How a Cashless Society Could Embolden Big Brother

from The Atlantic

In 2014, Cass Sunstein—one-time “regulatory czar” for the Obama administration—wrote an op-ed advocating for a cashless society, on the grounds that it would reduce street crime. His reasoning? A new study had found an apparent causal relationship between the implementation of the Electronic Benefit Transfer system for welfare benefits, and a drop in crime.

Under the new EBT system, welfare recipients could now use debit cards, rather than being forced to cash checks in their entirety—meaning there was less cash circulating in poor neighborhoods. And the less cash there was on the streets, the study’s authors concluded, the less crime there was.

Perhaps burglaries, larcenies, and assaults had gone down because there was simply less to readily steal. Perhaps, also, the debit cards deterred people from spending money on drugs and other black market goods. While nothing was really stopping them from withdrawing cash and then spending it illegally, the famous Sunsteinian Nudge was in effect—the very slightest friction in the environment pushed people away from committing crime.

The year after Sunstein’s op-ed was published, in a seemingly unrelated incident, a student at Columbia University was arrested and charged with five drug-related offenses, including possession with the intent to sell. Supposedly, his fellow students and customers had paid him through the Paypal-owned smartphone app Venmo.

More here.

Posted in Innovation, Privacy and tagged , , , .

2 Comments

  1. At the time this article was written, I can agree with the studies and claims that a cashless society will result in less crime. Fast forward to present day- two years after the article was published- I feel as if these results simply do not hold water in an ever-changing environment.

    It is amazing how change is occurring so rapidly in society and how far technology has evolved in the past decade. The reason I feel that crime will cease to decrease is because of cybercrimes and offenses that are unseen from the everyday authorities in neighborhoods. I love the idea of a cashless society- it is smart, efficient, and another sign of our growing technological advancements. Credit cards, PayPal, Bitcoin, Alt-coins, and money transfer apps like Venmo will definitely be the future but I do not believe it is safe to put so much trust and completely backing in this technology.

    I never heard of the company Venmo until I came to college- ever since I stepped on campus everyone has always brought it up, asked if I can transfer them money, or almost exploded when I told them that I did not have it. I had always carried cash and a wallet on me, but I am seeing less and less of that from people my age. People have their phone, credit card already in their phone, and ID on the back of their phone and that is it. Simple, efficient, and deadly.

    You may ask why “deadly”; in the “old days” when people would get jumped and robbed they had their wallets taken. They lost a credit card or two and some cash. Now, when people are robbed, their entire life is taken from their hands and we are helpless; your phone is taken with all the records of bank transactions, numbers, codes, passwords, locations- everything. This is the effect of going paperless and having everything at the palm of your hand. Yes, it is so simple to leave your house this way, but you are so vulnerable to attack.

    The other attack you are vulnerable to is a cyber-attack. It may not have been as prevalent in 2016, but the technology that has advanced since then is unprecedented. It is so easy to hack someone’s account from across the globe; once again, all information is stolen without a trace. Hackers walk the streets of wherever you live, with portable devices that scan credit cards when walking by, and you have no idea they did so.

    I am one of my only friends to always carry cash on me and will definitely continue to do so. I feel like I have a greater responsibility with the cash on hand because if I spend it all- it is gone, whereas if I have my credit card I can swipe, swipe, and swipe without even realizing what I spent. As to crime rates- there is no doubt that it will continue to fluctuate, or even increase- as we turn to a paperless society. It is only a matter of time until hackers and technology experts find a way to crack some of those “trustworthy” apps.

  2. I see a cashless society in our nation’s near future. The new era of technology has given our generation an ease of accessibility when it comes to socializing, acquiring new information and purchases. Applications like Venmo and Cash app would probably reduce the number of crimes committed in low-income neighborhoods. The downside to that is that leaves a new door open to white-collar criminals who seek to use this technology to initiate fraud. Since these apps make transactions public, financial predators can easily access information over the internet. It seems like the more advanced technology gets the more privacy issues arise.
    The convenience of these money apps is what attracts us but some people don’t look ahead to predict the risks that come along with making online transactions. these online transactions are more traceable than the old-fashioned exchange of currency. So in a sense, “Big Brother’s” all-seeing eye will be monitoring our cash flows. There are ethical issues that come along with these apps. The practice of using these apps wouldn’t put an end to the black market, but those who use this app for illegal business transactions would be subjected to having their transactions monitored. This could lead to an increase in the number of arrests related to the black market.

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