Local economy is safe. Local economy is paying cash to people you know.
National economy is not safe. Its chain stores swipe your plastic card into a reader and set you up for unwanted excitement. Thirteen million people a year are victims of identity theft.
A cash economy is local, personal and private. Cash doesn’t create an online data stream about your commercial relationship. It doesn’t operate on a high-tech platform susceptible to hackers and the third-party snoop. Cash works. It’s simple. It registers immediately when changing hands. No kite tail in the accounting.
Home Depot is the latest national retail chain to have been hacked, its credit card system reportedly compromised at 2,200 stores in the U.S. and Canada starting in April. “The company said it is working aggressively to root out the malware that infected its data systems and protect its customer data, but stopped short of addressing when or whether the breach had ended,” says the Wall Street Journal.
Cash has a friend in the Better Business Bureau. Jim Winsett, CEO of the local chapter of the trade group, suggests the marketing glitz of plastic has blinded us to cash’s virtue.
Mr. Winsett throws up his hands as to how you as patron of big business might defend yourself from ID theft. The most you can do is “be diligent” by checking statements and watching your accounts online. The solution is passive and tardy. Identity theft “continues to be the largest issue we have in the marketplace today,” Mr. Winsett says.
ID theft imposes more than $21 billion in losses on individuals and their credit facilitators a year, based on 2013 figures, Mr. Winsett says. Self-interest would suggest the elimination or strict limitations in the use of plastic. Having one’s “legal identity” stolen is a nightmare that can take months to solve and can make you vulnerable to arrest and criminal charges if you are entangled in the acts of the party who stole your public avatar. Your ID is your commercial and corporate identity, established in equity by flesh-and-blood natural persons who effectively become walking corporate entities acting in a corporate capacity.
Another reason to eschew plastic is interest in — or care of — your neighbor. Mr. Winsett concedes plastic is effectively a national economy tax on local economy. Your use of a card at a locally owned shop imposes a 3 percent to 5 percent tax on the retailer by way of fees. If you buy shirts and socks from a local clothier, you let the family running the store pay part of the mortgage on the deal. Is that loving your neighbor?
The benefit Mr. Winsett offers in defense of credit cards is consumer clawback power. “If a sale goes awry or the product doesn’t work well, then I have recourse with a credit card. If it’s a cash transaction, then my options are limited.”
But if we make purchases locally, clawback matters less. Local economy sales are in person — legal rights and bully-buddy backup matter less.
The unexpected remedy: Green rectangle
Users of plastic are defenseless against theft and abuse of their cloud-suspended personal data, Mr. Winsett says. If they operate in the ideasphere of credit, they are vulnerable.
A reanimation in the use of the dull green strip of paper, the Federal Reserve Note. Paper money. Circulating currency. “There’s pros and cons both ways to cash. I think the use of cash has several implications,” Mr. Winsett says. “One, it gives you the opportunity to really use your money. If you are in a circumstance in which you are working with a tight budget, then if you are paying with cash you know really at all times the funds you have available.”
Physical banknotes bring a realism and present orientation. Transactions are complete the moment the cash drawer clacks shut. The seller knows what he has. You know what you have left.
The local BBB has 2,000 members in 21 area counties, Mr. Winsett says. They favor cash. It is “a valid point” to assert, Mr. Winsett says, cash gives zero exposure to electronic theft.
What about robbery, strong-arm theft, pickpocketing or loss of a billfold bulging with $100 bills? Mr. Winsett doesn’t repeat this canard against banknotes. The only hitch with cash is the need to withdraw it from bank or ATM, he says.
How to add liquidity to local economy
If green rectangles are poor for crooks, plastic makes them rich. Might cash make Chattanooga rich? What if everyone used cash for a day? A week? Would that keep dollars in local economy that might otherwise flee to the national houses of credit?
“I would say positively yes. *** On a daily basis that would be thousands of dollars. On a weekly basis that would be hundreds of thousands of dollars,” Mr. Winsett says, warming to the subject. “How are those monies reinvested into our economy? How does that assist the business that they might expand and grow and be in a position to do things they would not if they were paying that 5 percent [fee] to a credit card company? The options are somewhat unlimited.”
— David Tulis is host of Nooganomics.com, a show from 1 to 3 p.m. weekdays at Hot News Talk Radio 910 and 1240 that covers local economy and free markets in Chattanooga and beyond.