BY SRINIVAS BALAGOPAL
EDITORIAL AND WEB EDITOR
Why lug around physical books when you could easily store hundreds of novels on your device? The same argument for eBooks can be made for a completely digitized consumer spending system. Why lug around dollars and heavy change when you can easily save your account details on your device? In fact, Venmo, an app that facilitates electronic transfers of money between friends, has grown popular with younger generations in the U.S. More macroscopically, the government and the Federal Reserve could have more leverage over the U.S. economy. If the entire population stopped using cash, more government oversight and thus regulation would be an inevitable byproduct.
At this point, you’re probably thinking that the government would become more abusive. But could a cashless society actually encourage government accountability? In the future, your financial details, ranging from the price of a drink you bought at Starbucks yesterday to your tax returns 20 years ago, could be on full display. Unlike cash, e-payments lack anonymity; financial privacy would be the last straw in the already incendiary debate over our electronic privacy. Laws that secured the electronic equivalent of the Fifth Amendment would become the signature issue of every election cycle.
Financial digitalization could open the door to formalized local currencies and economies. According to the Brookings Institution, Silicon Valley ranks third globally for GDP per capita. By enabling a local digital currency, we could become a micro-economy exclusive to the Bay Area. We could very well surpass our host state, California, which is currently the fifth largest economy in the world. Jokes about Silicon Valley leaving the country, much less the state, would run abound!
With a completely digitized, transparent economy, could we stop recessions? With more information about how Americans spend their money digitally, the Federal Reserve would have greater capabilities of controlling inflation, making better statistical models, and analyzing the specific effects of transactions in general. As unlikely as it sounds, predicting recessions could become more feasible because we would have more data.
But, like everything else that is new in our world, a cashless society is a mixed bag. There would definitely be immediate public outrage at the idea of others accessing our financial information with a few clicks. Even now, powerful companies track our every click and monetize our data, essentially infringing on our access to the Internet, a basic human right. With the advent of a digital currency, the boundaries of our privacy would no longer be an entitled right; privacy would become a privilege with a price. Richer individuals could essentially “buy” more privacy to keep their information secure, while less-privileged people would be left in
Digitizing our economy can reap numerous benefits for the country and us individuals. But our privacy should not be assigned a sticker price.