Viswanathan K's Thoughts

Can we ever get rid of cash altogether? Is it practical? Or desirable? What would be the full ramifications of such a decision? After all, all Western countries still use cash: even they haven’t they gotten rid of it in the Internet age. Or is it just a matter of time? To analyze the prospect, one should look at Sweden, a country that has gone quite some distance in getting rid of cash. Not the full distance of eliminating cash, but much farther than any other country. So what’s been the upside and downside of their decision? In most Swedish cities, for example, public buses don't accept cash; tickets are prepaid or purchased with a cell phone text message. One can almost immediately see the downside of that: what if you are a visitor to the country? How would you ride the bus? I don’t know how many foreigners visit Sweden, but this would surely be a problem in tourist centers like the US, Paris and Rome. Several Swedish banks refuse to deal in cash. That’s because they make mo...

In my company, they give gift vouchers as rewards. Sure, you get to pick the mall or store from which the voucher is issued, but it’s not the same as cash. When I asked why they don’t give cash, I was told that when the reward comes as cash (and hence as part of the salary), people don’t even realize they got an award! But with a voucher (or so they told me), you know exactly what you got as a reward. The association to the reward is clear, but not so with cash. With that reasoning in the background, it was interesting to read about this reform discussion in the budget as to whether it was better to give cash (instead of subsidies) to the poor. Those in favour feel that cash can be targeted at the people who are poor, whereas subsidies end up getting doled out to even those who don’t need them. (Think of the amount you pay for that gas cylinder to see the point). Plus, the cash option gives the poor to use the money the way they want rather than having the government decide the items ...

When it comes to gifts, I always felt cash were a better choice than goods. After all, how could one know for sure what the recipient wanted? Don’t many of us receive all sorts of items we don’t care about? And even if you knew what the other guy wanted, wasn ’t it possible that he was getting the same item from someone else as well? And by giving cash, didn ’t you give him the choice of buying what he wanted when he wanted it? And with cash, didn ’t the receiver also have the option of pooling in other cash contributions and/or from his pocket to buy that really expensive item? To me, cash feels far more valuable than an object of that same value. Because cash can buy so many different objects of a particular value. Or combinations of objects that add up to that value. This comment by Arthur Schopenhauer captures that sentiment: “(Money) is always ready to turn itself into whatever object their wandering wishes or their manifold desires may fix upon. Everything else can satisfy only...