The local public transportation system in the city I live in, switched to a cashless system sometime near the start of the pandemic. To ride these electric trolley busses, one must now use an app or a reusable card. The cards can only be purchased at 5 locations that I know of, none of which are within reasonable walking distance of where I live.
I downloaded the app. I had to create an account for the app. Then I had to create an account with the city to connect the local busses to the app. Then I had to create an account with the 3rd party payment processor to pay for fare.
So, I send the payment processor money, which they send to the city to pay for bus fare, the fare lets me ride the bus, so i have to prove i have the fare by opening the app, which will generate a QR code if there's enough money in my account, the code is scanned by a machine when getting on the bus and shows the driver that i have in fact paid the $2 to ride. So much easier than sticking a couple bills into a slot right?
I had to create 3 accounts. I had to create a password for each account. They can't be the same password either. That's because each one had different password rules. Restarting my phone, would sign me out of all non-google/non-samsung accounts.
Imagine trying to pay to ride the bus and having to first do a password reset. Now imagine you have to do that 3 times. all on a smartphone. Imagine doing this every day. Sometimes more than once in a day. To think, I used to panic when the machine on the bus wouldn't take my wrinkled bills. Those were the days.
You hit upon a really important point here: these systems are sold as being 'convenient' for us, but in reality they are acts of bureaucratic 'oligopolization', where a group of big players agree to collaborate with each other rather than the bus company agreeing to collaborate with you. This process often forces a bunch of unnecessary work onto us, and also is incredibly invasive: in London, for example, there are pubs that now force you to scan a barcode to bring up a menu on an app on your phone that requires to you to log in via Facebook or Google and to then write out all your personal details and connect your card in order to buy a simple beer
It would be much simpler to just run the transportation as a free public service. There is no fixing the world you describe as it is just too complex. This is neoliberalism at its finest!
Excellent as usual Brett! Thank you for the talking points. You do a great job breaking it down for us. Thank you for not giving up. We need you out there!
Automation equals convenience so it is challenging even for me to use it often but somehow we need to focus our “vibe” on slowing ourselves down as a society. To use cash, read a book, write letters and talk to people. More meditation, less consumption.
This was fantastic - I have never seen the argument put so clearly. Those of us who know the dangers of a cashless society now have the tools we need to make the argument - so thank you
I'm really happy that you find it helpful Cameron. If you know any others who would benefit from reading please do share it with them. More pieces will be coming in future too!
Excellent points! I've become much more conscious about keeping cash readily on hand after reading your articles.
Another key point, related to #7, are the fees that merchants must pay to participate in the non-cash economy. The extra monthly fees and 3-5% fee on credit card payments can spell the difference between your local independent market/bookstore/bike shop staying in business or going under. Paying with cash actually saves them money and gives them a greater chance for survival in a harshly competitive market.
Hi Sam, thanks for the comment (only getting to it now after a couple months!). Glad you like the article. Great point. In future I'd love to do some more research on how those costs affect small businesses (this is a perennial topic for small businesses)
My church had a 2 day rummage sale. We took in over $2800.00. A few checks, mostly cash and coin. Myself and 2 others counted all those U.S. currency notes and coin. There were several hundred 1 dollar bills.
I can appreciate your term "positive texture". While transacting in cash and making change, one gets to make social intercourse. Swapping stories and jokes, prognosticating the weather, complimenting on a new hair style or sweater, in short, bringing "positive texture" to a financial transaction.
There was certainly no "negative friction" experienced at the till. That's just marketing hype by those who would benefit by corporate capture of our transactions.
Really glad to hear that Scott, and thanks for the personal story. That resonates with me. If you want to see my other pro-cash pieces, check out https://www.asomo.co/s/cashback
I agree with you, Scott, about the weird inclination of neoliberalism to automate everything; however, China is working now on the 'digital yuan', but I don't know much how it will work. I do know that in China, the government owns the banks, and I think this makes all the difference.
I often wonder how the VISA/Mastercard credit systems can justify the fees they charge merchants (or the usury they inflict on borrowers). I imagine a world where every American citizen has a secure account at the Fed, accessed digitally for payments and income. There would have to be safeguards to keep the system independent of government control and manipulation, but the benefits would be many.
For sure. The question about how to create a public payments system that doesn't act in the interests of the tech/bank/card company oligopoly is a massive one, but also a very complex one when it comes to providing safeguards against the control and manipulation you mention. My CBDC pieces (Zen and the Art of CBDC Analysis) go into this to some extent
Excellent, Brett, as usual. Thank you. We are forced to use cashless whether we like it or not. But that begs a question: is it possible to design a cashless system that replicates at least some of the virtues of cash?
Hi Carne, just saw this comment now. Really glad you like the piece. I've listed a few points below:
1) In it's current form, cash is: a) state issued money in b) physical form that c) is a bearer instrument. Right now, there is no digital form of state issued money that is also a bearer instrument (unless a future CBDC gets released using some crypto architecture).
3) The original crypto-token movements certainly thought they were creating 'digital cash', but there tokens are certainly no state-issued, and seldom operate as money, albeit they do have a claim to being 'digital bearer instruments' (i.e. they depend on a ledger held by a network of techno-clerks - miners, validators - but those techno-clerks have no autonomous power to initiate a transaction. Only the person holding the private key can initiate - which gives the system a certain 'cash-like' vibe).
4) Probably the closest to non-state digital cash right now are stablecoins, which are tethered to existing monetary systems while having some digital bearer instrument element to them.
5) Prepaid cards also have a claim to retaining some elements of cash
This great piece has stuck with me since I came across it a couple of days ago. I like the convenience of cashless in part because these days I always have my phone (of course), and tend to lose cash that’s squirreled away in a pants pocket... I’ve thought about many of the issues you cite here, but seeing them all together really makes me think again.
One that perhaps you didn’t cover is how cash circulates directly in a local economy, not only reducing costs and serving as a conduit of actual in-person culture (“vibe”) but transmitting and sharing value directly between people and local businesses. I’m sure others have said it better than I have.
Hi Bowen, thanks for your comment, and glad the piece has made you think again on the issue. I totally agree on the local economy point. I covered that somewhat under point 7 (economic oligopolization), but yes, cash is heavily associated with localism. Given that cash is hand-to-hand, it has an inherent pull towards the local
You raise many valid concerns. My view is that we need Central Bank Digital Currencies, that treat the CBDC as legal tender, so no bank failure can impact your CBDC holding. Also, we need to provide much greater resilience in our power and comms grids. These need to move to 'mesh grids' employing local power generation, computing and comms facilities. If these go down, we are already so reliant on them for all manner of services, banking is only one. Widespread failure is not an option. We also need to combine CBDC with a flat% tax on all spending to replace most other taxes, with tax taken at the time money is withdrawn to spend. Everyone would then have the same '% skin in the game' and the total cost of government would be explicit. Lastly, combine this with a Universal Basic Income, the effect of which is to turn the flat% tax on spending into a progressive tax on income. The UBI would also eliminate systemic poverty, recognise some of the value of unpaid work in the home, and release a huge amount of human potential as people would be able to take on extra work to better themselves and their family without fear of losing access to the UBI when they need it. Also the UBI can be used to keep the labor market in balance. As it is raised, some people will drop out of the workforce, leaving an opening for someone who wants the work. At some point most people who want paid work will have it, and most jobs will be filled in a reasonable time, with the rest doing other things with their life, as they choose. Overall there would be less fear, hate and anger, lower crime, and better health. There is no way this can be introduced in the short term. However, we may be able to convince people to make these changes at a date say 30 years in the future, with all sides committed to it, based on very generous payouts to the people who now make a living from the current system, who would be put out of business/work once the new system is in place. We can spend the interim educating people (especially kids) about the new system and preparing and testing all aspects of the system in readiness for the change over.
Hi Michael, thanks for your detailed comment (I haven't had a chance to respond for a while, but seeing it now!). I like the fact that you have a comprehensive set of proposals designed to work together - albeit coordinating 1) a CBDC (with a progressive rather than conservative design) 2) a resilient local power grid 3) a flat tax and 4) a UBI is going to be a tricky process (albeit you do have a long-term view I see!) I can see that you're passionate about UBIs. If you have any articles on your position, feel free to leave a link
Nov 1, 2023·edited Nov 1, 2023Liked by Brett Scott
I was just in Mexico and children growing up on poor neighborhoods, just like when I was young playing on the streets, we played with anything we could find. I was glad to see about 8 children playing with marbles on the street, like when i was younger.
I then zipped down to Paraguay, and folks there spend their evenings outside having dinner and chatting with family and friends (they are not wealthy and yet to see a amazon/google vehicle BUT I do see cattle and some with horns (horns are important for a cattle's well-being which we extract from). It is also why they didn't run to the next hype or propaganda and most are not injected either, in some way they are clueless from the TV program[ming] and are living with the natural environment, they are in sync and intuitive.
Both countries are predominately "cash countries" as I understand. So I guess big tech can't harvest yet form them. Having said this, I think citizens in both Paraguay and Mexico are allowed to own guns but as I understand they do not all do.
I used to have marbles too - long live marbles! These are good examples of communities that have been relatively insulated from the spread of corporate surveillance capitalism. You might also find my piece about the 'war on informality' interesting in this regard https://brettscott.substack.com/p/the-war-on-informality
In 1989, the Loma Prieta earthquake interrupted the power and communication services over a large area. I witnessed the endless lines in the Santa Cruz Safeway store as people tried to provision themselves without power to run the registers or the credit card terminals. It was a mess, but somehow they managed until power was restored in a few days.
Then, in 2018, I was in Apalachicola, Florida, after Hurricane Michael. I had spent three days on my boat with a failed stove system, so back in port, I was overjoyed to find that Chef Danny had organized an outdoor kitchen where he cooked up and served for free all the restaurant frozen food that would otherwise spoil. Danny did not charge anything and the community pitched in to provide this important service to a battered community. No one went hungry. The local store was not so generous, but it did not matter because nutritional needs were met by the community effort. Power was restored in a week.
Digital cash depends on an energy and communication system that is vulnerable, but in some respects in this modern world, cash does too. Ultimately, the market is all 'tally sticks', and as Btrett Scott points out, cash is the simplest, most robust method of keeping accounts.
You spend a whole article talking about people getting walled off from the economy for not using private credit and payments rails, only offering cash as an alternative, and then go ‘oh no, no, I didn’t mean for people not to be stuck on existing private systems for the big stuff like salary and rent payments’. To agree with your metaphor and restricting myself to solutions actually mentioned in your article, you’re saying people who don’t use SWIFT enabled payment rails, usually on Visa or Mastercard, will not be able to long distance travel and that’s fine. I’m glad to hear you’re open to postal banking and credit unions. Since they solve for situations like salary, rent, and tax payments that cash is not that good for, I recommend discussing them actually play a role in your articles. In the interest of not getting stuck in ‘either or’ thinking
Well, some other things are worth mentioning. 1) I don't get paid to write these articles, and they take a lot of time, so if they're not paragons of perfection, I guess that's too bad. 2) I could expand every article I write to cover every possible angle and nuance, but that dilutes their impact and makes them unreadable to anyone except geeks. 3) I'm happy to, at some point, write a piece where I expand on the possibilities of how postal banking etc contribute to a balanced monetary system, but the specific political point of this piece is to protect cash - if I was to try add in all these other things it's going to, as I mention above, dilute the impact, which given that I'm not getting paid, is not a desirable situation. Anyway, I'm sorry that you're not happy, but I gotta do what I gotta do. Cheers
The local public transportation system in the city I live in, switched to a cashless system sometime near the start of the pandemic. To ride these electric trolley busses, one must now use an app or a reusable card. The cards can only be purchased at 5 locations that I know of, none of which are within reasonable walking distance of where I live.
I downloaded the app. I had to create an account for the app. Then I had to create an account with the city to connect the local busses to the app. Then I had to create an account with the 3rd party payment processor to pay for fare.
So, I send the payment processor money, which they send to the city to pay for bus fare, the fare lets me ride the bus, so i have to prove i have the fare by opening the app, which will generate a QR code if there's enough money in my account, the code is scanned by a machine when getting on the bus and shows the driver that i have in fact paid the $2 to ride. So much easier than sticking a couple bills into a slot right?
I had to create 3 accounts. I had to create a password for each account. They can't be the same password either. That's because each one had different password rules. Restarting my phone, would sign me out of all non-google/non-samsung accounts.
Imagine trying to pay to ride the bus and having to first do a password reset. Now imagine you have to do that 3 times. all on a smartphone. Imagine doing this every day. Sometimes more than once in a day. To think, I used to panic when the machine on the bus wouldn't take my wrinkled bills. Those were the days.
You hit upon a really important point here: these systems are sold as being 'convenient' for us, but in reality they are acts of bureaucratic 'oligopolization', where a group of big players agree to collaborate with each other rather than the bus company agreeing to collaborate with you. This process often forces a bunch of unnecessary work onto us, and also is incredibly invasive: in London, for example, there are pubs that now force you to scan a barcode to bring up a menu on an app on your phone that requires to you to log in via Facebook or Google and to then write out all your personal details and connect your card in order to buy a simple beer
It would be much simpler to just run the transportation as a free public service. There is no fixing the world you describe as it is just too complex. This is neoliberalism at its finest!
Excellent as usual Brett! Thank you for the talking points. You do a great job breaking it down for us. Thank you for not giving up. We need you out there!
Automation equals convenience so it is challenging even for me to use it often but somehow we need to focus our “vibe” on slowing ourselves down as a society. To use cash, read a book, write letters and talk to people. More meditation, less consumption.
Really glad you like it Manisha, and thanks for the support!
This was fantastic - I have never seen the argument put so clearly. Those of us who know the dangers of a cashless society now have the tools we need to make the argument - so thank you
I'm really happy that you find it helpful Cameron. If you know any others who would benefit from reading please do share it with them. More pieces will be coming in future too!
I definitely will - and can't wait for the best piece !
I shake my fist at you for getting me to subscribe with this alone, burying me even further in Substacks to Read.
Ha ha - my apologies!
Ha ha - my apologies!
I can relate...:)
Excellent points! I've become much more conscious about keeping cash readily on hand after reading your articles.
Another key point, related to #7, are the fees that merchants must pay to participate in the non-cash economy. The extra monthly fees and 3-5% fee on credit card payments can spell the difference between your local independent market/bookstore/bike shop staying in business or going under. Paying with cash actually saves them money and gives them a greater chance for survival in a harshly competitive market.
Hi Sam, thanks for the comment (only getting to it now after a couple months!). Glad you like the article. Great point. In future I'd love to do some more research on how those costs affect small businesses (this is a perennial topic for small businesses)
My church had a 2 day rummage sale. We took in over $2800.00. A few checks, mostly cash and coin. Myself and 2 others counted all those U.S. currency notes and coin. There were several hundred 1 dollar bills.
I can appreciate your term "positive texture". While transacting in cash and making change, one gets to make social intercourse. Swapping stories and jokes, prognosticating the weather, complimenting on a new hair style or sweater, in short, bringing "positive texture" to a financial transaction.
There was certainly no "negative friction" experienced at the till. That's just marketing hype by those who would benefit by corporate capture of our transactions.
Was inspired by the article.
Really glad to hear that Scott, and thanks for the personal story. That resonates with me. If you want to see my other pro-cash pieces, check out https://www.asomo.co/s/cashback
I pay cash because where I live, there is a 2.5% credit card fee that businesses pay. If I can save them a bit in fees, I am happy to do so.
Great Alissa!
I agree with you, Scott, about the weird inclination of neoliberalism to automate everything; however, China is working now on the 'digital yuan', but I don't know much how it will work. I do know that in China, the government owns the banks, and I think this makes all the difference.
I often wonder how the VISA/Mastercard credit systems can justify the fees they charge merchants (or the usury they inflict on borrowers). I imagine a world where every American citizen has a secure account at the Fed, accessed digitally for payments and income. There would have to be safeguards to keep the system independent of government control and manipulation, but the benefits would be many.
For sure. The question about how to create a public payments system that doesn't act in the interests of the tech/bank/card company oligopoly is a massive one, but also a very complex one when it comes to providing safeguards against the control and manipulation you mention. My CBDC pieces (Zen and the Art of CBDC Analysis) go into this to some extent
Brilliant, this is now the one piece I'll point people towards on this.
Sweet, thanks Shaun
Excellent, Brett, as usual. Thank you. We are forced to use cashless whether we like it or not. But that begs a question: is it possible to design a cashless system that replicates at least some of the virtues of cash?
Hi Carne, just saw this comment now. Really glad you like the piece. I've listed a few points below:
1) In it's current form, cash is: a) state issued money in b) physical form that c) is a bearer instrument. Right now, there is no digital form of state issued money that is also a bearer instrument (unless a future CBDC gets released using some crypto architecture).
2) Check out the 'e-cash' proposals from people like Rohan Grey (https://ecashact.us/) and Eduard de Jong https://eduard.dejongfrz.nl/papers/latest-howkingreturns.pdf
3) The original crypto-token movements certainly thought they were creating 'digital cash', but there tokens are certainly no state-issued, and seldom operate as money, albeit they do have a claim to being 'digital bearer instruments' (i.e. they depend on a ledger held by a network of techno-clerks - miners, validators - but those techno-clerks have no autonomous power to initiate a transaction. Only the person holding the private key can initiate - which gives the system a certain 'cash-like' vibe).
4) Probably the closest to non-state digital cash right now are stablecoins, which are tethered to existing monetary systems while having some digital bearer instrument element to them.
5) Prepaid cards also have a claim to retaining some elements of cash
This great piece has stuck with me since I came across it a couple of days ago. I like the convenience of cashless in part because these days I always have my phone (of course), and tend to lose cash that’s squirreled away in a pants pocket... I’ve thought about many of the issues you cite here, but seeing them all together really makes me think again.
One that perhaps you didn’t cover is how cash circulates directly in a local economy, not only reducing costs and serving as a conduit of actual in-person culture (“vibe”) but transmitting and sharing value directly between people and local businesses. I’m sure others have said it better than I have.
Hi Bowen, thanks for your comment, and glad the piece has made you think again on the issue. I totally agree on the local economy point. I covered that somewhat under point 7 (economic oligopolization), but yes, cash is heavily associated with localism. Given that cash is hand-to-hand, it has an inherent pull towards the local
You raise many valid concerns. My view is that we need Central Bank Digital Currencies, that treat the CBDC as legal tender, so no bank failure can impact your CBDC holding. Also, we need to provide much greater resilience in our power and comms grids. These need to move to 'mesh grids' employing local power generation, computing and comms facilities. If these go down, we are already so reliant on them for all manner of services, banking is only one. Widespread failure is not an option. We also need to combine CBDC with a flat% tax on all spending to replace most other taxes, with tax taken at the time money is withdrawn to spend. Everyone would then have the same '% skin in the game' and the total cost of government would be explicit. Lastly, combine this with a Universal Basic Income, the effect of which is to turn the flat% tax on spending into a progressive tax on income. The UBI would also eliminate systemic poverty, recognise some of the value of unpaid work in the home, and release a huge amount of human potential as people would be able to take on extra work to better themselves and their family without fear of losing access to the UBI when they need it. Also the UBI can be used to keep the labor market in balance. As it is raised, some people will drop out of the workforce, leaving an opening for someone who wants the work. At some point most people who want paid work will have it, and most jobs will be filled in a reasonable time, with the rest doing other things with their life, as they choose. Overall there would be less fear, hate and anger, lower crime, and better health. There is no way this can be introduced in the short term. However, we may be able to convince people to make these changes at a date say 30 years in the future, with all sides committed to it, based on very generous payouts to the people who now make a living from the current system, who would be put out of business/work once the new system is in place. We can spend the interim educating people (especially kids) about the new system and preparing and testing all aspects of the system in readiness for the change over.
Hi Michael, thanks for your detailed comment (I haven't had a chance to respond for a while, but seeing it now!). I like the fact that you have a comprehensive set of proposals designed to work together - albeit coordinating 1) a CBDC (with a progressive rather than conservative design) 2) a resilient local power grid 3) a flat tax and 4) a UBI is going to be a tricky process (albeit you do have a long-term view I see!) I can see that you're passionate about UBIs. If you have any articles on your position, feel free to leave a link
I was just in Mexico and children growing up on poor neighborhoods, just like when I was young playing on the streets, we played with anything we could find. I was glad to see about 8 children playing with marbles on the street, like when i was younger.
I then zipped down to Paraguay, and folks there spend their evenings outside having dinner and chatting with family and friends (they are not wealthy and yet to see a amazon/google vehicle BUT I do see cattle and some with horns (horns are important for a cattle's well-being which we extract from). It is also why they didn't run to the next hype or propaganda and most are not injected either, in some way they are clueless from the TV program[ming] and are living with the natural environment, they are in sync and intuitive.
Both countries are predominately "cash countries" as I understand. So I guess big tech can't harvest yet form them. Having said this, I think citizens in both Paraguay and Mexico are allowed to own guns but as I understand they do not all do.
I used to have marbles too - long live marbles! These are good examples of communities that have been relatively insulated from the spread of corporate surveillance capitalism. You might also find my piece about the 'war on informality' interesting in this regard https://brettscott.substack.com/p/the-war-on-informality
In 1989, the Loma Prieta earthquake interrupted the power and communication services over a large area. I witnessed the endless lines in the Santa Cruz Safeway store as people tried to provision themselves without power to run the registers or the credit card terminals. It was a mess, but somehow they managed until power was restored in a few days.
Then, in 2018, I was in Apalachicola, Florida, after Hurricane Michael. I had spent three days on my boat with a failed stove system, so back in port, I was overjoyed to find that Chef Danny had organized an outdoor kitchen where he cooked up and served for free all the restaurant frozen food that would otherwise spoil. Danny did not charge anything and the community pitched in to provide this important service to a battered community. No one went hungry. The local store was not so generous, but it did not matter because nutritional needs were met by the community effort. Power was restored in a week.
Digital cash depends on an energy and communication system that is vulnerable, but in some respects in this modern world, cash does too. Ultimately, the market is all 'tally sticks', and as Btrett Scott points out, cash is the simplest, most robust method of keeping accounts.
Thanks for sharing these stories - great examples
Great analysis.
Thanks Irene, glad you like it
I have to read your book to learn more about how finances work nowadays. Thank you for a great introduction.
That's really great to hear
You spend a whole article talking about people getting walled off from the economy for not using private credit and payments rails, only offering cash as an alternative, and then go ‘oh no, no, I didn’t mean for people not to be stuck on existing private systems for the big stuff like salary and rent payments’. To agree with your metaphor and restricting myself to solutions actually mentioned in your article, you’re saying people who don’t use SWIFT enabled payment rails, usually on Visa or Mastercard, will not be able to long distance travel and that’s fine. I’m glad to hear you’re open to postal banking and credit unions. Since they solve for situations like salary, rent, and tax payments that cash is not that good for, I recommend discussing them actually play a role in your articles. In the interest of not getting stuck in ‘either or’ thinking
Well, some other things are worth mentioning. 1) I don't get paid to write these articles, and they take a lot of time, so if they're not paragons of perfection, I guess that's too bad. 2) I could expand every article I write to cover every possible angle and nuance, but that dilutes their impact and makes them unreadable to anyone except geeks. 3) I'm happy to, at some point, write a piece where I expand on the possibilities of how postal banking etc contribute to a balanced monetary system, but the specific political point of this piece is to protect cash - if I was to try add in all these other things it's going to, as I mention above, dilute the impact, which given that I'm not getting paid, is not a desirable situation. Anyway, I'm sorry that you're not happy, but I gotta do what I gotta do. Cheers