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Why we should fear a cashless world (theguardian.com)
292 points by mantesso on Mar 21, 2016 | hide | past | web | favorite | 248 comments

Here in Italy the big issue is that many business will just not declare cash transactions. It's pretty common not to be given a receipt when buying a coffee and often when you visit a doctor they'll say: do you want the invoice or a discount?

A couple of friends got married recently and I found out they paid over half of what the owed in cash to get pretty decent discount.

So before we talk privacy and company let's remember that this kind of hidden economy has a huge cost for society and it's very widespread in southern Europe.

Taiwan is mostly cash and they use a receipt lottery to encourage people to buy from vendors who give receipts. Each receipt has a number and there's a lottery at the end of the month with cash prizes.

Also, people here know they can report a business for not giving out receipts. They might get a share of recovered taxes for that.

I don't know all the pros and cons of that setup but it seems there are ways to maintain a cash based system and still collect taxes.

Taiwanese confirmed here. Basically we use a lot of cash in our daily lives. The "hidden economy" still exists in some places, like some outdoor vendors or night markets.

I was familiar with the lotteries (didn't participate -- I just put my receipts in the charity buckets or the trash) but had NO IDEA this was why. I just assumed it was because the culture is just much more amenable to gambling (which I think is also true, but might not be the reason it's tied to receipts).

If this is truly the reason for the lotteries, is the government / tax agency giving out the prizes? I never bothered to look closely but it always seemed something run by those businesses.

> If this is truly the reason for the lotteries, is the government / tax agency giving out the prizes?

Yes of course. Every country has trouble collecting taxes. In Taiwan they memorialize the day when the police were too heavy handed with a woman selling untaxed cigarettes. A citizen died in the skirmish.

This day is 2/28 and largely remembered as the beginning of a 40 year period of martial law in Taiwan. I recommend visiting the 228 museum in Taipei's peace park. Even though the current government, KMT, revised the history in this museum to downplay the fact that 20,000 people went missing in Taiwan during this period, the museum still tells a great story. It's great because the story wouldn't exist at all in a place without free speech, such as China.

China has something similar as well, called the Fapiao: http://www.china-briefing.com/news/2013/08/13/understanding-...

Though as I understand it, it requires a dot matrix printer to populate these receipts (or writing them by hand).

Hmm I don't remember receiving many receipts in China. I spent 3 months there over two occasions a couple years ago. Taiwan's implementation appears more successful to me. Fapiao means receipt, so that makes sense. There is some required hardware or software but doesn't seem any more cumbersome than a credit card machine and printer. Nearly every shop has them in TW.

Edit: reading further I see China is rolling out their lottery in more areas the last few years

That's because you have to actively ask for it. If you don't, they never (almost) give it to you, as business buy those fapiaos from gov.

We asked for them quite often and they gave them each time. Total, we won 2 cans of Coke and maybe 10 yuan :)

Fun fact - fapiaos you get might be fake. Once I got fake fapiao, printed from fake printer, in fake taxi. I know it's fake because I tried to validate it online (there's service for that) after I noticed I got fake bill :/

Ah okay. That's not so surprising I guess. Sometimes I feel TW has some advantage over China in being small. Like a startup, it can implement and pivot easily.

Is this game-able by buying lots of things for a penny each from your own store, that kind of thing?

Somewhat but I imagine you'd risk getting caught =)

One thing I wonder is if you have an increased likelihood of winning if you buy more. Does a $1 purchase give you the same chance to win $100 as a $20 purchase? I don't really know. Over 100 receipts you usually win like $5

Make the winnings be a multiplier of the tax paid on the receipt.

Maybe they could make each receipt give you a block of numbers in proportion to how much you spent.

When this kind of tax evasion becomes widespread, that should be a clear indicator that the tax rate is too high.

In a cashless society, it becomes possible (if not inevitable) the enforcement of that taxation will become even more onerous.

$20 from grandma for your birthday? Gift tax.

You and your co-workers decide to split a large lunch? Temporary incorporation tax.

Your friend buys a 50 pack of DVD-Rs and you split them by reimbursing him half of the cost? Sales tax, again.

Sell an old comic book to a friend for more money than you paid for it? Capital gains tax.

Cash acts as an inhibitor to the impulse to tax everything or to tax it too greatly. It's understood that if you make a tax too burdensome, people will avoid and evade it.

> tax rate is too high

It's not that simple. Scandinavia has a higher tax rate than Italy (and Russia), but much less tax evasion.

"Too high" is not an objective measure.

If the people of Scandinavia feel that what they're getting in return is worth it, they'll pay the taxes.

People in Scandinavian countries have a higher amount of trust in their governments too. I'm sure that has a lot to with it.

Someone who believes that their tax money is going to be used for the legitimate(In his or her mind) needs of society has a greater incentive to pay them than the person who believes that their tax money is going to be used to pay kickbacks to the political allies of the people in charge.

Exactly this, trust. People give money to churches willingly when they trust the Church will use those funds to do good work. People pay taxes willingly when they see that they are being spent on things that help the community.

When that trust erodes, through government sinecures and throwing too much money at a brother-in-law's construction firm to build infrastructure, etc. Then people are unwilling to fund that activity and limit their tax payments as much as they can. And when they really lose faith as they did in Greece it seems, well not paying taxes seems to be more common than paying taxes and the whole thing breaks down.

That's wishful thinking. It's really matter of how the culture has evolved.

> In a cashless society, it becomes possible (if not inevitable) the enforcement of that taxation will become even more onerous.


> cost for society

You meant "cost for government," right?

It sounds like the slice of society that gets the cash discount is benefiting greatly from this "hidden economy." Saving 50% on a venue is a big win for the newlywed's pocketbook, leaving more money in their pocket to buy goods for their new household.

True. If you don't believe the government has any role to play in, say, paving roads, maintaining bridges, etc, then there's no "cost for society".

Well, until the bridges start falling down, anyway...

Ah, the tried-and-true roads & bridges argument.

No, I don't believe the government is necessary to do those things.

But if you look at actual government spending, these sorts of infrastructure projects are dwarfed by things like military spending, which could use a reduction.

"No, I don't believe the government is necessary to do those things."

I live on a very long (two miles) private road that I jointly build and maintain with an association, etc. There is no government role whatsoever, and we even have bridges.

So it would appear that my experience validates your libertarian fantasy world. Look - we're actually doing it!

I've got sour news for you. Even a wealthy, well educated collection of fair minded and well intentioned people find it very difficult to maintain a dirt/gravel road to an acceptable condition. It's very difficult and costly. We are right on the edge of success or failure in this maintenance.

Further, if we were to actually pave the road (a true fantasy) it would be completely, totally unthinkable with regard to cost. Asphalt is paid for by the square foot and it isn't cheap. When you drive by a very quick section of asphalt road being resurfaced ... say 200-400 meters or something - very short ... understand that that is millions of dollars in asphalt work. Millions.

Can you build some roads and bridges without the government ? Sure, of course you can. Will they approach, in any category, even the bare minimum acceptable standard that you hold ? No.

Hm. I understood that freeway (one of the most expensive roads in the world) was $1000 per foot. $5M per mile. I would expect asphalt to be much less.

Here's a link: http://www.dot.state.fl.us/planning/policy/costs/costs-D7.pd...

Florida says 2-lane roadway is $3.3M per mile. So a few hundred feed, costing millions? Nonsense.

> So a few hundred feed, costing millions? Nonsense.

1. Your parent actually actively maintains a private road, and has probably done their research...

2. It costs them so much because they just have a single road, so they can't amortize the cost over an entire city or country of roadway. Public utilities tend toward monopoly for exactly this reason -- providing the utility to any small fraction of society is enormously expensive.

Make no mistake, natural monopoly is what happens when you privatize utilities. Ever met a Comcast customer who feels anything short of contempt toward Comcast? Now imagine dealing with Comcast any time you need to drive to the grocery store. Or even leave your house.

3. Parent's numbers actually make sense when compared to Florida's, once you realize Florida has an entire state over which it can amortize costs.

Warm mixed asphalt roads should cost about $1M per mile. It's expensive, but it's not ludicrously expensive. If well done, in a warm environment, of low traffic, no truck levels, then you won't have to repave for upwards of a decade.


Maintenance a private road outside the USA. Labour is cheaper, however, everything else is more expensive so it balances out vs US numbers last time I checked.

(parent here)

Again, I was giving my own anecdotes about my own road, but then mid-comment switched to a hypothetical "stretch of road" that someone might drive by, being maintained, and in my mind I was thinking of a four-lane highway. It was unclear.

I will say, however, that with all due respect - things are more expensive here in California than they are in FL, so while 400 meters of four-lane @ the Florida rate posted above comes out to ~1.2 Million, it's probably a fair amount more in California.

It's expensive.

The Govt doesn't actually pave anything. Roads are a commodity. There are a half-dozen pavers in my small community of 50,000. If the costs are in the $100K per thousand feet, they are that for everybody.

Again, $M for a few hundred feet is nonsense.

Parent said METERS, not feet. So parent is saying maybe 8mil for a mile. Not insane to assume low volume work in a presumably remote area will be double or triple the price that the entire state of Florida can get.

Especially for a previously unpaved roadway with bridges that probably also needs widening, leveling, etc. That isn't patch work cleaning up existing paved road...

The number is high but not unfathomably so...

Anyways, either parent is telling the truth or not. But I find it hard to believe parent helps maintain a 2 mile private road and also you know better than him the cost of paving that particular road.

As has been said, road paving is a commodity business, so the reason why this particular road might be that expensive is probably that it's a remote road on difficult terrain.

Which raises the question: should this very expensive road, which is primarily used by members of this specific and admittedly wealthy community, be subsidized by the rest of (relatively) poor taxpayers of that state?

Yes. That's called infrastructure. Whenever America has 'subsidized' infrastructure, the nation has seen many fold return. Whether it was rural electrification, or secondary roads, or rural mail delivery, having it a given for everybody means anybody can assume a certain level of service. Commerce thrives on that.

I see the level of service argument. But, if an argument applies to roads or mail delivery, or landline phones, why does it not apply to fast internet service or cellular coverage or many other things, which have been doing just fine without centrally funded infrastructure?

Also, shifting the cost of such roads to everyone encourages even more construction in remote areas, which doesn't seem like a good thing to promote...

Ah, cell towers seem to benefit from some govt protection. We live in the country. The cell companies have to find land to place their towers on. They make an argument that, for emergency services, they're required to build the towers. So its inevitable, and we've just got to decide where they go up. Not whether they go up.

And actually, here in the country, there are many cell networks that do very poorly. Houses still have land lines mostly because connectivity can be very spotty. A govt-mandated tower utility would help that.

Lastly, its not about subsidizing. E.g. REC was not subsidized, just a protected class of business that was mandated to provide service to everyone in their area. Subscribers pay the whole freight. Its like insurance; those near the generation plant are kind of subsidizing those far away, but everybody gets service.

(parent here)

"Florida says 2-lane roadway is $3.3M per mile. So a few hundred feed, costing millions? Nonsense."

I was thinking of a stretch of highway or freeway - four lanes - when I asked the reader to "think of a stretch of road being worked on". Sorry - wasn't clear.

Also, I was measuring in meters. So, 400 meters of four-lane @ 6.6M per mile ... that's ~1.2M, give or take.

It's expensive.

> It's very difficult and costly. We are right on the edge of success or failure in this maintenance. Further, if we were to actually pave the road (a true fantasy) it would be completely, totally unthinkable with regard to cost. Asphalt is paid for by the square foot and it isn't cheap. When you drive by a very quick section of asphalt road being resurfaced ... say 200-400 meters or something - very short ... understand that that is millions of dollars in asphalt work. Millions. Can you build some roads and bridges without the government ? Sure, of course you can. Will they approach, in any category, even the bare minimum acceptable standard that you hold ? No.

1) If it's expensive to do for the private sector, it's expensive to do for the government, no part of the cost equation changes.

2) It only seems "cheaper" b/c the private sector would have to ask for money by providing enough value enough for you to part with your money, while government doesn't, and raises money by pointing guns at people. However, to avoid the free-rider problem, you can use assurance contracts to raise the construction money and tolls to pay for maintenance, similar to what governments would do anyways.

3) American infrastructure was rated a D+ by the ASCE, so in what way is having government the sole provider of infrastructure a guarantee of quality?

4) slightly unrelated, but do you really think we'd have the same level of urban sprawl, needing a car to get anywhere in suburbia and such a heavy reliance on fossil fuels if roads were built through market forces rather than government subsidy?

> 3) American infrastructure was rated a D+ by the ASCE, so in what way is having government the sole provider of infrastructure a guarantee of quality?

The same thing is true in most other parts of the world (i.e. who is financially responsible for building and maintaining the roads). In general you will find that the milder the climate is, the nicer the roads are.

> 4) slightly unrelated, but do you really think we'd have the same level of urban sprawl, needing a car to get anywhere in suburbia and such a heavy reliance on fossil fuels if roads were built through market forces rather than government subsidy?

It is already mostly financed through market forces by local governments and via various use taxes (e.g. fuel tax, property tax, etc)

Let's keep in mind we're talking about Italy here. So the knee-jerk "BUT DRONES" response is probably less accurate than if we were talking about the US or the UK or something.

Yes, let's indeed keep in mind that we're talking about Italy here.


No one takes this argument seriously because the people who use that argument usually want the government to do so much that roads are tiny fraction of what they do, or in a lot of cases, are outright hostile to roads altogether.

Roads and bridges are fine. 700 hammers for the military maybe not.

I worked as project manager for a contractor doing public works at one point. The government (at least in the US and probably everywhere) wastes a staggering amount of money.

Not saying the government doesn't need funding. They do. But they could certainly do a lot more with less.

They need better internal auditors. If you just cut their budget alone, it doesn't decrease waste or fraud. To change the percentage of waste requires accountability for wasting.

And the accountability ends up causing waste. A basic example I've given before is when you can't go and buy the cheapest thing because you have to prove it is the cheapest thing, which you can't do without a review (because people abused this is the past). The end result is that the cost to approve the cheapest option is so high you stick with a more expensive option that is overall worse, but currently considered the best.

Imagine a programmer who has to document what they do every quarter hour of their work day to ensure accountability to auditors looking to reduce waste. They end up wasting more time documenting what they do than you end up saving.

Accountability must come from outside government for it to be effective.

Not necessarily, you just need the internal auditors to have independence and the right incentives.

And actually-enforced penalties for individuals in government who stonewall the auditors because they know an honest auditor would want to reduce their budget.

Also I absolutely hate how people think cutting government income is a good way to cut wasteful spending because it is immediately obvious it doesn't work. It can't work.

We cheered when that scumbag Reagan talked about starving the beast. It was clear that even George HW Bush, Reagan's running mate knew it was a stupid idea. The problem that neocons won't talk about is that we don't have a single preferential way of allocating budget. Imagine we shrunk government income by one trillion dollars. That's the easy part but where will we cut our expenses? We haven't dealt with the difficult problem at all.

Remember that every dollar "wasted" goes to someone. If they are loud and influential, they will probably get to keep their money/credit. So basically the rebalancing brought upon by starving the beast is nothing more than a cash grab by the more powerful more influential over those less so.

I invite anyone who talks about cutting taxes to first come up with a plan to cut government spending. If the spending cut is palatable and can survive the mobs, I am in favor of starving our babies to cut taxes for the wealthy. But we can't put the cart before the horse. No new tax cuts without at least a matching spending cut that we can keep for at least a decade or so.

"we don't have a single preferential way of allocating budget." That's a very charitable way of saying there are no priorities in Washington and there never will be.

I don't mind discussions of cutting the federal government drastically even with overblown threats of riots and unrest. Why continue to prop up a federal system that was never designed to scale up to the size it is and that is out of control? It can't be fixed by any amount of tinkering so just let it collapse back to the original limited powers concept.

U.S. state and local governments do a much better job spending taxpayer money, just revert all these poorly run federal agencies and programs back to the state level.

A major issue here is income inequality. I understand that a part of me says "well, what's wrong with differences in the quality of life between someone living in some town in state A and someone else living in some town in state B.

We can talk about our successes with independent school districts where communities proudly fund their own schools with taxes at rates that they think are the best. Or take local police and EMS or local utilities for that matter. It is glorious when it works as it creates a sense of ownership and responsibility towards a community resource.

I agree with you in broad strokes that we can and should support devolution. However, I assert that we should not do this because our federal government was not "designed" to do this but because it is the right thing to do and it is in all our best interest to do it. We should not do something or avoid doing something based solely on what the system was "designed" to do. We should be willing to make changes to the system as we learn new things. I cringe on the amount of reverence with which we hold our founding fathers. The United States is a well recognized nation throughout the world and we do not need this crutch. (:

It's not a crutch. Separation of powers is a desirable thing because it tries to prevent the concentration of too much power in a body, group, or person. The Bill of Rights and constitution specifically LIMITS the powers of the federal government. America is an experiment in government that is no longer running, but its edifice is still there - which does not scale because it was designed _not to_.

Any power or service the federal government was not designed to own is reserved for the individual states. All the wealth transfer programs, pension plans, and public services we have now federally can be delivered by the states. So yes, there is a "design" there, we're just not adhering to it.

And when it all reverts to the states, then we can have real fights over what's the "right thing" for the state to do and where the dollars go.

The problem with doing income redistribution at the state level is that citizenship is at the federal level. If Ohio decides to have a state welfare system and Michigan doesn't, Michigan's poor move to Ohio and the system collapses.

A good solution would be to create a universal basic income at the federal level funded by a no-exceptions flat tax on consumption, which keeps the federal government simple, and then let the states do everything else.

And having welfare programs in today's America draws the poor from other countries. Not sure how what you're describing is any different, just a different scale. Every year around springtime, hundreds of homeless will literally start a trek from Portland OR to Berkeley CA to get enrolled in their generous welfare programs. What you describe happens already.

You can believe that churches and governments can easily match and surpass whatever the federal government can dish out once economic power reverts to the States.

> And having welfare programs in today's America draws the poor from other countries. Not sure how what you're describing is any different, just a different scale.

The difference is, as already mentioned, citizenship. The US is under no obligation to provide welfare benefits to foreign nationals or grant them citizenship. US states have no equivalent way to prevent low income US citizens from moving there and claiming benefits.

> Every year around springtime, hundreds of homeless will literally start a trek from Portland OR to Berkeley CA to get enrolled in their generous welfare programs. What you describe happens already.

How is the fact that it actually happens supposed to disprove it?

I was just trying to allay your fears of invading hordes seeking the heavy train of benefit heavy states. Such migrations happen today, legal and not. A lot of business owners profit off of the illegals, whose presence is subsidized by government. Very wicked little underclass we maintain, not quite slavery in modern times, but still...

Perhaps when the States have to administer their own welfare programs, it will no longer be profitable for the individual states to shoulder the burdens of hosting the underclasses when neighboring states will not. Sanity might return to the immigration debate, it could be a really good thing.

> Perhaps when the States have to administer their own welfare programs, it will no longer be profitable for the individual states to shoulder the burdens of hosting the underclasses when neighboring states will not.

That was kind of my point. It isn't profitable already. Increasing the magnitude would make it unsustainable. There just wouldn't be any states offering the same level of welfare programs as the federal government currently does.

> Sanity might return to the immigration debate, it could be a really good thing.

Federal universal basic income to all citizens as a replacement for existing welfare would do the same thing. Immigrants who cut the line wouldn't get it (and all the other welfare programs would be gone), which would make living here too hard to be worth breaking the law. Then we could correspondingly increase the number of legal immigrants we accept because we'll have more capacity to integrate new legal immigrants without the people who cut the line.

> It isn't profitable already.

No? I'm glad you caught that. Illegal immigration IS profitable, that's why it continues to happen. The advocates seem to cross political lines too, everyone must be profiting from cheap labor.

I love unsustainable pants-on-fire arguments like this. Any country or state that is being overrun in a truly unsustainable way either ejects the invaders (or does worse to them) or ends up conquered.

> Federal universal basic income

It's fun to imagine how one would tinker with the system, but you're just rearranging the deck chairs on the titanic.

I love the idea of a no-exceptions flat tax on consumption. However, our GDP per capita is only about 53k. If we need to extract about $6.3k (a number I pulled out of my ass - this is about the current IRS standard deduction and is about $500 per month), we'd need about a 12% tax on every single financial transaction.

I am afraid this 12% tax will drive a lot of our economy underground forcing us to raise rates. How do we prevent that from happening?


VAT is the usual way. The total tax ends up being 12% (or whatever), but it ends up being a much smaller percentage of the total price at each stage because it's collected throughout the supply chain. And then business customers want to make sure the tax is being collected because they can't deduct the already-paid tax when the item is resold if it wasn't reported by the seller.

How does vat work in other countries? Is it one rate across the country? Do provinces and local government get any of this money? Are they banned from imposing an additional sales tax? I'd think you don't want additional sales tax if you have vat but then you'd lose some revenue for local government.

The simplest way to do it would be to add e.g. 8% to the VAT and then give that part to the state where the buyer lives to use for whatever they like. But there is no inherent reason why states couldn't keep their existing sales tax instead. I mean you never want additional any tax, but the money has to come from somewhere.

Well, it's also a cost for private society:

Imagine you're an IT contractor that needs to bill international customers for your services. In Italy you have to pay very high taxes since being an independent worker you fall in the same category of those who can easily dodge taxes although you're not in exactly the same position: the government treats you as a thief by default and puts you up to a taxation level that makes sense only once that it's assumed that you will only declare about half of your revenue.

This is actually a big problem and has severe repercussions on the ability to spawn new businesses in Italy.

> You meant "cost for government," right?

Well, depends on if you want a government capable of affording to pay for public education, roads, military, etc.

I mean if you care about none of these things and want the government completely destroyed, a 50% revenue cut might seem okay to you.

Of course I care about those things. I simply think that government is not required to provide them.

Sounds good in theory, but practice that's silly. No business buys $5 billion bridges, like the new one being built now in NY cruising the Hudson. No business buys $5 billion airports, like Denver International, and the latest estimate to renovate LaGuardia. That requires a sovereign to borrow that much money in a way that lenders trust will be repaid.

If you want to argue governments act in part to facilitate waste and fraud, i.e. those airports and bridges don't really cost that much, I agree, but unless there's aggressive auditing attached to every project, I see no way around it. Enough people are sufficiently dishonest and greedy they will take if they can get away with it.

So who provides them if the government does not without falling into the tragedy of the commons and/or cutting off the poor from access to such services?

James Tooley has done fascinating work on private education for the poor around the world, putting the lie to the myths that private education is only for the wealthy and that the government must provide education.

There is an excellent EconTalk expisode[1] with Tooley, as well as a lengthy article here[2] by the author.

[1] http://www.econtalk.org/archives/2014/12/james_tooley_on.htm...

[2] http://educationnext.org/privateschoolsforthepoor/

1) What does that have to do with roads, military, etc?

2) His argument still would fundamentally function as a regressive tax burden greater than the existing tax burden [for education] on the poor.

3) A fee-for-service regressive tax burden will ultimately cut the poor off from services.

> With a minimum wage of about $33 per month in the area, monthly fees in the private unrecognized schools are thus about 12 percent of the average monthly earnings of an adult earner.

You do understand in the US the poor aren't paying 12% of their income to send their kids to school right?



The full federal tax burden for education, infrastructure, etc. on the poor is ~3%.


If you factor in the state-and-local burden, the full burden is barely higher at ~13%. So for literally one service, the cost is nearly the entire tax burden for the poor.

So the math in play here is "what are public goods? non-rival and non-excludable.

There! Done in one :)

You can't have "privacy, but".

Either you have privacy and accept that sometimes, some people are going to use that privacy to commit crimes (such as dodging taxes), or you don't have privacy. If there can be an exception to privacy because tax, then there can also be an exception to privacy because terrorism.

Yes. But our society have had so much freedom for so long they can't imagine that they need to make an active effort so that it remains that way. It's not limited to freedom. Ecology is the same. Resource managment is the same. Weigh loss is the same.

When one is quite ok right now and that he/she needs to spend energy and think, and take responsability, for what's going to happen way later, it's rarely done.

So "privacy but" are going to win. Because it takes thinking and effort to fight it. And what for? Righ now, i'm alrigh.

Lets put that theory to the test, lets imagine a world where each transaction is added to companies and private citizens total tax record, and then all details are imminently deleted. At the end of the day, you get the same total sums as if you had all the individual transactions, but you can't derive any additional information. Would this be an acceptable deal for introducing a cashless society? My conclusions is that the banks would not accept it, and the government would not accept it. By default, cash would thus continue.

Banks would not accept this deal, as they need the customer data for data analyzes and market research. It is also a resource to be sold in some places or to be "shared" by "partners" like insurance companies and marketing firms.

Government would not accept it, since if the tax department get this then a dozen other department also want it. Police, secret police, and prosecutors want to dig for dirt, and has a long history of ignoring anything that would benefit a defense. Social security want to dig through it in order to skip doing a real assessment of a person (having dept is a good sign, and a buffer is a sign that the person should be denied help). Political parties and political research wants to analyze it and draw conclusions without having to talk to people and do polls.

I do not want someone else to analyze my transaction, and if they have to, I want safeguards that prevent incorrect conclusions to be drawn. As it stand, there isn't any, and its barely even recognized that I am a stake holder with any rights over the data.

Exactly the same thing happens in Greece. It used to be very common for shop-owners to "forget" to give you the receipt. After the crisis broke up though people are way more likely to ask for receipts as there are some incentives to do so (minor tax cuts for a specific amount of receipts etc.). Credit/debit card transactions have also tripled since 2008 or so which is good I guess. Things are different with doctors, lawyers etc. though, since virtually noone accepts cards and sometimes you might even need to argue with them to actually print you one. Thus you have some ridiculous incidents of doctors with apparent annual income of 9000 euros which is ridiculously low even for lower class standards. It's getting better, but it's a whole culture that needs to change for these incidents to cease. People using credit/debit cards is a step to the correct direction. In our case a cashless world might even be good.

Does the government not prosecute obvious cases of tax evasion (9000 euros example)? That's what would likely happen in the U.S.

It should but it doesn't (or didn't). Up to recently there was practically no investigation on such cases and tax evasion on such circles was rampant. You drive a BMW, run a private clinic in an expensive area in Athens and your annual income is 10k euros. That's OK, I mean why would you lie to me? OK, I'm probably exaggerating but you get an idea. Since 2013 or so there is some effort to audit professionals with such declared incomes but it is practically impossible to check a backlog of 20+ years of cases especially with the glacial pace that the revenue services move.

Skipping taxes and using cash is only a problem if it's too widespread and the government really has genuine trouble collecting money even for the most basic needs of the society. Luckily, using cash to evade taxes is practically only possible for small entrepreneurs who can manage maintaining both the real income flow and the official income flow, and these people are also those who benefit from it the most.

It's the big businesses who practically need to log all sales and transactions by the book. Companies which have lots of employees and locations can't possibly maintain such double books in practice, not to mention keep it secret. (They can try smart "tax planning" via remote jurisdictions and tax havens though, which on the other hand isn't generally available for the local entrepreneurs.)

However, if you buy a lunch or pay your barber with cash, is it right that he gets your cash and the government gets nothing? Wrong. The minute the bistro owner or barber goes buy food from a chain store or fills up at the petrol station, VAT and other taxes will be paid and the money will re-enter the official circulation.

At best the money will bounce a few times between a few local entrepreneurs until it eventually becomes taxed again. How much effort is worth spending trying to chase these pennies?

What if efficient taxation reduces the amount of transactions? This happens all the time, and then both the tax man and the entrepreneurs lose.

What if all that unaccounted local cash flow actually lubricates the economy, making better and more efficient use of money, and thus generates larger total taxable flow of money?

The percentage of untaxed cash flow also serves as an indicator of how aligned people are with the government taxation level. If people are willing to make lengthy efforts to avoid taxes repeatedly, then maybe taxes are too high. If they only do it when it's convenient or for local shops, then maybe everything is close to fine.

It's not so black and white whether it's a "huge cost for society" as it's also "beneficial to society". The question is about trade-offs which need to be balanced, not overruled.

The downside is not simply in the value of the missed taxes; it's the fact that the best business is now determined by tax evasion capability.

Instead of "the most dominant market players are the ones with the best products", we get "the most dominant market players are the ones who have some combined aptitude in product value and tax evasion". That is, some resources are wastefully diverted to tax evasion instead of to making better products.

A smart dude who could have been working towards self driving cars is instead finding ever-cleverer ways to hide money or game the tax code.

Ok, so that gives us two options:

1) make taxes impossible to avoid. Problem: tax code is written not by the few tax-evading small businesses, but by the many tax-evading large businesses, who won't be spending less on getting loophole-filled laws written. So this plan won't work.

2) force people to pay less taxes, such that they cost of evading is higher than the cost of paying them.

There's a super easy fix for that, if the people have the will to demand it: require receipts for all transactions, allow consumers to report business who do not give receipts, and have large fines for businesses who still don't. Offer cash rewards to consumers who report businesses that are repeat offenders.

> if the people have the will to demand it

I think Mitch Hedberg put it best: I give you a dollar, you give me a donut. End of transaction.

What's a consumer's interest in asking for a receipt? Especially when you can get a discount instead?

>What's a consumer's interest in asking for a receipt? Especially when you can get a discount instead?

Because some people need an alibi. Patrice Oneal put it best: https://youtu.be/RrBPmoIAyts?t=100

> require receipts for all transactions, allow consumers to report business who do not give receipts

You incentivize compliance through monetary awards for reporting offenders.

So I guess I'm curious about how Italy's system works then? It's an empirical question, how much money would I have to be offered to turn on a system of convenience and perhaps monetary discounts? (I'm not considering the downside of off the book transactions as a consumer, I realize).

I'm assuming for it to work in Italy, you would have to make the reward for reporting non-compliance higher than any discount a business owner could offer.

It would presumably need to be several orders of magnitude higher as I would probably buy more donuts than I would submit non-compliance reports. And let's not forget it's the government that's running this - they don't necessarily need to turn a huge (or any) profit to make this work in the long term.

  Donut with receipt:    $  1.49
  Donut without receipt: $  1.00

  Taxable reward from
  gov't for reporting
  non-compliance:        $500.00

The government would also have to worry very little about profit because the fine for not giving customers receipts could be higher than the reward for reporting non-compliance, which makes the system self-funding.

If I find dead insects in my donut, I'd like to have evidence that I actually bought a donut from them.

What are you going to do with that evidence that walking back to the shop won't accomplish? If I'm too far away, I'll throw the donut in the trash. If I'm nearby with nothing better to do, I'll stop back and ask for a refund.

Nothing about that practically requires a receipt. If I'm denied a refund when I go back with an insect-laden donut, I can make enough ruckus in the shop to get my entertainment value's worth. I don't really need the $0.75 anymore than I need the donut...

Actually I would send it and a photo of the donut to the local health and safety regulators. I don't care about how much I spent; I care about not having it happen again.

"There's a super easy fix for that, if the people have the will to demand it: require receipts for all transactions, allow consumers to report business who do not give receipts, and have large fines for businesses who still don't. Offer cash rewards to consumers who report businesses that are repeat offenders."

This already exists and is in wide use in China. It's quite interesting.

If you go to a restaurant in Shenzhen, for instance, you are issued a stack of scrip whose denomination matches (to the nearest ten, IIRC) your total bill.

Those little paper slips are lottery tickets which award real cash prizes:


Italy does that. You are fined if you cannot show a receipt as a customer. People still want discounts.

> You are fined if you cannot show a receipt as a customer.

Italy fines the customer rather than the shop keeper, or did I misunderstand what you said?

> Here in Italy the big issue is that many business will just not declare cash transactions. It's pretty common not to be given a receipt when buying a coffee and often when you visit a doctor they'll say: do you want the invoice or a discount?

1) Require receipts for all transactions.

2) Offer 10% of recovered cash for anyone you report who doesn't follow #1. Add the penalty on top of any recovery [e.g. Current Fines + 10%]

3) https://www.irs.gov/pub/irs-utl/cashchapter4_210632.pdf

4) Taiwan-style receipt lottery [ http://www.tealit.com/article_categories.php?section=living&... ]

Portugal has implemented 4) a couple years ago.

It seems to me the most unscrupulous businesses in the United States all do their business by the books. No need to fudge it by failing to declare revenue. They just don't pay taxes, and it's all legal.

Cash businesses here do exist. My mechanic only takes cash, and he's a lot cheaper (and, incidentally, better and more honest with his customers) than other mechanics I've dealt with. I wonder how the IRS deals with that. I know that with people who get tips (waiters, hairdressers, etc.) they assume a certain percentage of income from cash tips.

So what is it then that makes this kind of fraud common in Southern Europe but practically nonexistent in Germany? (judging from my experience)

It's that nebulous thing called "cultural factors".

There are two stable equilibrium points in a society, one where most people play by the rules most of the time and one where most people ignore the rules most of the time. It's quite difficult to shift from the latter to the former; it seems to be historically associated with Protestantism, which itself could be seen as a movement to ""clean up"" religion from corruption.

Read Tacitus' writings on Germania. While the Mediterranean and Near Eastern peoples were issuing violently long-winded, and ultimately hollow, discourses on the subject of ethics, Northern peoples were holding to faithfully monogamous marriages and living in small communities in comparative peace. What the Southern peoples preached the Northern peoples lived.

Yeah lets look back to a 2000 year old mistly fantasy document that romans used to moralise their own society for our own explaitions. That seems like a great idea. Its not like that line of thought ever had bad consequences.

I'm going to treat this like a real comment instead of a sarcastic quip.

The reason we go back to '2000 year old [not sure if 'misty' or 'mostly', both work in interestingly different ways] fantasy document[s]' is because there are universal truths about the human condition. The value of a statement is not in its newness or its antiquity; it lies in the truth of the thing being said. Brashly rejecting an idea because it is old has the same merit as rejecting an idea because it came from a woman - that is to say, none.

There will always be ways to evade taxes and the problem with Italy, Greece and other southern societies is not technical but a weak government which can't impose the already existing laws to their citizens, public workers and politicians themselves. Going cashless is not an excuse for an incompetent tax office and Ministry of Finance.

I don't know for Italy, but in France, you litteraly can't start most business without doing 20% of your money off black market.

Once you are big enough, it gets easier and you can go full legal, but to start, it's terrible.

There will always be ways to evade taxes, but the harder we make it the less tax evasion there will be.

You could also say "there will always be crime, but the harder we make it the less there will be."

Technically true but useless for evaluating the cost/benefit of any specific proposal. If the question is, is it worth pervasive mass surveillance, the answer is no.

>>let's remember that this kind of hidden economy has a huge cost for society and it's very widespread in southern Europe.

Any where, where there are cash transactions this is an issue. In India, apart from salaried people taxed at source almost anybody else rarely if ever pays taxes. Its assumed taxes are only what stupid people pay.

And since they make up for a huge vote bank, any move to introduce reforms for cashless payments are resisted. Plus contribution to political parties happens in cash so politicians themselves don't want it.

This leads to a situation where the tax burden is expected to be endlessly on the salaried middle class and they are expected to pay up unfairly all the time.

Privacy aside, the true reason is people just don't want to pay taxes.

Mostly I think that peoples support for paying taxes is proportional to the perceived value they receive from them, and how fairly they are being applied (c.f. Denmark vs. USA - and note that "perceived" is important, and subject to manipulation)

I don't know the details, but plausibly could you argue that India's real problem lies in government inefficiency and/or corruption?

>>plausibly could you argue that India's real problem lies in government inefficiency and/or corruption?

Your are assuming corruption is an phenomenon that is generated in total isolation without other factors contributing to it.

Both government inefficiency and corruption have roots in lack of accountability.

I suspect you can chase the turtles down quite a ways - and I already specified I don't know the details.

It wasn't really about India but about the idea that people somehow inherently dislike paying taxes, rather than feel like they are getting ripped off when paying them. It's a complex issue regardless of the country and culture.

> has a huge cost for society

Has a huge cost for the government, yes, but whether or not its a cost to society depends on the marginal benefit of the government having that dollar, vs the marginal benefit of keeping that dollar in public hands.

A corrupt government would be the extreme case of where that dollar is likely best kept from the tax man, but this is far from exclusive to corrupt governments.

This is exactly what happened to Greece (my in-laws are Greek). Greeks and Greek Americans are completely cash based. Consequently the government has no idea how wealthy its residents are and tax evasion is extremely rampant. I'm sure that isn't the only reason to Greece's problems but I bet it did have a huge impact.

>>I'm sure that isn't the only reason to Greece's problems but I bet it did have a huge impact.

These sort of problems run quite deep and have unintended consequences.

If money is not traceable, you also give way accountability. Opening up a door for corruption to happen easily, unchecked and unaccounted for. Rinse - Repeat for some time and you will see there are new problems due to corruption, which breed other new problems and so on..

And what about people who are only paid under the table, and the people who employ them? I'm thinking of day laborers. Regardless of anyone's legal circumstance they need to eat; under the table work serves as a safety net, regardless of the tax issues.

I don't think we have to go that far south to see these things happening. Here in Amsterdam the other day went to pick up the car from the garage I was amazed when the guy told me that I had to fork out 700 EUR cash only.

In Brazil this practice is also pretty common.

The more untrustworthy/incompetent/reckless the government is handling taxpayers' money, the more often one sees this kind of behaviour.

That are mostly the smaller companies (at least in Germany). The bigger corporations also avoid taxes, but the legal way and with electronic transactions.

First politics should do something about this!

That's not uncommon in the USA either. Restaurants, salons, convenience stores. All businesses that deal with a lot of cash and you can easily hide income from.

Why is this phenomena a cost to society? By this phenomena, real prices are able to decrease, with all the concomitant benefits of having reduced expenses.

Almost all Euro govts have >100% of their country's total revenue in debt. If prices were to go down, they're completely screwed. If prices go down because you starve the government's income ... that's incredibly bad for them.

(when prices go down you have to pay a bigger percentage of your income to serve the same debt)

I've been "cash only" for 8 months now and I love it. Of course I need a credit card if I buy something on Amazon or a one-off web store, but the point is to move as many transactions offline as possible.

There are so many privacy benefits to using cash, but one that really resonates with me is the physical nature of it. When you pay for something with cash, you can feel the transaction of money exchanging hands and it can have a psychological effect to prevent frivolous spending. Or at the very least, further reinforce that YES we are spending money!

Also, store clerks, cab drivers, any anyone who accepts tips always love getting cash.

Funnily enough, I'm the exact opposite. Mentally, money in my account is "my money". Cash I've withdrawn feels like already-spent money. Since it's unaccountable, I tend to spend it more frivolously. Might be a generation-to-generation thing.

I'm definitely the same here. Taking cash out at an ATM feels the same as spending it. It's spent money to me.

> Since it's unaccountable, I tend to spend it more frivolously.

Which is fine!

Here's what you do: allot a certain amount of cash to discretionary expenses each month. You take that money out at the beginning of each month (actually in my case, twice a month) and then use it. And when you run out you're out.

What you've just done is used physical cash to put a hard ceiling on your discretionary spending. This turns what are normally variable expenses into a fixed item in your budget, which makes it a heck of a lot easier to account for.

This is also called "budgeting"

I appreciate your deeply insightful comment. Thank you for your service.

Yep, I share your same mindset. Whenever I take money out of the ATM I typically only take what I need right now because once it's in my wallet it's already spent.

Same effect, different reason.

Once it's in my wallet, it's already spent by my spouse.

I might actually spend as much as 10% of my cash withdrawals myself. I can reliably keep a single $10 bill in there, as the "didn't want to clean you out"-based guilt prevents the very last note in there from being taken.

Of course, now the spouse just takes the debit card from my wallet instead, so I might have to start keeping more cash in there, in case I go to pay for something one day and it's not there.

My first real job & paycheck was an internship in Tokyo. Since Japan is very cash-based, and I only had a savings account (and wasn't sure what the limit on transactions was, if any), I would withdraw my spending money /for the month/ and avoid going to the ATM as much as possible.

It definitely formed a different attitude towards cash then I feel I otherwise would have got. The money I have left in my wallet feels like all I have this month, and as the bills disappear I really feel the spending. I feel spending from my bank account much less.

I never realized this, but I do this too.

I think the mentality comes from using your bank's website/mint/etc to track your spending. Anything done with a card becomes a specific line item staring you in the face; cash, however, just falls into "miscellaneous".

Or even better on the frivolous spending, the "I don't have enough on me right now" situation. If it's really important, you'll come back. If you need to trim your purchase from the grocery store to match what's in your wallet, the stuff you didn't really need factors in.

It makes you MUCH more conscious of how much things cost because you don't want to get to the checkout and be short.

>I don't have enough on me right now

Yeah I remember that situation. I accidentally left my card at home. I didn't have lunch that day and I barely managed to drive home with an almost empty fuel tank.

To me looking at the balance on my phone is far quicker than counting all the damn coins. 1 cent coins are such a huge annoyance that I'd rather throw them into the trash than actually pay with them.

On the plus side, using a card gives you a good list so you can see what you've spent. This makes accounting simpler than using a cash book and accumulating receipts.

On the minus side, I use contactless ("wave to pay") all the time now, and find I rarely look to see how much I'm spending on small transactions. Even with larger transactions, it doesn't feel like "real money".

I think it's the opposite for me, using cash makes it way easier to get an idea of how much I spend. I use the ATM three times per month with 100 pounds each so 300 pound/month in normal expenses. With card I would need to to an addition of everything per month.

My credit card bill this month is £500, That seems easier than "i had n trips to the ATM plus I think I had £30 in my wallet from last month and I got £25 from donna for the booze we bought in France over the summer"?

Not only that, I can download a monthly spreadsheet of all my transactions, pivot them into a simple table and so on and so forth. Data out the wazoo. £105 a month on tube fares. £235 a month on lunch. £17 on fuel. Knowing where I spent it is as useful if not more so than how much I spent in total.

Then of course there is the free money I get from spending on a card. It all seems like a no brainer. And I never need to go to an ATM. And most the time I just lean my wallet against a card reader and mosey onwards.

I'm not sold.

My bank (Danske Bank) even does that for me. When I log in, it shows a bar chart of spending categorized for the previous 30 days (housing, transport, food etc).

Changing the range changes what transactions are summarized, and what transactions are shown in detail below the graph. Clicking a graph category further filters and shows the transactions that match, with the graph changing to more specific sub-categories (rent, water, electricity etc if I click housing).

The categories are set automatically, but can be overridden or a transaction can be divided between several, and that remembered for future transactions.

I'm impressed that a bank produced this system!

I wish a UK bank did that! (Maybe one does, but I haven't heard about it....)

True, but when the time comes where you need to cut expenses for some reason, do you know where that 300 pounds is going? That is the advantage he was getting at.

I download my transactions weekly from my CC company and can easily see I've been spending way too much money eating out the past two months.

> On the plus side, using a card gives --you-- everyone a good list so you can see what you've spent


The modern world seems to be one in which business, governments, and hackers know exactly what we are doing.

True ;-)

There are so many privacy benefits to using cash

I like to use cash a lot too. And the privacy benefits are true sometimes, but more and more places want your information when you purchase anything. I bought a weed wacker the other day and they wanted my address and phone and email. I never say no, but instead reply with, "555 Fake Street" which is obnoxious, but its like you don't need my damn address to sell me lawn equipment. Amazingly, most people dont understand why anyone would give false information to a random business.

How many people use 555-areacode-1212 for loyalty card search at the cash register? It's an offline equivalent of bugmenot.

<areacode>-555-1212 is the correct order.

Similar for me, but I resisted using cards in real life from the beginning. I use them exclusively for internet transactions. I just don't like the idea of giving up a freedom of anonymity, yet I notice others are seemingly jumping at the chance.

I'm not sure what I would do if I lived in a city where electronic transactions are a requirement for public transport. I guess I would walk as much as possible... or even move to an alternative place.

    I'm not sure what I would do if I lived in a city
    where electronic transactions are a requirement for
    public transport.
Step into my office ;) There are many things you can do, walking is the best one. You can pay for Metrocards in NYC with cash though. The machines still accept them.

> We already live in a world that is, as far as the > distribution of wealth is concerned, about as unequal > as it gets. It may even be as unequal as it’s ever been.

Sure, if by "a world" you mean "a hyper-prosperous nation like the US or the UK"... and if by "unequal as it's ever been" you mean that third-world countries are taking our jobs and becoming much more prosperous, hitting our middle income brackets - the global 2% - harder than anyone else.

If you really mean globally, then inequality is in fact falling.

But sure, yes, the "cashless" ideas going around today are just a way for the government to enforce surveillance and steal away citizens' money with negative interest rates.

> If you really mean globally, then inequality is in fact falling.


Inequality is decreasing between nations as the developing world catches up with the west. But inequality within nations -- even developing nations -- is increasing. It's possible for inequality to increase as the the developing world catches up to the west; in fact, that's exactly what's happening.

So the old geographical distributions are very slowly eroding, but they are being replaced by obscene levels of inequality within individual borders. This trend is exacerbated -- especially in Europe -- by tax evasion and avoidance managed (and practiced) by large fintech companies. So the author's fear that concentrating power in the hands of a few large fintech firms would exacerbate global inequality -- and lessen nation states' ability to combat inequality with policy -- is well-founded in global trends.

edit: Instead of downvoting, go read François Bourguignon's "Inequality and Globalization: How the Rich Get Richer as the Poor Catch Up", which states exactly the thesis outlined above and contains pointers to the data sets used to arrive at these conclusions.

Exactly. On a global scale, the very poor are getting richer, but so are the very rich, while the middle-classes are getting (relatively) poorer. If you are middle-income (somewhere between $10K and $1M), then the probability that your children will be relatively better off than you is falling.

See https://publications.credit-suisse.com/tasks/render/file/?fi... - p35 is particularly relevant in this conversation.

> If you are middle-income (somewhere between $10K and $1M), then the probability that your children will be relatively better off than you is falling.

The charts you reference are for wealth, not income. The chart on page 36 suggests about a 1/8 chance for a reduction in pyramid tier and about a 48% chance for an increase in tier. (Now, that's also a blended chart, but I don't see anything particularly dire in that data for North Americans.)

False. You kids might not make as much money but in realty their living standards jave grown quite a bit.

I think this is pretty debatable, at least in the US.

Being born during the middle or late-middle of the 20th century was extremely lucky if you managed to stay out of manufacturing and could put your retirement into funds that came close to matching public markets. A lot of people doubt we'll ever see that kind of economic growth in the first half of the 21st century.

Don't under-estimate the impact of three-four decades of financially comfortable retirement on "living standards".

> and lessen nation states' ability to combat inequality with policy

Ok, one person is a great programmer making good money and another person is not interested in any of that and makes less money. I do not see any inequality here that needs to be combated with policy. One possible result of such policy would be that both will turn out to be less interested.

You cannot turn the losers into winners, but you can certainly alienate the surviving winners and convince them to build their next factory in China instead, or do their next startup from a beach in the Philippines.

Instead of reducing inequality, the outcome will become very biased by profits made in China or the Philippines, and therefore lead to even more inequality. Lather, rinse, repeat.

At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter. Your policy will obviously not outsmart them. Therefore, if your policy has any effect, it will inevitably be exactly the opposite of what it was meant to be.

> At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter

Quite a bit is also caused by the undue influence rich people have over the policy-making process, helping them to ensure they remain rich by constructing 'glass ceilings'. Saying "well unless we give in to their demands otherwise they'll take our jobs to China" is simply not a good enough response.

As a middle-income web developer in the UK, I have more in common with a middle-income web developer in Bangalore or Shanghai than I do with a multi-millionaire in London or California.

> quite a bit of inequality is caused by the fact that some people happen to be smarter

Why does someone deserve to have a worse life because they weren't born that smart? Why do they deserve to be uncertain how they'll be able to pay medical bills, unable to send their children to great schools, and unable to afford healthy food?

In theory, "meritocracy" only favors the lucky -- for example, those born with a love of programming in the year 1985. In practice, "meritocracy" doesn't exist and never has.

I hope that globalization isn't inconsistent with national autonomy, especially when it comes to taxation and social policy. If these two things are inconsistent, then globalization will lose out in the long run. That would be a shame, because liberalized borders and economies -- if properly regulated -- would benefit everyone.

> One possible result of such policy would be that both will turn out to be less interested.

Tax rates on the top 1% or 0.5% of earners could double over-night and those people would still have more than enough money to make their effort worth-while. We are literally talking about people who have more money than the can possibly spend on personal luxuries in their lifetime.

At some point far before the 1% mark, wealth accumulation becomes much more about personal power and legacy than anything else. These people continue working hard for the same reason that tenured professors continue to publish prolifically or retired people work hard on their lawns or hobby projects -- for love of the work, and/or because they literally don't know how not to work.

(Whether or not those people deserve to be taxed heavily is kind-of irrelevant to the fact that your hypothesis about human psychology is wrong.)

> You cannot turn the losers into winners

What is a loser? Most middle class people are of average or above-average intelligence and work hard. The only thing separating these people from e.g. Donald Trump is access to an inheritance or some other means of attaining large amounts of capital.

I'm willing to bet your average middle-class accountant or actuary would much rather (pay someone to) manage a portfolio of investments than crunch someone else's numbers.

Also, FYI, almost all computer programmers in the world -- including skilled ones -- are solidly ouside of 1% territory.

> but you can certainly alienate the surviving winners and convince them to build their next factory in China

So your argument for not redistributing some percentage of the wealth of billionaires is that they're petty assholes who will take their ball and go home? But isn't that what losers do? ;-)

As a matter of fact, globalization and national autonomy aren't inconsistent. Tax havens aren't a fact of life, they are an engineered reality created by lawyers and lobbyists.

> Tax rates on the top 1% or 0.5% of earners could double over-night ...

They are not after the 1%, never have, and never will. They are after you and me, my friend. So, gear up for a good fight, because I am giving them zilch. I'd rather flush my money down the toilet.

> So your argument for not redistributing some percentage of the wealth of billionaires is that they're petty assholes who will take their ball and go home?

Yes, and that is why the factories have been rebuilt in China over the last 25 years. It is not going to get any better in the future. I don't know what they will be doing next, but it will certainly not include "redistributing some percentage of their wealth". Why would they? But then again, who cares? I don't want their money. I have my own.

In order to outsmart them, you will have to be smarter, but if you could, you would be one of them. ;-)

> They are not after the 1%, never have, and never will. They are after you and me, my friend.

Oh right. Those bastards trying to close corporate tax loopholes are totally doing so because they hate me and all the money I'm not saving due to those loopholes...

> Yes

> In order to outsmart them, you will have to be smarter

NO! It's really not that damn complicated. And there are even plenty of extant policy proposals for eliminating or greatly reducing tax avoidance schemes.

Public policy, most of the time, isn't rocket science. See e.g. https://www.oecd.org/ctp/BEPSActionPlan.pdf

There's a difference between globalization of unskilled labor, globalization of skilled labor, and tax avoidance. The first and second are, to varying extent, unavoidable and probably net beneficial to the bulk of humanity. The last is not unavoidable and is also decidedly unbeneficial for most of humanity.

(There's also a difference between off-shoring for the purpose of true cost reduction nand off-shoring for the purpsoe of tax avoidance. The former is far more common than the latter, although a decent amount of FDI is about tax/tariff avoidance.)

> but if you could, you would be one of them

Of course I would. But I'm not delusional and wasn't born into either connections or cash. So I do what I can to boost my odds, but I also cooperate whenever the opportunity arises.

And, if I ever do "make it", I'm sure as hell not going to become one of those "got mine, fuck you" types.

>Tax rates on the top 1% or 0.5% of earners could double over-night and those people...

> At some point far before the 1% [from context, presumably income] mark, wealth accumulation becomes much more about personal power and legacy than anything else.

False, IMO. 99th percentile income is about $400K gross per year (for household income). Two 40-year olds raising children, making $400K between them are technically "top 1% income", but are quite far from granting buildings to their alma mater and building monuments to themselves. They are more likely worried about college tuition, retirement savings, and healthcare than they are about whether the plaque on the front of their building should be silver or bronze.

>convince them to build their next factory in China instead

No, the government doesn't do this, the shareholders do this (this includes the CEO). It's a huge red herring that delays automation from happening. Even China nowadays invests heavily into automation.

>At the basis, quite a bit of inequality is caused by the fact that some people happen to be smarter

Everytime I hear the word "talented", "bright" or "smart" on HN I don't even know what it's supposed to even mean anymore.

Somehow you deserve to be called a genius because mommy got you a contract with IBM and you decided to buy off an OS from some random guy for $50,000 and then made it run on IBM's computers.

There was also that guy who screwed over his cofounder with some social network.

Yeah sure they are now two of the richest humans on this planet but I don't think their success can be attributed to their "talent" alone. They very likely are not capable of pulling it off a second time.

But, aren't "obscene levels of inequality" only obscene related to a few decades post WW2, which many people seem to take as a normal, but which is really rather unusual? The statement talks about "highest inequality ever", and I really don't see how any society can be much more unequal now than it was even 100 years ago -- not to mention any time before then...

Many EU governments consider cashless to be a treat since it moves control of money away from the state and has social costs.

The push for a cashless society and negative interest rates doesn't paint a good picture about the future of our financial system. It's nearing its well deserved end.

The bubble is about to burst and they're trying to release pressure to make it last a bit longer.

The funny thing about negative interest rates is it is one of the few good reasons to buy physical gold, especially with the elimination of large denomination euro notes.

Gold is just another fiat currency, plus at a high value it's even more worthless as a currency since you'd need such minuscule amounts to trade for goods/services.

"Gold is just another fiat currency". Did you come up with that or did you read it somewhere? If you read it somewhere, I'd love to read that article.

All you have to do is think about it's actual uses. I have degrees in finance and economics.

All gold is IMO is a hedge against inflation by tying your monetary policy to the rate at which you can dig some shit out of the ground. Not remotely sane IMO.

It would be like basing the value of the dollar on corn. At least corn would have some real value though (fuel, food, etc.).

Silver is pretty cheap at about $0.50 per gram and the best part? It looks cooler to have a bag full with silver coins than a few gold coins!

The best tip ever for saving to only spend cash. When you have the physical money leaving your hands it feels like a lot more than inserting a card and pressing a pin code.

I am mostly using cash if I have the possibility to, which is kind of annoying sometimes since in Sweden (where I live) there are many "cashless" shops. Even in normal grocery stores checkouts it's like 50/50.

I've never visited a country that has as strong opposition to cash as in Sweden. One time I walked into a boutique trying to purchase a cellphone and the salesmen there were happy to help. Unfortunately they told me that they didn't accept cash and then I just said "then there's no deal". The look on their faces was kind of fun, even if it sucked that I had to redo the whole process.

Just wanted to tell you that you're not alone in Sweden with using and liking to use cash. There's at least one more - Hi!

I haven't encountered a single grocery store that refuses cash and only accepts electronic/card payments yet. Was this a chain supermarket?

Many stores run a 50/50 setup these days, if they're large enough. That is, half the registers are card only, the other half accept both. I've seen it in Willys, Coop, and ICA.

Not the grocery store, but many smaller shops sometimes only accept ccs.

I did the envelope savings plan. Single cash amount for the month, when the envelope was empty that was it!

Not only is the surveillance problem, but when all the peoples money is in the banks, banks have more control to charge people for "handling" their money, so not just negative interest rates are the problem.

Also when all the money is in the banks, governments have much more freedom to apply higher tax levels or just take the money.

With a cashless society, there are third party entities that decide:

1) if the payment will be honored ( legal pot growers / legal sex workers / donations to wikileaks have this problem

2) the payment will be possible ( is the bank systems functioning )

3) how much of a cut the third-party will take from the transaction (visa, mastercard, but also app stories 30% cut)

4) who gets to know what was purchased (your bank shares information with the government)

5) who gets to know who made the purchase

6) who can access money: minors can't have bank accounts/etc, does someone have access to a banking system at all - lots of people can only cash checks through pay-day lenders

Genuine question - What about a "cashless" currency based on blockchain? (a la bitcoin). Wouldn't it be and not be under any single entity's control at the same time?

One lesser point, bitcoin is pseudo-anonymous: you can always follow the money even if you can't identify all the people who handle it. It might be argued then that any entity who knows what you're spending and where has plenty of control over you. There are anonymous coins that don't have this property.

The biggest danger with blockchain is that if it ever fails, it would fail for technological reasons and its failure would be instant and complete. Like encryption being broken. Instead of government money, where the failure is telegraphed years in advance, e.g. by reckless abuse of the printing press.

The equivalent of breaking encryption on bitcoin is perfectly forging paper money, or breaking the security on any financial institution that enables you to steal all their money.

Also, if someone can break sha256, not only is bitcoin screwed, but so is the Internet as we know it and every secure institution period. The overnight "instant and complete" breakage of fundamental assumptions about security would destroy everything. So interestingly, if you could break sha256, you could probably break into almost any financial institution and steal their money as well.

The security of a blockchain is in its popularity. As long as the code is open (and I'll admit, I am not a fan of how bitcoin mixes the default interface (BitcoinQt) and the default implementation (BitcoinCore) together so much) and there is investment in the market, there will be strong financial pressure to consistently and diligently analyze and track the source code for weaknesses.

Bitcoin at 3B has at least a dozen security firms that have looked into its crypto. If you had another crypto that broke a trillion you would have thousands of companies constantly safeguarding and testing the crypto of the currency in the same way Google offers ludicrously high bounties for anyone who can break Android/Chrome/ium security.

Not necessarily. What we're seeing with Ethereum, for instance, which seems to be the main blockchain technology that banks want to use right now, is that it was "customized" to fit the banks' needs to the point where the blockchain used by the banks doesn't even need to be public, the way Bitcoin is. It also doesn't need to work based on the "consensus" mechanism. And it could be further modified so that each transaction can also be wiretapped/blocked directly by the NSA, and so on.

I don't necessarily blame Ethereum for this, although they did have a hand in following the banks' rules and essentially writing software for them, but this would've probably happened even without Ethereum agreeing to do it. Maybe the banks would've forked Ethereum's technology and then they could've done whatever to it, or they could've written their own tech from scratch.

Cash and current forms of electronic payment have the nice feature that the seller gets their money almost immediately. As I understand it, bitcoin transactions take a while to confirm. I wouldn't want to stick around in the shop until some miner got around to my transaction.

The "takes a while to confirm" is a shortcoming of politics in bitcoin today. Blocks are limited to 1MB, there are more than 1MB of transactions almost all the time now, so some transactions (the ones paying the lowest fees) get delayed multiple blocks and take forever to be confirmed.

That will eventually be fixed, and once we are back to normalcy where transactions aren't limited by block size, you can regularly get - even on feeless transactions - multiple confirms in seconds. Your transaction won't be finalized until it enters the block, but once you have a half dozen or more confirms the probability of failure of that transaction entering is extremely low - well below 1% at that point, insofar as I have never seen it happen myself and don't know anybody who has had a multi-confirm transaction miss acceptance.

Small payments using BitPay require one confirmation, and that typically only takes a minute or so. Their fee (1%, I think) covers reversal risk.

Now imagine being lined up at the equivalent of a cash register with every single person in front of you taking "a minute or so" beyond what a transaction currently requires. Nobody's hiring additional cashiers (or whatever they'd call them) or self-checkout kiosk supervisors (to go along with the extra kiosks) if there isn't any extra money to be had.

You fire one cashier and install 100 self checkout machines. Problem solved!

Where are you going to put the food if you fill up your entire grocery store with 100 checkout machines? Also spending a minute or so waiting for the checkout machine to clear my transaction still sounds like huge pain in the ass.

And replace those cashiers with people who have other job titles to manage inventory shrinkage. There's no getting around the fact that you need eyes near the doors to make sure that everything gets paid for, and you need enough eyes to monitor the traffic: more parallel traffic, more eyes needed. (Anecdotally, I see more staff at self-serve checkouts than at cash registers in stores that have both, yet the cashier lines move more quickly than the "more convenient" kiosks.) I'm sure there's an ideal world living in some people's minds, but it's not part of the external reality and probably never will be.

I avoid self checkout - slow and inconvenient. But it's just a matter of improving the technology: we'll get there eventually.

I avoid self-checkout because the entire machine is usually set up around the assumption that I will try to walk out of the store without paying for one or more items, or by futzing the bar codes so that I pay $1 for a $30 beef roast.

The self-checkout technology will never improve as long as that assumption remains. If you can't trust the customer to not steal a pack of gum, you can't trust the customer to not steal an entire beef tenderloin.

The professional cashier does not need to keep every damned item on a giant scale after scanning it, because they are an agent of the store, and presumably trustworthy enough to notice and stop shoplifters and scammers. And they usually don't have to halt the entire checkout process and wait for a manager to come by and restart it whenever anything even mildly out of the ordinary happens, such as using a coupon.

You can't improve the technology when the premises are wrong. And the premise is that you can turn a grocery store into a glorified vending machine.

If we put an RFID tag on every item and use an RFID gate then we would just have to walk past the gate which is capable of detecting every item without you having to take it out of your cart or bag. A turnstyle could then force you to pay and disable the RFID tags. Cost and transmission distance of passive RFID tags are the major obstacles, I believe.

How do you detect RFID tampering or the use of RFID-blocking shopping bags or pouches?

Remember, the store is more interested in protecting its operating margins than in providing more convenience for the customer. If the technology does not allow a store exec to believe that it can stop a $30 steak from walking out the door unpaid, it will never be installed.

One confirmation on average is approximately 10 minutes. Most small value payments are acceptable with zero confirmation once the payment has been broadcast to the majority of nodes which only takes a few seconds.

Yes, you're right. No confirmation, just broadcasting.

The blockchain is mostly a solution in search of a problem. Bitcoin is cool, but I doubt it will ever have large-scale applications beyond DNMs and hacker/hobbyists.

- The current biggest problem that bitcoin faces is one of scale - and there's no clear solution in sight. Why on earth would you want every little transaction on the blockchain? If I buy a stick of gum, that doesn't need to be on public record for eternity. It is impractical and unwieldy.

- Centralized systems are always more efficient than decentralized ones, and systems naturally tend toward centralization. Bitcoin falls down under centralization, which we are also currently witnessing with the hash power tied up by a few largely unknown Chinese operators.

There are proposed solutions like pseudo-centralization with LN where bitcoin just becomes a settlement layer for off-chain contracts - and the details behind LN are still so primitive it is not clear it will actually solve any real problems.

What you are talking about in practice for something at scale is a centralized blockchain of some sort, which is really just a distributed, immutable database, with some sort of trusted signing authority. What exact advantage does that give aside from potentially non-reversible transactions, which are a clear non-starter for most consumer purchases? There are already services that offer true non-reversibility for special cases where this is desired.

There has so far been no viable application for blockchain technology as a replacement for cash except black/grey market purchases.

In theory, yes. But currently, there exist enough structural problems, as much I know, that Bitcoin or similar schemes can not replace cash.

Further, even with a total secure system, there will always be the pressure of the governments to control it.

I think the primary reason is a loss of privacy and freedom. With a digital currency all your purchases can be tracked. You also lose freedom in that government at any level could suddenly make some products or service illegal, throw in that they could retroactively do so.

Of course there is monetary policy too. Negative interest rates try to force spending to correct bad government policies which usually are the cause of depressed spending. Then combine this with the idea that printing digital currency is as simply as flicking a switch which would rapidly devalue currency in people's accounts.

Simply put, its another attack on privacy and the freedom it entails

It's nice to see the Guardian writing negatively about the cashless push, and they hit the main points.

To me, the main danger of our time is totalitarian governments overreaching in reaction to changes in threat-actor models, and hence most of my primary concerns revolve around the particular issues that touch upon this point. There are two main issues I have with the push to the cashless society.

1. Lack of anonymity. Cash serves as a mostly anonymous medium of exchange, which encourages the free flow thereof. That being said though, one of the primary reasons you might want anonymity is from government overreach. For example, there is evidence that in the increasing surveillance panopticon, the gov wants to know what you are reading and purchasing for reading. If you use a cc to buy a book at a bookstore, that is easily tracked back to you and could in the future be used to put you on $list. While cash isn't perfectly anonymous, it ups the level of effort to find out (pulling cctv recording to correlate purchase to person).

The lack of anonymity has been my primary disagreement with Max Keiser regarding bitcoin as well. To me, I can very easily see a currency upset on the horizon which is then used to push cashless on the society as a new currency model.

2. Revocation of access/control of assets. In a similar vein to police forces using confiscation as a budgetary padding tool, I can far too easily see the same being applied to cashless currencies. More than that though, is the ability to access the option at all in the first place. As an example for this, I give you the national bank blacklist database. For some people, suddenly being blacklisted by banks can create all kinds of problems, because much of our society relies on banking functions. I fear the same type of blacklist with little oversight could be applied to a cashless currency, to the point that, lets say you were a dissident, suddenly you lose all your money and can't open a new account. If everything is cashless, how do you buy bread?

The article itself touches on the surface of these matters, but I think there needs to be a much deeper and deliberative discussion about the potential dangers, and benefits, of the push towards a cashless society.

I was living in a rural area where the poor used the underground economy ( flea markets etc. ) to supplement or offset low subsistence , meager wages and I know the poor in urban areas do as well. A cashless society will be a regressive tax on the poor !

I am not one to argue that technology solves the problems of the poor. But, there are lots of holes in this argument:

1. The unbanked already exist in a world that expects them to be banked. Almost all jobs in America are paid in checks or direct deposit. Checks are useless to people without bank accounts. They then have to spend time and money getting the check turned into cash at a check cashing place, like Amscot.

So moving to electronic banking would actually HELP these people. If you really rely on cash, then you are at a disadvantage since most jobs dont pay in cash.

Yes, there are real obstacles in the way of these people getting bank accounts. Education, time, documentation, etc. But everyday someone continues to remain unbanked, they are inconveniencing themselves in many ways.

2. Cash is already dead to a lot of people (in 1st world countries), so surveillance is already possible. Governments, banks, and payment processors ALREADY have access to this information for a large number of people. If this is a large concern, the author should be tackling the fact that this is on-going, not that it might happen in the future.

But it does seem true that killing cash will open up new demographics to the same surveillance.

3. Bankruptcy is not a tool used by very poor people. Its often used by middle class and upper class people who deal with the finance world. I think this article has a very poor understanding of what "poor" means, even in a 1st world context.

4. This whole article is based off of bad solutions. Keeping cash around so that some people will be saved by withdrawing their money in the next financial crisis is NOT the solution to financial crises. Better regulation, management, and transparency is.

Except laws, regulations and transparancy are changing all the time. If cash remains, it gives you some margin to operate despite bad state, silly leadership, idiotic laws, wrong social decisions, etc. It's also a buffer for transitions, and help initiating things on the side that can grow eventually into something legit and good-for-society that would otherwise have not be possible because doing it right would have kill it.

Thing is, since no system is perfect, and no system stays the same, you need to have a small, yet stable % of grey area to let the population compensate and adapt.

Those all seem like good points, which the article does not explicitly make.

I love being cashless honestly, but I see the benefits of using cash for transactions.

My problem is that I usually do things online and plus I'm always feel much more secure knowing my Amex would be fully protected vs cash. Day to day I'm not worried I'll get robbed, but in the off chance I'm somewhere where I might I'm much happier carrying no cash and just my Amex.

> I'm always feel much more secure knowing my Amex would be fully protected vs cash

Seems like the opposite should be true. Who cares about losing the amount of cash a normal person carries in their wallet to a mugger? If you get mugged often enough for it to have a real effect on your finances, then maybe you should move.

Conversely, if the only thing in your wallet is some plastic that will probably be cancelled within half an hour of the mugger fleeing, then he has two separate motivations to kill you; 1. how dare you not give him easy cash for his quick junkie fix, 2. if you're dead, the card will go uncancelled for longer.

In my view, long before the government realizes the full potential of abusing a cashless society, private businesses will have bled us dry -- especially the poor -- with transaction fees.

This comment strikes hard for me given that I am also reading Sen. Elizabeth Warren's book A Fighting Chance. It is remarkable how much greed pervades these "stodgy old banks".

Cash, on the other hand, empowers its users.

And convenient electronic payments doesn't in anyway empower users?

Also, if people are unbanked and below the poverty line I would expect they would be more concerned with getting by than "Orwellian levels of surveillance."

> And convenient electronic payments > doesn't in anyway empower users?

Maybe you did not understand the article? It did not argue about convenience but about peoples control over their wealth.

> Also, if people are unbanked and below the poverty > line I would expect they would be more concerned with > getting by than "Orwellian levels of surveillance."

In many cases this is a big problem as it allows the Orwellian government to have larger control over people.

If people are below the poverty line then extra fees associated with transaction-handling, cost of technology for access etc are a big deal. Cash is closer to free to use. If you buy something used, a PC, fridge, whatever, because you can't afford new, do you want a transaction fee in addition? It may only be 1% or $1 (not accounting for the price of a smart phone and network costs) but that is still $1 more than you needed with cash.

Cash is not free, there is a time cost to handling the cash, depositing it, there is a risk cost for vendors from employees stealing it, there is a risk cost from being robbed...there are always trade offs.

A lot of these comments mention that cash gives the government less control, however try visiting India or China or Greece and ask people the real reason they use cash. It's to evade taxes and launder money! Same with cash tipping in the US. So in some ways electronic is better to help catch the cheaters, but if it's not transparent it could pose a problem if the wrong people get in charge.

> It's to evade taxes and launder money!

Assuming the government have the right to tax us for everything all the time and that you are not a free man but just a number. This past year I have seen one new tax introduced at regional level and seen at least one other rise by a significant margin (close to 50%). I don't see a like change in the earnings of my colleagues. Maybe we should all try harder to evade the govt, at least a little.

Have you read the linked article, because most of the things you mention are not related to the point discussed in the article. Yes, there are good reasons for electronic transactions, of course there are.

To be fair, if I pay you in cash - and you don't declare your income: I'm not the one evading or avoiding taxes.

We're all responsible for our own actions.

That said, I like having and using cash - it gives me a greater sense and overview of how much I spend and I find it convenient in general.

In the UK at least, there are lots of free bank accounts with no fees for withdrawing cash or using your debit card. I understand it isn't like this everywhere though (especially in the US).

Fees for card payments are a US thing, mostly because they predominantly use credit instead of debit I believe.

> Also, if people are unbanked and below the poverty line I would expect they would be more concerned with getting by than "Orwellian levels of surveillance."

They're probably more immediately concerned with getting by, by they're more affected by surveillance than someone with more resources. The primary use of commercial surveillance is to enable better price discrimination, and being poor means they're easier trapped in local maxima designed to extract any surplus they do have.

I don't understand this argument that people feel safer storing cash than keeping it in a bank. The cash is just as ephemeral as bank credit. With the exception that it's controlled by your central bank instead of the commercial banks.

Cash can be made useless centrally just as easily (if not easier because of its central nature) and there have been instances of this in the past in cash-only societies.[1]

[1] https://en.wikipedia.org/wiki/Romanian_leu#Second_leu:_1947-...

By storing your cash in a bank, you are exposed to both the bank's insolvency and the devaluation of the currency by a central bank. By keeping it under your mattress, you are only exposed to the latter. Of course, by not storing your money in a bank, you are 100% responsible for securing it, which is the primary drawback that most people face. You are also more directly exposed to fluctuations in currency valuation since fiat is generally inflationary and the money is doing no work for you at home - but quite a few people still find it worth all the drawbacks to keep a chunk of cash at hand.

> By storing your cash in a bank, you are exposed to both the bank's insolvency

Only for very large amounts, at least in Europe, the central bank insures your money from its own reserves in case of bank failure up to a certain amount, AFAIK typically in the hundreds of thousands of €/local equivalent.

If a bunch of banks go under at once, or even one big bank with a sufficient number of claims, who's to say the insurers will even be able to pay out on that? Nonetheless, I always find this type of apocalyptic thinking to be humorous - why do people think that their cash will be worth anything if the financial system collapses? Another motivation would be if you are concerned about having your assets frozen.

The central bank pays.

As an example, in the UK personal deposits of a failed bank are guaranteed by the Bank of England up to £75,000.

The Bank of England can always cover the amount, since they can simply print money as needed.


It's not insurers who pay it's the central bank. It has control over the currency itself; because of that it can (and has to) always pay.

> Another motivation would be if you are concerned about having your assets frozen.

I'm with you on that one.

> Cash can be made useless centrally just as easily

Most monetary economists would disagree. The zero bound on interest rates exists on cash, not bank deposits. From a central location, one can interrupt electronic funds transfers to and from certain persons or looking like this or that. You can't prohibit Iran from holding dollars in cash, though. To do so means threatening the systemic value of the currency. Cash forces an all-or-nothing constraint on the powers that be.

The whole "but criminals use it" is a complete straw man. Yet you can see most people fall for it, over and over again.

If we had a totally cashless society, you would see a level of white collar financial and banking crime that would make 2008 seem like a picnic.

Anyone who is not convinced that the banking elite are the top criminals needs to watch this very recent documentary:


We should criminalize the usage of water.

Criminals use it after all! Even the banking elite!

Just enforcing the rule of law would be enough.

I'd love to have only electronic money. It would have so many advantages.


The risks of it and the potential for misuse are so many, that all advantages of electronic money are not worth to go in this direction. We are in a situation today, where privacy is one of the greatest assets we have and should preserve. When we loose it, we very likely loose our freedom and essential democracy. Instead we might get a "democracy" that is controlled by opinion-formers and big corporations that make money with our privacy.

The concern for economic fairness is, I think, a real one. There is a disparity in most economies between the people who are banked, and those who are unbanked. Going "cashless" favors the banked, and that is a problem. I don't know how to address this.

But, I disagree with one of the authors' other claims: "Cash has its uses for small transactions – a chocolate bar, a newspaper, a pint of milk – which, in the UK, are still uneconomic to process by other means. It will always be the fastest and most direct form of payment there is."

This is not necessarily so. Think about another example: let's say I order something online, and the store gives me free shipping. Free! For sending me a physical item! How can they possibly come out ahead on that? Simple: because we have a sophisticated infrastructure for sending physical goods to many different places, and the marginal cost of one more item on all of those vehicles - and there are likely to be at least three or four, including several processing centers - is actually rather small.

What if, instead, I want that item as soon as possible? Very expensive. Because my item is no longer a marginal-add to a sophisticated system. It is now closer to a one-off, and I have to pay for the service.

So what does this have to do with cash? Everything. Cash is a physical item that must be stored, transferred from businesses to banks, then counted at banks, stored and redistributed. Doing this is expensive. There are many small businesses in NYC that do not accept cash, and I have assumed the reason is that completely eliminating this cost - handling, storing and transferring cash - is easier and cheaper for them. We have always considered handling cash just a part of running a business, but it is not necessarily so. In the future, handling cash may be more like overnight-express, rather than free-ground-shipping.

The card companies in the UK try to encourage people to pay by contactless card (debit or credit) for low value items. That's perhaps no surprise.

Transport for London, who run the public transport in London, are encouraging people to use contactless debit/credit cards rather than their own stored-value card system or cash.

In Denmark I've had the man selling sausages from a wagon on the street ask me to pay by card. I guess he didn't want to bother going to the bank, or carry all the cash around.

The whole cash less payment industry is in trouble, once people realise that they can withdraw more than 50 [USD|EUR|GBP|..] at once..

Just kidding.

Well almost, since it was what did it for me. I started withdrawing larger amounts, 500 or 1000 Euros, each time, after ending up with no cash too often.

And I didn't feel the need to use another payment method since. YMMV (obviously).

Many very good points there, and it's definitely nice to see this suggested from the left.


- "We already live in a world that is, as far as the distribution of wealth is concerned, about as unequal as it gets. It may even be as unequal as it’s ever been." -- I keep seeing this kind of statement all over. It seems really, really hard to believe, presuming that "ever" includes antique or even more recent feudal societies, but perhaps there is something to it -- perhaps it might be true under some measure of inequality?!

- "Today more than 6 billion people have a mobile phone" -- similarly, I really don't see how this could be true, as it seems to imply something close to 100% market penetration worldwide for most age groups. I can see how there might be 6 billion mobile phones (or phone numbers?) active, but 6 billion distinct people?!

6 billion out of a global population of 7.125 billion is just over 84%, so not that unbelievable, particularly considering how quickly a usable phone becomes worth approximately zero in the first world.

Yeah, but (e.g. looking at http://www.census.gov/idb/worldpopinfo.html in 2014) 6bn people means that literally everyone over age of 14 has a mobile phone (plus about 100 million of those under 14, too). Even accounting for all the phones first-world children have, it seems like quite a stretch.

It's not that unreasonable. The iphone costs apple only slightly more than $200 to manufacture per unit and there are obviously even cheaper phones out there.

If stores weren't required by law to charge the same price to credit card users vs cash users, you would see most stores slap a 2-5% surcharge on credit card transactions, because that's how much they have to pay to Visa/Mastercard/Amex. Many people only use credit cards to get points, which is an unfair tax on customers who don't use credit cards. I find cash to just be easier to use, and I forego the rewards chasing. Once I pay with cash, I can throw away the receipt and not worry about the transaction ever again. No worry about identity theft. No need to check my statement every month and remember whether the transaction was me or not. Easier to split bills or pay people back. Knowing that more of my money is going to the shop keeper than a large financial corporation.

It is no longer illegal to charge a surcharge for credit cards [0] in most, but not all US states. As far as I know, it has always been legal to give a cash discount.

Until recently the sticker price had to be the credit card price, but all in all it appears merchants don't prefer cash despite the option of discounting it.

[0] https://www.nerdwallet.com/blog/credit-cards/credit-card-cha...

"Cash means total financial inclusion"

The author doesn't know what financial inclusion means. In fact financial inclusion has seen a boon thanks to cashless payments like m-pesa in Kenya. Thanks to not having to lug around cash and maintain expensive bank branches and offices, some of the poorest countries have made great strides in furthering financial inclusion.

People want to eliminate €500, not €5. But even if they eliminated all cash I doubt there would be a catastrophe of the type the article claims; people will use different implementations of the same technologies to find privacy and convenience. In fact wives married to alcoholics in Africa often prefer to store their money in cashless wallets and saving groups, because it is easier to hide from their husbands who might find the cash under the mattress.

IMO the real issue on tax evasion is not that people don't like to pay taxes. People don't like is to be obligated to give money that will be spent in ways that they don't agree.

Cash is the only way Govt can implicitly (https://en.wikipedia.org/wiki/Petrocurrency)/explicitly (https://en.wikipedia.org/wiki/Zimbabwean_dollar) control 99% population;

In theory, cryptocurrencies like Zcash [1] should solve the issues with transaction privacy. However, enforcing taxation when using a totally private and anonymous currency disconnected from government control would be nontrivial if not impossible. Likely the reason why governments are so against them.

[1] Zcash: https://z.cash/

I recommend Douglas Rushkoff's book "life inc, How Corporatism Conquered the World and How We Can Take It Back":

Centralized money has been the means for sucking profit out of local economies since about 1300. Rising income inequality has been an 800 year process. I thought I knew how the world worked, but Rushkoff changed my world view.

The article itself is somewhat misleading - cash, i.e. currency, does depend on the issuing institution's integrity and the willingness of people to accept it.

Was a bit surprised to see The Guardian echo certain viewpoints heretofore only heard from preppers.

I think this is a symptom of a wider malaise in our societies today. Technology can be an enabler of wonderful new things, but it also affords new opportunities for power and profit to those who control it.

The average person is not a financial expert and so there are very lucrative opportunities for those who know the system well to make a lot of money at the expense of those who do not. Payday loan companies and high interest credit cards come to mind as extreme examples, but every time you put money in a savings account at your bank they are making a lot more on it than they are paying you in interest, and every time you use an on-line payment service or swipe your card in a store you're giving a significant cut to the payment services involved, not the person you thought you were paying. This is before we even get into the privacy implications and so on.

The average person is also not a technical expert and so there are analogous opportunities to take advantage of them, but we are becoming so dependent on technology that if anything the opportunities here are even more one-sided and certainly much greater in number. Day-to-day functionality and communications increasingly rely on isolated, closed ecosystems, run by commercial operators that have every incentive to lock people in and then exploit them, yet which are typically not subject to regulation as essential public services the way that traditional phone and mail systems typically have been. The "war on general purpose computing" is well underway, again with even basic things like the software you can run on your own devices locked up through a combination of proprietary repositories or app stores, cloud integrations, DRM and similar technologies, and legalised anticompetitive behaviour thanks to ever-increasing distortions of IP laws.

Much of this comes down to the same recurring themes with new technologies: as well as providing useful new capabilities, they can also become a threat to privacy, to ownership, and ultimately to the freedom of smaller businesses or private individuals to create and use technologies and data as they wish rather than as the controlling mega-businesses and governments dictate.

This does not seem healthy to me at all. However, since most of it is predicated on the average user of these technologies not understanding the full implications and often not having any meaningful choice apart from giving up on a technology altogether anyway, there is only so much the little guy can do.

We should fear a cashless world, but we should fear more the kind of world that cashless transactions exemplify.

Proposal: remove cash, add constitutional amendment defending the right to transact.

Any proposal on how to ensure that it doesn't end up like the right to a speedy trial [1,2]?

[1] http://fusion.net/story/5419/right-to-a-speedy-trial-this-in...

[2] http://www.theatlantic.com/national/archive/2013/04/do-louis...

It is all about control. If you remove the independence of cash and you end up with government regulation deciding how much, what and where you spend your money. Such regulation can be used to put stress on businesses that the state deems 'unsuitable'[1] as well as punish those with differing opinions than the state[2].

Cashless society would essentially turn the world into one giant PayPal.

1 - https://en.wikipedia.org/wiki/Operation_Choke_Point

2 - https://en.wikipedia.org/wiki/IRS_targeting_controversy

A good conversation of "why we should fear a cashless world" should at least mention the Book of Revelation and the Book of Daniel in The Bible. It would be negligent to omit them from discussion like this.

I assume that you're referring to Revelation 13:17:

> And [the Beast] causes all, the small and the great, and the rich and the poor, and the free men and the slaves, to be given a mark on their right hand or on their forehead, and he provides that no one will be able to buy or to sell, except the one who has the mark, either the name of the beast or the number of his name.

Like most of Revelations, I think this needs to be interpreted in the context that it was written. Jews during the time of Nero saw Nero as the "the Beast". From what I understand, these "marks on the hand" were a plan by the Romans to control Jewish citizens in much the same way that modern governments try to control slum populations. I doubt the author foresaw contactless credit cards and Apple pay, though I admit that the authors of both the article and of Revelations were worried about similar consequences.

> to be given a mark on their right hand or on their forehead, and he provides that no one will be able to buy or to sell, except the one who has the mark

How else would you describe 21st century RFID using 1st century vocabulary? Revelation was written 2,000 years ago, and is supposed to be about things in its future, after all.

> How else would you describe 21st century RFID using 1st century vocabulary?

Why did it need to use 1st Century vocabulary?

I am a practising Christian, and in my heart, I suspect Jesus would say something like "don't worry about how you pay for physical stuff".

It used 1st century vocabulary because that's all that could be had when it was written (about AD 90, Greece), using a different language, culture, context, and mindset than anything that exists today. If one were to update it, it would be impossible without fundamentally changing it, due to subjectiveness and the gulf in descriptions.

There are Christians, like myself, that do not believe that Revelation is about the future. Look up "preterism".

As a Christian, I hold a mostly preterist view on those prophecies (they already took place): "Truly, I say to you, this generation will not pass away until all these things take place." - Jesus

A good conversation about a real world subject would ignore allegorical political writing from 2000 years ago posing as mythology because it isn't relevant or insightful.

Cashless societies are advanced as a solution to problems of moral decay. E.g., doing business under the table, not reporting taxes due to governments, or performing an illicit transaction. In many ways, advocacy of a cashless society is admittance that people are dishonest, and therefore all transactions should be made electronic. Instead of strengthening individual morality, workaround solutions are proposed -- like those trying to fix a morally bankrupt society via algorithmic systems that require no morality whatsoever.

So whether it be a government sponsored currency, perhaps a world currency, to stop bad behavior and bad actors; or a public blockchain (Anarcho-capitalism). We as a society are now faced with a moral decision centered around privacy and how much of it should be entrusted to governments. Notice how the thesis of cryptocurrencies is trust-less systems, because people / governments are assumed to be nefarious by default. That is a big nuance being ignored. Ultimately (IMO) this is an issue of morality. One which benefits from reading history, analogy, literary examples or anything for that matter. We are seeing a tug of war between citizenry and governments in the financial and cryptographic realms. This is relevant.

The financial system and notions of a cashless society foster a growing anti-government sentiment. It is obvious in this and other threads; a strong pushback against government, which all relate back to the Books mentioned. It is difficult to ignore the religious or moral contexts of this topic.

Especially peculiar when Bitcoin has already established a cult following, complete with a pseudo-church which evangelizes. Not to mention it was created by a supposedly anti-government (Satoshi) person "yet to be revealed". Is playful conjecture not fair discussion? You can clearly see companies are racing to research cryptocurrencies, artificial intelligence, and what same may argue as anti-government measures.

So, I think a real world subject -- is subject -- to everything of the real world. Like the written Words of The Bible and anything else that exists for good interpretation. When 2+ Billion people identify as Christian, and they (potentially) push back against cashless societies, it will become exceptionally relevant.

Friends who are replying, my intent is not to stir up debate between Christians or about religion. The Books mentioned are relevant to this topic. They are good reading for anyone interested. Based on the down votes it seems HN would rather not include them while discussing this topic; which is all the more reason to go read them for yourself. They remain significant in our modern culture, e.g., music, books, movies and the lives of billions of people (worldwide.) While 1984 and many other dystopian novels are good for thought experiments...

These Books are relevant both historically and today.

We generally like to talk about fact and science, and not old spiritualism. Though I have to admit, prophecy remains very popular here! But mostly with HNers taking the role of prophet.

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