The War against Cash, Part V

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    By Dan Mitchell

    My friends sometimes tell me that libertarians are too extreme because we tend to make “slippery slope” arguments against government expansions.

    I respond by pointing out that many slopes are very slippery. Especially when dealing with politicians and bureaucrats.

    Today, we’re going to look at how some politicians want to push us down the slope as part of their war against cash.

    I’ve already written about this topic four times (here, herehere, and here), but it’s time to revisit the topic because of what has just happened in Canada.

    Kevin Williamson of National Review is properly disgusted by Prime Minister Trudeau’s decision to deploy financial repression against protesting truckers.

    Prime Minister Trudeau has invoked, for the first time in his country’s history, Emergency Measures Act powers to shut down a domestic political protest, the so-called Freedom Convoy movement… Trudeau is not sending in the troops. He is cutting off the money. …And so he is using the Emergency Measures Act to invest himself with the unilateral power to freeze bank accounts and cancel insurance policies,without so much as a court order and with essentially no recourse for those he targets. Canadian banks and financial-services companies will be ordered to disable clients suspected of being involved in the protests. …Using financial regulation to crush freedom of speech isn’t financial regulation — it is crushing freedom of speech by abusing the powers of a government office. …financial regulators enjoy powers that no FDR — or Napoleon, or Lenin — ever dreamt of possessing. The opportunities for mischief are serious and worrisome — and so are the opportunities for tyranny. …When the laws are enforced exclusively (or with extra vigor) against political enemies, that is not law enforcement — that is political repression. …we don’t have to send men with jackboots and billy clubs to break up protests — we have very polite Canadian bankers to do that for us.

    Kevin then points out that Trudeau’s despicable actions are a very good argument for cryptocurrency.

    It can be no surprise, then, that people are looking for digital platforms that protect their anonymity and keep their communications slightly beyond the reach of the long arm of the state. …And it’s even less surprising that cryptocurrencies and other escape routes from the banking system increasingly appeal to people who are neither cartel bosses nor international men of mystery. In a world in which unpopular political views can cut an individual or an organization off from the financial main stream, such innovations are necessities.

    Liz Wolfe wrote about Trudeau’s overreach for Reason and also pointed out that cryptocurrencies are a valuable tool against oppressive government.

    Canadian Prime Minister Justin Trudeau invoked his country’s Emergencies Act of 1988 in an attempt to snuff out anti-vaccine mandate protests that have roiled Canadian domestic politics for weeks. Invoking the act allows Trudeau to broaden Terrorist Financing Act rules to bring crowdfunding platforms and payment processors under greater government scrutiny. …cryptocurrency exchanges and crowdfunding platforms must now report large and “suspicious” transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), thus allowing more government surveillance of who’s forking over money to the protesters. The government will also be using its expanded powers to allow financial institutions to freeze the corporate accounts of companies that own trucks used in the blockades, while suspending their insurance… This type of situation—one in which protesters are being freezed out by crowdfunding platforms, one in which the government is threatening to suppress demonstrations and surveil financial transactions—is precisely the use case for crypto, which may be why Canadian officials namechecked it in their Terrorist Financing announcement. …crypto’s real value lies in the fact that it’s much harder to trace back to its sender, allowing pseudonymous donors to support whichever political causes they want to…the liberatory promise of crypto lies in the fact that it can bypass these intermediaries and make transactions more discreet—something Trudeau’s lackeys surely know, and seem a bit threatened by.

    Amen. I don’t understand cryptocurrency and I don’t own any, but I definitely think it’s important to have alternatives given the track record of government.

    By the way, worries about government over-reach existed long before Trudeau decided to launch his financial assault.

    Libertarian-minded people have been concerned about this issue for a long time.

    Here’s some of what Larry White wrote in 2018.

    Coercive anti‐​cash policies abridge the freedom and reduce the welfare of peaceful individuals who prefer to use cash. …They compromise financial privacy and enable the prosecution of victimless crimes wherever banks are required to “know their customers” and to provide transaction records to government officials. They impose an unlegislated tax on money‐​holders, and leave them no means of escape into untaxed media of exchange, whenever the central bank decides to pursue a negative interest rate policy. They harm the livelihood of small businesspeople who rely on cash sales, particularly those serving the unbanked or operating in outdoor markets, and reduce the welfare of their (mostly poor) customers by raising transaction costs.

    And here are some excerpts from William Luther’s column for Reason in the same year.

    The case for cash presumes that we should be free to go about our lives so long as our actions do not harm others. It maintains that governments are not entitled to the intimate details of people’s lives. …demonetization advocates hold a progressive view of government.They think that existing laws and regulations have been rationally constructed by enlightened experts… There is, of course, an alternative view of government—one that is skeptical that laws and regulations are so rationally designed. …Some of these rules…were constructed to benefit some at the expense of others… Physical currency enables one to disobey the government. …Importantly, this argument…is a case for due process and financial privacy—bedrock jurisprudential principles in the West.

    I’ll close with a few comments about what Trudeau should have done. Particularly after the road blockages lasted more than one or two days.

    Instead of invoking a draconian emergency law, local Canadian governments should have used regular police powers to impose fines on truckers and- if necessary – impound their vehicles.

    And if any of the truckers responded with violence, they should have been arrested and prosecuted.

    For what it’s worth, this is how local governments in the United States should have responded (and should respond) to protests by Antifa and Black Lives Matter. Or to protests by any right-wing group.

    The bottom line is that I’m a big believer in civil disobedience, but my tolerance drops when ordinary people are harassed, inconvenienced, and intimidated.

    P.S. Luther’s point about the “progressive view of government” is not just a throwaway line. He’s referring to the mindset that first appeared during the “Progressive Era” of the early 1900s, when politicians such as Teddy Roosevelt and Woodrow Wilson decided that government was a force for good (unlike America’s Founders, who gave us a Constitution based on the notion that government was a threat to liberty and needed to be restrained).

    P.P.S. Returning to more practical issues, India is a another bad example of what happens when politicians push a nation down the slippery slope.