in the tax web (rightly so, of course) while plutocrats dodge all manner of tax and consider the social contract entirely optional, but Know Your Customer rules mean we are trapped in an endless cycle of proving who we are and where our money is coming from just to be able to buy our homes etc. etc. while shell corporations pay cash for empty apartments and London is just a safe haven for the world’s dirty money. A cashless – or in all likelihood low-cash – society will change this not a jot, and a progressive tax system is only possible, a la Doug Bamford above, re. those already in the net, and not for taxing what is effectively free-floating international capital.

Technology is not ‘coming anyway’; its implementations are the result of choices we are making or, more typically, ignoring, and putting our fingers in our ears and singing cheerful songs about.

Chris W @34, actually, you can still pay cash for an anonymous travel card in London. Just.

56

engels 02.17.16 at 12:13 pm

Thanks, Maria. I can believe the government can make life very hard indeed for cash users (just as they’ve made it very hard for those of us who don’t like carrying ID) but I thought Jake meant that they could stop people from using BitCoin (possibly altogether) and I was wondering how that was possible (for all I know it is, I know next to nothing about it).

57

engels 02.17.16 at 12:16 pm

On London transport: you don’t have to register your debit card, although obviously police (and data miners?) could easily trace it to you, but if you don’t there’s no longer anyway of knowing how much you are being charged for any given journey.

58

engels 02.17.16 at 3:41 pm

A bizarre recent prosecution based on Oyster card records (doesn’t say whether the card was registered):
http://www.telegraph.co.uk/news/uknews/crime/12144963/Commuter-who-walked-past-actress-at-Waterloo-station-cleared-of-bizarre-sex-assault-claim.html

59

Anarcissie 02.17.16 at 3:59 pm

Outlawing cash will intensify the contradictions, will it not? In the US, and probably elsewhere, we already have a considerable underground economy; if it is denied currency, it will create new ones, even more out of control than the old one.

I believe it is already theoretically illegal in most of the US to directly give money, food, clothing, or shelter to people without official permission. Thus Food Not Bombs is said to be a ‘terrorist organization’, although it neither terrorizes nor is an organization.

60

reason 02.17.16 at 4:00 pm

“It isn’t hard to see, though, that the end of cash would give governments almost unlimited power to deny resources to those they consider undesirable. “
I don’t understand the logic behind this to be honest. Governments have police forces and armies – they already have almost unlimited power in physical terms. What restrictions they have on them is a question of laws and institutions. And what you are saying is yet another reason for a basic income.

61

reason 02.17.16 at 4:05 pm

Anarcissie @59
Yes.

62

reason 02.17.16 at 4:06 pm

P.S. I think one good virus in the interbank payments systems, would put an end to the discussion.

63

dsquared 02.17.16 at 4:29 pm

In the US, $20 is the largest common bill

the largest bill in common use, but the largest bill in issue by value is the US$100, two thirds of which are held outside the USA.

64

pnee 02.17.16 at 5:35 pm

@48 Bill Murray Consumers typically don’t lose money when their credit cards are stolen. (Credit card companies take the losses as the cost of doing business).

Consumers always lose if their cash is stolen. Merchants get robbed for cash, and often put up signs saying just how little cash they have on hand.

Nobody is putting a gun to anyone’s head. People use plastic because they find it convenient. Merchants pay a small percentage to the credit card companies, to please their customers but also it reduces their own headaches with cash.

And absolutely none of this has anything to do with central bank policies.

@62 reason If that happened outside of a hollywood movie, what makes you think paper money would be worth anything? It’s all fiat currency, that’s valuable because there is a system in place to accept it and move it around. Bring down the banking system, and it’s back to barter. Again, paper money is only a small part of the economy today.

65

absurdbeats 02.17.16 at 6:28 pm

Margaret Atwood, in The Handmaid’s Tale

All those women having jobs: hard to imagine, now, but thousands of them had jobs, millions. It was considered the normal thing. Now it’s like remembering the paper money, when they still had that. . . .

I must have used that kind of money myself, a little, before everything went on the Compubank.

I guess that’s how they were able to do it, in the way they did, all at once, without anyone knowing beforehand. If there had been portable money, it would have been more difficult.

66

GHG 02.17.16 at 7:04 pm

absurdbeats beat me to The Handmaid’s Tale reference! As usual, Atwood out in front.

67

Rostale 02.18.16 at 12:00 am

If HSBC is any example to go by, going cashless won’t slow the drug cartels down a bit.

68

jinnipen 02.18.16 at 7:35 am

How does the concept of legal tender fit into this discussion?

69

Dipper 02.18.16 at 8:37 am

A large proportion of US Dollar bills are held outside the US. One reason, as explained to me by an East African Asian colleague, is that periodically governments change their bank notes, and typically you would have to bring in your old notes to the bank and exchange them for new notes. At that point the government knows how much money you have, and then they come after you. So lots of people throughout the world keep their wealth in US Dollar bills.

70

Maria 02.18.16 at 10:04 am

@64 ‘Nobody is putting a gun to anyone’s head.’ And nobody makes you shop at Walmart, either. http://www.goodreads.com/book/show/820842.No_One_Makes_You_Shop_at_Wal_Mart

On a grumpy and slightly derailing note, I’d say a small percentage of US $100 dollar bills are held by banks like HSBC who, when you go in to buy 500 dollars for your travel (more often non-US travel as they’re so widely used), insist on selling you a plastic-wrapped pack of money with 4 x $100 dollar bills and the rest in small notes. Impossible to use as $100 dollar bills are so often counterfeit. gnghghghghgh!!!!

71

Peter T 02.18.16 at 10:10 am

“I don’t understand the logic behind this to be honest. Governments have police forces and armies – they already have almost unlimited power in physical terms. What restrictions they have on them is a question of laws and institutions.”

Anyone who says this has clearly never much to do with either police or armies. Like tax offices, these institutions rely on the fact that 90% of compliance is voluntary. The resources to enforce compliance more than very, very selectively are simply not there. Which is why when a crime becomes a normal habit, police give up on enforcement.

What a move to end cash promises is a major shift in the cost of enforcement. Anyone can be cut off from most necessities with a few clicks.

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reason 02.18.16 at 10:12 am

pnee @64
You didn’t understand the point. People need food, water to survive every day. Lots of people use cash to buy these things. The payments system freezes, people get panicky fast. The discussion about getting rid of currency becomes fast when people realise that.

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reason 02.18.16 at 10:13 am

oops
words missing
The discussion about getting rid of currency become POLITICAL POISON fast when people realise that.

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reason 02.18.16 at 10:18 am

reason,
but anyway the discussion at the moment is, as far as I know, outside of academic circles only about get rid of large denomination notes.

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engels 02.18.16 at 1:16 pm

Anyone who says this has clearly never much to do with either police or armies

+1

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ZM 02.19.16 at 12:32 am

I don’t see why no one agrees with my point of looking at the positives of a cashless society, not just the negatives.

I saw an interesting design for a wearable called World Being, the idea being that it would tell you things like the carbon emissions of your consumption. We use money to exchange for goods, and goods, obviously, are made from materials, but at the moment we don’t get a list of resources we consume daily, weekly, monthly, or annually – we just have records of the income and outgoings of money.

This is completely useless data, it hardly tells you anything at all, and doesn’t tell governments much either, apart from they always want the economy to grow and GDP to grow, despite the fact we are consuming too many resources.

A cashless society where the there is electronic data on resources in goods and the resources people consume is much more data rich, both for individuals and governments, and whoever else gets access to that data.

I do not think it is a threat to freedom in and of itself, it would be more useful. And if you think beggars won’t get any money then, 1. Beggars should have access to income from government welfare payments, 2. Most beggars are not overly happy being beggars as far as I can tell so I am not enthused by the idea we have to keep cash instead of electronic replacements so as to maintain a population of poor beggars asking passers by for cash, 3. If you are concerned about the wellbeing of beggars it would be better to ensure adequate welfare payments and public and affordable housing, rather than be worried about moving away from cash to electronic replacements which are more data rich

Of course, you would want a good system designed, with safeguards

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engels 02.19.16 at 12:34 am

Beggars should have access to income from government welfare payments

To quote Bob Dylan: ‘is that some kind of joke?’

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ZM 02.19.16 at 12:41 am

No.

They should have access to government welfare payments. What is a joke about that?

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engels 02.19.16 at 12:54 am

You said ‘if you think beggars won’t get any money then, 1. Beggars should have access to income from government welfare payments’. I agree that they ‘should’, what I can’t take seriously is the idea that that ‘should’ translates into anything other than wishful thinking.

I live in London and I pass several beggars every morning and evening. They don’t get any money from the government and government policy (and the kind of policies favoured by most Labour MPs) is focussed on making it harder for them to get any government money.

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ZM 02.19.16 at 1:25 am

But the problem you are describing is beggars not getting income from government welfare payments, not that a cashless society is a bad idea because we need cash for beggars.

Moving to a cashless society would potentially make governments have to provide welfare payments to people who would otherwise be beggars, and housing, since there would not be the alternative of making them beg from passers by.

Chris Bertram says at least with cash people can live on the margins of society – but I bet most of these people would prefer to be included and not live on the margins due to the cash economy. It is not very nice to make people live on the margins of society in my opinion.

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js. 02.19.16 at 1:48 am

I personally hope that any beggar who I hand money to is going to use it on drugs or booze.

Don’t forget cigarettes! The best of the lot. But seriously, I completely agree with this sentiment, and I think it needs to be voiced more often and about as bluntly.

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engels 02.19.16 at 3:34 am

Zm, I don’t want to ‘make people live on the margins of society’. I just think that if they do then it’s better if other people can give them money than if they can’t, and I don’t think that stopping people doing that would ‘potentially make governments have to provide welfare payments’ to them, unfortunately.

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reason 02.19.16 at 2:16 pm

Peter T.
“What a move to end cash promises is a major shift in the cost of enforcement. Anyone can be cut off from most necessities with a few clicks.”

Still don’t understand the point – people can be thrown in jail. People even without money have friends who will not let them starve. The point is that the restriction on government power is not a question of what they can do, but what they think they can get away with and what opposition forces there are.

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reason 02.19.16 at 2:19 pm

p.s. I think ZM has a point (although beggars could also still receive help in kind). But what gets me about this whole discussion is the trend towards seeing the “Government” as “the other” and not “our government”. I’m a bit surprised to see that on crooked timber (no matter how much they hate the current Tory government in the UK). Are we all now anarchists and libertarians?

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reason 02.19.16 at 2:26 pm

Look one thing that shocks me in Europe, is that in many European countries you can change the constitution via a simple act of parliament. I thought what happened in parliament was the ironic thing I have ever heard of – the parliament via a simple majority changed the constitution to insist that the highest court needed a supermajority to stop a law. Of course this should all be exactly the other way around. Constitutions should require supermajorities (after all they are laws to be followed by political opponents).

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engels 02.19.16 at 2:27 pm

Reason, you seem to think that if I have a gun, say, or can call on someone with one) and other people don’t or can’t, that will ensure they do as I say. In the real world coercion and authority are a LOT more difficult than that. Just ask a USian occupying army, or your dinner lady.

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reason 02.19.16 at 2:28 pm

This may seem like a distraction from the original post, but I think the original post is missing the point – the problem is not details of particular regulations, but represents instead lack of general inalienable rights. You are looking in the wrong place.

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reason 02.19.16 at 2:30 pm

engels
Have there never been coup d’états?

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reason 02.19.16 at 2:36 pm

Oops …. me @85
what happened in parliament should read … what happened in POLAND .. sorry for any confusion.

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engels 02.19.16 at 2:37 pm

Has the ever been a coup d’etat where the junta proclaimed that the only government power they were assuming was the power to execute people, because that was the ultimate sanction?

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reason 02.19.16 at 2:48 pm

engels
????? Is this relevant to the discussion? I was just pointing out that if a government freezes an account, it is just as subject to judicial and press review as if they put someone under house arrest. It is not a different level of power, it is just a different detail about a single lever of power. This potential (and unlikely) law change is not the real problem, it is just a small symptom of a bigger problem. Pretending that this by itself is a major problem is a sort of blindness. I think you are UK based, but I see this more often in the US because their political system is so dysfunctional. They concentrate on single small items (instead of whole systems), because reforming whole systems seems impossible to them. But whole systems is the way you need to think.

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reason 02.19.16 at 3:05 pm

P.S. Same with the Polish case obviously, the problem was not that they changed the supreme court rule, the problem was that they could.

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reason 02.19.16 at 3:39 pm

I just read the original article and it also shows or reflects another sort of blindness. The only reason we would need negative interest rates is because inflation is so low. It is easy to create inflation – print and spend money (or even take it off rich people with loads of it, and give it to poorer people who will spend it). Why doesn’t he point out that unwillingness to do this is the real problem?

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