South Korea is elminating coins and requiring shoppers to upload their cash receipts to a digital database; Indians are still reeling from a 2016 decision that turned 86% of the country's cash worthless in a matter of hours; migrants and refugees are being targeted for new schemes of financial inclusion, but not experiencing the promised benefits; US cities are retaliating against cash-only retailers eager to speed the flow of customers, increase spending, and surveil our every purchase while exluding undersirable demographics; and despite our technological proficiencies, fiction writers 500 years ago still had more creative solutions to our money woes.
It seems like a straight-forward topic and yet we still manage to ramble off script.
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(Yes, this is a machine generated transcript. We'll fix it soon!)
Thank you Alexey for this very money transcript!
[0:00] David, before we get started, I have a climate change story. We do climate change topics on this podcast every once in a while, right?
[0:09] Yeah, I suppose so.
[0:11] Well, the past week I was in DC, the nation's capital of the United States of course, and the day I was leaving to go from DC back here to Atlanta, not just a day but the very hour I was trying to leave, the city got hit by historic rainfall: we receive something like 3.6 to 4 inches of rainfall in just under an hour and that was the hour I was trying to leave. So I didn't know how bad it was at the time but I looked outside the window and said: there's no way I'm going to walk to the bus station, it’s a mile away, let me just call a taxi. A taxi got there, I was drenched just getting into the car. And I noticed that as we, you know, went towards the airport, we kept having to reroute ourselves because so many roads were closed because they have been converted to mini-rivers, buses shut down in the middle of the street, water just gushing everywhere. And at a certain point my driver took a turn down some neighborhood roads, we're going along and I look out the window and… you ever been on a boat, David?
[1:18] Yes, Daniel, I've been on a boat before.
[1:21] You ever been on a boat and look behind you and saw the wake that the boat was creating?
[1:28] Yep, like I said, I've been on a boat before.
[1:33] Well, I was in a car and I looked out my window and to my surprise, we were creating that wake and that wake went right up to the front door of the house as we are passing. I looked in front of me and we were full-on in a river, David. And about that time I looked down at my feet and water was coming up through the car. It's about that time that the engine shut off and my driver jumped out the window of his door and started pushing the car. And I was, I poke my head out the window, I said, “let me help you, I'll get out” and he said, “no, you have to get to the airport, you stay.”
[2:06] He’s just really determined to get that tip I guess.
[2:09] This was Rambo driver, he was going to lay down his life to get me to the airport. But I did eventually take off my shoes, he was really struggling, so I got out the window myself, we collectively pushed the car to a dry spot and I eventually got myself to the airport, it took an extra two hours but luckily my plane was delayed 2 hours so. Although when I went through the TSA scanner, the body scanner, it showed all these anomalies because I was dripping wet. And so I had to take the sensitive pat-down of shame right there in front of everybody.
[2:44] The most American story I've ever heard, Daniel, you’re in the nation's capital, the swamp is supposed to be drained but it's actually overflowing and it's overflowing because of climate change. Some poor gig economy guys out there like trying desperately to make a 5-star rating and then get a little bit of a tip. So you offered to help and he says no you don't do that, you end up going out and doing that anyway. Poor guy’s cars probably ruined, who knows if he has the insurance and stuff that he needs, will he be able to drive, will he be able to survive now that he can't drive people in his flooded Uber car?
[3:20] But that's not the concern of the young American, David, who goes about his way.
[3:25] Meanwhile you're just like marching down a river like battling through this crazy climate catastrophe brought on in large part by the very city that you're you're suffering in ultimately to go get on an airplane and contribute to the climate change that causes this. It’s beautiful.
[3:44] You might describe it as heroism.
[3:48] Some people might.
[Both laugh]
[3:54] Well, that is a good way to put it, David, that's a great way to put it. But the social paradoxes aside, it really does illustrate what we mean when we say that climate change introduces more energy into the system. This is something you brought up first in one of our early episodes but that's the reality of it: so much heat enters the system, so much more water gets evaporated, gets circulated in the atmosphere, and when it does come down eventually – it comes down much harder and much quicker. And this was, in fact, one of the top 25 most heavy rainfalls in US history since 1871, so we're seeing these things accelerate and happen more frequently.
[4:35] Well, with all the climate information in the back of our heads, let's jump into the show.
[4:45] I'm David Torcivia.
[4:47] I'm Daniel Forkner.
[4:49] And this is Ashes Ashes, a show about the systemic issues, cracks in civilization, collapse of the environment, and if we're unlucky the end of the world.
[4:59] But if we learn from all of this, maybe we can stop that. The world might be broken, but it doesn't have to be.
[5:11] Daniel, I've got money on my mind today and I'm not just talking about our Patreon which you should all check out.
[5:20] Patreon.com/ashesashescast or, wait no I can't plug the shop yet, cause it still doesn't function.
[5:28] That's what happens. If this was just a cash shop we’d never have any of these issues.
[5:35] You know when you are pointing out my privilege at the beginning of that story, you know, I did try to take my driver's information, he didn't seem interested. I was really beating myself up because if I had had money on me, I wanted to give him a large tip, you know, just something, a little gesture of my gratitude for him really going out of his way to try to get us to safety – but of course we live in the digital age – I didn't have cash. And then I went into the taxi service app to try to give him a tip but then oh, I got an email that said you're not allowed to leave a tip that big, would you like to readjust it?
[6:12] What kind of weird nanny control is that where you're not even allowed to leave a tip of the amount that you feel is appropriate? I mean this is a guy who heroically killed his car to try and finish this fair, and you're trying to give him a tip as a gesture like thank you for driving into this flood for better or for worse, however ill-informed that may have been, and they say no, you can't even do that. Which I guess brings us to some of these issues that we'll talk about throughout the episode today, you might have guessed it at this point, we are talking about money but specifically the lack of cold hard cash that finding ourselves increasingly in as we move towards a cashless world. And the different ways that this means, that can play out in terms of privacy, in terms of control and many things that you haven't even considered yet.
[6:57] While we're talking about the nation's capital, two other interesting little tidbits here. I was walking down the street on one day, went to a salad bar to find out that they don't accept cash, and the friends I was with, we all thought this was peculiar because this was a highly gentrified area – it's actually right where Amazon headquarters is about to build their new facility, and right outside are several homeless people on the sidewalk, this is adjacent to one of the most luxurious apartment buildings I've ever seen – but they don't accept cash. And I wonder if that has anything to do with maybe further driving down that wedge of gentrification, of keeping those people, those undesirable people out of your area to make it seem more attractive to all those new software developers incoming for their cushy jobs at Amazon. But then in an ironic twist we were just a couple blocks away, I think it was the next day, we walked by an H&M and on their door was a similar sign, except it was the opposite, David, it said, “Sorry our network is down indefinitely, accepting cash only.” Once again the contradictions of a digital economy.
[8:05] This has been an episode of Black Mirror, thank you for turning into Ashes Ashes. No, but I actually think there's a lot of Black Mirror episodes, it seems to feel like they are revolving around the fact like: “oh, what if there was no money, what if everything was digital cash?” And we’re not going to get into that, we're not going to get into this blockchain stuff or any of these alternatives, whatever, it’s not the point of the show. The point is: talking about this world where we are no longer given the option of paying in cold hard cash, in coins and bills, in physical things that can't easily be traced, that can be exchanged without any sort of middleman coming in and dictating how we can do that. And this has been the case for at this point thousands of years even if – as we talked about on this show, Daniel – that may be the invention of money wasn't necessarily the right idea, wasn't a step in the right direction, but nonetheless, this is the system that we settled on. And we have moved forward and are trying to push it into scary new futures, and let's talk about what that might mean.
[9:09] Several countries are pushing out for the so-called cashless society. And many of them are actually well on their way.
[9:16] Those are the top of the leaderboard right now are Norway, Nigeria, Sweden, and Argentina who all have around 1.5 to 2% of their GDP represented by cash that actually circulated which is much lower than other countries. Like here in the United States I think it's maybe 7% or 8%. And in 2016, David, the bank of Korea announced its plans to phase out coins by 2020, and this is to help accelerate the shift towards a cashless society. The amount of cash that people have in their wallets at any given time has already declined 33% from 2016 in Korea. And you may ask, David, how is this possible? How are they going to get rid of all the coins, how do you receive change on an item you buy if the amount you're owed is less than the lowest paper bill value, right? If I buy something for $1.50 and hand over $2 where is that 50 cents going to come from if there's no coins? It turns out, South Korea has been building up its digital cash infrastructure significantly since 2005 when it introduced digital cash receipts to try and fight tax evasion.
[10:26] Under this system, for any person who makes a certain income, they have to enroll in the government's tax accountability system, so that even when they purchase something with cash, they have to provide their phone number or credit card number, something that will identify them and then a receipt of the change that issued get sent to a government database.
[10:48] So, once the country goes fully coinless, that system is one way that people could receive their change in a digital form even if they're paying with cash.
[10:58] Daniel, but not every nation feels like they're ready for this cashless transition. And the fact is there was just a recent report that found that the UK is sleepwalking – and that’s the word they used towards cashlessness – meaning they're really not prepared for this process, they haven't thought about the potential problems that they might encounter, but they've sort of started moving in that direction anyway because market forces really like the idea of cashless: banks, retailers – they have a lot of reasons for liking the stuff, the government really likes it. There's a lot of reasons not to like it and we'll talk about some of those, but for the most part, this is just happening. But it ignores the fact that there are a lot of people who want to resist this or who wholly feel like they can't even live in a cashless world. And so, there was this great report, and we’ll link it on the website, about looking at UK's preparation for a cashless society. And this report found that as many as eight million people in the UK would be completely unable to participate in a cashless economy. And this is for variety of reasons: some of them are things like “we don't have a bank account” which makes it hard to have digital cash if you don't have a way to store it, some people can't go out and buy things themselves – they’re infirm or something, so they have other people do it for them – but in the digital cash world it’s hard, you have to transfer digital cash to that person, they have to make a purchase and then transfer the digital cash they didn't spend back to you. And, you know, giving somebody a bill, 20£ is much easier than try and go through these several steps that might have fees tacked on along the way, that might take time. So you can quickly start seeing that there's a lot of little edge cases here that most of us haven't considered. This worse as you find people populations in more vulnerable places.
[12:37] The worse off you are, it tends to be the more precarious you are in terms of the transition to cashless economy. And we'll address some of these points as we go forward, but this report really found that the UK is not prepared for this transition. But despite that fact, ATMs are very quickly fading from United Kingdom. It's hard to find these, it's hard to take money out increasingly, fees are going up. So even if you want to continue participating in the cash economy that is becoming a larger and larger barrier to do so.
[13:08] It's estimated that eight million people in the UK would be unable to function in a cashless economy. And of course, who are the people who are most vulnerable? The most obvious are the poor, the homeless, the elderly who perhaps still rely on checks or are not technologically savvy, migrants as well, this is a big point we'll talk about, refugees, asylum seekers, people who are otherwise on the margins of society who can't really access financial services in the way that they were created for people who live within those systems constantly. Another marginalized group that might be affected that is going to become increasingly problematic as time goes on is all those facing enormous debt, whether that's from student loans or medical debt. Here in the United States, medical debt is the number one cause of bankruptcy, and as a result, many people find themselves unable to participate in a normal direct deposit type of job, because the wages will be garnished so much that they can't survive and so they're forced to turn to maybe serving rolls, cash-based jobs as a matter of survival. But of course, they too would be impacted once all of their financial transactions, their accounts, and their assets are all linked to a database. You want to mention one of your friends in that context?
[14:31] Not to beat a dead horse here, Daniel, but I've talked about a friend on this show a couple of times who is being chased by medical debt. And this debt which came from a car accident which they were unable, they weren’t insured, they broke both their arms, eventually, it was healed, they found themselves with six figures, high six figures medical debt. They just had to check out of society completely because they found that they couldn't pay it, their wages were being garnished no matter what, they couldn't get their head above water, they ended up frequently homeless because of this and they just said fuck it, you know what? I'm dropping out of society, society is going to try and kick me out anyway, it’s going to make it impossible for me to live because I have this accident chasing me around for forever. And now they hop trains travel around the country, go do odd jobs and ultimately they’re paid in cash for these odd jobs so they can stay off this debt radar, have enough money to feed themselves, clothe themselves, occasionally stay in places and then move on with their life. And when they've been there too long, they go somewhere else. And this sort of migrant labor workforce moving around, avoiding this kind of stuff, has really sprung up recently because of this sort of debt tracking that you're talking about, where when we have these electronic records that follow us everywhere, it's very easy for people to use that to force us into certain behavior, in this case paying debts.
[15:46] I don't want to say completely that we shouldn’t be paying debts, even though I have advocated on this show several times for a worldwide global debt jubilee, I think it's the only thing that can possibly save this economy at all. That's another conversation, if you like to hear more about that please check out our episode called Debt End.
[16:02] Episode 28, David.
[16:04] Yeah, that's the one, one of my favorites. And it really goes into details of how debt has been changed from something that builds up communities to something that rips them apart. I think it's a very important thing to listen to and understand. But the larger conversation here is that this electronic form of money that chases us around, makes this sort of activity, this behavior very possible and then pushes a lot of people into removing themselves from the majority economy at the detriment of everyone else.
[16:30] But many people are resisting proliferation of salad bars like the one I ran into in DC who only accept cash.
[16:37] I think I mean that they’re cashless, not that they only accept cash, that they don't accept any cash, but continue.
[16:45] Specifically Philadelphia became the first US city to ban cash-only stores, they did so in March of this year 2019 and the New Jersey followed suit in the same month banning cash-only stores, and San Francisco then did the same in May. And I believe there is a proposal in your great city, David, of New York to do the same.
[17:08] Yeah, you can already see it coming into play, we do have stores here that are no-cash, a lot of salad bars maybe we're talking about the same salad bar here, Daniel. But there are some new stores that are being built that were traditionally no-cash stores, stores run by Amazon or something, and they are now accepting cash. And I think it's in preparation for realizing the fact that we're going to start transitioning back towards this cash-has-to-be-accepted system and we're not going to have this cashless techno-utopia at some people like to see, and they will always have to pay somebody somewhere to be the cashier and won't just all be automated robots doing that for us, for better or for worse.
[17:48] But a funny thing about that Philly cash ban, I say cash ban but it’s a cash-only ban, is it is illegal for stores to say that they only accept credit card, debit card, whatever. No, this law compels them to also accept cash but there are actually a number of governmental departments in Philadelphia that actually only accept digital or check payments which incidentally I think is against the law. I was looking up and reading some stuff about treasury law and the fact that you have to be forced in America, there’s this idea that if you have cash, somebody has to accept it. And it's technically not true, but it is true for certain things and one of those things is government debts. So if you have to pay a fine or fee or whatever at one of these government organizations I think cash should have to work, maybe if it's like a fee to do something that doesn't count as a debt, so if like I want to file paperwork and it's $100 fee, I can't bring in cash for that, they need electronic payment. But I think it's ironic that they're banning cashless systems at the same time as running their own.
[18:52] It was actually curious about that cause I thought the same thing, David, I always heard growing up that it's illegal to refuse US tender, but in fact, it really only applies to debts, public charges, taxes, and dues associated with the US government. There is no federal mandate affecting whether or not a private business or person doing a transaction can refuse cash. And I guess the idea being that when you agree to purchase something, you're basically entering a contract on the spot saying I will take this in exchange for this, but the terms of that agreement are up for debate, negotiation whereas a US Federal Loan is much different.
[19:34] Yes it is. Okay, Daniel, that's a lot of boring stuff to be completely honest. Let’s take a second and let's go back in time. Cashless is funny, you know, that phrase is funny and how it's evolved over time.
[19:50] What I want is Cashmore.
[19:52] Cashmore? Well, we are cashless.
[19:55] And I mean, we hear it a lot in a lot of different contexts. I mean, one, we have this modern like “oh yeah, all payments will be done with credit cards, debit cards, checks, and phone payments, mobile payments.” And that is the cashless utopia that we imagine in Silicon Valley today where it means that I can come in, I can analyze all your shopping behavior, I can profit off of your shopping behavior, taking 1% or 2% as a middleman to line my pockets and I can take what would have at one point been a seamless transaction, insert myself into it and pull a little bit of money out of it as a rent-seeking tool. And, to be fair you know, this has enabled all sorts of amazing things, internet commerce is enabled by these electronic payments and whatever, blah blah. But this is a relatively recent switch in terms of what cashless means, the term is not new it’s been used at this point for hundreds of years. And I guess it started evolving more towards what we’re talking on now in the earlier part of the 1900s with the idea of credit cards or credit coins initially, where you know, it's like basically “add it to my tab” but with a coin. And then we actually had actual credit cards and then moved on and now here we are with his electronic payment credit card stuff. But before that, cashless had a very different type of meaning.
[21:12] Very different indeed. In the novel Utopia by Thomas Moore written 500 years ago he imagines a future in which money is done away with since in his view, “frauds, thefts, robberies, quarrels, tumults," – tu-mutes, I’m going to skip that word – “contentions, seditions, murder, treacheries, and witchcrafts all tended to originate from disputes over money.” And many writers after him wrote about similar dreams of a cashless society. And in 1887 Edward Bellamy wrote his utopian novel Looking Backward, in which he is credited with the very first conception of a credit card. However, there's a big difference, because unlike our ideas today, almost all of these writers saw cashless society as the result of doing away with money itself by restructuring the very organization of the economy, which often involve doing away with private property and transmuting surplus profits into surplus resources for the common good. Moore’s novel, for instance, takes place on an island in which everyone is taught a useful skill with much overlap, especially with agriculture, and they form organizational structures for storing surplus goods and crops in communal storehouses so that all people can benefit from them when they need it.
[22:41] That sounds like not a glorious capitalism, Daniel.
[22:46] It's a far cry from it. And we have no such conceptions of cashless societies today. In fact, the limits of our imagination appear to be just doing away with physical cash so we can digitally make the exact same purchases just with some fancy wifi-enabled watch. As one research paper puts it, David, “a cashless society is a replacement of coins and notes with efficient electronic payments.” How exciting!
[23:17] Well, a lot of these ideas of utopian cashless economy, Daniel, I think are important just looking out for one second because ultimately this would influence a lot of thinkers, a lot of economists, it would lead to, you know, the idea of Communism at some point of being this classless moneyless society, the idea that we can live and exist without cash, without forms of currency will lead to the creation of the ideas of labor notes instead of money that represented the fixed value of boolean or something else, the creation of fiat currency, whatever. All these ideas got started with this idea of how can we build a better world, a world that doesn't need cash? And now here we are today with the technology that is vastly more advanced than anything that these philosophers or thinkers could possibly imagine, with the capability to travel around the world, this the mastery of the world which also, of course, ended up in un destroying the world. But that aside, you know, we've used this unlimited power to basically recreate the exact same thing that we had before, the transaction of fixed store value, in this case, money, and instead take that, add somebody else into the middle as a third party. So before, we were able to exchange with somebody without anybody looking over your shoulder, now companies like Visa and MasterCard, Stripe – all these companies are looking in at your transaction to take a little bit of it. And so they're taking a 1.5%, 2%, whatever the fee is, the profit in exchange for, you know, making this little bit more seamless of a process. But they are also recording this, they are looking at what you're doing, they are looking at who you're buying from. We’re exchanging all of the privacy, we’re paying more for these transactions because ultimately it's us the consumers that are paying this additional fee. And yeah, we do get some of it back in the form of credit cards, you know, if you have a 1.5% that you get back as a reward – well great, awesome. But, you know, the retailer marked prices up 2% or 2.5% in order to afford the credit card fees and not add that to their bottom line. So ultimately, it's us paying more for this ability to have this access to instant cash but is able to streamline things, but at what cost, you know? That is really the cashless question, why are we giving up our privacy, why are we paying more for what is ultimately in the end like just a very little bit of convenience? And yeah, you know, I don't like going to ATMs, I don’t like pulling out money, I don’t like having a wallet full of cash.
[25:43] But is it worth the sacrifice? I'm not sure. That's just looking at things from a very privileged perspective and the story gets a lot darker when we start looking at people who are on the margins of society.
[25:56] 3 years ago, David, in November of 2016 The Reserve Bank of India announced that all 500 and 1000 rupee notes were no longer valid. In just a matter of hours, all those bills were useless. These were the two most widely used banknotes in a country highly dependent on cash and it resulted in 86% of all cash in the economy disappearing overnight. This was an absolute catastrophe for the poor and countless small businesses, the construction industry contracted by 3.7%, businesses could not figure out how to pay their workers, markets disappeared as people went back to their villages. It is estimated that 1.5 million jobs were lost, and some economists claim that it set the Indian economy behind some 6 to 12 months in terms of economic growth. But one thing that it did do is give the government more access to financial transaction information and banking data useful for tracking the activities of its people and, of course, it dramatically increased the government's ability to collect income tax. And you talked about how it negatively impacts a specific group of people, a good case could be made that this was targeted at the poor because although this wiped out a majority of the cash, it only impacted some of the cash, not every single bill was wiped out, just the more popular ones used most frequently in the transactions that the poor engaged in.
[27:25] Yeah, well, let me dig into this a little bit for a second for I think this is a really important moment that caught everyone by surprise. I remember when this happened, they announced it, nobody had any idea that this was coming, and just suddenly they like dropped it. It was probably the largest experiment in the history of currency they just did without any prior announcements, it caused panic, it caused chaos, people were lining up for hours, people quite literally died in these lines trying to exchange their soon-to-be-retired bills for smaller ones. I think it honestly was a well-intentioned move, I think it was really honestly trying to fight “terrorism”. I think it was trying to fight this black markets and tax cheats, whatever. But I think it was also created by people who really had no idea of just how much of the economy is an informal economy, that is these people whose transactions never enter the digital economy, which is what cashless people are always trying to push us towards. They want us to live in a world where everything is digital, where all our money is ones and zeros and can be tracked in sorted and analyzed and taxed very easily in this process. But for most people, and especially in India, that's absolutely not the case, a lot of these people are completely unbanked, they have their life savings in these bills because they are the largest bills available to them and suddenly they're finding out overnight that if they don't exchange their life savings for smaller denominations then their whole life's work in terms of generating this money is gone. And yeah, ultimately they were given the time to do that, but this transition meant that they were waiting in line for days, for weeks to try and make sure that this was all moved over, that meant they were unable to work, that meant that some people potentially lost their houses cause they couldn't work to pay the rent – all these things like trickled down and very much show that people who don't realize how much of the economy is handled in cash, how much of the day-to-day world is filled with inconveniences, is something that you can't just step out in like “oh, just stop by the bank, swap these things out”. Like it was so short-sighted in the way that is was put into action that I think is really the big problem. And there's some great research papers that dug into this, and of course, as always this disproportionately affected farmers who oftentimes unbanked in large part because they don't have to be, they’re sort of set aside in large part from participating in tax services which is one of the major reasons to be banked.
[29:48] Agricultural workers in India are tax-exempt so they would never bother with banks. There were no banks there near their house so they have to travel somewhere. This is a group that, as we talked about several times on the show, is already put it on pressure, pressure from companies providing seeds, pressure from microloan people who come in and try and pray on these people under the guise of doing charity, climate change is putting pressure on farmers. I mean the suicide rate is out of this world. And of course, these are the people most affected by these policies. And beyond that, there's no sort of recourse for this, nobody got in trouble for this disaster, I mean, let’s remember again: people died because of this – nobody got in trouble for that, some people got bad articles written about them in newspaper, people slamming the idea, but everyone ended up ultimately re-elected.
[30:35] Some people are celebrating it now because tax collections are slightly up.
[30:38] And that's a big success. Terrorism went down very briefly for a couple of months and then it returned back to where it was, the black market doesn't seem to been affected. So all these things that they were trying to do, trying to formalize: everybody lost out at. So let’s look at that one area that was increased: tax collection. Again a lot of these farmers who were the most affected don't even pay taxes, so great, that was pointless. But, you know, this seems like a very much dynamite style fishing where you, as we talked on the show, you just throw dynamite into the water, blow up some fish, collect the fish at the top and you ignore all the damage it does to the ocean, to the reefs beneath you that ultimately make it so that you can't collect more fish because everything is dead. It's just that kind of fishing when just out of sight are these huge whales that are eating everything, these are of course the very wealthy people of India who for the most part are living in tax loopholes, who have the money store overseas and would make up much more of the total tax revenue than these poor people who are already conducting things in cash because they're mostly unpaid, because they’re mostly don't have large amounts of money that need to be in the bank. So that entire thing is an exercise in futility where you have these technocrats you think they know how to best modernize an economy without any sort of actual consideration what the economy is. Where they're so busy thinking about what it could be and what they want it to be and what they wish it was that they never really stopped to say, well, what are we going to do to actual people's lives? And in many cases, unfortunately, the answer was: destroy them.
[32:07] To be fair, this is not of total cash removal from society, it's limiting the types of cash available to people. But it is one of those first steps towards moving to a cashless society just like Korea removing coins from their system under the angle of moving entirely to mobile payments and electronic payments. And, I mean, we see this kind of stuff here in the United States still too, right Daniel? If you go to the store with a $100 bill, oftentimes they won't accept it. And, you know, by and large, who are the people who are trading $100 bills? Well, you know, at one hand there's the stereotype of the Wall Street guy who's just flicking out because he has a wallet full of them to show off, but most of them, and the reason that they're most often not accepted, are day laborers, people who are paid $100 for an entire day's worth of work, they're unbanked, they take this money to buy groceries or whatever and then they are oftentimes doublechecked for it, they are thought it's fraud, it’s counterfeit, blah blah.
[33:03] Suspicious activity to pay in the large bill.
[33:06] Exactly. But these are some of the most vulnerable populations. And they're forced to pay in these bills because the people taking advantage of them are trying to do so, you know, again out of the sight of this watchful eye of the electronic panopticon. And so some people might suggest: well, if we had electronic services everywhere that can analyze this kind of behavior then we can prevent this stuff from happening – but as this demonetization experiment in India discovered – most of that money was ended up being laundered anyway, nobody could tell anything weird happened, there's lots of ways to get past these electronic systems without somebody directly whistleblowing you so somebody looks into it investigates. It's really hard to detect this kind of stuff if you're even remotely capable or somebody teaches you how to do it. And of course, there are plenty of banks who are more than happy to do that, shout out to HSBC, Deutsche Bank – all these banks that launder billions of dollars to the Mexican drug cartels – made more money off that money laundering program that they did then they actually had to pay in fines. So good business practice, I guess, and I hope the blood on your names was worth it. Well, I'm off-topic here. Let’s go back to cashless, Daniel.
[34:11] The cashless initiative in India was not something that was only relevant to the domestic economy there but international financial institutions really wanted this program to get kick-started because – as we've talked about in that Debt episode, I think we've also talked about the IMF in episode 59 - Bankrupt Ethics and other episodes – their goal is to increase foreign investment into hard-to-reach markets. And, you know, an informal economy might be great for the local communities and the people who live in a certain area, but if a bank somewhere halfway across the world can't take part in those transactions, it's not useful to them, right? And so it doesn't really matter if this transition harmed a lot of people, doesn’t it really matter if people died, what matters is that going forward the people who live and work and survive in this region are now integrated into a sprawling financial network that is transnational in scope and therefore can be exploited transnationally. And speaking of things that are transnational, I want to talk about how this is impacting immigrants, migrants, refugees because more and more people are going to find themselves in this category. And we need to understand how people are trying to take advantage of that.
[35:32] There was a joint initiative by the United Nations High Commissioner for Refugees and the United Nations Capital Development Fund, which I'm going to abbreviate from now on to UNHCR, which aims to integrate migrants and refugees with financial institutions. From the joint initiative they write, “affordable access to financial services can help refugees cope with negative shocks, reduce exposure to risk and stimulate economic activity at community levels.”
[36:06] In one of the implementations of this initiative it targets an estimated 10 million people who live in Central and Western Africa and who have been displaced from their homes. And this program writes, “financial services can play a critical role in empowering refugee communities by offering credit, insurance, savings, and other products. Financial service providers can help refugees transition beyond reliance on economic assistance programs to achieve independence and contribute to their host country's economic development.” And there are few things that come to my mind about the intent behind this program. Again, we talked in episode 28 – Debt End about the many ways that modern debt is used as a way of coercing people and nations. And it sounds like to me the United Nation is in this case perhaps less interested in some pure form of direct assistance for these displaced people but rather asking: how can we turn these people from a burden on host countries into sources of economic growth? And I wonder how that might contribute to the various moral narratives we have about human worth.
[37:21] So, for instance, this initiative talks about the importance of providing loans to refugees, and if one refugee happens to take part in a small business loan and is successful because they're able to open a coffee shop, they pay their way into a living, does that mean that those who are not able to achieve that level of success are somehow unworthy of assistance? Because this is the premise of the initiative, let's get these people off of some kind of government assistance, let's get them off of social programs and let’s give them their own financial tools to make it in this world. And I’m skeptical of this. And I don't want to completely dismiss these efforts out of hand because there are certainly some good intents behind it, you know, it is true that having access to savings improve stability and being able to transfer money digitally can help families connect with support groups that may not be in their immediate vicinity. But it's also true that when you look at the stated intent behind many government and corporate programs that purport to help migrants, the stated goals don't always mesh with the eventual implementation. So specifically, the UNHCR's first financial inclusion program was actually launched in 2016 in Greece. And as it's been reported on, many of these services are not truly aimed at integrating migrants into financial services but rather financial tools act as a temporary way for governing populations and controlling them. Here is from a journalist Martina Tazzioli:
As a UNHCR officer told me, debit cards for asylum seekers in Greece are not considered to be an integration program but 'a temporary mechanism for supporting populations in transit'. The main worry raised by refugee support groups is that the centralized cash assistance system managed by UNHCR will strengthen data sharing with Greek authorities. In Athens, the Red Cross showed me what they can see and the data they can access in real-time, via Pre-paid Financial Services: asylum seekers' transactions are displayed, as well as the exact locations where the 'beneficiaries' took cash from ATM machines or the shops where they used the cards. While access to the cash assistance program is based on an individual check to see if the person matches the eligibility criteria, the UN, which provides the payment, uses the data to produce general surveys about refugees' purchases.
In these ways, the financialization of humanitarian support of asylum seekers is revealed as a mode for temporarily governing migrant populations, while they are within the channels of asylum, sorting between people eligible for the cash assistance and others who are not. Financial-humanitarianism marks a partial shift away from traditional forms of humanitarianism: it shapes asylum seekers as subjects who, on the one hand, have to actively contribute to the government and confinement, and on the other are expected to become 'autonomous'.
Now the same journalist reveals more details about how cashless systems are used to control migrants in a more recent article. She writes how refugees who qualify for cash are given a monthly card which includes anywhere from 90 to 150 euros, and that's per month, but only if they confine themselves to a small island off the coast of mainland Greece and agree to live in government camps and don't overuse electricity and conform to other eligibility requirements. And so what is my concern here? I mean, obviously, we're talking about a program that purports to make migrants and refugees more financially included yet really only uses these tools to track them and to control them, to discipline them, you know, to encourage them to act one way versus another way, control where they go. And I think one of the main counter-arguments here is well, why should we give assistance to people foreign to our country if they won't comply with our requirements that they live in a sectioned-off area? You know, we’re building camps for them to live and we're offering them cash, is that not enough? This argument of course again kind of goes back to these notions of worthiness and other moral justifications for why a poor migrant might have brought the situation they are in on themselves.
[41:48] And this is not an episode about refugees, but very briefly, there is big hypocrisy here when we refuse to help those showing up on our borders when we ourselves have benefited so handsomely from crossing theirs. There was a famous comedian, YouTube personality, David, who recently suggested: maybe America is full, referring to the outrage over concentration camps on our US - Mexico border. But maybe their country was full when we assassinated their nation’s president for opposing our fruit companies condemning millions of people to hard labor on foreign-owned plantations. Maybe their country was full when we gave billions in weapons to militant groups in Afghanistan also that we could provoke Russia, something we talked about in episode 79 - Death Dealers. Maybe their country was full when the rising seas, increased heat waves and collapsing fisheries cause them to flee the homelands they've lived in for generations.
[42:48] In a way we have all crossed the borders of those suffering from climate catastrophe. We've all crossed the border, those of us who have benefited from the sprawling military complex that our governments send to countries all over the world to secure our supply chains leaving people destitute in its wake, we've all crossed their borders. And now that they have been driven from their homes, we only accept them if they'll get a credit card and start contributing to the economy and stick to their designated government camps. I don't know about you, David, but I think that's a little dehumanizing.
[43:22] So, I mean, now we're getting really well, Daniel, into this idea of who's really affected by some of these movements for controlling the way that we spend money. And in this case, looking at how individuals are being attacked more or less by the restrictions placed on them in something as simple as a way that we want to push our transactions and expanding out from there. And that's really what I think we need to come back to is that cash, all the problems that come along with it for sure and the way that it's very much changed our world and our relationships with each other, but at the same time there's something liberatory about it, the fact that it can be spent anywhere, that it is universal, that you don't have to have somebody say, “yes, you can spend this.” And we've introduced electronic money systems that are about stepping in as a nanny state. There are traditional Silicon Valley-style things that can be utilized to ensure that they are only spent in certain ways, say for kids. But then the government also has electronic forms of money, say EBT, to ensure that people are only spending them on what they decided that people need, in this case, food. And this sort of nannying encourages a certain type of viewpoint on people, seeing them as unable to help themselves that we have to step in and do things for them, make sure they're not being irresponsible. But the questions of why we feel like that or what it means that we perceive these people as never enter this equation. And cash doesn't do that, you give somebody cash, they can blow it on whatever they want, maybe they make a bad choice maybe they don't.
[44:50] But it ensures that we trust the person, and oftentimes showing that trust people allows them to make better choices and makes it harder for us to exploit them in that process.
[45:01] I'm just thinking back to that taxi service that wouldn't let me tip my driver. And it occurs to me how we all benefit from the movement of people and those of us who are privileged benefit in a huge way from those who are, I guess, in a more precarious situation. You know, me trying to get to the airport in Virginia, in DC: here I am in the back seat of a driver's car, his own car, right, because we now live in the gig economy, you can't even get a job as a driver unless you pay for your own car. He's risking his car to get me to the airport because I called him on this digital application on my phone, and why is he even working this day? Why is he working in a flash flood? I mean, who does that unless they're in a situation where they need that money, they need that income and they're working this job – because, I guess, they don't have an alternative in some secure employment with a company, right, who's going to directly deposit their checks every day or every two weeks, and when there's a problem they can take a sick day – no, he doesn't have that choice, if he doesn't work today, he doesn't get paid. So he chooses to take that risk because he needs to.
[46:09] And then the flood comes, his car is ruined, you know, it is very hard to recover an engine from being flooded by water, especially if you try to turn it on afterward. And so there's a good possibility that his car is now totaled. But look at my situation, I was able to get out of the car, get about my day and open up my phone and call another one. Why was it so easy for me to get my needs taken care of in this situation? It's only because people who are in a precarious situation feel that they have to take that risk. And I think this idea that we can just solve all these people's problems by integrating them into financial services is just wrong, because basically what you're doing is you're telling these people that the only chance for success is to take risks like that. “Oh, you have the financial tools at your at your fingertips, anyone can be successful, just drive for Uber, just drive for Lyft, you can make your own way.” But what you're asking is for a huge population of people who are vulnerable to take risks every day: that if they get sick, if a flood occurs – all of that risk falls on them. I didn't have to pay anything for the failure of this person's car, I didn't have to pay anything for, in fact, I can probably get a refund. So there's a huge… What's the point I'm trying to make?
[47:30] I have no idea.
[47:32] That there's nothing new about the concept of taking advantage of people who are in precarity. But I think the main point related to cashlessness is that the systems of financialization make it so much easier, they make it more efficient, they make it streamlined to where I can benefit from one person then open up my phone and get another person, right? You see what I'm saying, David? I don't know if I'm making sense here. But maybe I can provide an example beyond just my own and that comes from something going on in Denmark. And this was reported on by anthropologists Marie Kolling and Camilla Ida Ravnbøl – I apologize for mispronouncing that – but they examined the economic precarity of Roma migrants, people from Romania, living in Denmark and trying to survive. 80% of Roma migrants who live in Europe are in poverty, and many of them have found that they can make a little bit of money working for collecting cans and bottles at music festivals. And so Denmark has a music festival called Roskilde Festival, it went cashless completely in 2017 meaning you have to pay online for your ticket, you get a wrist card which has your financial information on it, you use that to pay for beer and everything within the festival.
[48:46] But what they do offer is like a small recycling fee if you return your used beer cup.
[48:53] Of course, most people just throw them on the ground. So what these migrants will do is they will purchase tickets for these festivals and then they will go around collecting all the cups and bottles that people throw on the floor, they bring this to a station, the bottles are sorted and counted and then they are given a receipt. The next day they can take that receipt to a cash station and convert it to a plastic cash card. And then finally they can take that cash card somewhere to have it converted to cash. And there's several interesting things about this, right, because it's a cashless system, they can't purchase the tickets initially, they have to wait for scalpers who purchase the tickets online and then sell it to them for cash and often at double or triple the price. And that's because these migrants cannot access bank accounts. The ones back home have been shut down and they can't access traditional banks because they have no official income. And what's interesting is that what one migrant told the anthropologists is that their greatest fear is the police because they're constantly in places where technically they're not supposed to be, or I guess the police find a suspicious for them to be these music festivals, so they're constantly being stopped by police, they're having their things confiscated, they get their money taken. But if they have these receipts, it often stops the cops from searching them, because it did reveal some kind of legitimacy for their presence.
[50:19] And again, I think all this highlights the fact that cashless systems in this context are used as a way to control and surveil people. The police can come in and say, well, you know, you're clearly not a Denmark citizen so you can't be here, but if you're performing some kind of labor and you can prove that, then that's fine. But the cashless aspect of that enables this kind of surveillance of these people with where you know exactly how much they're getting paid, you control when they can collect their payment. And then of course what's really striking about this is that the festival owners actually benefit hugely from this population because they need someone to clean up the beer cans, they need somebody's collect the bottles – that's why they give a refund – but not enough festival-goers actually bring it back. So if these migrants were not paying the festival to do this job, they would have to expend an exorbitant amount of money to hire a crew to come in and clean up the festival. And so I think all of this kind of exposes financial inclusivity of something that doesn't solve the exclusivity problem, where just because you take something digital does not mean that you somehow make it egalitarian, in fact, it can even further drive wedges between those who “belong” and those who don't.
[51:38] Well, this reminds me of another topic that is related to all this, Daniel, that I think is worth bringing up. And that is actually the fact that bank accounts can be expensive. And, whoa, David, you're saying, hold up, I've got free checking account, they send me a free pack of checks every month, they have dogs on them, it's the greatest thing in the world, I got a free ATM card and yeah, you know, I have to pay ATM fees if I go out of network but otherwise this is a free thing, I just have to make sure I'm above that like whatever minimum. And you have no idea what you're talking about. Well, I say to you: maybe for you, the responsible educated privileged user of these accounts, because you had family members and educational institutions teach you the proper way to administer your financial whatevers and you have the luxury of making enough money that you can actually make sure that you stick to all this. But for many Americans and in fact many people around the world, this is not necessarily the case. And in fact, bank accounts can themselves be predatory even though they're just supposed to function as mechanisms to hold this money electronically. The most common way that we see this is that dreaded term overdraft fees. So most people at this point are familiar with overdraft fees, even if you've never personally got them.
[52:56] It's – just very quickly to summarize – when you have a bank account that has, you know, say $100, and you go out and you buy something with your debit card that costs, say $150 – oops, that's more money than what's in your bank account. And bank will prevent you from taking that money out, but they’ll charge you a fee for that process. And that fee varies but oftentimes it is about $30 to $35. And these can add up quickly when you don't already have enough money in your bank account, to begin with. And next thing you know, couple these transactions, oftentimes three or four a day, and you can end up owing more money than you have in the first place. Now you find yourself in debt to your bank. And this can quickly go out of control, especially if you have automated services that might be billing you, say Netflix account, Spotify – whatever.
[53:43] And a couple of transactions that might be for something small, say a stick of gum, one or two dollars, pushes you over the edge. Now that stick of gum costs $35. And that adds up, you might have $140 in a single day. And in fact, some banks don't have any limit to how much this fee can add up to. So you could theoretically charge yourself thousands of dollars in fees if you kept trying to purchase things throughout the day. But defenders of these overdraft fees would say, well, you know, at least we’re not making people turn towards predatory payday loans, because those can have APR's 400%, 800% and instead of owing $100, $200 in fees you might end up owing thousands of dollars in debt to these payday loan operators. So actually, David, you’re wrong once again and these overdraft fees actually a good thing.
[54:30] Well, David, you know that's an interesting idea, I mean 800% APR, who wants to pay that, right? I certainly don't. But I think if you were to convert an overdraft fee to an APR percent you might be surprised at the figure that comes up. So let's say you tried to buy an item for $10, you didn't have it in your account, so you were charged a $35 overdraft fee. A pretty standard. And then because you're in a financial situation that's difficult, that's why you overdrafted in the first place, let’s say it took you three days to pay this back. Well if you do the math on that you'll see that the APR on that would be around 30000%.
[55:09] It should be no surprise that in 2017 Americans paid $34 billion with a B in overdraft fees. And while we're on bank accounts. You know, bank accounts themselves are not even free. In the US the average cost of a checking account is over $9 with some banks charging as much as $30 a month unless you maintain a minimum balance or have a direct deposit through your employer. But imagine those Romanian migrants collecting cash at a music festival if they had a traditional checking account – even if they're making money – because they're making money through cash cards and it's not part of a formal employment position, there's no way they would avoid these fees. So in a way this financial inclusion involves several catch-22s, you know, there's a limit to how much you can make when you don't have access to financial products. When your income is low enough, trying to access banks and financial services actually just buries you even further in debt and expenses.
[56:13] There's one other thing I want to mention here, Daniel, and that's there's an extra layer financial literacy that I think has to apply to a lot of this electronic banking and cashless stuff. And oftentimes people – and I’ve alluded to this earlier – who are in the most precarious positions don't have access to the education of these financial instruments. And you end up with a lot of misinformation, with people not understanding the terms of things, and then that sets them up to ultimately be exploited by credit card companies, by electronic payment operators and things. I recently had some conversations with a lot of my friends actually, surprising number, many of which come from middle-class fairly privileged lifestyles, and a lot of them are terrified of credit cards either because they've had them before and racked up credit card debt or because they've never had them and their parents have warned against the dangers of credit cards and the fact that it allows you to ultimately end up in places that you can be exploited by these companies if you're not diligent in the repayment process of them.
[57:08] That they just avoid them completely and these are, once again, you know, people who went to schools that should have taught, you know, knowledge about credit cards, who had parents who had credit cards. And for people who don't have access to this, who don't know these things and oftentimes are given cards with much too high limits, too high percentages, too early in their life, it just sets them up to find themselves in huge amounts of debt and ultimately in servitude to these companies as they try and work them off. I mean, that's what debt is, debt that follows you around that you don't expel with bankruptcy means you’re constantly working to pay it off. And that is a functional form of servitude to these companies, to MasterCard, to Visa, you have basically wage slaves who were taking a little bit of their money and shifting it into these corporations all for the privilege of having an electronic payment system that is just slightly more convenient and you get little, I guess, rewards and allows you to purchase beyond your means. And I think it's one of the very interesting things about these cashless systems that really pushes them forward and is why we see so many companies trying to get us to switch to cashless systems. Because, you know, if I'm a store credit cards are more expensive for me to operate, I have to pay a fee, I have to have a till that has a point-of-sale system that is more expensive, I'm paying fees to whoever is doing the processing. And yeah, it's maybe a little bit easier on my accounting side but it also makes it harder for me to cheat on my taxes or whatever.
[58:41] And yeah, a lot of these cash places do cheat on their taxes, it's just part of the game. And the electronic systems prevent all that. There's a lot of downsides and a very small number of good sides. So what is that’s motivating so many places to go entirely cashless? And one of those things that’s really I think pushing this is that we actually spend more when we're not handing over cash.
[59:05] You’re saying we pay more with credit cards than we do with cash, David? I don't believe you!
[59:10] Come on, Daniel. I know you understand this type of thing.
[59:13] Yeah, I’m just joking, I completely believe you. In fact, I was actually thinking about this, this common wisdom if you, the other day when I visited a coffee shop. So I walked up, I ordered my drink, I handed the person my card without hearing what the price was, I declined the receipt, you know, save the plastic and then I walked off with my drink and I had no idea how much I have spent. And I think it makes sense why we would spend more money, you know, when we’re using plastic versus cash: there's not just the powerful psychological experience of physically separating yourself from cash that was in your pocket and now isn't. But when you pay with cash you don't have the luxury of ignoring how much something costs because, you know, you actually have to count it out.
[1:00:00] Yeah, I think what the system relay reminds me of is casinos. You walk into a casino and if you want to gamble, the first thing you have to do is exchange all your cash into whatever form the casino uses, generally, it's chips, right? These are representations of cash but they're much easier to spend for whatever reason. But what a lot of casinos have started moving towards now, and it's supposed to be for the electronic machines, but some of them even in traditional chip-based table games. Basically, credit cards that are loaded on with your cash but are easy to spend because it doesn't look like anything, you don't realize how many coins you are putting into a machine, it's easier for them, they don’t have to constantly reload stuff, it's easier to transfer from one to the other. But the ultimate effect is that people end up spending much more than they would otherwise because they're not seeing their cash disappear. And that is one of these very insidious hidden systems that is behind these larger cashless electronic payments schemes and I think a very large part of why it is being pushed so much. And we’ve seen some companies and some organizations explicitly list this as one of the reasons to transition to these electronic mobile payment systems.
[1:01:09] So basically take it one step further: instead of a plastic card, now you just have a phone that you swipe, you don't even have to take out your card anymore.
[1:01:18] Well yeah, that's the ultimate level of this, especially we've already been conditioned by Apple, by Google to you make mobile payments in all these games that have us addicted via various dark pattern UIs and UXs which we've talked a little bit about on this show. And now if we can extend that into the real world, well, now that influence is even farther and we’re able to take advantage of these systems if I'm Apple or if I’m Google to, once again, catalog what you’re buying so I can better target you with ads but also profit off that exchange via my Apple Pay or Google Pay, Google Wallet systems.
[1:01:49] David, real quick, I just want to circle back, you know, you were mentioning something about casinos and doing away with tokens. And that may be useful in getting us to spend more because we don't realize how much we're losing. There's another abstract consequence of cashlessness that has more to do with our moral decision-making and our character that I think is very profound. There was an interesting study carried out by Dan Ariely at Duke University. He gave participants a set of 10 puzzles or questions with the promise of cash payment for each question they got correct.
[1:02:29] And he ran this study in three different ways. First, he got a control group and it involved people completing the puzzles, presenting their responses to the researcher and getting paid for what they got correct. And the average was 4 out of 10 correct puzzles and that's what they got paid on.
[1:02:49] Next, he had the participants do the puzzles but tempted them to cheat a little bit by giving them the option to tear up their result or put it away and then report to the researcher from memory how many puzzles they have solved. And the average solutions reported went up to 6 out of 10. So people started to cheat just a little bit. And he found something significant from this second stage, he ran this a couple of different time and he found that the amount of cheating that people were willing to commit did not change when he altered the economic incentives, that is increasing the amount of money he paid for each correct question, this changed nothing. He also tried allowing people to pay themselves out of a bowl of money without having to interact with a researcher. This also did not change the level of cheating that people did. But then he ran this study a third way, and that was that he had participants rip up the results again incentivizing them to cheat, but instead of receiving cash for their correct answers, they received tokens which the participants could then take to a second researcher somewhere else to exchange for cash. And when this step was implemented, the frequency of cheating doubled.
[1:04:04] So people were much more willing to cheat. And he speaks about this research and he writes, “From all the research I have done over the years, the idea that worries me the most is that the more cashless our society becomes, the more our moral compass slips. If being just one step removed from money can increase cheating to such a degree, just imagine what can happen as we become an increasingly cashless society. Digital money has many advantages but it might also separate us from the reality of our actions to some degree.”
[1:04:39] And David, isn't that really what we talked about in episode 28 – Debt End that this is the great innovation of our financial monstrosity, that what we're doing is we're taking something that was originally all about relationships – remember, debt came before currency because it was a relational contract, it was I know you and I know that you're going to return a favor if I do a favor for you, therefore let me give you this or do this for you knowing that in the long run, we all benefit from this mutual aid. This was the first form of debt but then this got extracted away when currency entered the equation and you could take something that was once exclusive to two people who knew each other and relied on that trust and you could convert that to a contract that had specific monetary value. And then because this was now a contract extracted out of the relationship of people, you could then take that and sell it, you could do something else with that, you can have it enforced by strangers. And then you no longer need two people to even know each other to engage in financial activity. What is the logical conclusion of this? We're keeping the money system but now we're even taking the physical form of it out of the equation so we have no more even cultural notion or attachment to the things that we are dealing with.
[1:06:02] Daniel, maybe there's this awareness from the companies operating these electronic payment systems that they, in fact, do encourage cheating. And when we look at the Indian demonetization project, when we look at some of these other cashless systems, one thing that is always pushed forward is like well, we can stop counterfeiting, we can stop the black market, because we can administer, monitor and surveil all the systems and make sure that the bad guys will get in trouble, right? And you probably encountered this at some point, and I don’t know if you have directly, but I've had friends who definitely have. If you've ever paid somebody in Venmo, the application that allows you to easily send money to friends which is owned by PayPal, the PayPal subsidiary, you have to, when you are sending the money, put the subject line: what it's for. And, you know, they force you to actually put something in there, and there's a reason they do that because it allows them to have some sort of thing that can point to if somebody's using it for something illegal, they can say, well we didn't know it, it said this other thing. But if you type something illegal in that thing then you can have your payment denied, your account shut down, frozen, like all sorts of things. And some of the things you can put in there are very benign and I had friends who have done this, obviously if you type something like drugs – that can be problematic. And it's not every time they are going to shut it down but I have had friends who said that even if it's a joke and you’re not actually buying drugs, you know, just like people used to write checks and in the subject line they write things like for good sex or whatever.
[1:07:31] And you do the same thing with Venmo, it's a joke between friends or whatever. But I had a friend recently who wrote Cubano on this line. As you know, ambiguous reference, and it was specifically to pay for Cuban food.
[1:07:47] But Venmo canceled the transaction and froze his account until they can investigate it further because they thought it was for a Cuban cigar which is an embargo trade thing in the United States, you are not supposed to have them, you’re not supposed selling them to each other. And they did like a mini-investigation and he's like, it was just Cuban food, you know, stop. And eventually, they did. But this is the kind of surveillance and like nanny state thing that we see any types of systems. And this is a very silly overt thing but in some cases, this kind of overzealous regulation and attack on our transactions can have deadly consequences. So in 2014, the US Department of Justice launched something called Operation Choke Point. And the goal of this was to shut down, in their words, predatory lenders. And unfortunately, it basically forced banks and other financial institutions to voluntarily shut down a whole bunch of actually legal bank accounts and transactions for business owners if the activity just looked suspicious. And oftentimes many of these businesses weren’t doing anything illegal, it ended up targeting things like gun shops, tobacco sellers, dating services, pharmaceuticals, coin dealers who would buy a lot of gold bullion and even some government grants that would come in to organizations that normally didn't have much cash flow, it would suddenly look suspicious and high-risk.
[1:09:14] And this type of overzealous regulation of these bank accounts had a deadly consequence when one woman named Eden Alexander was denied medical treatment because she was a porn actress.
[1:09:22] And so her transactions, her bank accounts, the way she deposited cash and stuff looked really suspicious and so banks locked her account, and that prevented her from paying for medical care which meant that her minor infection turned into a deadly infection. And while she was eventually taken to a hospital, friends and family who attempted to raise money for her online ended up having their fundraising shut down as well because it was “in connection with these pornographic items.” And these sites like GoFundMe or whatever have the ability to shut down anything without any recourse. And while she ultimately was able to recover at great debt to herself and this stuff was taken care of, it really shows how if she had maybe avoided the hospital because she didn't know if she could afford this stuff, she waited a few more days, she very likely could have died. And there are people who absolutely have died who had fallen through the cracks of the system because of these types of actions. And I think this is really important moment here, something to look at specifically because in a cashless society where every transaction is surveilled and looked for as fraud or something illegal or something that just might not be in the government's best interest, not only would mistakes like this happen more frequently, but there's would be absolutely no escape from this, there would be no alternatives from these systems because we would have no cash that can operate outside of this electronic panopticon. And it doesn't matter how many apps or services ultimately are created by the free market or whatever you want to call it to transfer payments, you know, whether using Venmo, whether you are using these electronic mobile payments like Apple Pay, whether you’re using cash app – all this stuff, all ultimately is digitized and routed through a handful of large financial institutions like Visa or MasterCard. And these financial institutions have proven they are more than willing to shut down, halt, freeze accounts based on the whims not only the government but of these organizations themselves if it looks like it might be bad for their bottom line. And of course, this means the people who are most affected are, what's that word, Daniel, every time?
[1:11:25] The poor.
[1:11:27] You got it. And although if you remember, the original goal of this Operation Choke Point was to halt illegal activity, what it really ended up doing so often like so many of these bills was to try and regulate the legal activities that poor and disadvantaged people are most likely to engage in. If they had actually wanted to target the illegal financial transactions, why not add things that are much larger problems in the sheer amount of dollars stolen, things like wage theft? That is the largest category of theft in the United States by a huge amount, but that is not a concern for these types of things, because just like this demonetization in India, we’re inappropriately targeting the wrong people because it's not going to rock the boat.
[1:12:12] And these types of cashless systems, when we digitize all of our electronic transactions make these types of actions just that much more easy. I think this is one of the largest things, and we could touch here, Daniel, on the fact that, you know, all these digital transactions allow advertisers to better feed their algorithms, to take advantage of us, to know how much willing to pay for things which allows them to change prices in – all these things we’ve talked about several times on this show. But it's really this, I think, the fact that electronic payments which are supposed to be this liberatory practice for the way that we interact with each other on a monetary level are in fact so often used to limit our access, to control us, to lock us down and ultimately impoverish many of us for the actions of exploiting people, taking their money, moving it to themselves and profiting off of it if I'm Stripe or Apple or whoever. And that’s what so frustrating about this. If we go back to those original visions of a cashless society, and of course the definition of what cashless means is very different between the two, but one was about quite literally liberating people.
[1:13:16] We'd all be living on tropical islands, we’d all be farmers.
[1:13:20] Yeah we wanted farmers to be able to just exchange things freely with each other without a middleman, we wanted labor to be equally valued between people creating, that every person who needed something was able to get it. And that kind of dream of a world we can move past these transactions, it’s so far gone that this word that was once about liberation, about moving past this like minimization of human relationships to economic dollars, is instead now just maximizing those numbers, quantifying everything about us once again, tracking us, making sure that everybody is profiting off this in as many places as possible, and just sucking us dry in every place that can be done. That if there's any like single theme for the modern world is, it’s well off people with all sorts of resources figuring out new and exciting ways to drain everybody else.
[1:14:17] Well, I guess, it shouldn't be surprising, David, that that rich people want to be a part of every transaction and want to monitor all of our purchases and somehow control that. But I guess what is surprising is that we've lost sight of how this impacts us and how, you know, we're not kind of tuned into the political implications of these types of systems where 500 years ago it was very obvious how the money system was being used against marginalized people to exploit people. And it's why so many people wanted to escape that, to construct something better. And perhaps that's what we need more of is the idea of our need to create something better, not just incrementally improve the efficiency of how we conduct transactions, but maybe change the very nature of what it means to do a transaction in our communities and in our economies. Those great idealist writers of the past used to imagine doing away with private property laws, establishing a way for communities to come together and pool their resources, not section it out to individuals who can then hoard it, buy work for something common, something good, for something better.
[1:15:27] It's a mess of rants and thoughts right there, Daniel, but it is without a doubt a lot to think about.
[1:15:34] And think about it we hope you will.
[1:15:37] We have so many sources on our website for this episode as well as a full transcript of it. So if you want to read any of that, check our facts or have a great aid for listening along, you can find all of the information on our website at ashesashes. org.
[1:15:54] We will never use ads to… support this podcast. [Both laugh]
[1:16:00] You started struggling with that tonight, man.
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[1:16:48] We are also on all your favorite social media networks and you can yell at us, like our posts and do so much more if you just look us up, its ashesashescast – we’re there, we’re posting hot contents, you're definitely going to want to check it out! And if you would like to interact with us directly well, boy, do I have news for you! We have the best online Discord community of all the podcasts anywhere, I am happy to say that, I'll stand by that. And you can find an invitation to that Discord community, it's an online chat room on our website. Just go on there, click the Community link button and you'll find that, you'll have guides to download it if you're not familiar with this software, but it's great, come hang out with Daniel and me and the rest of the Ashes crew. It's a great group of people, we talk about all sorts of stuff and we'd love to have you there with us.
[1:17:35] I second that. I second that wholeheartedly, David.
[1:17:42] It's is one of my...
[1:17:43] I could not, I could not have said it better myself, David. Myself.
[1:17:47] Yeah, it's one of my favorite parts that has come out of this entire show. And shout out to all of you on there, we love you. And for the rest of you who are just here for the podcast, well, you're in luck because we have another great episode coming up next week. And we hope you'll tune in for that. But until then, this is Ashes Ashes.
[1:18:05] Bye.
[1:18:06] Bye-bye.
[1:18:10] Okay, we’re really slogging through this.
[Laughs and cries at the same time]