Just a few short days ago I was pointing out that if you consider who some of the "smartest" people are (as measured by top credentials from top universities), you will quickly realize that allowing such people to have significant political power is "very frightening." As a couple of examples, I used late 1970s top MIT Economics Ph.D.s Paul Krugman and Olivier Blanchard, who have used their credentials and their respective perches at Princeton/NYT and MIT/IMF to perpetrate on the world every kind of economic fallacy to justify expansion of government, to undermine world economic performance, and to keep the people in check.
And now in this weekend's Wall Street Journal we find the prime real estate in the Review section given over to one Kenneth Rogoff for a lengthy piece advocating that the governments of the world phase out the use of cash. The title of the article is "The Sinister Side of Cash." It seems that Rogoff is just out with a new book ("The Curse of Cash"), and this big article gives him the chance to peddle it.
Who is this guy Rogoff? You've already guessed correctly: he is yet another contemporary of Krugman and Blanchard in the MIT Economics Ph.D. program of the late 70s. (Rogoff actually took a year off -- to play chess! -- and got his Ph.D. in 1980.) He's also a big-time professor of economics at Harvard. And also one of Blanchard's predecessors as Chief Economist of the IMF. Hard to be more of a genius than that, right?
And of course, what geniuses like Rogoff know more than anything is that their great genius gives them the ability to envision a far more perfect world than this imperfect thing we've been suffering with so far. Naturally the visions of these geniuses are all variations of the same thing, namely some kind of government program to more closely monitor and/or control the people. The geniuses know that there is no downside in such programs, first because the programs have been designed by themselves, and second because government programs are administered by all-knowing and perfect government functionaries, who are people like us and can always be trusted to do the right thing.
So what is the reason given to phase out the use of cash? It's that the government money laundering laws, introduced in 1970 and tightened multiple times since, just haven't succeeded like they were supposed to in wiping out all crime involving money. Now we learn that it wasn't the "laundering" of the money that was allowing crime to flourish, but the very existence of money in the form of cash:
There is little debate among law-enforcement agencies that paper currency, especially large notes such as the U.S. $100 bill, facilitates crime: racketeering, extortion, money laundering, drug and human trafficking, the corruption of public officials, not to mention terrorism. . . . Cash is also deeply implicated in tax evasion, which costs the federal government some $500 billion a year in revenue.
I have previously covered the subject of criminalizing money laundering in two posts, The Joke Of Criminalizing Money Laundering (June 2015) and The Joke Of Criminalizing Money Laundering -- Part II (April 2016). The short version is that the money laundering laws -- principally the Bank Secrecy Act of 1970, and amendments to same in the USA PATRIOT Act of 2001 -- were supposed to stamp out crime involving large amounts of money through deputizing the banks to spy on their customers 24/7 behind their backs and thereby enabling the authorities to "follow the money" to track down the crooks. Forty-six years in, at a cost of massive expense to financial institutions and equally massive loss of freedom and privacy to the people, the government hasn't made the slightest dent in the big-money crimes (the biggest of which are the illegal drug trade and illegal gambling). Indeed, it seems that a brand new heroin epidemic is exploding right now beneath their very noses. Meanwhile they regularly prosecute banks and other financial institutions for failing at the impossible task of figuring out which of their customers are crooks, and they periodically prosecute some poor slob who had the temerity to use cash in large amounts for an otherwise perfectly legal purpose without reporting it to them (famous example: Denny Hastert). And they cynically use the cry of "terrorism" (see, e.g., Rogoff quote above) to justify continuing and expanding the money laundering laws, as if those laws could be of any use catching terrorists (whose activities involve relatively small amounts of money) when they are useless in catching big drug dealers (whose activities involve much larger amounts of money).
And of course the answer of the geniuses like Rogoff to total government failure is always the same: double down! We can finally succeed in stamping out this financial crime thing if only we hand over to the government yet more massive new powers, here the ability to track and trace everything the people do 24/7, down to the the smallest transaction. (OK, in the article Rogoff says he would be willing to allow the continued existence of bills of $10 and smaller. Thanks, Ken!) All behind their backs, of course.
To anyone with the slightest understanding of human nature and incentives, the results of Rogoff's program are completely predictable. The professional criminals involved in big-time financial crime will find a substitute for cash. Maybe it's Bitcoin. Maybe it's another crypto-currency. Maybe it's some other currency than dollars. Maybe it's gold. Maybe it's existing dollar bills in circulation (which could gradually become more valuable as they become scarcer over time.) Maybe it's all of the above. The big-time crooks have the need and the time to find the substitute. You do not. So the government gains absolutely nothing against the big-time crooks, but gets the ability to track and trace everything the regular people do.
So is your thought, so what? What do I have to worry about if the government gets my monthly credit and debit card statements? I'm law abiding! That's what you think. There are said to be over 4000 federal crimes alone (nobody has an exact count!). Criminal defense attorney Harvey Silverqlate has a book titled "Three Felonies a Day," the title reflecting the number of crimes you are likely committing on a regular basis without knowing it. For a small sampling of crimes that you may be committing, see this article "8 Ways We Regularly Commit Felonies Without Realizing It."
Government flunkies would never do something so evil as flyspecking the financial records of their political opponents to find something to prosecute, would they? Really, you owe it to yourself to pay attention to this issue -- and to use cash everywhere you possibly can.