Cash Is Essential For A Free Society

The furor over Starbucks investment in Square is boiling over like an exploding espresso machine. It’s pretty frothy. 

Starbuck’s CEO, Howard Schultz said ’The consumer is going through a seismic change in which cash is eventually going to be obsolete.’

That’s a bit much. As I pointed out in Anonymous Cash = Freedomcash is a prerequisite of a free society, while enacting a system without anonymous cash is only attractive to the government and moralists:

A strong society that accepts human nature without moralizing will always have anonymous cash.

And who does such a system benefit? Not the part-time sex worker, trying to make ends meet in a down economy. Not the bellman at the airport, whose tips might disappear after the transition to cards. Not the homeless guy I gave $2 to the other day, or the busker playing guitar in the train station. Or the Green Peace folks collecting coins at the park.

The ones that benefit are the those selling the cards and the readers. And the policy-makers who want to see the flow of cash to find — supposedly — drug lords and terrorists, but secretly want to know everything about everybody.

But this is the argument for pervasive surveillance again. In the name of security and safety, they say we should all accept the intrusion of the government into our private lives so that the state can be protected from its enemies. After all, they say, if we aren’t doing anything illegal, why should we care? What have we got to hide?

But we have the right to privacy in our doings. We don’t have to say why we want privacy: it is our right.

And the shadowy doings at the margins of people’s lives are exactly the point of privacy. The man funneling money to a child born to his mistress without his wife’s knowledge, or a woman loaning money to her brother without her husband knowing: they want anonymous cash. The rich golf champion that takes a woman not his wife out on the town has a right to privacy, even if a narrow-minded and moralistic society doesn’t think so.

We have known for years — decades — that pot is no more (and perhaps less) dangerous than alcohol, but the laws are slow to change. And in the meantime, millions of people are buying pot. At some point in the near future, the prohibition will end, and it will then become a regulated and taxed commodity, like alcohol. In the meantime, people slip into the shadow world to buy a bag. And they are justified, since laws that are enacted without regard to science and health — that are ideological and repressive — are illegitimate, and the people have the right to run around them.

Historically, tyrannical governments have attempted to raise taxes to unsupportable levels, and cash money could change hands without the government being aware: the gray economy. While today’s government may not be engaged in this sort of economic control, the use of traceable digital money would certainly be the sort of economic foundation a tyranny would want.

The advocates of total intelligence as a way to catch the bad guys are going down the wrong path. To counter the drug lords, we simply have to make pot legal. And if we contort our free and open societies to counter terrorists’ use of cash, they have won.

This is similar to the ‘security theater’ that goes on in our airports: where techniques that do not work are employed to convey a sense of security, and unobtrusive techniques that do work — like the Israelis’ airport security — are not used because of the politics around ‘profiling’. In order to meet some hypothetical threat from terrorists, our personal privacy and free movement are held hostage. At what cost? Who benefits from all the back scatter scanners being bought?

I maintain that cash is a prerequisite of a free society. If the authorities start rounding up all the money, and begin distributing smartcards, it’s time to rally in the streets.

Cash is not a metaphor for freedom, it is a requirement of freedom. A strong society that accepts human nature without moralizing will always have anonymous cash. Only totalitarian governments — where everything not expressly required is illegal — would want to monitor the flow of every cent.

Technically, it would be possible to design and deploy anonymous digital money, just like we could be encrypting all telephone calls. But governments always want to reserve the right to listen in on our conversations secretly, so the phone systems are inherently insecure. But cash predates the notion of modern nation states, and even our modern currencies are unbugged.

We shouldn’t let the government be a party to every transaction, gift, or exchange we engage in. And if we let them, they will want to, and once they get that ability, we might never be able to go back.

So let’s not jump up and down too much about the glories of traceable digital money. Perhaps Square will rollout anonymous digital money soon, too. Then I will applaud.

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