There have been many bad bold ideas put forth in mankind’s history, such as those listed in the article, “6 Spectacularly Bad Ideas From History’s Greatest Geniuses”. And today Joseph Stiglitz, a Nobel prize-winning economist from Columbia University, has been pushing one. Now don’t get us wrong. We respect Stiglitz’s work that earned him the Nobel Prize. The prize does not ensure that all ideas from Stiglitz make sense. At the World Economic Forum 2017, Prof. Stiglitz again called for the banning of paper currency in the U.S. or the implementation of a cashless society in the country. However, we believe this recommendation is a bad bold idea and that no action should be taken to implement it. It is an attack on basic freedom in the United States. And it simply will not work.
On Why A Cashless Society Won’t Work
Why won’t it work? There are many substitute currency options available or will be invented to circumvent a potential ban. Gift Cards, barter, other country currencies and airline miles could all be used as a substitute for example. Also, banning cash or implementing a cashless society is a fundamental attack on liberty.
Matthew Lynn, in a The Telegraph piece titled “Abolish Cash? You’d be losing a crucial part of free society”, writes: “More importantly, cash is about freedom. There are surely limits to the control over society we wish to hand over to governments and central banks? You don’t need to be a fully paid-up libertarian to question whether, in a world where we already worry about the amount of data that Facebook and Google can gather about us, we really want the banks and the state to know every single detail of what we are spending our money on and where. It is easy to surrender that freedom—but it will be a lot harder to get back.”
While we appreciate Professor Stiglitz’s fine work in screening and its application to information asymmetry for which he was awarded his Nobel Prize, we believe the Professor’s paper cash ban— thus, the implementation of a cashless society —should be ignored. Bans do not work when there are many substitute goods readily available. This fact is a basic economic principle and will not cure America’s ills of corruption—which is what the Professor is trying to solve.
At the end of it all, it reminds us of another Bad Bold Idea in 1919: “Here’s the cure for all of America’s problems: Prohibition.”