July 1, 2010
Cash will eventually go away. So will checks. Someday all you will need is a retina scan and a password, or an embedded chip, or something along those lines. Imagine a world where all transactions are digital. I’m not sure we know what’s ahead.
For starters, you wouldn’t have to prepare your taxes. All of your transactions would be reported to the IRS as they happened. Perhaps you’d have a separate password for business-related transactions to keep things straight.
I wonder how much of the budget deficit could be closed by eliminating the ability for cash businesses to lie on their taxes. It’s probably a big number. A cashless world could create a huge shift of the tax burden to lower income folks who currently get paid in cash.
When you eliminate cash, you also eliminate a lot of crime. Criminals need cash to stay off the radar. In a cashless world, drug dealers and crime syndicates could try to set up fake businesses to launder their revenues, but it wouldn’t work. Imagine setting up a fake dry cleaner, for example. The government could easily determine whether that business is buying the type and quantity of dry cleaning supplies typically needed, and whether the profit margins are at industry norms. All of that information would be available through the tax records. A drug dealer could pretend to be a consultant, but even then you expect a digital trail for buying printer ink, business travel, and the like. Perhaps the drug dealer’s address and educational level would be tip-offs too.
Violent crime will greatly diminish too, because so much of society’s violence happens in the context of criminal enterprises that will no longer be profitable or practical.
In the cashless world, you would never need to carry a wallet. You would never need to balance a checkbook or spend an evening paying bills. Many of you have already reached that point. But you’d also never have to drive to an ATM because some caveman paid you with a check, and you’d never need to wait in line behind someone who is paying by check. I can’t wait.
Everyone’s fear, of course, is that a cashless society is more vulnerable to government tyranny. But realistically, moving from a 95% cashless world, where we probably are today, to 100%, probably doesn’t generate that much extra tyranny, unless you’re a drug dealer.
There’s a privacy issue, too. But as I have argued before, privacy will someday be a quaint footnote in history. When privacy goes away completely, we’ll all be freer. There’s only a penalty to privacy when your asshole neighbor can look down his nose at your hobbies while secretly masturbating to Field and Stream magazine. The best two situations for society are when you have either complete privacy or complete non-privacy. It’s the middle ground that creates problems. That’s where we are now.
Kids already have no privacy. Their texting and browsing histories can be monitored. Their locations can be tracked. And if they have a credit card, their purchasing can be tracked. In practice, parents don’t take advantage of all the ways they can monitor their teens, but everyone understands that the tools exist. That generation will never have a memory of privacy as their parents knew it.