1.3 Updates:

Implementing a Cashless Society

Structured Outline
CSC208—Elliott

Special Note for Spring 2017: I will only grade for credit submissions that are actually in the prescribed structured outline format: title, intro, labled sections, TOPIC SENTENCES ONLY within the sections representing paragraphs (separated by spaces), conclusion, and summary.

Assignment

  1. Prepare a Structured Outline on a proposed action regarding a formal move to a cashless society that everyone must now use. You have many different actions that you can choose from, including the prohibition of a move to a cashless society. You can chose an action that you believe in, or one that you don't believe in, and you can find either of these either ethical or not. We are after clear exposition of your ideas, and a strong ethical analysis.

    Chose one of the four ethical theories we have studied, or cultural relativism as the framework for your analysis.

  2. Follow the assigment rules and deadlines for what you bring to class, editing cycles, feedback forms, submission to D2L and etc.

  3. Give a clear statement of the action that you propose.

  4. You MUST consider, and discuss the actual technological concerns of your proposed action. No magic technology please!

  5. As always, your structured outline should be suitable for inserting directly into a 3,000-5,000 word full paper without making changes to even a single punctuation mark. The only change would be to complete the paragraphs that follow your topic sentences.

The ethics of a cashless American/International Society
What are the issues?

Some background ideas:

  1. The importance of a strong banking system for a national economy.

  2. We used to have local banks. Now we have moved toward a few very large banks

    Pros:

    • Lower administrative costs, so more competitive
    • Only one set of high-priced lawyers is needed to interpret the extremely complex set of banking laws instead of the same set of lawyers duplicated for every smaller bank.
    • More unified politial clout including internationallly so favorable banking climate and easier to make profits.
    • Easier to enforce uniform regulations
    • Naturally follows capitalist free commerce—let the markets work

    Cons:

    • Worse service and higher costs because of lowered competition
    • "Too big to fail" problem with taxpayers on the hook for bad policy
    • Subverts the political system through massive payments to campaigns
    • Possibility of catestrophic evil through totalitarian control, or being hacked, including by a foreign government
    • Can set military goals based on profit
    • United States owned by foreign interests

  3. We can separate the idea of centralized control from that of digital money.

    • Banks can be separated by states, with common standards, but independent implementation, administration and auditing
    • National "emergency" default trigger which condition is enforced one day a month. All banking zones are shown to be separated from one another.
    • Can have layers of zones / collectons of states, so that minor failures are isolated but all other zones are operating normally.
    • Can this work, or is the overhead inviting disaster?

  4. Moving to a cashless society will not be easy. Consider just even these two points (See D2L Ethics Documents):

    1. The Dodd-Frank Act to address problems in the banking industry (now under attack by the Republican Congress) is twenty-thousand pages of legalese. Banks really do have a huge burden of regulation.

    2. In an effort to curb corruption, India recently banned all high-denomination cash notes.

  5. The U.S. is approximately "80 percent" cashless already.

  6. Money laundering is already a huge international problem. When banks are "too big to fail" even when they get caught laundering tens of billions of dollars, no one goes to jail.

Notes on a cashless dollars-based system

  1. Background
    • Apple-pay, Google Wallet, etc.
    • Paypal
    • Linked to existing banking and credit card systems
    • Credit card / debit card model
    • What infrastructure do we need to make this universal?
  2. Pros:
    • Very convenient—simplifies household finances, purchases. Like one giant debit card application without the fees
    • No counterfeiting
    • Harder to launder money for illegal activities
    • Simplifies court cases involving money
    • Encourages fair payment of taxes
    • Economy is based on this model already. Very few important transactions are made with cash anyway. So let's do it right.
    • Even the poorest people have cell phones and mobile internet access
  3. Cons:
    • Potential to take down an entire economy over night through massive software glitch or hacking
    • Loss of privacy—invites corporate and government intrusion and abuse
    • How do you protect from massive extortion and theft? That is, now if you are going in a dangerous neighborhood, you can carry a small amount of cash. It is harder to carry a "small amount" of cashless access to your banking resources.
    • New systems are difficult for the poor, the uneduated and the elderly to learn.

Notes on electronic currency systems

  1. Tend to be international, and it is difficult to make them national: the market sets the price and money can be accessed via the Internet. (Have to build a speciliazed network, or censorship to make national only).

  2. Huge corporations have made investments in this technology of the future

  3. The technology has been proven in world markets

  4. Some potential for catestrohpic failure because depends on practically believed but theoretically unproven cyrptographic technology

  5. Track record of problems through hacking, hardware and software failures, lost keys, and social disputes about how to proceed

  6. Giant players such as governments present a threat to some systems

  7. Transactions can be made completely private, partially private, and public.

Arguments in Favor of a Cashless Society

  1. We are virtually cashless in most cases anyway, so let's do it right

  2. Banks are notoriously inefficient and slow to deveolp modern software. Huge corporations are glued together by takeovers producing massive software problems. Lots of government regulations that require banks of lawyers to interpret. Lots of secrecy about IT development. Result: Very slow to respond to consumer needs in the modern world. Not competitive.

  3. Most United States citizens live mostly within the law: they work and pay taxes, so a transparent money system will not be a problem for them.

  4. Most honest "normal" people use credit cards and online banking now anyway because it is more convenient.

  5. Digital currencies can provide a modern banking system to even the poorest countries, as long as citizens have cell phones. This could be a huge boon to the world's most desperate people.

  6. Solves the "three sets of accounting books" cheat resulting in rewarding successful business that also follow the rules of society. [Businesses that cheat have an unfair advantage. It is common for small businesses to "cook" their books, and to under-report their income to reduce the amount of taxes they pay. This effectively punishes those that behave in ways most beneficial to society. (The "three-books" system: one for the government to reduce taxes, one for selling a business to maximize profits, one for the partners to know who gets what.)]

  7. Most large criminal enterprises rely on laundering money. This may be harder when cash is removed.

  8. Society can make better decisions when the flow of money is understood.

  9. Governments can't print digital currencies to pay their bills.

  10. Digital currencies eliminate counterfeiting.

Arguments Against a Cashless Society

  1. The specter of totalitarian government is now perched for takeover. Those best-suited to speak out for reform may have no funds on which to live.

  2. A lifetime of work and savings can now be removed in less than a minute.

  3. Extortion can now be total, in the wrong hands.

  4. Criminal hacking now has the ultimate power.

  5. National defense may be greatly weakened. E.g., what happens to the Bitcoin economy if blockchains can't be validated?

  6. The autonomy of local and state governments is weakened.

  7. Potentially vulnerable to cyber-attack from anywhere in the world.

  8. If the Internet fails in time of crisis, losing our money system will make everything much worse. But are we at this point already?

  9. Digital currencies attack the sovereignity of nations. Governments can no longer control the flow of money in and out of their country.

  10. Governments can't print digital currencies to pay their bills.

Bitcoin—an example