A cashless economy leads to a safer society

[Nye Bevan]

“Cash", wrote Marcus Felson, an eminent American criminologist, “is the mother’s milk of crime.” Its appeal to criminals is clear. Unlike cars or paintings, it can be concealed immediately after being pinched. It has no security features to prevent its being easily and anonymously spent on legal or illegal goods. Unlike nearly any other object that can be stolen, it needs no fence.

Criminals’ need for cash motivates much predatory street crime. A new paper from the National Bureau of Economic Research asks whether this might work in reverse: if cash motivates crime, could the absence of cash reduce crime? The answer seems to be yes.

The paper looks at county-level crime data in Missouri from 1990 to 2011, a period when crime dropped markedly all over the rich world. During this time Missouri, like the rest of America, changed the way it delivered its welfare and food-stamp benefits. Instead of paper cheques states now use a debit-card system known as Electronic Benefit Transfer (EBT). Missouri introduced EBT cards in eight phases over 12 months. This gradual shift allowed the authors to analyse not just differences in crime rates before and after the introduction of EBT, but also how those differences compared with changes during the same period in counties that had not implemented it.

They found that electronic payments led to a drop of 9.8% in the overall crime rate and caused the rates of burglary, assault and larceny to fall by 7.9%, 12.5% and 9.6%, respectively. The introduction of EBT was also associated with a lower number of arrests, an indication that the crime rate’s decline did not stem from more aggressive policing. EBT’s effects on non-property-related crimes such as drug offences, rape and prostitution were statistically insignificant. The findings suggest, according to Volkan Topalli, one of the authors, that “for people in densely populated urban neighbourhoods, the less cash they have and the more their transactions are digitised, the less attractive criminal targets they make.”

http://www.economist.com/news/finance-and-economics/21600149-cashless-economy-leads-safer-society-less-coin-purloin?zid=317&ah=8a47fc455a44945580198768fad0fa41

[House of Roberts]

1. A cashless economy empowers the big banks even more.

They will get an even bigger cut of the economy than they have now.
Also, it makes it possible for taxes to be applied to all sales, even used goods sold by individuals.
How can you have a yard sale without cash?

[Lucky Luciano]

7. Doesn't need to be strictly cash.

I often have only $40 on me until I run out. I use my CC as much as possible to rack up the points. The $40 lasts the week easily too - usually a daily Starbucks latte is my main cash transaction - though I could put that on the card too actually.

Yard sales can still be cash.

[Warpy]

2. The problem with a cashless economy is that it can get hacked

Look at the mess at Target and other big retailers.

[Sen. Walter Sobchak]

3. People carry less cash, but more value

A Disney security manager told me about a year ago at a loss prevention event that in 1995 the average man only carried about $150 in cash and valuables and most of that being his watch. Women were a little higher. He then said contemplate that if you rob a tourist on Harbor Boulevard any given night what they're going to have in the possession. Smart Phones, digital cameras, tablets, designer sunglasses or handbags. You as a street hoodlum aren't likely to find a thick moneyclip on any of your victims, but you can steal thousands worth of accessories and electronics without much effort.

Anywhere in America you as a hoodlum can probably assume that robbing a college aged kid will at least yield a smartphone of some value.

[seveneyes]

20. The risk vs reward ratio needs to be changed

How many muggers get caught and are let off with little to no consequence? Crimes involving victims are not prosecuted severely enough to deter these criminal bastards from harming others. Make a first offense mugging 10 years minimum and multiply times 5 for each repeat offense. For each POS incarcerated, release a prisoner for a non-victim crime.

[Sen. Walter Sobchak]

35. It's odd how a crime that as recently as the sixties could carry the death penalty

is now largely unpunished in most urban areas.

[delta17]

28. Do smart phones have any value if they are stolen?

I am no expert on this, but I thought the provider would just cut off the service if it is stolen. Then it is just an MP3 player. Also, they are cheaply made and updated pretty often. I don't think they have much street value, but I could be wrong.

[Sen. Walter Sobchak]

33. In most instances change the SIM card and away you go

http://www.zdnet.com/smartphone-theft-reaches-pandemic-proportions-and-you-are-a-target-7000026397/

What's smaller than a slice of bread, worth hundreds of dollars, and carried by almost anyone? If you guessed "smartphone," you'd be right on the money. In fact, it's the relationship between money and smartphones that is causing the problem.

As we all know, smartphones are small, portable, jewel-like, and quite expensive. They are extremely portable and easily resold. These characteristics make them ideal targets for criminals, and those who carry smartphones ideal targets for robbers.

iPhones, for example, have become a form of hard currency. As BusinessWeek reports, an iPhone bought here in the US for $815 (with tax) is worth about $1,130 in Italy. That's a $315 profit on a legitimate purchase. Using numbers from the BusinessWeek story, unlocked iPhone 5S devices cost about $700 on average in the US and can be resold for $971 (in France) to $1,196 (in Brazil).

[DJ13]

4. Every single purchase can be tracked in a cashless society

[Skip Intro]

12. As well as location, employment, history, and yes, medical.

It will start with a card and then certainly quickly progress to implants of read/write data-chips.

Almost certain to end in some twisted totalitarian, authoritarian, 1984-ish nightmare.

No thanks.

[cprise]

14. Its based on a 1% class-warrior's redefinition of "crime"

No doubt this person feels extremely secure against white collar criminals; he may even be one, and so not face any strict punishment.

I mistakenly thought The Economist was a little smarter than WSJ.

[Victor_c3]

15. I'm worried about that too.... n/t

[lumberjack_jeff]

6. Bitcoin would be a panacea then, right?

Not all commerce should be the banks and the government's (redundancy alert) business.

[Recursion]

9. No: bitcoin's supply is determined by algorithm rather than policy

Leaving the governments with no monetary policy options is the same problem the gold standard has.

[TampaAnimusVortex]

21. Given that it's a global currency - all governments would be subject to it.

There would be no need for a government to have a monetary policy, as it's primarily used in protective measures against other countries monetary policies. Read the book "Currency wars". You'll see the dominant actions being taken right now with all this quantitative easing is just that.

Besides, removing the potential for abuse in monetary policy is more than worth it. I think anyone that has watched over the last few years has seen how the banksters has corrupted both parties now and we will see that manifested forever after as bailouts followed shortly thereafter with bonuses.

[Recursion]

23. Then the entire world becomes the Eurozone

There would be no need for a government to have a monetary policy, as it's primarily used in protective measures against other countries monetary policies. Read the book "Currency wars".

I have; it's very simplistic. There is an endogenous money supply need; oddly enough, Keynes, Galbraith, and Friedman all talk about that very clearly.

[Recursion]

8. Yes, generally freedom/anonymity and security can be traded for one another... (nt)

[lumberjack_jeff]

10. +1 nt

[Skip Intro]

11. Talk about total control. n/t

[SheilaT]

13. It has been my observation that those

who pay for everything with a debit card don't really pay attention to how much they are really spending. They truly live from paycheck to paycheck, even when they make a pretty decent wage.

Me? I take a sum of money out of the bank every Monday. Around 2/3 of that money gets put into envelopes labelled: Gas, Clothing, Health & Well being, Entertainment, and Miscellaneous. Most of those labels are pretty obvious. Health & Well Being covers things like my make up, perfume, lotions, and other such girly things.

The rest of the money is my grocery and walking around money. When the cash runs out, that's it. I'm done for the week. When I need new clothes or want to go to a movie, I take cash out of the appropriate envelope and shop or watch. I have found that this way I can keep good control over my expenditures. I am never really carrying around that much cash at any time, although I do usually have cash on me. I do also have credit cards, which I use for larger expenditures. I need new tires. Those will go on the credit card. When I stay in a hotel, I use a credit card.

My concern is that when people stop using cash, they stop understanding how much they are really spending.

[Louisiana1976]

29. I often use my debit card, but I keep close track of what I'm spending.

Because money for the debit card comes out of my checking account, I have to be careful not to have overdrafts.

[SomethingFishy]

30. At 40 bucks a pop for overdrafts...

I would venture to say that people using debit cards are less likely to overspend.

[SheilaT]

31. Once someone has been badly burned by the overdraft charges

that may well be true. But, even if they're paying good close attention to how much they're spending, I see too many simply spending down to very close to zero dollars in their checking account. Never a good idea.

About twenty-five years ago I got a checking account for free so long as I maintained a $400 dollar balance at all times. So I treated that balance as if it were zero, which meant I always had money there in case of some sort of dire emergency.

[bemildred]

16. And a cash economy is an anonymous economy, which is why Big Brother hates cash.

And why the black economy is a cash economy.

[WinkyDink]

17. "Criminals’ need for cash motivates much predatory street crime." Indeed----WALL STREET.

The Middle Class is not being destroyed by street muggings.

[hobbit709]

18. how would politicians hide their bribes?

[99Forever]

19. Oh NOES!

I made those risky cash purchases at Target between black Friday and New Years. Meanwhile all of those "safe" debit and credit card customers were SO well protected.

[former9thward]

34. They actually were protected.

No one lost anything. Of course that never made the front pages because it was not sensational.

[NYC Liberal]

36. What happens when your cash is stolen?

If your CC info is stolen, in most cases you get a new card and the charges removed. It takes a few days..at most.

If you have cash stolen, how long does it take to recover that money...if you even can?

[JCMach1]

22. MPesa in Kenya has changed everything... you carry your cash through a phone connected wallet

Because the banks are such a powerful lobby in the US, we have resisted an easy transition to such an economy...

M-Pesa customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents. M-Pesa is operated by Safaricom, a mobile network operator (MNO), which is not classed as a deposit-taking institution (such as a bank).

The service enables its users to:

Deposit and withdraw money
Transfer money to other users and non-users
Pay bills
Purchase airtime[14][15]
Transfer money between the service and a bank account (in some markets) [16]

The user interface technology of M-Pesa differs between Safaricom of Kenya and Vodacom of Tanzania, although the underlying platform is the same. While Safaricom uses SIM toolkit (STK) to provide handset menus for accessing the service, Vodacom relies mostly on USSD to provide users with menus, but also supports STK.[17] ... http://en.wikipedia.org/wiki/M-Pesa

another link: http://agi.ac.za/sites/agi.ac.za/files/standpoints_is_the_success_of_m-pesa_empowering_kenyan_rural_women_.pdf

Would be nice to see the US Post Office work in conjunction with mobile providers to power this service in America... Cut regular banks out entirely!!!

[diabeticman]

27. My wife's grandparents lived through the depression. She was raised with the belief of not trusting

banks. Her family always had cash at the house (not that it was much) but My wife does not trust banks. We both have credit union accounts but we always get the majority of the money out and pay bills with cash where she get a receipt and know the bill was paid or keep over zealous companies taking more out of our account than we expect.

Recently her friend had an idea to get satellite TV set up. She signed up for the 2 year deal thing but when the installation she found out it could not be installed due to where some trees and power lines where growing. The company claimed the contract would be voided due to the inability to set up the sat alie but 4 months later her account was debit $500.00 by the company and she is fighting them for the money back.

[JCMach1]

38. In Kenya, you would just MPESA (like a text message) the payment to the company

like a check... no auto deductions, but very easy for payments.

[Liberal_in_LA]

24. less privacy

[pipi_k]

25. Crime aside...

going cashless has been great for me in terms of not having to handle money that someone else has touched minutes/seconds after wiping his nose or not washing his hands after using the restroom.

Went from having at least two head colds (often with Bronchitis) per year to one head cold since 2006.

[zappaman]

26. We need to get all the cash in a pile and burn it!

I volunteer to start collecting it.
Can I count on you giving me yours so I can properly dispose of it?
No charge of course.

[RebelOne]

32. I never carry cash. I have $1 in my wallet.

I use plastic for all of my purchases.

[NYC Liberal]

37. I very, very rarely use cash.

The benefits of using a credit/debit card far outweigh the benefits of cash (for me).

-Easy to keep track of how much money I have and how much I spend
-More secure. If my card is stolen, I simply cancel it and get a new one. And any fraudulent charges can simply be removed.
-Losing or damaging my card doesn't mean I lose any money.
-I can send money to people or make payments online. Can't do that with cash.