Monthly Archives: June 2015

The digital tyranny – The threat posed by a cashless society

Robert Henderson

We are in danger of sleepwalking into a cashless society. More and more purchases are made by electronic means , through standing orders,  direct debits, debit cards  or credit  cards.   Debit and credit  card purchases already account for over a third of UK GDP and more than three quarters of retail purchases (up from 46% in 2003), while  card and computer purchases have just overtaken UK cash sales.

The next logical step  towards  a cashless society is to have laws which allow private businesses  and any public body  which charges for  its services  to refuse cash payment.  Denmark is seemingly  taking the first tentative steps along that road.  The Danish Government has proposed legislation which if passed  will  remove the obligation to take cash from retail outlets such as petrol stations,  clothes shops  and restaurants next year.

With the combination of more and more people using  methods of payment other than cash and the willingness of technologists to  feed the trend with ever more sophisticated and comprehensive  systems of  cashless payments, there is no reason to think that this trend towards  making cash dysfunctional will stop unless governments take a hand and prevent cash from becoming  defunct by law.  This development  is alarming because the abolition of physical money would  carry  tremendous dangers in terms of  the opportunities for  state authoritarianism  and simple practicality.

The dangers  from state authoritarianism are:

  1. There would be no money which could be held which was not potentially known to the state, because with only electronic money available it would have to be stored electronically and be accessible via the Internet  if it was to be useable.

But what about using virtual currencies such as Bitcoin?  Apart from the dangers of such a means of exchange – the great volatility in value, the frauds which are occurring where Bitcoin is stolen, the lack of a lender of last resort and a restricted range of  goods and services which can be bought – Bitcoin still  needs  to be stored electronically and hence is  potentially identifiable and accessible to governments. There would also be an audit trail from an individual’s source of electronic money  to the purchase point of a virtual currency  like Bitcoin. The only exception would be if someone sold something or did paid work for someone and was paid in a virtual currency like  Bitcoin.

If Britain  went cashless and others did not the likelihood is that a black market in foreign cash such as dollars would  arise in Britain.  There would also be the possibility of exchanges made by barter or a product such as cigarettes becoming a de fact currency.

  1. A cashless system would allow the state to have all  electronic money stored in a central government controlled place.  This would leave  the  individual  at the mercy of the state which could deny electronic money to anyone within their jurisdiction by cancelling or blocking their means of payment.
  2. The state could more readily control the money supply if all bank accounts were  under the control of the state and physical cash did not exist.  The state would be able to manipulate public economic behaviour by  imposing a negative interest rate when increased spending is deemed desirable  – people save less because it costs them money – and a transaction tax every time a purchase is made  – people spend less if because it will cost them to make a purchase – if it is thought an economy is over heating.
  3. The state could remove money from your account at will.
  4. The opportunities for general surveillance of the individual both by the state and by private corporations or individuals would be greatly increased.

The problems of practicality are:

1.The idea  assumes that everyone can  afford a  computer of some sort, whether that be a mobile phone, tablet or desktop, and can afford to replace their means of getting access to the Internet  every few years at best.  The reality is that millions of people are too  poor to be able to meet such costs.  The taxpayer would have pay for access to electronic money for those too poor to buy their own.

  1. Many people cannot use the digital technology.  Huge numbers of people  are still not using  this technology. The latest figures from the Office for National Statistics (ONS) estimates that  11% of the UK population (approximately 6 million) has never  used the Internet.  Moreover, the ONS did not ask for frequency of use merely whether someone had used the Internet When the ONS asked whether people had used the Internet in the three months prior to the question being asked,   only 86% answered yes.  Thus 14% of the population had either not used the Internet for more than three months  or   had never used it and, importantly,  only 68% of disabled people had used the Internet in the previous 3 months. Clearly there will be large numbers of people, including  the most vulnerable in society,  who will seriously struggle to use digital technology for the foreseeable future. If cash becomes illegal many of  these people will literally not be able to live if they cannot understand the technology or have no one to operate it for them.

3.The computer systems which support a cashless society will inevitably be subject to  regular disruption, whether from hacking or simple failure because,  as we all know,  digital technology frequently goes wrong and the system downtime can be considerable.   Imagine being unable to access the only means you have of paying for something.  It would probably be necessary to have more than one electronic payment device because of this, although that would not help if the fault was not with your payment device but with that of those from whom you wished to make a purchase.

  1. Many people will have their means of accessing electronic money stolen  or lose it themselves.  They would then need to replace their equipment which allowed them to access their electronic money.  Many would not be able to afford to do so and those most likely to lose or have their electronic money access  equipment stolen  would be the old and the disabled.

A cashless society would have considerable attractions for a government. It would greatly extend the power of the state over the individual. Crime generally might  be reduced without  physical cash to oil the felonious wheels, although cybercrime would become more tempting in the absence of banks to rob and people to mug. Tax evasion would become very difficult for most people (the rich would simply move their money to other jurisdictions) .  There would also be the saving on the abolition of the need to maintain a physical money supply.  Banks  and other financial institutions would also welcome the abolition of cash as it would remove the considerable cost of physically handling cash and maintaining a branch network.

The danger is that cash will become defunct by default,  because the Government shows no interest in protecting cash and arguably is surreptitiously encouraging  its demise by making it either impossible or very difficult to access public services in any way other than through the Internet.  We could reach a point where, say, 90% of the population use electronic money  and a government simply says it is time to go cashless ignoring the fact that millions of people who cannot use electronic money will be left in the soup. Politicians need to be lobbied now to ensure that  the maintenance of cash remains a legal requirement.

But it is not just a case of ensuring that cash remains a legal requirement. Even a  widespread refusal to accept cash  by businesses and other corporate bodies which charge for their services  would be seriously socially disruptive. That idea also needs to be knocked on the head  by making it illegal to refuse cash in payment for anything.

Get writing to your MP.

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The Emperor’s New Clothes (2015) – It’s the rich wot has the pleasure and the poor wot gets the blame.

Robert Henderson

Narrator: Russell Brand

Director:   Michael Winterbottom

This documentary shamelessly mimics  Michael Moore  with a large dollop  of  “The smartest guys in the room” thrown in for good measure.  The end  product is a tepid imitation of Moore’s style   and a rather better pastiche of The smartest guys in the room.

Like a Moore documentary there is much in the film which is shocking: the greed and irresponsibility of the bankers:  the overt or tacit  collusion of  politicians which allowed  bankers to be effectively unregulated  in the run up to the 2008 crash; the failure to punish  with the criminal law any of those who were responsible for the banking crash; the ability of the likes of  Fred Goodwin  (the erstwhile CEO of the Royal Bank of Scotland)   to walk away with a pension worth hundreds of thousands a year after wrecking  through his megalomania for expansion  one of the largest banks in the world. More generally the film also makes much of the  growing inequality in Britain.

Sounds intriguing? But the problem is Brand, unlike Moore, never manages to get to quiz any of those responsible or even to  embarrass them  by getting close enough to shout questions at them.   This is in large part simply a consequence of Brand /Winterbottom choosing a subject – bankers’ recklessness –  where getting to speak  to the culprits was a  obvious non-starter.  But  that makes a large part of the  film’s  approach  an anticipatable and hence avoidable  mistake.

A fair bit of the film features Brand arriving at the head of office of, say,  a high street bank, daringly entering the  public foyer  and then hitting a brick wall of indifference as he is left to grill receptionists and security guards on the wickedness of their employers.   The result  is  underwhelming the first time he uses the ploy, but moves from underwhelming to  irritating as the  device is repeated several times.  The nadir of this  “beard them in their lairs” tactic  is  Brand’s  arrival at the home of  Lord Rothermere  (whose family own amongst other publications the  Daily Mail) to tackle Rothermere about his non-dom status. After  Brand  had vaulted over a wall to show his rebel devil-may-care  tendencies, the scene ended with him conducting a meaningless conversation with a bemused housekeeper via an answerphone.  There was a vapidity about all these scenes which robbed them of their potentially humorous situational content based on the incongruity of what Brand was asking rank and file employees.  In the end it was simply Brand behaving boorishly.

All of this tedious , ineffective and self-regarding guff is wrapped within an ongoing theme of  Brand  “going back to his roots”   to  his childhood  town of in Grays in Essex.  (Brand is part of what Jerome K Jerome  called “Greater Cockneydom”).   He is  certainly much  friendlier  in his dealing with the  white workingclass than the vast majority of those on the Left these days who  tend to approach them  with all the delight of someone trying to avoid dog excrement on a pavement,  but there is a cloying quality to his relationship with those he meets as though he is playing in a rather ham fashion  the  part of a cockney sparrow returning  to its  long deserted nest.   He is also rather too keen to prove his street cred- there is an especially  cringeworthy episode where Brand  vaults a underground barrier and claims he has dodged the fare.  More damagingly perhaps, was that  hanging over his  words on the state of the have-nots and the misbehaviour of the haves hung  the fact that Brand is a rich man, a fact he tried  to address by trying to make a very feeble  joke indeed  about the fact.

Ironically Brand  displays a strong conservatism with a small ‘c’  when he laments the change from the Grays of his youth as a place where  the shops were run by local people and  “all the money spent in the town stayed in the town” to a modern Grays of boarded up shops and multinationals who suck the money and by implication the sense of community out of the place.

That is too black and white a view of then and now, but I can sympathise with Brand’s general nostalgia for the not so distant past. My memory tells me  that people were generally more content  forty years ago.  The trouble is that Brand completely fails to do is address the thing which has most dramatically changed places such as Grays namely, mass immigration, which of course is all part of the globalist ideology he purports to loathe.    That he should avoid the immigration issue is unsurprising because it is part of the credo of the modern Left that it is nothing but an unalloyed boon, but it does undermine horribly the credibility of the film as  an honest representation of reality .

The most nauseating part of the film involved Brand using an audience of  primary school children (at his old school) to  get his message across  by feeding them with the most intrusive sort of leading questions along the lines of  “Bankers earn zillions of pounds a year while the person who cleans their boardroom takes home fifty quid a week: is that fair?”  The children were charming, but using children as ideological props is a cheap shot at best and abusive at worst.

The film is at its best  when Brand is working from a script with  crisp graphics and commentary  in the style of The Smartest Guys in the Room. The  cataloguing of  the excesses of the financial industry and the stubborn refusal of the authorities in Britain to bring criminal charges against any board member of  the institutions which were responsible,   even the banks  which required  bailing out by the taxpayer, was  angering. Comparing this escape  from punishment  by high ranking bankers (who invariably  left  loaded with huge amounts of money on their departure from the offending banks)   with the many, often quite severe,  custodial sentences handed out to the 2011 rioters for stealing items worth at most a few hundred pounds and often for much  less  showed a reality that lived up unhesitatingly to the old refrain  “It’s the rich wot has the pleasure and the poor wot gets the blame” .

There is also some strong stuff about the growing inequality in Britain and the thing which with frightening speed is creating a massive generational divided, namely, the grotesque cost of housing which has removed from most of this generation any chance of buying a property  and forcing people  increasingly into extremely expensive  private rented accommodation.   But here again, the immigration issue was left untouched.

The film missed  several important ricks.  One of the scandals about the way bankers have been able to walk away from the 2008 crash without any serious action being taken against them is  that there has been no attempt to apply  the provisions in the Companies  Act  relating to directors behaviour. These provisions  allow the removal of personal limited liability  from  directors  where they have behaved in a reckless fashion. Remove their limited liability and creditors, including the government on behalf of taxpayers,  could seek  every penny they hold.

Then there is the extraordinary fact that the shareholders of the bailed out banks  still hold shares worth something.  The banks  were irredeemably insolvent when the Labour government bailed them out. The shareholders should have lost everything.  This fact  went unexamined.

But the film’s greatest  failure is to spend far too  little time role that politicians played in the economic disaster through their lack of regulation and the aftermath of the 2008 crash.  For example,  there was nothing on the  Lloyds TSB’s  takeover of  the HBOS which ended up capsizing Lloyds.  This takeover was done at the behest of Gordon Brown  and turned Lloyds TSB from a solvent bank with a reputation for prudence and caution into a bank which had to be bailed out by the British taxpayer. The bank is now the subject of a civil action by disgruntled shareholders who claim they were misled by  Lloyds about the state of HBOS.

Much of what Brand dislikes  I also dislike. Like him I deplore  globalisation because it is destabilising at best and dissolves  a society at worst ; like him I think it a monumental scandal that neither the main actors in the financial crash nor the politicians who had left the financial services industry so poorly regulated  were ever brought to book; like him I am dismayed  at the growing inequality in Britain  and the particular  disaster  that is the ever worsening British housing shortage.  But the film offers no coherent or remotely practical  solution to the ills of the age. It is simply a rage against the machine and like all such rages ultimately leaves its audience dissatisfied after the initial adrenal surge of sympathetic anger.

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