I’ve recently heard a radical idea: we should become a cashless society.
The technology is pretty much here, with credit and debit cards, PayPal, and even Bitcoins. Other countries are moving in that direction. South Korea has established a goal of becoming a cashless society by 2020 (http://www.koreatimes.co.kr/www/news/biz/2016/03/488_199146.html). India and the Scandinavian countries are also heading toward the abolition of currency.
There are a number of advantages beyond the obvious lighter pockets. The illegal drug trade depends on cash. So does the “underground economy” and the resultant tax evaders. For those who prefer cash, inflation makes it necessary to carry higher and higher denominations.
But there are some huge disadvantages, too. For one thing, the government makes a tremendous amount of money — about $70 billion per year — from the difference between the cost of printing money and its face value. For example, it only costs about six cents to print a $100 bill, and this denomination is now about 80 percent of the cash in circulation (think drug dealers). By the way, this is called seigniorage (http://thismatter.com/money/banking/seigniorage.htm). For another there are privacy concerns. Without cash, wouldn’t there have to be a paper trail for every transaction?
A major proponent of a cashless society is Kenneth S. Rogoff, who has written the book The Curse of Cash. But because of the aforementioned privacy concerns, this work has been controversial; it’s Amazon rating currently reflects the emotional extremes — 24% five-star and 65% one-star.
With technology moving so rapidly, I suppose a cashless society is inevitable. Certainly no one seems to use cash in science-fiction stories, although they do talk about “credits.” But it will not be easy; just this morning I found “Cash-Starved Indians Are Struggling After Modi’s Surprise Currency Ban” in the news — http://time.com/4569379/india-currency-ban-cash-modi-effects/?xid=newsletter-brief.
What was that about a ‘brave new world”?
There is an excellent discussion entitled “Why Are We still Using Cash?” on the Freakonomics website at http://freakonomics.com/podcast/still-using-cash/.