At best this is a half-truth. For example, consider a new regulation on industrial air pollution. This would certainly add a financial burden to industries that produce air pollution, e.g., factories, refineries, etc. But, these represent only a fraction of the whole economy. More broadly, such regulations would create opportunities for innovation. There would be lots of money to be made from producing and selling air filters and other pollutant-reducing technologies. This would have the effect of growing and diversifying the economy, both in financial terms and in the creation of jobs. And then of course there are the non-economic benefits, notably less toxic air. So, please stop saying that increased regulation hinders economic growth.
So, let’s assume for a moment that we could overcome the accessibility issue — that we could provide banking services to everyone. This is a big assumption, given that we’ve largely failed to do it up to this point. But, let’s assume we could eliminate the poor’s reliance on cash. Immediately it becomes clear that the biggest winner of all these new banking customers would be the banks themselves. But, let’s make another assumption: we can overcome any moral objection to banks profiting from consumer demand that is mandated by the government. So, for the time being, let’s be satisfied that we’ve eliminated the need for cash without further disenfranchising the poorest populations.
Now we’re left with the crime issue. Ideally, cash would be phased out over a decade or so. There would certainly be missteps, but hypothetically criminals would eventually no longer have access to the near perfect fungibility of cash. Now we find ourselves having to embrace another major assumption: in the absence of cash, criminals will not develop alternate means to conduct their “discrete” business dealings. Furthermore, even if they do develop new means, these would be inferior to cash in terms of “discreteness” and fungibility.
It seems fair to assume that any new currencies used for shady dealings would be electronic, for example like Bitcoin. This presents a whole new slew of complications for law enforcement. Hard cash can be traced and is increasingly hard to counterfeit. Electronic transactions, however, do not necessarily abide by the relatively rigid rules of the analogue world. Digital spaces harbor far more possibilities for “hacking” the system. It seems reasonable to assume that the code for a digital currency could be counterfeited in far more ways than the layout of paper currency. Furthermore, if social media use is any indication, financial transactions in the digital realm have the potential to become increasing anonymous and thus harder to trace (unless we take the authoritarian step of requiring real-name internet registration).
In the end, becoming a cash-less society might have some short-term impact on criminal activity. But, these effects would be hard-fought and by no means guaranteed. In fact, forcing criminals to innovate may make them harder to catch. It is far more likely that eliminating cash will have an immediate and lasting impact on the poor. Moreover, cash is useful for daily, non-criminal exchanges. For example, whenever possible I tip in cash. It’s more personal, and goes directly to the other person, rather than on a circuitous route through banks and management. Even as we continue to embrace the convenience of digital payment methods, we should not undervalue the social importance and impacts of cash.
Growing concern about the Zika Virus may seem like a strange topic for this blog. In recent years, China has of course had a variety of viral epidemics. However, the knee-jerk response of several South American countries raises an unfortunate reminder of parallel histories of forced population control in the two regions. China famously used doomsday models to justify its one-child policy (Greenhalgh 2005), and forced sterilizations were all too common thoughout South America, for example, in Peru.
At present, El Salvador, due to perceived risks from Zika, has begun to urge woman to refrain from getting pregnant until 2018. In a characteristically heavy-handed response, Brazil has deployed its military to “spread awareness” of Zika in the lead up to Carnival. Though there is not yet a vaccine, Zika has a very low mortality rate. While evidence suggests that the virus may be the cause of an uptick in birth defects, the correlation remains unverified. Thus, given the dark history of forced population control in the region, it seems reasonable to suspect that Zika is just another in the long list of justifications for targeting poor, rural groups – where Zika-infected mosquitoes are likely more prevalent.
While based in historical precedent, this theory is not meant to be a conclusive assessment of the current situation in South America, of which I am by no means an expert. This is merely a caveat from a China scholar to the experts who must now assess the broad implications of the Zika outbreak.
The “hey wait a second” thought had crept into my head even before rendezvousing with the ladies. I didn’t even have to tell my wife what had happened to know her reaction. She laughed at me as expected, but was also very understanding. She actually told me to forget about it – to chalk it up to a learning experience. But we were on a tight budget, and so I decided to go back, eat a piece of humble pie, and ask for my money back. On my way, I looked up the word for “refund money”（退钱）– which I had learned before but now won’t ever forget. I told the owner that I was a poor college student, and that 325RMB was just too expensive for me. She said no problem, and was all set to return my money. But then, just at the last second, she asked me how much I wanted to pay. At first I thought she was trying to charge me some sort of return fee, but then she said, “How about 285?” And then it hit me. As a foreigner I didn’t know the value of anything in China, not even getting my dirty underwear cleaned. 325RMB is ridiculous for a couple loads of laundry. “150,” I said. She laughed, and countered, “Okay, 200.” I shook my head in agreement, “Okay, and it’ll still be ready tomorrow after 5:00?”
So, I wound up knocking about $20 off the original price. I learned a lesson about the value of getting your laundry done and the value of just walking away in a negotiation (and about just doing laundry in a plastic tub). An accidental technique has now become purposeful. I also learned an important lesson about learning the value of things. In China, value is determined in a very interpersonal way. It’s not something you can look up in a book, or even on a price tag. Understanding value is particularly experiential in the Chinese context.
Most anecdotal business stories are not very useful to foreigners running their own small businesses in China. They make great bar-talk, but mostly involve large companies, with enough money and large enough margins not to worry a whole lot about the difference between a few hundred, thousand or even ten thousand dollars. One such case involves a large American outdoor company which, as luck would have it, was told to me at a bar in Shenzhen by the American businessman it happened to. During a large order, the factory insisted on a large fee to release the merchandise. They asked for half-a-million dollars. This was negotiated down to a quarter-million. When the order was about to be released, the factory all of sudden demanded a million bucks. After a whole lot of negotiating and empty threats, the order was released for some amount slightly higher than a quarter-million dollars.
The lesson recounted by the American businessman was that the Chinese can’t be counted on to honor contracts, and may even rescind deals they themselves have initiated. That may be true. (What they don’t realize is that even at a million dollars, the mark-up at which the American company is selling the products makes such a sum inconsequential.) However, to individual businessmen, these sums of money are very consequential, and thus such a story, while entertaining, does very little to instruct one on how to start and run a business in the Chinese context. My assumption here is that the amount of money involved drastically changes the circumstances of business negotiations. And walking away may hold very different consequences for a small business owner whose entire business rests on a single negotiation. Thus, the strategy for handling any number of business related situations must be considered in relation to the scale of the business within the cultural context. In order to contribute to our understanding of Chinese economic practices beyond anecdotal evidence, I focus on expatriate entrepreneurs (“expatrapreneurs”) who own and operate small businesses in China. For them, financial profitably relies on practical cultural knowledge, and comes without the “free pass” extended to most foreigners for casual faux pas, or the financial leverage imbued to Americans representing multi-national corporations in China.