Thursday, 7 March 2019

Pounds and pennies aren't the issue

When decimal currency was introduced in 1971, I remember my grandmother and her sister complaining that “they should have waited until we oldies had all died off” before making the change.  There was more to it, of course, than simply a reluctance to change on the part of the older members of society, although that was certainly part of it.  It was also about the effort involved in learning something new and unremembering the habits of a lifetime.  The problem with the proposition, of course, is that no sooner have one set of oldies died out than another set have taken their place.
The report this week about the looming demise of the use of cash raises a similar issue.  Whilst it’s not a clear split, it is certainly true that the older generations are more used to cash and less willing to give it up than the younger generations.  That does make it different in one key aspect, though: because of that generational split, it really is true that the passing of time will, for demographic reasons, further reduce the use of cash.  The call made was that steps should be taken to ensure that those who want to continue to use cash are able to do so, and in respect of those who grew up in a largely cash economy and still live there this makes eminent sense, although for that particular section of society it’s necessarily a time-limited requirement.
It isn’t only the elderly who prefer cash, though.  Leaving aside the advantages which cash confers for certain types of criminal activity, the combination of digital exclusion and relative poverty means that there are many other people who are unable to be part of the increasing move away from cash.  In the case of these groups, I’m not at all convinced that ensuring the ability to use cash for the indefinite future is the right approach – it looks to me like addressing the symptoms rather than the underlying causes.  It’s the exclusion issues and the relative poverty which need to be tackled, not ensuring the means by which they can be perpetuated into the future.
There was another aspect about the report that struck me as well.  It isn’t just ‘cash’ that many are wedded to, it’s the pound itself as a unit of currency.  As long as the UK remains a member of the EU, there are economic arguments both for and against ditching the pound and adopting the Euro; but popular feeling for retaining the pound owes little to those and depends much more on an identity-based attachment to a particular historic currency.  Whilst I can understand the economic arguments on both sides, I’ve always felt that the ‘attachment’ question is rather lacking in rationality, owing more to nationalism that economics.  If and when we break the link between what we spend on the one hand and coins and notes on the other, perhaps it will become more obvious that the units in which we measure money are less important than its ability to purchase the things that we need.  And, whether people are ready and able to join the cashless economy today or not, that question of spending power and how it is distributed is far more important than either the units in which it is measured or the means by which it is exchanged.  Talking about how we continue to use cash is a diversion from the real question.

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