March 12, 2010

The cost of money

Everyone except James Allan scrabbled in the bag Joe DiVanna brought with him to the Digital Money Forum (my share: a well-rubbed 1908 copper penny). To be fair, Allan had already left by then. But even if he hadn't he'd have disdained the bag. I offered him my pocketful of medium-sized change and he looked as disgusted as if it were a handkerchief full of snot. That's what living without cash for two years will do to you.

Listen, buddy, like the great George Carlin said, your immune system needs practice.

People in developed countries talk a good game about doing away with cash in favor of credit cards, debit cards, and Oyster cards, but the reality, as Michael Salmony pointed out, is that 80 percent of payments in Europe are...cash. Cash seems free to consumers (where cards have clearer charges), but costs European banks €84 billion a year. Less visibly banks also benefit (when the shadow economy hoards high-value notes it's an interest-free loan), and governments profit from Seigniorage (when people buy but do not spend coins).

"Any survey about payment methods," Salmony said Wednesday, "reveals that in all categories cash is the preferred payment method." You can buy a carrot or a car; it costs you nothing directly; it's anonymous, fast, and efficient. "If you talk directly to supermarkets, they all agree that cash is brilliant - they have sorting machines, counting machines...It's optimized so well, much better than cards."

The "unbanked", of course, such as the London migrants Kavita Datta studies, have no other options. Talk about the digital divide, this is the digital money divide: the cashless society excludes people who can't show passports, can't prove their address, or are too poor to have anything to bank with.

"You can get a job without a visa, but not without a bank account," one migrant worker told her. Electronic payments, ain't they grand?

But go to Africa, Asia, or South America, and everything turns upside down. There, too, cash is king - but there, unlike here with banks and ATMs on every corner and a fully functioning system of credit cards and other substitutes, cash is a terrible burden. Of the 2.6 billion people living on less than $2 a day, said Ignacio Mas, fewer than 10 percent have access to formal financial services. Poor people do save, he said, but their lack of good options means they save in bad ways.

They may not have banks, but most do have mobile phones, and therefore digital money means no long multi-bus rides to pay bills. It means being able to send money home at low cost. It means saving money that can't be easily stolen. In Ghana 80 percent of the population have no access to financial services - but 80 percent are covered by MTN, which is partnering with the banks to fill the gap. In Pakistan, Tameer Microfinance Bank partnered with Telenor to launch Easy-Peisa, which did 150,000 transactions its first month and expects a million by December. One million people produce milk in Pakistan; Nestle pays them all painfully by check every month. The opportunity in these countries to leapfrog traditional banking and head into digital payments is staggering, and our banks won't even care. The average account balance of customers for Kenya's M-Pesa customers is...$3.

When we're not destroying our financial system, we have more choices. If we're going to replace cash, what do we replace it with and what do we need? Really smart people to figure out how to do it right - like Isaac Newton, said Thomas Levenson. (Really. Who knew Isaac Newton had a whole other life chasing counterfeiters?) Law and partnership protocols and banks to become service providers for peer-to-peer finance, said Chris Cook. "An iTunes moment," said Andrew Curry. The democratization of money, suggested conference organizer David Birch.

"If money is electronic and cashless, what difference does it make what currency we use?" Why not...kilowatt hours? You're always going to need to heat your house. Global warming doesn't mean never having to say you're cold.

Personally, I always thought that if our society completely collapsed, it would be an excellent idea to have a stash of cigarettes, chocolate, booze, and toilet paper. But these guys seemed more interested in the notion of Facebook units. Well, why not? A currency can be anything. Second Life has Linden dollars, and people sell virtual game world gold for real money on eBay.

I'd say for the same reason that most people still walk around with notes in their wallet and coins in their pocket: we need to take our increasing abstraction step by step. Many have failed with digital cash, despite excellent technology, because they asked people to put "real" money into strange units with no social meaning and no stored trust. Birch is right: storing value in an Oyster card is no different than storing value in Beenz. But if you say that money is now so abstract that it's a collective hallucination, then the corroborative details that give artistic verisimilitude to an otherwise bald and unconvincing currency really matter.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of the earlier columns in this series.

March 5, 2010

The surveillance chronicles

There is a touching moment at the end of the new documentary Erasing David, which had an early screening last night for some privacy specialists. In it, Katie, the wife of the film's protagonist, filmmaker David Bond, muses on the contrast between the England she grew up in and the "ugly" one being built around her. Of course, many people become nostalgic for a kinder past when they reach a certain age, but Katie Bond is probably barely 30, and what she is talking about is the engorging Database State (PDF).

Anyone watching this week's House of Lords debate on the Digital Economy Bill probably knows how she feels. (The Open Rights Group has advice on appropriate responses.)

At the beginning, however, Katie's biggest concern is that her husband is proposing to "disappear" for a month leaving her alone with their toddler daughter and her late-stage pregnancy.

"You haven't asked," she points out firmly. "You're leaving me with all the child care." Plus, what if the baby comes? They agree in that case he'd better un-disappear pretty quickly.

And so David heads out on the road with a Blackberry, a rucksack, and an increasingly paranoid state of mind. Is he safe being video-recorded interviewing privacy advocates in Brussels? Did "they" plant a bug in his gear? Is someone about to pounce while he's sleeping under a desolate Welsh tree?

There are real trackers: Cerberus detectives Duncan Mee and Cameron Gowlett, who took up the challenge to find him given only his (rather common) name. They try an array of approaches, both high- and low-tech. Having found the Brussels video online, they head to St Pancras to check out arriving Eurostar trains. They set up a Web site to show where they think he is and send the URL to his Blackberry to see if they can trace him when he clicks on the link.

In the post-screening discussion, Mee added some new detail. When they found out, for example, that David was deleting his Facebook page (which he announced on the site and of which they'd already made a copy), they set up a dummy "secret replacement" and attempted to friend his entire list of friends. About a third of Bond's friends accepted the invitation. The detectives took up several party invitations thinking he might show.

"The Stasi would have had to have a roomful of informants," said Mee. Instead, Facebook let them penetrate Bond's social circle quickly on a tiny budget. Even so, and despite all that information out on the Internet, much of the detectives' work was far more social engineering than database manipulation, although there was plenty of that, too. David himself finds the material they compile frighteningly comprehensive.

In between pieces of the chase, the filmmakers include interviews with an impressive array of surveillance victims, politicians (David Blunkett, David Davis), and privacy advocates including No2ID's Phil Booth and Action on Rights for Children's Terri Dowty. (Surprisingly, no one from Privacy International, I gather because of scheduling issues.)

One section deals with the corruption of databases, the kind of thing that can make innocent people unemployable or, in the case of Operation Ore, destroy lives such as that of Simon Bunce. As Bunce explains in the movie, 98.2 percent of the Operation Ore credit card transactions were fraudulent.

Perhaps the most you-have-got-to-be-kidding moment is when former minister David Blunkett says that collecting all this information is "explosive" and that "Government needs to be much more careful" and not just assume that the public will assent. Where was all this people-must-agree stuff when he was relentlessly championing the ID card ? Did he - my god! - learn something from having his private life exposed in the press?

As part of his preparations, Bond investigates: what exactly do all these organizations know about him? He sends out more than 80 subject access requests to government agencies, private companies, and so on. Amazon.com sends him a pile of paper the size of a phone book. Transport for London tell hims that even though his car is exempt his movements in and out of the charging zone are still recorded and kept. This is a very English moment: after bashing his head on his desk in frustration over the length of his wait on hold, when a woman eventually starts to say, "Sorry for keeping you..." he replies, "No problem".

Some of these companies know things about him he doesn't or has forgotten: the time he "seemed angry" on the phone to a customer service representative. "What was I angry about on November 21, 2006?" he wonders.

But probably the most interesting journey, after all, is Katie's. She starts with some exasperation: her husband won't sign this required form giving the very good nursery they've found the right to do anything it wants with their daughter's data. "She has no data," she pleads.

But she will have. And in the Britain she's growing up in, that could be dangerous. Because privacy isn't isolation and it isn't not being found. Privacy means being able to eat sand without fear.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series.