A Right to Use Cash?

A development in India that unfolded while I was there inspires this post about money and privacy.  In November, the Indian Government announced a “demonetization” plan.  The largest bills in circulation (500 and 1000 rupee notes) were declared invalid by the end of the year, to be replaced by a new 2000 rupee note.  You could deposit 500 and 1000 rupee notes in the bank before the deadline, but that would either force people to open a bank account (as many people there do not have one) or raise awkward tax questions for people depositing cash amounts far in excess of their declared income.  How well this worked is an open question (lots of people apparently swapped their old cash for the new cash), but here is my question:

To what extent does the ability to use cash implicate a significant privacy right?  Some economists, most notable Kenneth Rogoff, argue that we would be better off getting rid of cash.  Illegal activity, they point out, would be much more difficult to finance without cash. The same could be said about corruption.  No cash means all money would be in the financial system, and so on. One objection to this line of thought, though, is that getting rid of cash would mean that every transaction would be known by your credit card company or bank, and could be known by the government through a search warrant. Cash, by contrast, allows you to keep transactions private, so long as the vendor doesn’t report or remember you.

While I cannot imagine a court saying that Congress lacked the power to prohibit cash as legal tender (the power to coin money probably includes the power not to coin money), I can imagine Congress refusing to adopt such a proposal because of its privacy aspects.  Should those concerns, though, outweigh the benefits of channeling transactions into other forms of payment?  Someday we may have to think about that more carefully.

 

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8 Responses

  1. Orin Kerr says:

    Does “significant privacy right” mean “constitutional right” or does it mean “policy interest?”

  2. Gerard says:

    Policy interest

  3. Orin Kerr says:

    Oh, then, sure.

    P.S. Accessing bank and credit records doesn\\\’t require a warrant.

    • Brett Bellmore says:

      But ought to; 3rd party doctrine is a joke, don’t third parties have 4th amendment rights, too? You give your information voluntarily to somebody else, it should just change who is named on the search warrant.

  4. Most of the currently recognized US privacy rights explain this element of privacy poorly. The use of cash ties to the right to seclusion in two ways. The first is that by using cash, you can avoid follow-up contacts for marketing, the second that you can avoid being contacted to be informed that your credit card and other details were stolen. It also ties to the right to anonymity, which is less recognized. (I’m not a lawyer; it may be that there are other aspects of privacy rights that tie better. Also in my review of Solove’s Understanding Privacy, I discussed the idea of identifier creation as a harm, http://emergentchaos.com/archives/2008/08/soloves-understanding-privacy.html)

    Perhaps your question can be rephrased: if the use of cash intuitively protects privacy, can we use that to help us find a theory that explains that intuition?

  5. Gerard Magliocca says:

    Orin,

    Point taken about warrants.

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