The Question of Cashlessness and Dictatorship

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Since we’ve recently had some discussion about cashless business and the way it connects with freedom, which is particularly appropriate this week, developments in Hong Kong deserve a timely mention:

In Hong Kong, most people use a contactless smart card called an “Octopus card” to pay for everything from transit, to parking, and even retail purchases. It’s pretty handy: Just wave your tentacular card over the sensor and make your way to the platform.

But no one used their Octopus card to get around Hong Kong during the protests. The risk was that a government could view the central database of Octopus transactions to unmask these democratic ne’er-do-wells. Traveling downtown during the height of the protests? You could get put on a list, even if you just happened to be in the area.

So the savvy subversives turned to cash instead. Normally, the lines for the single-ticket machines that accept cash are populated only by a few confused tourists, while locals whiz through the turnstiles with their fintech wizardry.

How do I reconcile my agreement with the concerns of Reason’s Andrea O’Sullivan, who wrote the above, and my aversion to the Rhode Island government’s ban on cashless retail?  Well, I ask myself an important question:  Did the General Assembly pass and the governor sign that legislation in order to preserve the rights and anonymity of the people of Rhode Island?

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No.  By all appearances, somebody complained to a legislator or two about running into difficulty making a purchase at some point.  The politicians thought the legislation would buy them some good will from desired constituencies (like young voters), and they don’t give much thought to the rights of business owners to define their own business models.  That doesn’t mean that the legislators’ conclusions were wrong or right, but it does suggest that they weren’t crafted carefully in such a way as to balance the interests of various groups and all of our interest in preserving our freedom.

Yes, Hong Kong does give us preview of a dystopian future.  Everybody’s accustomed to life without cash, and they’re on the dangerous edge of a communist dictatorship.  In evaluating legislation in the Ocean State, we shouldn’t start by imagining how it would play if transported into a dictatorship, but rather by asking whether it brings us closer to being one.

To avoid the dystopia, we need the freedom to innovate.  A society in which the government does not feel it has the authority to impose business requirements is one in which people will develop new technologies and value their freedom, competing against large conglomerates that, themselves, would one day be subject to takeover by a central government.



  • Joe Smith

    A society in which the government does not feel it has the authority to impose business requirements is one in which people will develop new technologies and value their freedom,

    Well, let’s remember even in a laissez-faire “free market” economic system inefficient markets still arise (externalities, public goods, monopolies/anti-competitive behaviors) and necessitate some form of market intervention as well as the need for government (or some entity with the power of enforcement) enforcement of contracts, property rights, and related legal issues.

    and that’s not factoring in a society where citizens view the economic organization of resource allocation not just through the efficiency lens..

    Hence, putting equity/social/moral aspects aside, there is still the need for government to impose some market requirements – the balance though is tricky.

    when you write – “somebody complained to a legislator or two about running into difficulty making a purchase at some point. The politicians thought the legislation would buy them some good will from desired constituencies (like young voters), and they don’t give much thought to the rights of business owners to define their own business models.” – I think of the Old Schoolhouse rock song “I’m just a bill”

    Bill: Well I got this far. When I started, I wasn’t even a bill, I was just an idea. Some folks back home decided they wanted a law passed, so they called their local Congressman and he said, “You’re right, there oughta be a law.” Then he sat down and wrote me out and introduced me to Congress.

    but it does suggest that they weren’t crafted carefully in such a way as to balance the interests of various groups and all of our interest in preserving our freedom – that’s not really the job of a single legislator (although we might hope some thought is done); that’s why there are committees, testimony, studies, and then full legislative body votes along with a check by the executive branch and possibly a review by the judicial branch.

    I hope we haven’t lost the notion a single person or two can get a hold of their representation and make a case for legislation..and Hong Kong is a perfect example of why we need to balance efficiency versus equity concerns in this area.

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