Save the $100 Bill (2016 Oct)

by Barry A. Liebling

Government is the institution that enforces the rules of conduct. If you understand and appreciate the essential function that personal freedom plays in human flourishing, you will see that the only proper role for government is limited to protecting individual rights. Specifically, government ought to prohibit the initiation of force and the use of fraud. There is no justification for government tampering with the peaceful, mutually consensual, dealings of its citizens.

Of course, there are powerful factions that reject the concept of personal freedom and actively work to replace it with some form of authoritarianism. These enemies of liberty come in a wide variety of models and flavors (think communism, socialism, fascism, welfare statism, communitarianism, and other less common but also abhorrent orientations), but they all have in common the core notion that the government should be the boss and individuals should be obedient.

In the United States a sizable proportion of professors at the most prestigious universities are highly sympathetic to authoritarianism. They are passionate advocates for expanding the power and reach of government while reducing the autonomy of individuals as much as possible. But they do not typically come right out and state their premises and intentions because they know that many Americans would be repelled. Instead the enemies of liberty make policy proposals disguised as earnest attempts to “improve the country.”

Recently Harvard professor Kenneth S. Rogoff published a column in The Wall Street Journal that is a summary of his new book The Curse of Cash. Dr Rogoff argues that the country would be much better off if $100 bills were eliminated. Scrutinize his reasoning and you will see that changing paper currency is not the fundamental issue for the professor. Instead, Dr Rogoff views the elimination of $100 bills as a vehicle for achieving the real prize – reducing every citizen’s personal autonomy and shifting more power to the government.

Consider the premises behind the professor’s main points.

Dr Rogoff mentions, correctly, that criminals use large notes to keep their activities secret. Eliminating currency with pictures of Benjamin Franklin will make life more difficult for felons because they will have to find other ways of hiding their wealth and making transactions. But getting rid of large bills will also make it more difficult for ordinary citizens to deal in cash. And it is ordinary citizens who are the main target of the professor’s confiscation scheme. Genuine criminals can always be apprehended whether $100 bills exist or not. Regular people will have a range of actions – paying for large purchases with cash – taken away if the professor’s recommendation is implemented.

Note that the term “private actions” has two meanings. It can signify doing something that is not visible to the general public. The expression also means acting in a way that is not under the control of an outside agency (such as the government). Clearly, Dr Rogoff is unsympathetic to ordinary people (not part of his academic, government, leftist cabal) taking any private actions.

The professor writes that, “Cash is … deeply implicated in tax evasion, which costs the federal government some $500 billion a year in revenue.” Notice that what the government fails to extract from its citizens is described as a “cost.” But there is no consideration for costs incurred by citizens (essentially serfs) who are paying exorbitant taxes to the ever-grasping government. Dr Rogoff reveals himself to be a partisan committed to the interests of tax collectors and implies that they are entitled to whatever they want.

The column recommends that all people, especially low income citizens, be provided with debit cards to replace as much cash as possible. It explains that, “this would also make it simpler, safer and less expensive for the government to make transfer payments.” Note again, the studied attention to crafting policy that will benefit the government to the detriment of personal autonomy. Left unsaid is that expanding the use of debit cards can enable the state to keep more detailed and obtrusive tabs on individual citizens and penalize them if they engage in “unapproved activities.”

Dr Rogoff recognizes some people will reject his proposal because it diminishes personal privacy. He writes, “but where does one draw the line between this individual right and the government’s need to tax and regulate and to enforce the law?” For the professor there is no line. The government is supreme because it has “needs,” and individual persons (who are not members of the leftist elite) just have to comply and suck it up.

The professor is obviously a fan of Keynesian economics and philosophy. He is a cheerleader for the government via central banks to manipulate the interest rate and even bring it below zero if “wise bureaucrats” suspect it will “stimulate the economy.” Note that below zero interest rates implies that you are penalized for keeping your money in a bank – and this is intended to “nudge” you into spending it. He points out that currently, because cash is widely and easily available, many citizens (by working in their self-interest) will resist the attempted meddling by the central banks, keep their money, and not purchase as much as government planners want. This makes it harder, perhaps impossible, for the central bankers to achieve their “noble objectives.” But eliminating $100 bills will give central bankers more control over the economy while simultaneously reducing the available options of regular citizens. All power to the state.

Full disclosure – I am not in the habit of using bills any larger than $20. Until I read the professor’s column the existence of large denomination currency was not a topic I considered salient. I am now convinced that eliminating Franklin notes is a notion that is a direct attack on individual liberty. Save the $100 bill.

*** See other entries at in “Monthly Columns.” ***

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