Economics

Is King Cash Facing a Coup D’etat?

Data privacy today is of greater importance and cognizance than it has ever been in the past. Among American consumers there is mounting distrust of both the government and corporations with respect to invasive data collection methods and unethical data uses. Most of the conversation thus far has revolved around the internet, social media, and giants in this realm such as Facebook and Google. And while they are well deserving of critique, why is the same skepticism not applied to Visa and Mastercard? Credit card behemoths and banks have the ability to collect, analyze, and monetize data on every purchase ever made— with the exception of cash transactions. Cash provides an essential consumer protection from the government and corporations as an inherent data opt-out. Yet, it is slowly losing relevance and in effect being phased out by newer technologies. The preservation of cash as an option to consumers is of paramount importance despite its shortcomings. Cash’s eventual disappearance will cause far-reaching and insidious consequences, which we can already witness starting to take hold abroad.

The-For-and-Against-Cash

The US dollar, in both its physical and digital iterations, is the most important world currency. In recent years, as money demand has grown alongside the digitization of many transactions, the question has been raised – where is our physical currency being held? About 5% is in bank reserves, another 5% is in American households, and an unbelievable 90% of U.S. currency remains unaccounted for. Much of it is held in foreign countries; estimates range from 50% to 70% of U.S. paper currency is abroad. Most of this is kept in hundreds as a store of value by Russian oligarchs, international drug kingpins, and of course other countries’ treasury reserves. However, this ghost currency is also floating around in America’s informal economy; from illegal activity to under the table employment. Many critics argue against physical currency precisely because of its use in illegal activities. Harvard macroeconomist Kenneth Rogoff postulates that a transfer to a cashless society would hurt the economy in the short term because of a decrease in demand for illegal products and services. However, he also states that if just a fraction of the lost tax revenue from unreported activities (which could make up as much as 7-10% of overall GDP) were recovered, this would more than make up the difference. But the same reason for which cash is chosen to evade the law – anonymity – it is also essential for consumers. And the use of cash for tax avoidance is not a strong enough reason to go completely digital. In fact, other theorists believe that getting rid of cash would not necessarily solve the problem. According to the UK Treasury and Home Office, cash is only the third most popular channel for money laundering, behind banks and accounting firms. Moreover, if the desire is to stop tax evasion, governments should concentrate their energy on the use of offshore financial centers, not cash.

Governments may additionally argue that the discontinuation of cash would help economic growth in other ways too. With a cash society, the movement of money is slow and expensive. Operating in cash is claimed to cost the U.S. approximately .5% of its GDP every year. This is undoubtedly an attractive reason to switch, but in the grand scheme it is unwise to sacrifice freedom for marginal revenues and growth.

It’s not just governments that find cashless society attractive though. There are certain interest groups that also see going cashless as ultimately beneficial. Small businesses, for example, argue that going cashless makes them more secure. They feel safer without the use of cash- there is no risk of money being stolen on site. However, this neglects a serious flaw with cashless economies in general: they are much more vulnerable to cyberattacks. Cyberattacks pose a risk to the stability of the entire national and even global economy long-term, but more tangibly, an immediate theft risk to consumers. Based on existing protections from banks, consumers are often at higher risk than they may realize. In digital banking, banks generally claim any transactions conducted online with an individual’s password is of their volition, so money is not replaced or refunded.

Even more pressing is that in a cashless world, there is an entire forgotten echelon of society that would be completely disenfranchised – the low income. Low income individuals, along with the elderly, homeless, recent immigrants, minors, and other groups often cannot open bank accounts and thereby could not at all participate in a cashless economy. This has to date been recognized as a significant problem and is the reason that in many U.S. cities and states there is existing legislation that mandates businesses to accept cash. However, this is not true everywhere; many countries, particularly in Europe, allow businesses to refuse cash. This could be possible too in the United States, perhaps if the Swedish model of government subsidized bank accounts for low income individuals were introduced. Regardless, the looming issues of data privacy remain.

The Consequences of Cashlessness

The most pivotal issue with a cashless society is data privacy and the preservation of anonymity. The presence of currency in general, who holds it, and who controls it, is a statement of power in itself. Cash counteracts this and acts as a public good. Since it is held in common, the power is widely dispersed throughout the economy and between consumers. There is no central point of failure or central point of control. However, governments around the world are seeking to gain control over their currency flows and have the ability to do this very effectively through digitization. This can manifest itself in one of two ways.

One is that all money must be held in bank accounts, giving banks, credit card companies, and other financial services providers, already unruly characters, an unprecedented amount of control over an individual’s personal finances. These companies work together to record purchases, share and compile information, and exploit spending patterns for targeted marketing. Take Paypal for example: they claim they are protecting user data, but their terms and conditions outline the non-associates which they may pass data onto, including Facebook, Axium, Oracle, and more. However, this option may still be more attractive than the following because there are a number of financial service providers to choose from. The competition between them can be used to drive demand for greater transparency and consumer protections. Already growing awareness over privacy issues has lead to the new Apple Card. It is unique from Visa or Mastercard in that it only shares data with credit agencies and no further partner corporations.

The second option for digitization is the government holding everyone’s money in central bank bank accounts. This would solve the issue of unbridled corporate power, and to be fair the government is generally held to relatively higher standards of transparency. However, it presents its own issues.

Governments could use their financial power to isolate certain individuals from participating in the economy, potentially for politically or socially motivated reasons, whereas this is not possible in a cash economy. Already, the U.S. government can seize funds from an individual or company bank account without even a formal conviction. This is a power that has historically been abused. During “Operation Choke Point,” in which the U.S. government claimed that it was simply cracking down on predatory lending, it also financially went after moral opponents such as the pornography, gambling, and firearms industries. Private credit card companies do this too. Many pornography providers have switched to using crypto-currencies like Bitcoin in order to avoid the excessive fees that are charged by credit card companies. Moreover, even if many are sympathetic to these quasi-sin taxes, it’s not long before they may creep into more ambiguous areas, dictated by partisanship and special interest groups.

For example, consider a future in which the government places a charge on individuals that make donations to abortion providers such as Planned Parenthood. One’s inability to make anonymous donations would threaten the existence of certain organizations and voices, arguably violating the constitutional right to privacy. This right is not explicit in the U.S. Bill of Rights but can be reasonably implied from the fourth amendment right against unreasonable search and seizure (“to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures”) and by the fifth amendment right to avoid self incrimination (“shall be compelled in any criminal case to be a witness against himself”). An even broader interpretation, such as that favored in the U.S. Supreme Court case, Citizens United v. FEC, could cite the first amendment freedom of speech as granting freedom to make anonymous donations. Considering unchecked political donations and their implications does slightly complicate this argument. However, the aim of this article is not to comment on whether or not dollar limits should be applied in political finance, or if corporations deserve the same rights as people, but to stress the importance of anonymity for citizens. Without the preservation of anonymity, of which cash is an integral part, citizens are vulnerable to corporate and governmental abuse.

Global Digital Currencies

The disappearance of cash, while seemingly not immediately relevant to the United States, is likely not a distant future. There is an ongoing international digital currency race that will only continue to gain traction at an accelerating speed. The most malicious and determined character in this race is China. China’s central bank is set to release the first digitized domestic currency in an act of financial innovation and suffocating state control. China’s new digital currency will be unique and morally questionable in that it allows the central bank to not only track the movement of money but in some cases supervise transactions. They plan to use big data analytics to seek and find money laundering. This will supposedly help to expose corruption — if you accept the presupposition that the Chinese government is not corrupt itself. The new currency, which will initially be available in banks and on the Chinese equivalent of Apple pay, Alipay, will trigger several effects upon its highly anticipated release. First, it may push Chinese consumers to switch their money into anonymous crypto-currencies like Bitcoin. This would cause a depreciation of the Yuan, benefitting the Chinese export market but harming morale. Yet, it may be stopped by the Chinese government, which has previously criticized crypto-currencies like Facebook’s Libra, stating only governments have the right to create digital currencies. The simple fact that the government would even have the ability to stop this, and further dictate which purchases consumers can make, is inherently the issue with digital currency. Moreover, when considering the Chinese are already world leaders in artificial intelligence and facial recognition, it is not hard to see that this is a further power grab. As for the worst case scenario of increasing Chinese authoritarianism— look to the Uyghurs.

The possibility of creating state run digital currencies has also attracted the interest of North Korea, Venezuela, Russia, and Iran. North Korea, a pioneer in digital crime, has already made headway in mining, crypto-jacking, and hacking exchanges in existing digital currencies. The North Korean government has already stolen over two billion dollars worth of digital currency in order to fund its weapons program. And, its own crypto-currency would give it the power to avoid U.S. sanctions to a greater extent. Iran and Russia are similarly motivated to avoid sanctions and attempt to weaken U.S. supremacy in the global financial system. The Venezuelan case on the other hand, is unique and a testament to the government’s continued mismanagement of the economy. Maduro has released a digital currency, the “petro”, whose value is linked to the value of a barrel of oil, and is claimed to provide a solution to the country’s runaway inflation issues. However, “petro” hasn’t yet been successful- it can be found almost nowhere. Some independent crypto-currencies have made headway in Venezuela, though. The crypto-currency “Dash,” for example, is now being accepted as a form of payment at select locations of Church’s Chicken in Venezuela.

There are some democratic nations working to develop digital currencies, too. Sweden, for one, is hoping to soon release the E-Korna. But, Sweden is a special case. The country already functions on a mostly cashless basis, the EU has strong data privacy laws, and the Swedish people have an unusually high degree of trust in the government and new technology. However, even given all these positives, the most important factor is that cash will still be accepted legal tender. The Swedish government even cautions that every household sets aside cash in the event of mass power failure or hacking.

Final Thoughts – Why Data Privacy is Important The increasing surveillance of our lives limits our freedom and impacts our behaviors. The way we spend says so much about who we are and what we stand for, and our financial freedom is deeply imbedded into our constitutional and human rights. Even more than that though, the effect is insidious, the growing surveillance changes how we think and how we behave. Consider the Foucauldian idea about the connection between panopticon prison and discipline within society. The design of a panopticon prison is similar to a two way mirror. There is a central guard tower surrounded by prison cells on all sides, which guards may see into, but for prisoners it is unknown if the guards are present. Since the prisoners do not know when they are being watched they are on high alert at all times. They internalize the gaze of the guards and thereby permanently change their behavior —whether or not they are actually being watched. This is the underlying idea of the surveillance state and the government’s ability to remove anonymity from money would further enhance this effect. Of course, cash represents only one small part of the overwhelming data privacy problem. Yet, it would be foolish to take for granted the mundane and to wait until it’s explicitly threatened to start paying attention. This is not a condemnation of digital currencies, but a plea to preserve cash as an option for those who would prefer to buy and sell without surveillance.

January 2, 2020 0 comment

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Asia Economics Featured Print Article Religion

New Age Yogis and the Commodification of Spirituality

written by Eden Ballard

This article was published as part of our Spring 2019 print edition, the entirety of which may be found here.

One of the most basic human instincts is to search for a sense of belonging. Often, this is found through religion; believing in a higher power or powers not only facilitates a sense of purpose in life but also helps people connect to one another. However, religion and spirituality are not as cut and dry as they used to be. The global market has had a drastic and transformative impact on belief systems for people all over the world. With religion decoupled from place, sacred things have become commodities that can be traded and adapted to accommodate various cultural demands and ultimately reflect local politics. This effect can be traced by looking at the practice of yoga, a historically spiritual practice that has been processed and transformed into a sellable good that has comfortably integrated into the global market.

A Brief History of Yoga

Today, yoga is worth up upwards of $80 billion[1]the global market as a result of classes, retreats, equipment sales, and associated products. Although its status as a commodity is fairly recent, yoga began being practiced in modern day India around 3000 BCE as a way to achieve harmony between the heart and soul on the path to divine enlightenment and provided a basis for what would stem into Buddhism and Hinduism. As the centuries have passed, yoga has traveled and evolved to fit the demands of markets around the world and now has dozens of variations. In the past, yoga emphasized mindfulness and connection through the pillars of love, kindness, and compassion. In contrast, modern yoga typically prioritizes health benefits over spiritual benefits… although some people embrace the spirituality as well. Even though this ancient practice has a relatively clear history[2], the political and spiritual components of modern yoga are strained and complex and thus, impossible to generalize.

Because of its intimate ties to religion, yoga has caused extensive discourse. The physical benefits of yoga are universally appealing to those who decide to pursue it but for some, practicing spirituality outside of their normal beliefs is unacceptable. This conflict is circumvented in several different ways including prohibiting the mindfulness and spiritual practices of yoga and focusing on it as a sport or adapting the names of the poses relative to the local cultures. These maneuvers have allowed yoga to be adapted into various markets all over the world and made into a global commodity. Pierre Bourdieu, French sociologist, anthropologist, and philosopher, called people like the ones engineering these changes “cultural specialists” and explained that they “ransack various traditions and cultures in order to produce new interpretations and uses that can be consumed.” And consumed it is. Yoga, in various forms and interpretations, is taking off around the world.

Qualifying the Spirituality of Modern Yoga Practices

In many secular places, there is an inverse relationship between the number of people practicing yoga and popularity of organized religion. People that otherwise feel disconnected from the religions they were brought up with find the filtered spirituality of western yoga to be appealing. Brigid Delaney, Senior Writer for the Guardian Australia, wrote about how “Australians are losing their religion but their craving for meaning and moral teaching appears stronger than ever.” This trend is clearly visible in North America as well where religion is on the decline[3] but the yoga industry is booming. One in five Americans[4] describe themselves as spiritual but not religious – partially due to the influence of yoga. Delaney also wrote an article[5] on her attempt at delving into the world of yoga in an effort to clear her mind and strengthen her body. She wrote, “In many respects, yoga is the perfect pastime for our age – the meditative elements give us the opportunity to find peace and stillness in a time of increasingly hectic and crowded information, the instructional bits give us moral lessons in the absence of traditional religion, while the stretchy, bendy, sweaty physical stuff is a great way of countering eight or more hours a day spent hunched over a computer.” Yoga, effectively, has helped meet the demand for connection coming from a generation of people who feel disconnected and disillusioned.

The power of modern yoga extends beyond flimsy spirituality found while stretching on plastic mats laid out on the hardwood floors of rec center classrooms. Yoga, in more secular places, tends to be a mechanism for creating community and connection, and helps people feel grounded in an incredibly turbulent world. Delaney talks about how, secretly, she wants to be one of the yoga mat toting, juice drinking, athleisure wearing yoga fanatics that “loiter in the aisles of the organic fruit and vegetable shop.” By donning leggings and slurping green drinks, these people are finding their “Neo-Tribe”[6] – which Z. Bauman explains “helps the individual gain a sense of identity and belonging through identification with a subcultural consumer group.” Basically, buying into this consumption pattern helps people feel less lonely.

Yoga Outside of the West

Although yoga is gaining popularity globally, its spiritual components don’t flourish everywhere the way they do in the west. In places that tend to have stronger conventional religious practices yoga is contentious; the spirituality of yoga is seen as incongruent with dominant religious values. In 2013 the BBC ran an article called, “Does doing yoga make you a Hindu?[7]” The underlying question being are non-Hindu religious followers being subversive by practicing yoga? Can the founding spirituality be successfully cleaved from its physical counterpart in order to make a secular activity that poses no threat to dominant local ideology? The answer is complicated. So much so that the question of whether or not yoga is religious a “vexed question[8]” in Indian politics. Orthodox Muslims believe that sun salutations go against Islamic Law as Muslims are not supposed to bend to anyone, or anything, but Allah. Alternately, the practice of yoga in Indian schools causes concern for some because the chanting “Om” during the practice is too connected to Hindu religion. As a result, many leaders have said they are okay with yoga as long as it is disassociated with religion.

Different countries have handled this question in different ways. Iran, where Sharia law is the rule of the land, yoga classes “make no overt reference to spirituality at all.[9]” To avoid what could be called “blasphemy” the emphasis is instead placed on the physical component by calling it “the sport of yoga.” Where teachers in the west tap into consumer spirituality, teachers in Iran are accredited by the Yoga Federation[10]which promotes “Unity through sport” and simply defines yoga as “a holistic health system with Indian roots stretching back 5,000 years.” Their homepage justifies their practice of yoga as a sport with a quote from B.K.S. Iyengar[11]who says that, “there is nothing wrong in holding a competition on the qualitative presentation of the yoga asanas.” He concludes by saying that yoga “should be competition on the artistic level and not on egoistic body cult.” By placing the emphasis on exhibitive competition, they deliberately neglect the spirituality that people cling to in so many other places. Simultaneously, Iyengar is bashing the imagined community that yoga is creating in the Australia and North America and thrusting it in its least flattering light as an egoistic body cult.

Some places chose to forgo working through the complexities of yoga and spirituality in favor of banning it completely. In 2008, a religious ruling in Malaysia banned the sport in five states. However, in Kuala Lumpur, the capital, physically practicing yoga is allowed as long as chanting and meditation are not. This partial acceptance is standard in other Islamic countries such as Indonesia as well. A profitable compromise that introduces a new commodity while preserving and protecting tradition.

Savasana – Wrapping It Up

Since its creation in 3000 BCE in what is now modern India, yoga has evolved and expanded to accommodate demand in cultures around the world. The religious roots of the practice have been the direct cause of discourse around the world and helped shape yoga into a variety of practices and consumable packages that are woven into the global market. The adaptation of yoga in more secular places has accommodated quasi-spiritual consumerism in places that are experiencing a sense of disconnectedness a result in the decline of religion. Alternately, yoga has been adapted as a sport with an emphasis purely on its physical components so as not to interfere with dominant religious ideology. Although modern practices typically bear little resemblance to ancient practices, the addition of spiritual or physical yoga practices have influenced consumers around the world.

[1] Technavio. “Yoga Is on the Upswing in North America.” December 4, 2015. Accessed April 27, 2019, https://blog.technavio.com/blog/yoga-upswing-north-america.

[2] Yoga Six. “A Quick Reference Guide to the History of Yoga.” March 12, 2018. Accessed April 27, 2019, https://yogasix.com/history-of-yoga/.

[3] Religion News Service. “Religion Declining in Importance for Many Americans, Especially for Millennials.” December 10, 2018. Accessed April 27, 2019, https://religionnews.com/2018/12/10/religion-declining-in-importance-for-many-americans-especially-for-millennials/.

[4] Tara Isabella Burton. “‘Spiritual but Not Religious’: Inside America’s Rapidly Growing Faith Group.” Vox, November 10, 2017. Accessed April 27, 2019, https://www.vox.com/identities/2017/11/10/16630178/study-spiritual-but-not-religious.

[5] Brigid Delaney. “The Yoga Industry Is Booming – but Does It Make You a Better Person?” The Guardian, September 17, 2017. Accessed April 27, 2019, https://www.theguardian.com/lifeandstyle/2017/sep/17/yoga-better-person-lifestyle-exercise.

[6] Russell Keat, Nigel Whiteley, and Nicholas Abercrombie. The Authority of the Consumer. Taylor & Francis, 1994.

[7] William Kremer. “Does Doing Yoga Make You a Hindu?” BBC, November 21, 2013. Accessed April 27, 2019, https://www.bbc.com/news/magazine-25006926.

[8] Shefali Anand. “Is Yoga Religious? In India, It’s a Vexed Question.” WSJ, June 9, 2015. Accessed April 27, 2019, https://blogs.wsj.com/indiarealtime/2015/06/09/is-yoga-religious-in-india-its-a-vexed-question/.

[9] William Kremer. “Does Doing Yoga Make You a Hindu?” BBC, November 21, 2013. Accessed April 27, 2019, https://www.bbc.com/news/magazine-25006926.

[10] “International Yoga Sports Federation – Directory,” Accessed April 27, 2019. https://www.iysf.org/directory/iran.

[11] “What Is Iyengar Yoga?,” Iyengar Yoga: National Association of the United States. Accessed April 27, 2019. https://iynaus.org/iyengar-yoga/about.

October 17, 2019 0 comment