The end of cash and the last money counter

With apologies to Francis Fukuyama for a twist on his book's title but I think it is safer for everyone if central banks stop printing paper money or minting coins. 

In times past workers were paid their salaries in cash. They would line up during paydays at the payroll teller's window or table, sign after their name on the payroll sheet and be handed envelopes containing their period's salary. Some companies did not even have envelopes. The payroll master just counted out the bills and coins in front of the worker.

Preparing the payroll sheet was tedious. You needed to have a typewriter with a very wide carriage because the sheet was twice as wide as the length of a legal size paper. If the payroll typist was not lucky enough he would fold up the sheet before he could insert it into his standard typewriter. And the payroll master needed to have the correct number of bills and coins for all those envelopes. Therefore he must figure well in advance the number of each denomination to be withdrawn from the company's depository bank.

But the risky side was bringing the cash from the bank. Many payroll money were lost to robbers or lost on the way to the payroll office of a firm. Good for those with big payrolls who had their cash brought to them by the bank's armored vans.

The worker also faced the risk of being robbed of his earnings for the period because his envelope  contained all his salary for the preceding 15 days of work.

But that changed with the introduction of ATM payroll accounts.  One does not need anymore to carry all 15-days worth of money. An employee does not even have to withdraw cash in order to pay bills. You can pay through the ATM.

However,  even with an ATM account a person can still be  robbed of his savings. A robber can just force him to withdraw money from the ATM and flee away with the cash.

We should make the next step: doing away with cash completely to make the world safer.  The First to disappear will be kidnap-for-ransom operations. Kidnappers cannot just ask the family of the kidnap victim to deposit the ransom to their account because it can be easily traced. Secrecy of bank deposits can be waived by the courts in criminal activities. 

What ransom will kidnappers demand? Jewelry? Gold bars? They will find it hard hiding and transporting their loot. Perhaps they can demand that the ransom be paid by transferring credits to their mobile phone accounts as in GCASH or Smart Padala. But those can still be traced.

How will jueteng operators conduct their enterprise if their runners cannot collect in cash? Will they turn to cellphone loads, as some are doing now,  as a way of collecting bets? That will move jueteng a little above the underground economy because some of its income will be captured through more usage of cellphone loads which means more taxable income for mobile phone operators.

With the end of cash goes the last money counter. But the world will be a lot safer. And in the case of jueteng, a little increase in government revenue.

OK, I forgot about the problem of counterfeiting which will also go away with the last cash.

Where is my thumb drive, Canon?

A few months ago I bought a Canon printer at the COMDDAP exhibit at SM City, Cebu. It was supposed to come with a freebie: a 4 gig thumbdrive.

Following instructions in their exhibit flyers, I e-mailed a scanned copy of my purchase documents to the Canon distributor in Manila. But in return, I got an automated reply asking me to send the serial number of my printer. When I did, I got another automated reply.

The Canon Philippines website has an online inquiry but when I did I also got another automated reply.

My e-mail to the Canon Singapore regional office bounced saying the addressee was not in the Lotus Domino directory.

Now, a 4gig thumbdrive is but a measly P500 or so at any CDRKing stores. But it is the duplicity of the Canon distributor - Dentsuindio - that irked me.

Update: The thumbdrive did finally arrive last week. But I think the exhibitor should have had on stock enough thumbdrives or whatever freebie they advertised. They spent more than the cost of the piece in sending the thing first to the wrong address and then sending it finally to me. 

The COMDDAP contact person was quick to answer my complaint. More power COMDDAP guys!

All's well, that ends well!

My favorite economist wins the Nobel

Congratulations to Paul Krugman for winning the Nobel in economics. I devour the essays of Krugman because he writes like my other favorite - Richard Dawkins; concise and easy to understand.

Eat you hearts out Bush and Greenspan.

My forecast: Steven Levitt gets his in 10 years. 

My "prayer": Dawkins gets a Nobel too.

Manila gamblers make it to best-seller

I've heard of our bigshot politicians accompanying Manny Pacquiao to Las Vegas during his boxing bouts. These big shots are also famous for their bigtime gambling habit. But I never suspected they are that big thus meriting a mention in a best-selling book. This passage from The Black Swan confirms:

All they had to do was control the "whales," the high rollers flown in at the casino's expense from Manila or Hong Kong; whales can swing several million dollars in a gambling bout.

The Black Swan comes flying again!

This passage from The Black Swan by Nassim Nicholas Taleb is very interesting in the face of the current financial turmoil.

In the summer of 1982, large American banks lost close to all their past earnings (cumulatively), about everything they ever made in the history of American banking—everything. They had been lending to South and Central American countries that all defaulted at the same time—"an event of an exceptional nature." So it took just one summer to figure out that this was a sucker's business and that all their earnings came from a very risky game. All that while the bankers led everyone, especially themselves, into believing that they were "conservative." They are not conservative; just phenomenally skilled at self-deception by burying the possibility of a large, devastating loss under the rug. In fact, the travesty repeated itself a decade later, with the "risk-conscious" large banks once again under financial strain, many of them near-bankrupt, after the real estate collapse of the early 1990s in which the now defunct savings and loan industry required a taxpayer-funded bailout of more than half a trillion dollars. The Federal Reserve bank protected them at our expense:
when "conservative" bankers make profits, they get the benefits; when they are hurt, we pay the costs.

The US president at the time was Bush Sr who was also in the midst of a war with Iraq.

Fund managers often drown would-be investors in statistics to show that the investment schemes they are marketing would surely rake in money for their investors. Taleb updates us on this pseudo-science.

Lehman trouble worries my colleagues

The collapse of Lehman are making my colleagues walk with their fingers crossed and in daze.

They have placements, big placements, in the local subsidiary of American International Group (AIG) because of the big returns on their investments.

AIG is skittering on the brink and my friends are praying real hard. Well, win some; lose some.

People like me who have nothing to invest have nothing to lose. And no hope of winning anything. :-(

The Obama Speech - a must read (and view)

I have lumps in my throat while reading the text of the speech of Barack Obama. And later I had tears in my eyes when I watched the video. On the amusing side: my family and I counted 30 "thank you's" from Obama before he could go on to his speed.

Will the Philippines ever have a Filipino Obama? Ninoy Aquino could have been one. Except that unlike Obama, Ninoy had the pedigree for politics. So Obama's story is more astounding.

I am optimistic. Since I plan to live for 30 more years, I know the Philippines will have decent leaders before I die. And I hope to see my grandchildren enthusiastic to vote for one. That will be the day that I will cast my ballot again. Just like those old Americans who went back to the primaries and will vote again on November 4 just because they see hope in Obama.

First, a transformation in our society should come before we can elect a Filipino Obama. That is what happened to America. Paul Krugman says America has been transformed that is why it is now possible for a Black (or a woman I should add) to be elected to the highest office.

I believe transformation comes with the creation of a strong working middle class with enough voting clout to counter the tendency of the masses to vote for a populist politician and the bias of the elite to choose from among their own.

Periodically I get to lecture to group of students who come to the office as part of their class requirements. I always make it a point to show them the need for upright politicians, honest government bureaucrats and hardworking entrepreneurs to get this county out of the rut it is in.

The hope of the Philippines are in these young students. Those of us who have been in politics, in government bureaucracies or in business for more than two decades and still have not done anything, our time is up. Let's give way to the young, nurture their idealism and provide them with the opportunities for the sake of our grandchildren.