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A cash-free society: nirvana or nightmare?

Never ask of money spent

Where the spender thinks it went.

Nobody was ever meant

To remember or invent

What he did with every cent.

--Robert Frost

Say, buddy, can you spare a quarter?" But suppose we lived in a society that had no quarters--for that matter, no coins or paper currency. What would happen to our daily lives?

Banks, electronics firms, and law-enforcement agencies are leading the charge to replace metallic coins and paper currency with silicon chips. They want to exchange all physical money for electronic money. This change could impact society enormously. However, there is virtually no open debate on the topic. In this column, we shall investigate the benefits and costs of a cash-free society.

Look closely at your VISA or ATM (automatic teller machine) card. These cards list your name and account number on the front and have a magnetic strip on the back. Bankers and electronics buffs call these "dumb cards" because they contain little information about us.

Now imagine a "smart card." This card looks like our plastic charge cards except, perhaps, it is thicker. The card is smart, because it is basically a computer disc that stores data about us.

"Smart cards' time has finally come," says Joseph Schuler, a Maryland consultant, in the Wall Street Journal. "In the U.S., we're finally beginning to see some of the applications we thought we'd see three or four years ago." Millions of us already use these smart cards. For example, many college students purchase cards that operate soda, photocopy, or laundry machines. In Europe, many phone booths require smart cards. The idea behind these cards is simple. We buy, say, $10 worth of electronic money from a machine or a sales clerk. This $10 is stored on a plastic card and is electronically diminished every time we purchase something. In other words, the card has a memory.

More complicated cards also exist. American Telephone and Telegraph Company has a Smart Card and System division. According to William Bulkeley in the Wall Street journal, they are

demonstrating a security-conscious

card that works with cash

machines developed by its NCR

Corp. subsidiary. The card slides

into a slot on the cash machine.

The user then dictates words into

a telephone handset and the

smart card compares them with a

voice-print stored in its memory.

The card can be used like any

cash card to get bills, but it also

can store $20 or $50 in its memory,

to be spent when needed.

Do we want banks to record and store our voices for our security?

Today, influential persons would like smart cards to replace all other monies. Bankers, in particular, want to eliminate the costly, time-consuming process of sorting billions of checks. Retailers want to quit worrying about bounced checks and credit checks.

Let us see how a cashless society might work. Let's imagine that on January 1 we are required by law to take all the cash in our wallets, in our safe, deposit boxes, and in our piggy banks to an official bank. This bank would count all our monies, let us say $10,000, and issue us a plastic "money card" with a balance of $10,000. This money card might store our account numbers and financial records from various commercial banks, retail stores, and brokerage accounts. Suppose you want to pay me $100 (a fine, democratic idea). You might go to a "money machine" (an ATM look-alike) and press buttons that transfer $100 from one of your accounts to one of my accounts. You would receive a paper receipt for this transaction. These money machines would replace cash registers and would be located in all businesses, perhaps in all homes. We would receive paychecks, buy tooth, paste, and give our children allowances by inserting our money cards into money machines. Let us assume, as its advocates claim, that this system could keep our friends and enemies from using our money card with a technology called public-key encryption.

The mandatory usage of money cards could have positive social implications. Here are a few arguments that money-card enthusiasts, not necessarily myself, use:

* A clean wallet. We could toss out our dirty, germ-coated money and keep just one clean money card, plus a clean, digitalized, high-security photo I.D. card.

* Abolish cash robberies. Muggings, liquor-store holdups, and cash crimes would vanish, since cash would no longer exist. Why would a thief force you to transfer money to his money card? The transaction would be electronically recorded and easily traced.

* Tax the underground economy. The IRS estimates that millions of Americans operate outside our official economy. They run family businesses, operate secret sweat shops, or take cash payments only, which they do not report to the IRS. Money cards would allow the IRS, for better or worse, to tax these evaders.

* Shine light on government corruption. Many law-enforcement officers, bureaucrats, and elected politicians take bribes, kickbacks, or "legal fees" to cover up criminal or lobbyist activities. Jonathan Beaty and S. C. Gwynne provide chilling examples in their book The Outlaw Bank: A Wild Ride into the Secret Heart of BCCI. (According to this book, the Bank of Credit and Commerce Inter, national was a criminal enterprise aided by the highest levels of the American government.) Perhaps money cards would make it easier for our Ralph Naders and courageous investigative reporters like Beaty and Gwynne to "follow the money" that greases corruption.

* Eradicate counterfeiters. The counterfeiting of currency, money orders, and negotiable financial paper is a big business--especially with high-resolution computer scanners and laser printers. Money-card advocates allege that bogus money cards might be harder to manufacture than bogus paper monies.

* Restore accidental losses. Many people lose their wallets, cash hordes, and valuable paperwork through carelessness, fires, or natural disasters. A lost money card could be easily re, placed.

* Simplify accounting. We could place our money card into a money machine, press a couple of buttons, and get a "hard copy" (paper record) of every cent we earned and spent.

* Promote business efficiency. Money machines would allow businesses to lay off countless bank tellers, retail clerks, and bookkeepers--thereby passing on the savings to the rest of US.

Even in a cash-free society, there would be no free lunch. Every technology is a double-edged sword. This means that money cards would cut some people to pieces. Here are a few thoughts that all of us might reflect upon:

* Law-enforcement dossiers. Police could collect, store, and sort all of your economic transactions. The same police who take bribes from drug pushers could sell lists of women who pay for abortions to anti-abortion groups. The same federal agents who built a 1,000-page dossier on Marilyn Monroe could trade financial dossiers about business owners to competitors. Our politically selective law enforcers could create and market unprecedented databanks about "political opponents."

* Assault on family privacy. With money cards, every time we give our child a $5 allowance, the IRS will know. Government agencies could see all financial transactions between spouses and relatives--which could lead to new forms of "gift" and "family" taxes.

* Money-card addicts. Millions of people are addicted to credit cards--which is one reason why bankruptcy is rampant. A totally electronic financial system will make impulse buying even easier.

* Credit bureaus. These organizations would be all-powerful. They could sell, openly or secretly, anything about us. I'm reminded of a cartoon that showed two KGB agents standing outside the Kremlin after the Soviet Union collapsed. One agent said, "What are we going to do now?" The other agent smiled and answered, "No problem, we'll open a credit agency."

* Hackers. Computer experts, working for themselves or for hire, might alter our records, create fictitious millionaires, set up dummy companies, and so on. In short, they could create an electronic underground society.

* New barter system. People are ingenious. They might want to protect their legitimate privacy or their illegitimate criminality by circumventing money cards. For example, they might use diamonds, gold, art, or other commodities--as people do in countries with unstable economies. People might steal, swindle, and kill for these new "de facto" currencies, just as they do today for $100 bills.

* Big Brother's supercomputer. What will happen to "political freedom" if our unelected secret agencies are free to store all our financial records in centralized computers?

Here is another intriguing prospect: the greatest beneficiaries of a money, card world would be a few alphabet agencies--in particular the IRS, the FBI, and the CIA. Will these groups support a cash-free society, or will they stick with the cash that enables them to hide their own secret activities? Likely, they will support the money-card for three reasons: (1) they desire the extra power over us; (2) they could manipulate their own money-card records; and (3) they could pass more laws that hide their real agendas.

The technology to move to money cards already exists. A brave, new money-card world would be one of the greatest transfers of power in history from citizens to the government. A money machine would give Big Brother powers unimagined by George Orwell in his novel 1984.

We must struggle to ensure that our high-tech financial system is our servant, not our master!

Scientist Andre Bacard is the author of Hunger for Power: Who Rules the World and How. A guest on hundreds of radio talk shows, he can be reached at Box 3009, Stanford, CA 94309.
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Title Annotation:Technology and Society
Author:Bacard, Andre
Publication:The Humanist
Date:Jan 1, 1994
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