How Do You Tip The Girls?
link Citi Economist Says It Might Be Time to Abolish Cash – Bloomberg Business.
I think it’s a fair comment to make that if an economist says it’s a good idea, then the idea must be suspect. There’s the old joke that the reason that there are decimal points is because economists have a sense of humor. As many will know, economists live in the most esoteric of worlds in which arcane models are developed to explain movements in prices and in the supply and demand dynamics of goods and services in an economy. If convincing enough, such models are used to form political policies which greatly affect the lives of citizens. Often, these models are created with the most fundamental error in assumption: namely, that people are rational.
Do they work? One word: Keynes. Another one: Obamacare. So the musings of Citibank’s Mr. Buiter who thinks that the time is nigh to consider abolishing cash is a clarion call to go exactly the opposite way. As many should have realized by now, the pervasive invasion of everyone’s privacy by all manner of intrusions whether mandated by law or volunteered via the seduction of social media has made everyone a drone whose activities can be traced at almost any given time. You don’t need to wear tinfoil hats to be a bit wary of that. Who isn’t a bit creeped out when an ad for electric dog polishers shows up on your favorite website right after you were searching for the prices of them the day before?
If all money is electronically stored and there is no cash, there is a trail of every activity that you engage in. This will make life entirely more cumbersome for the regular people who don’t live in the make believe world of economists. While this can put a crimp into nefarious activities such as drug deals, it will also make it difficult to bribe doormen at bars and restaurants, to say nothing of how to discreetly show appreciation for your favorite exotic dancer.
A world in which cash is eliminated is a world in which we all become just numbers to be picked up as if we were in some futuristic Tom Cruise sci-fi flick. I think we should go the other way. Rather than having our net worth governed by some geek bureaucrat with access to a keyboard, we should go back to paying for things in cash. Judging by what has happened when you allow lawyers to make laws and accountants to oversee taxes, it would be fatal to allow economists to eliminate cash.