
A Cashless Economy Locks Out the Poor - ChrisArchitect
https://www.nytimes.com/2018/12/06/nyregion/how-the-cashless-economy-shuts-out-the-poor.html
======
CPLX
A society without cash is a society in which every person has no choice but to
get the permission of someone they don’t know and will never meet each and
every time they seek to obtain food, water, shelter, or transportation, and
that permission can be revoked instantly, silently, and invisibly at any time.

This is now before the city council in NYC, as the article points out, so the
topic has come up in conversation more recently (and it’s noticeable, my
office is in the area profiled in the story) and it’s amazing how many people
just haven’t considered the basic dynamics of that.

~~~
vishnugupta
I agree with your assertion, however:

> that permission can be revoked instantly, silently, and invisibly at any
> time

This can happen with cash too, as 99% of Indians found out to their utter
dismay on 8 November 2016!! [1].

Granted that this is a Black Swan event [2] and the revocation was done
publicly. However, as someone who lived through this and experienced it first
hand, I stopped trusting cash from that day onwards. I carry _just enough_
with me to get by for couple of days.

I don't know of any other single event that sent shockwave through 1300+
million humans literally overnight.

[1]
[https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis...](https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetisation)

[2] I sincerely hope so. Though it's been carried out a few times in India,
thankfully not within the same generation.

~~~
cesarb
> However, as someone who lived through this and experienced it first hand, I
> stopped trusting cash from that day onwards. I carry just enough with me to
> get by for couple of days.

I suppose you leave the rest in a bank account. That won't help if all bank
accounts are frozen, as I lived through in the early 90s here in Brazil (we
called it "Confisco da Poupança", see
[https://pt.wikipedia.org/wiki/Plano_Collor#Medidas_do_Plano_...](https://pt.wikipedia.org/wiki/Plano_Collor#Medidas_do_Plano_Collor_I)).

~~~
yholio
A country willing to destroy it's hard currency would have absolutely no
problem seizing the bank accounts of it's citizens. So these types of events
are not really arguments for or against cash, it's all dumb luck if you get to
keep one or the other.

In stable countries with a functional rule of law however, bank credit is
seriously inferior to cash for all purposes except convenience and security.

------
yholio
My bank locked me out of my account because they didn't approve of the way I
was using it (crypto whitdrawal). All fully legal, from an exchange account I
hold in my name. They now give me the runarround asking me to prove with paper
documents that I own the money (interesting reversal to physical interaction).
No calls, no case person I can talk to, just an impersonal postage address,
and if I contact the branch all I get is 'you need to send the documents'. I
did, more than two weeks ago, I dropped them in this very branch. Sorry, we
can't help you because "an investigation is ongoing". So I am guilty and
without money until proven otherwise.

Bottom line, cashless without a citizen right to unreversible banking is a
form of bondage. It creates a paralel, private justice system, where you have
no rights and your are judged by the value you have as a customer of the bank.
A small customer is worthless and rightless.

~~~
cesarb
> It creates a paralel, private justice system

Can't you just bring the traditional justice system back into it, for
instance, by suing them in small claims court demanding the release of your
money? The judiciary supersedes whatever internal mechanisms the bank has; if
the court tells the bank to give back your money corrected for inflation plus
moral damages, they have no choice but to comply.

~~~
yholio
The point is, I shouldn't have to do that; if access to banking is necessary
for survival then the burden should be on the bank to get a court order before
they have the right to freeze an account.

If I sue the bank, it's an absolute guarantee I will be locked out of the
account for a few months to a year until the case is settled. And it will be a
civil claim against a commercial entity, the burden of proof is on me, I don't
have access to a free lawyer and so on. The parallel justice system has
already scored a massive victory against me from day one by stripping me of
most civil rights.

That's fine and dandy in a world where banking is optional and banks are
businesses like any other, but in a cashless world being locked out of banking
is a sentence to homelessness or death. How many days of rent delay will your
landlord accept until he evicts you? How many days can you live on the streets
before you are being fired from your job? What is the average life expectancy
of a homeless person with no income and how often do they win in court against
major financial institutions?

~~~
candiodari
> The point is, I shouldn't have to do that;

Don't worry about it. You can't.

[https://tax.findlaw.com/tax-problems-audits/ten-things-to-
re...](https://tax.findlaw.com/tax-problems-audits/ten-things-to-remember-
when-you-owe-the-irs.html)

Things that can be done to you without any (beforehand) judicial oversight ,
by the IRS. Or, for that matter, can legally happen without so much as warning
to you.

    
    
        File a tax lien against you;
        Levy your bank account;
        Garnish your wages;
        Close down your business;
        Seize and sell your home;
        Damage employment and business relationships;
        Assess you personally for corporate employment taxes;
        Put you in a monthly installment payment arrangement that is too high;
        Contact your banker, neighbors, friends and business relationships concerning your tax liabilities;
        Go after third party transferees of your assets.
    

Note that, at all times, you should consider that you might need to hire, and
retain for ~a year, an accountant and a lawyer, plus add the same amount in
reserve for court fees and the like.

We are effectively proposing adding "taking every last dollar out of your,
your family and kids and anyone you did business with wallet directly".

The government is not very reasonable when it feels it is owed money.

------
privateSFacct
I've traveled to developing countries (not Africa).

Reality is mobile money is big - it basically lets the poor / unbanked have
kind of a virtual wallet it seemed. I never signed up (westerner with a Visa
card and USD) but didn't feel like it was locking people out. Folks using
these wallets could transfer funds internationally to relatives surprisingly
easily it seemed (I'm used to western union) as well.

Be interesting if something like these non-bank mobile wallets ever come to US
(in overseas countries you can load your wallet with cash on street everywhere
so you don't have to have a visa / debit card to do so).

------
sfifs
As a counterfactual the other hand everyone in China appears to pay by mobile
phone without problems using WeChat Pay and Alipay and no one seems to be
locked out. Almost no one I know carries cash - it's just for the tourists who
can't access that system. In Africa, mobile payments seems to have driven
financial inclusion rather than the reverse.

The cashless economy certainly drives de-anonymization, but very little
evidence of "locking out poor" exists where this has actually happened

~~~
yorwba
Only about 60% of all Chinese even have a smartphone. [1] "Everyone" you saw
was probably a relatively well-off member of the middle class in a first-tier
city. As a tourist, you obviously won't see anyone who can't afford visiting a
touristy area. Try looking for a place more than an hour from any public
transport and check again whether the people there all use cashless payment.

[1] [https://www.statista.com/statistics/257045/smartphone-
user-p...](https://www.statista.com/statistics/257045/smartphone-user-
penetration-in-china/)

~~~
thaumasiotes
> As a tourist, you obviously won't see anyone who can't afford visiting a
> touristy area.

This is totally untrue. Tourist areas attract beggars.

Beggars may not have smartphones, but penetration in first-tier cities goes
much farther than "relatively well-off members of the middle class".

~~~
siruncledrew
Interestingly, beggars even have QR codes for WeChat payments:
[http://www.asiaone.com/china/no-loose-change-beggars-
china-n...](http://www.asiaone.com/china/no-loose-change-beggars-china-now-
accepting-mobile-payments)

------
Rainymood
A cashless society allows every single transaction to be tracked, I do not
want this.

~~~
Santosh83
And controlled remotely. It gives massive power in the hands of those who
control the tech. It's downright dystopian. I mean... the tech itself is
great... but combined with what we know of human nature, it's a recipe for
high-tech feudalism.

~~~
hoffs
I mean it already gives such power, there's no one stopping someone adding
couple of zeroes next to their account.

~~~
Santosh83
Well, now you can take your money out as cash under extreme necessity. In a
fully cashless society your entire life savings are just a few bits on a hard
disk...

------
zimbatm
Another side-effect is for donations. In London it's possible to live without
any cash. Even markets are accepting cards now.

There are often charities that are asking for money at the entrances of the
tube. The UK is depending quite heavily on charities for people in need. This
year it looks like they started equipping themselves with contact-less payment
systems. It would be interesting to be able to see the numbers behind the
scene.

What is quite sad is that beggars are not able to equip themselves with
contact-less payment systems. I assume that they necessarily will become
dependent on the charities to be able to survive.

~~~
kalleboo
> What is quite sad is that beggars are not able to equip themselves with
> contact-less payment systems

In Sweden I've seen a beggar with a "Swish" number displayed. (Swish is the
domestic cashless person-to-person payment system, all you need to use it is a
cell phone and a bank account). So it's not impossible for beggars to be
cashless.

~~~
zimbatm
Can everyone get a bank account in Sweden?

I don't know if the experience of giving some physical money to someone
necessarily translates well. Do you know if people actually bother to
read/scan the "Swish" number to do donations?

------
i_know_nothing
There is an important point to be discussed, that happens mainly in
violent/poor countries: the frequent robbery (and it's consequences, like
murders).

A cashless economy will help solve this problem that affects everyone,
especially the poor (paradoxically).

~~~
foolfoolz
lol what?

they going to make you open your phone. send your money away to them. then
steal your phone.

~~~
i_know_nothing
It's quite different. We're talking about digital money, traceables
transactions, improved security systems and so on.

I'm not saying that this will solve all problems, but will make things
difficult for the thieves.

------
CapitalistCartr
A cashless society requires computers to work flawlessly to function. It
requires those controlling the network to make decisions with the public's
best interest foremost.

------
mcv
If the problem is that some people don't have a checking account, wouldn't it
better to provide them with a cheap/free checking account?

Even if all local shops accept cash, there's still tons of stuff you can't do
without a checking account.

On the topic of cash-free living: I only use cash for 3 things these days: to
buy cheese, to pay my cleaning lady, and for my son's weekly allowance. Even
the babysitters accept online payment these days.

~~~
privateSFacct
1) What is more secure - Venmo behind face ID on an apple phone or a checking
account that literally anyone who has the numbers (which you give when you
write a check) can take money out of, either by creating a versa check or
doing an ACH debit so all your money disappears? You are a poor person - are
you in a good position to see dispute resolution through?

2) Garnishment orders - can the state or other collectors garnish the checking
account - so all your money disappears?

3) Will the bank allow the account to go negative, charging major fees, then
blacklisting you with checksystems?

4) How controllable is saving money in these accounts? Some folks "save" money
by not cashing their checks, then going to a check cashing place when they
need the money.

Is it possible that a few % of population have medical debt, tax debt or other
support orders that make using a normal checking account difficult? Past
experience with fraud or being ripped off in a checking account?

~~~
mcv
1) Why would you allow other people to take money out of your account? Modern
checking accounts require two-factor authentication. (And who even uses checks
these days?)

2) Not without a court order I would hope.

3) Depends on what you choose and what the bank will allow. It's safer not to.

4) I'm still puzzled over the relevance of checks.

I admit, every time I discuss such financial issues with Americans, I keep
being surprised by how medieval American banking still is. Isn't there a
market for modern banks over there?

------
msh
I can see the potential problems, but maybe a part of the solution would be to
legally give the poor a right to a basic/free bank account.

~~~
GraemeL
Forcing people that are struggling to live day-to-day to use bank accounts
just makes life worse for them.

The first thing that happens when they're in debt is that their bank account
gets frozen to pay the debts leaving them with nothing.

Forcing all transactions to be electronic takes away the margins they live in.
It's no longer possible for them to pay 1/2 their rent with a promise to pay
the rest in a couple of days when they get paid so that they can feed their
children during that period. The rent comes out of their account on time and
their children go hungry until payday.

~~~
IanCal
This depends on the laws. In the UK there are requirements lenders and
collectors must follow. You can get an agreement for a low repayment based on
your required spending.

> It's no longer possible for them to pay 1/2 their rent with a promise to pay
> the rest in a couple of days when they get paid so that they can feed their
> children during that period.

Why not? You can transfer money whenever you want.

------
thefounder
Something like crypto coins/cash would have best of the both worlds: good as
cash, transactable online.

------
plgonzalezrx8
Instead of stopping business from doing what is best for them, why don't we
help the poor by providing them with the tools necessary to take part on the
economy? Is it possible to help those less fortunate to have access to the
right tools?

~~~
dsfyu404ed
Having cash as an available option throughout the economy greatly complicates
a whole range of bad behaviors by private entities and governments.

Having a cash option available benefits society and just giving poor people
electronic banking would not confer the same benifits.

------
sxp62000
Why are businesses in large cities going cashless? Are there any sinister
reasons for doing this? The article seems too harsh. I thought going cashless
was mainly to speed things up during check out.

------
lifeisstillgood
A hipster-ish coffee shop I use has now gone cashless entirely - you _cannot_
pay with cash.

They must have hit a tipping point where the faff of cash drawers, trips to
the bank and so on were not worth it.

~~~
ganzuul
Seem to remember something about 'legal tender'. Meant you had to accept cash
payment. Of course you could refuse the customer on other grounds...

Might not be a thing in the land of hipster-ish coffee shops.

~~~
jk563
> Legal tender has a very narrow and technical meaning, which relates to
> settling debts. It means that if you are in debt to someone then you can’t
> be sued for non-payment if you offer full payment of your debts in legal
> tender. [1]

[1] [https://edu.bankofengland.co.uk/knowledgebank/what-is-
legal-...](https://edu.bankofengland.co.uk/knowledgebank/what-is-legal-
tender/)

~~~
kaybe
So what differentiates an unpaid bill from a debt?

------
IshKebab
Apparently nobody has heard of prepaid debit cards?

