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"the Soviet Union had the decency to grant the masses that stayed clear of politics a safe life"

I have to note that it's only true about late Soviet Union (1955 onwards?), because earlier Soviet Union was explosively unsafe country where you could be shot "for being a spy to Japan", relocated to uninhabited island in Siberia during Winter to freeze there, or just starve in one of famines.

You are absolutely correct. The bolshevik takeover of the country resulted in a fierce civil war where they basically wiped out the previous intelligentsia and large parts of the church.

And then there were external threats (causing paranoia) and massive mismanagement because they ran their economy according to utopian phantasies, similar to what the Chinese did. (which also resulted in tens of millions starving to death)

Only after the second world war the continent was sufficiently stabilized for a few decades and that's when the masses lived a decent life compared to what they had before.

Interesting spelling of 'phantasies'. I hadn't seen that before.

Is it wrong in English or just unusual? I'm from a German speaking country and we use the word "Phantasie", so that's why I used "ph" instead of "f".

There are some clinical uses in psychology, but otherwise it's wrong.

It's an archaic spelling, which is always cooler. :)

I recall recently the Norweigians suggestion when all cash Is electronic they could influence the economic situation by mandating -ve interest rates.

And yes that is as Orwellian as it sounds

You can already mandate negative interest rates by creating inflation.

True but this would be directly effecting citizens bank accounts

While I agree with most of your points, I think the informal economy mainly exists for tax avoidance, and not because very short term jobs involve an onorous amount of paperwork. If this is correct, then those jobs would still exist in a cashless society, it's just that they would have to pay tax.

> I think the informal economy mainly exists for tax avoidance

Garage sales and lending your buddy five bucks are also part of that "informal" economy. Without cash, the government would be dipping its beak into those transactions as well.

The governent already ignores small electronic transactions as not worth the time to collect. I don't see how a cashless economy changes this.

They ignore it now

They used to ignore cash transactions for the same reason. The advance of technology makes everything cheaper, and sometimes that's bad.

That's the real reason they want to get rid of cash. They want to make it impossible for any economic activity to occur without the government approving and getting a cut.

I don't think it will actually work. Were the US to get rid of cash tax cheats and drug dealers would simply switch to GBPs, euros, or yen. Or drugs.

The only people who will be absolutely locked into the system are cubicle dwellers, but that's already pretty much the case.

I think this depends upon who you are, giant multinationals have no problem filling out the paperwork for day laborers.

Some guy who want some help with his yard-work one Saturday, probably is just going to skip hiring a day laborer if he has to register with the state as an employer and fill out all the local, state and federal income tax and employment tax forms for a days work. Even if the amount of money to pay that tax is trivial.

I think the informal economy exists to avoid both taxes and paperwork. And for some things the cost of the paperwork is significantly higher than the cost of the taxes.

Oddly enough, much of the formal economy seems to be based on tax avoidance as well: shelters, offshore payments/banking, Double Irish with a Dutch Sandwich, etc.

http://www.investopedia.com/terms/d/double-irish-with-a-dutc...

That's not completely true. There are, at least in the US Sunbelt, large numbers of people who exist more or less off the books. It is only partially about tax avoidance. As the difference* between U3 and U6 unemployment has risen, this will only increase.

To the extent that funds from the above-board economy transfer to the informal economy, the taxes are simply paid by the last person in the chain who paid taxes.

*they're narrowing now, but it is anyone's guess as to whether the big jump from the 2008 time frame is permanent or not.

It is as Orwellian as it sounds, but the population will probably turn to underground "banks", I-owe-yous and what-not. And barter too.

I big chunk of us operate on those side channels already.

This is true. Why the downvotes?

Very good question.

> At least the Soviet Union had the decency to grant the masses that stayed clear of politics a safe life without a care in the world.

Unless, of course, they lived in the same country as some people who didn't stay clear.

https://en.wikipedia.org/wiki/Holodomor

Actually, famines happened all over Soviet Union. You could live anywhere.

i think you may be overselling it a bit. the government didn't invent all these new payment methods. they're the ones who still mint and print currency. when they stop doing that, i'll start worrying.

also, to date i have not been unable to spend cash anywhere or with anyone, that i can remember. this includes traveling to asia and europe and south america. in fact the global trend is that most people still prefer to be paid in cash. i know i sure do. when people ask me if i take venmo or paypal i just roll my eyes.

it almost seems the more electronic methods pop up, the scarcer cash gets, the more cash is in demand.

hmmm. didn't they teach us something about that in econ 1a...

> didn't they teach us something about that in econ 1a...

Cash is desired by some businesses because of lower transactional costs, though, not due to scarcity. It's a superior good (along some axes and for some people) and is valued as such.

strictly defined, electronic payments and cash payments of the same denomination are the same currency, since they are nominally equivalent, but i'm going to posit that they're diverging and will functionally become two different currencies as the proliferation of electronic payments and easy/cheap credit continues. i think when a good or service can be sold for different prices ("cash discount"), it's going in that direction.

Of course the government didn't invent these payment methods, businessmen like you and I did. I'm not against cashless payment, I'm using these services myself.

I'm against the government having too much power and regulating every detail of life.

yes but it seems like in this case government is the only one providing the free alternative! an exclusivity provided by design of a sovereign state obviously, but ironic nonetheless. that's why i say when it stops, i'll worry.

The view from the other side is that people can't get an unfair edge anymore by not paying taxes. Gang criminality can be fought of more easily simply because it will harder for them to earn money illegally. No more underpaid illegal workers in the building industry leading to cut wages for legitimate workers.

>The view from the other side is that people can't get an unfair edge anymore by not paying taxes.

It's mostly rich people and corporations that are not paying taxes through legal holes, off shore accounts, special tax breaks from their pals in the gov etc, and they'll continue to do so, cash or not. Heck, they already do it with virtual money.

And seeing as 10% of the population (or less) holds 80% of the money, it's those few that the big losses result from.

>Gang criminality can be fought of more easily simply because it will harder for them to earn money illegally.

There are lots of ways they can launder their virtual money. Mafia has tons of reputable establishments for example. A guy gets his drugs and in return has to buy X or Y overpriced good with a credit card.

One other point is in a cashless society it becomes easier to institute a negative interest rate policy.

https://en.wikipedia.org/wiki/Interest_rate#Negative_interes...

While that's all true I think this all started when credit card providers and businesses figured out how much valuable data they can extract out of one's purchase history.

Of course once the data is all aggregated within the databases of the two or three credit card providers in the country, it's easy for the state to dip his fingers in.

>nor can afford to incorporate a business

You don't need to incorporate to be self-employed. The costs are essentially zero.

Depending on where you are living of course.

I'm giving you here an example of Austria (EU): If you want to earn more than around 5000 dollars a year, you HAVE to incorporate. The cheapest setup will still cost you a few hundred dollars per year, but from start to incorporation it will take you at least 2-3 weeks.

Many will need the services of a tax consultant to deal with the taxes, which also involves some costs. (If you are employed the company has to deal with the taxes for you)

Then there are also liability issues depending on how you incorporated. Something similar to a LLC costs more to incorporate, but with the cheaper ones you are liable with your private property. (if you get sued by a customer they could take your house)

Another issue is that you don't receive social services like unemployment benefits if it didn't work out for you. And then you also pay more for health services than normal employees.

These are a lot of issues for someone just trying to make a few bucks because he/she has for some reason or another financial problems.

It's not some insurmountable problem for entrepreneurs that have a reasonable plan and some money saved up, but we are talking about people that are trying to get through a tough year. In such a situation the additional risks when you are already at the bottom are for many not acceptable.

Maybe in your country.

In my country to be self-employed you have to register and pay "freelancer" insurance cost to the state that add up to something equivalent to $800 per month (nominally $300-$400 in our economy).

In most US states you need a business license.

People incorporate for a reason, though. If you don't your personal assets aren't protected if the business gets sued or becomes insolvent.

There's a reason Donald Trump still has lots of money after having his businesses go bankrupt four times.

A corporation isn't a magic shield. The limited liability exists mostly to allow investors to own stock in large enterprises without being exposed to more liability than the value of their shares.

Trump is/was doing multimillion dollar real estate development with outside investor's money, and observing lots of corporate formalities. That's why his businesses could go bankrupt without wiping him out.

If I represent a creditor, I'm not going to care if your chickenshit small business is incorporated or not, particularly if it's just a professional services business like a consultant. I'll just sue you AND your corporation. Besides, most creditors that loan to small businesses demand personal guarantees from the owners.

Just having a corporation won't make you Donald Trump. But it might earn your tax preparer some fees.

>If I represent a creditor, I'm not going to care if your chickenshit small business is incorporated or not, particularly if it's just a professional services business like a consultant. I'll just sue you AND your corporation.

You can sue anybody you want. The question is always whether or not you can prevail. If you're just a creditor you would almost certainly be unable to get a judgement against the individual unless he did something stupid like spend corporate money on personal items.

Doing stupid things is common in the small business world. For example, I regularly run across people who have no personal bank account and just use the company account for everything. In practice, there is almost always something about how things are run (particularly with a failing company) that is actionably questionable and pulls the owner personally into the suit.

I wouldn't have wanted to be a farmer when Lysenko was still considered "the man".

An aspect of viewing every transaction is that it allows you locate anyone geographically. As long as you buy a train ticket, or gas for a car, or a sandwich, your location is recorded.