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The problem with cash
A Colombian police officer holds a forged 100 U.S. dollar bill, on March 22, 2011, in Cali, department of Valle del Cauca, Colombia. In his new book, David Wolman advocates for the elimination of cash.
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Kai Ryssdal: Humor me for a minute and take a look in your wallet. Whaddya got: $10, maybe $20? Maybe more?
Money. It's the bills we pay. It's the debt we're in. It's the paycheck we get every week or two. But day to day, mostly it's cash.
David Wolman's been thinking about cash a lot lately. And he doesn't like it one bit. His new book is called, appropriately enough, "The End of Money." David, welcome to the program.
David Wolman: Thank you Kai.
Ryssdal: Why do you want to take our money away, man?
Wolman: Well, so the project began when I got curious about this campaign to get rid of the penny. But then the argument started to resonate with me, and I said, well wait a minute, why just the penny -- what about the nickel and the quarter and the $10 bill? I decided, well I'll try to not use and not even touch cash for an entire year, and let's see how that would go, whether it's at the parking meter or traveling overseas. You know, there are very legitimate arguments to made in defense of cash, but what I wanted to do was subject it to a little bit scrutiny because it seems to have skated by for centuries now without anybody wondering 'What are the real costs here?'
Ryssdal: Well let's do that. Let's just tick down the list. And first of all, as you have pointed out, cash is not cheap. It's an expensive way to conduct transactions.
Wolman: Right. So first of all, you have to get it out there to the world, to all those ATMs and cash registers. And then you have to secure it, and maybe move it some more and count it, and make sure your employees aren't skimming off the top. Then you have cash as the currency of crime. 2009, 2010 -- there were like 10,000 bank robberies just in America.
Ryssdal: So if you didn't need banks to put your cash in, you wouldn't have bank robberies, right?
Wolman: Right. And in Sweden, in fact, you have this union of bank worker employees saying let's get rid of cash altogether, because they're tired of the hazard of robberies.
Ryssdal: There's another thing that you go into in some depth in the book, and it becomes a little bit your -- OK, this is a strong word -- obsession as you went about your experiment with living cashless for a while in this society. And it's a thing our mothers always told us when we were kids, and we were like, 'What do you mean money's dirty?' I mean, it's just filthy.
Wolman: It really is. I mean, other than maybe handshakes or grabbing a handle on a bus just after someone else has, this is sort of the top three or four way that we exchange each other's communicable goodies. There's a wild study that some Swiss researchers have conducted trying to see how much they could grow the influenza virus on some dirty, humid banknotes in a dark and scary place.
Ryssdal: Well, wait -- how did it go?
Wolman: It grew surprisingly fast. Then I shipped that study off to a friend at the CDC and she said, look, unless you're literally blowing your nose right into it and putting it in a human wallet and not letting it rub up against a bunch of other leather, maybe -- only maybe -- would the virus remain intact.
Ryssdal: There's a socioeconomic part of this as well, though, right? If you get rid of cash, which is among the key ways that people who don't have a lot of money spend money, then if you go electronic -- whether it's credit cards or mobile payments or whatever -- are you going to disenfranchise them?
Wolman: If you get rid of cash tomorrow: yes, absolutely. The doormen and the waiters of the world out there are probably not loving this idea, but in the long-term, if you can imagine 10, 15, 20 years from now, if a substitute technology or technologies is really there, then you're actually helping the 99 percent who are kind of stuck in the cash economy. And if you're excluded from the formal economy, you can't have a bank account, you can't earn credit to maybe later get a student loan or get a mortgage. You're stuck with cash stuffed in a tea can that's stored in your apartment that you hope somebody isn't going to steal. So that's sort of the idea that I was probing, but you're absolutely right. This would be foolhardy if we outlawed cash tomorrow.
Ryssdal: David Wolman, his book is called "The End of Money." David, thanks a lot.
Wolman: Thank you.
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Actually, there now is a way to receive non-cash tips instantly. tippees display a business card showing their unique Medallion image, which is scanned by the tipper using their smartphone. this method, launched by Ziptip in 2011, was created in order to solve the problems of tipping (wanting to tip but not having cash; leaving cash sometimes is not secure; tippers can't track tips paid for expense reports; tippees sometimes don't control their tip receipts, tipping opportunities (when one is using cash) are too limited and sometimes awkward), but will come in handy when cash usage continues to decline.
The real disenfranchisement comes with never using cash; one becomes credit dependent at an unsustainable rate. 15 years ago, I had never made over $14,000 a year yet had a high credit score, 8 credit cards, and up- to $80,000 in credit...I used it, defaulted, never payed it, waited the 6 years, and never will!!!
This is the worst idea I’ve heard since electronic voting machines. If we didn’t have cash, we would have to have some sort of legal substitute for cash to serve as a receipt and paper trail, or we would be even more at the mercy of a potentially fraudulent banking system than we currently are (or is that the plan?). And it isn’t just banks. Banks and employers have a mutual interest in reducing costs by eliminating payroll checks and relying on electronic transfer, which is a formula for “faith-based” accounting and employer honesty. It isn’t just speculation: Two years ago, my employer used the Internet to do his payroll and issue checks, which came without printed pay statements showing all deductions. At the end of the year, the IRS questioned the amount indicated on my W2 and refused to issue my refund, except that I produce that year’s pay statements. I explained that I wasn’t given any. Too bad. My $900 refund was denied (it came ten months later by surprise). We are increasingly a “consumer beware” society, with a legal system that favors banks, employers, and businesses over workers, consumers, and taxpayers. Without some sort of legally-binding hard copy, there would be no check on charges and accountability within a system designed primarily as a convenience to businesses, not to mention the machinations of high finance .
The "doormen and the waiters" or students, or the unemployed or the poor would not be disenfranchised, they would use what came before money - they would barter. I wonder if Wolman talks about a barter economy in his book. What I think about when I think about the end of money is bartering.
There was no mention about the large and ever growing undeground cash society - what percentage of Los Angeles economy is in CASH. There is a Mexican cement company offices at least in LA and Houston where one can make payments for building material delivery in your home village in Mexico - no high Western Union fees or paper trail.
Example - husband mowes 4 lawns a day and wife cleans 2 houses a day = $100,000 cash income - no taxes, food stamps, free school lunches and driving Escalate - what a country!
In order for us to include everyone in the tax paying society, we have to implement a consumption based tax system, and if we exclude basic food and medicine, we are not penalizing the less-well-to-do. Nobody NEEDS $200 sneakers, Salvation Army and Goodwill have pefectly usable clothing - it is not what you buy, but where you shop.
You cannot "grow" a flu virus on a piece of money. A virus has no independent metabolism and cannot reproduce, or do much of anything, outside a cellular host.
Here's the abstract for the study he must have been talking about: http://aem.asm.org/content/74/10/3002.abstract
As you can see, they tested the survival of the flu virus, not its "growth."
What a total waste of four minutes.
Maybe David Wolman will make some (presumably electronic) cash selling his novel (novel as in: freaky sci-fi... right out of an Orwellian nightmare) but to be consistent, he should sell it strictly as an e-book.
Hey, you never know if those actual paper pages might be contaminated.
As if the only way to steal money from a bank is in person robbery!
Usually your questions are more to the point.
I suspect that banks lose more money to embezzling and other forms of non-robbery thefts than in person thefts of cash.
Yes, you brought out the author's viewpoint. It was as if you supported that point, and never asked the share of bank losses that are due to such crimes.
Cash and checks, ways that individuals can transfer money one to the other -- what are the replacements? The cash economy is not all for criminals.
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